Airbus Helicopter Deals Raised Red Flags Amid Probes of Jet, Defense Units
Internal committee examined third-party agent fees in Indonesia, Thailand, South Korea
Airbus SE executives raised concerns about fees paid to a number of middlemen working with its helicopter division, led at the time by the company’s current chief executive, according to internal documents related to Airbus’s record $4 billion bribery settlement in January.
In that settlement, U.S., U.K, and French prosecutors alleged Airbus inappropriately paid middlemen to secure orders at its commercialaviation and its defense and space units. Internal documents submitted to investigators in the probe and reviewed by The Wall Street Journal show that Airbus executives also raised red flags about payments to middlemen at the helicopter unit.
The division at the time of the internal scrutiny was headed by Guillaume Faury, who took over last year as Airbus’s group chief executive. Suspect helicopter deals were flagged for various reasons, according to the documents.
Some middlemen payments appeared to executives as excessive compared with the underlying helicopter orders involved, according to the documents. Others were flagged, according to the documents, for what executives suspected was improper due diligence or lack of supporting paperwork. Airbus executives made no final determinations about the propriety of the helicopter deals in the documents viewed by the Journal.
Mr. Faury, who headed the helicopter unit from 2013 to 2018, declined to comment.
Airbus, citing “legal reasons,” said it couldn’t comment on specific cases covered by the investigation.
Mr. Faury is one of a handful of senior executives who have remained on Airbus’s executive committee in the wake of the sweeping bribery investigation that led to the biggest-ever international settlement of corporate bribery charges.
Britain’s Serious Fraud Office, the agency that led the investigation for the U.K., found that none of Airbus’s current board, including Mr. Faury, was implicated in any of the allegations they made public as part of the settlement. The SFO said it “has no evidence that the current Executive Committee members knew of the corrupt practices or culture of Airbus.”
The documents, which haven’t been made public and haven’t previously been reported, include minutes of meetings by Airbus executives tasked with reviewing how to exit contracts with middlemen that might have fallen afoul of global bribery and corruption rules.
Overall, about 110 partnerships with thirdparty agents working for Airbus’s various units were flagged by executives as suspicious in the internal review, which was then used to help prosecutors in their outside probes. British and French prosecutors brought forward 13 separate counts against the company related to those deals. None of them was related to helicopter sales.
Prosecutors have said publicly they narrowed the scope of their probe to concentrate on the biggest deals with the clearest evidence of alleged wrongdoing. They have said they are now probing the actions of individuals, after settling with Airbus.
The settlement with prosecutors included a deferred prosecution agreement, in which Airbus wasn’t required to admit or deny specific wrongdoing. Prosecutors have said they won’t investigate any further deals that have been disclosed by
Airbus. Those would include the helicopter deals discussed in the internal documents.
Airbus first conducted an internal review into the full extent of its third-party relationships in late 2013, according to prosecutors. An Airbus audit found “significant breaches of compliance policies” in Airbus’s relationship with its thirdparty agents, they said. It reported the issues to investigators, and the company has cooperated in the various probes.
Airbus ultimately decided to freeze all outstanding payments for deals in its commercial aircraft division, which accounts for the lion’s share of its overall revenue. That freeze later extended to its other two divisions, defense and space, and helicopters.
After its internal audit, Airbus set up what executives termed the “liquidation committee,” in an effort to unwind relationships with scores of agents it was using around the world, prosecutors have said.
Payments to middlemen in Thailand and South Korea related to helicopter sales were deemed as excessive by the committee, while the level of remuneration for its agent in China was ordered to be reviewed, according to minutes of the committee’s deliberations, reviewed by the Journal.
The committee asked for due diligence of its agents in Japan and Indonesia to be checked and updated, according to the minutes. All proposed contracts in Brazil were put on hold, while contracts in Argentina were initially allowed to proceed under new compliance rules that were stricter and limited the amount payable to the local agent.
The liquidation committee was tasked with deciding how to deal with suspect contracts, whether by continuing to honor them, through settlements or by refusing to pay. The decisions were based in part on whether the amount of money promised to the agents was justifiable, according to the documents.
In Indonesia, Airbus sold helicopters directly to an agent, PT Dirgantara Indonesia, a state-owned defense contractor. The agent then resold the aircraft to the final customer, according to minutes from the liquidation committee.
In November 2014, Airbus announced an order for 11 anti-submarine Panther rotorcraft helicopters to be delivered to the Indonesian navy via Dirgantara. The company was tasked with taking delivery of the aircraft and outfitting each with sonar and a torpedo-launching system before final delivery.
The committee asked that the helicopter division find evidence to support the payment promised to the third party, according to the minutes. Dirgantara didn’t respond to several requests for comment. A representative of the Indonesian military procurement department didn’t respond to requests for comment.
In some instances, commercial considerations were taken into account. In Thailand, the minutes from a January 2015 committee meeting show Airbus couldn’t justify the size of payments promised to an agent there related to a deal to supply the country with helicopters, according to the documents.
Still, the committee opted not to cancel its dealing with the agent for fear of jeopardizing the company’s chances of winning a new helicopter order that was “very near” to being awarded, according to the minutes. A month after the committee meeting, in February 2015, Airbus announced it had won an order from the Thai army to provide six light-utility EC145 twin-engine helicopters. The Thai military didn’t respond to attempts by phone or email for comment.