On 31 January 2020, Airbus reached a record-breaking €3.6bn global settlement with UK, French and U.S. authorities regarding allegations of bribery and corruption. These three resolutions reflect the culmination of a three-and-a-half year UK and French joint investigation and two-year parallel U.S. investigation, together touching sixteen jurisdictions.
Under the settlement Airbus has agreed to pay:
- €991 million under a Deferred Prosecution Agreement (“DPA”) with the UK’s Serious Fraud Office (“SFO”). This related to five counts of failure to prevent bribery under section 7 of the Bribery Act between 2011 and 2015 across the same number of jurisdictions: Sri Lanka, Malaysia, Indonesia, Taiwan and Ghana. This is the SFO’s seventh DPA since their introduction in 2014, with the settlement sum totalling more than all of the previous sums paid under DPAs combined.
- €2 billion under a Judicial Public Interest Agreement with France’s Parquet National Financier (“PNF”). This related to charges of bribery of foreign public officials, misuse of corporate assets, breach of trust, conspiracy to defraud, money laundering of the proceeds of these offences, forgery, and use of forged documents across China and multiple other jurisdictions.
- €527 million under a DPA with the U.S. Department of Justice (“DOJ”) and Department of State (“DOS”). This related to two counts of violating the FCPA and ITAR, bribery in one jurisdiction and undisclosed payments to facilitate arms sales in four jurisdictions.
The DPA and global resolution provide key insights into authorities’ conduct of international investigations, a warning on the far-reaching implications of wrongdoing and guidance on best practice for multinationals.
- International cooperation between authorities: The interaction between French, UK and U.S. authorities demonstrates the scale of international cooperation. Whilst the PNF had primacy in the investigation, the PNF and the SFO worked together closely as part of a formal Joint Investigation Team. Taking an unusual role away from centre stage, the U.S. authorities conducted their investigation in “parallel”. Demonstrating a truly joined up approach across the global resolution, the three settlement agreements each acknowledged and gave credit for fines paid across the other two jurisdictions.
- SFO and PNF divide and conquer: The SFO and PNF divided and concentrated their investigatory efforts by each taking responsibility for conduct in certain countries. The SFO took on Malaysia, Sri Lanka, Taiwan, Indonesia and Ghana whilst the PNF focused on others (China, Colombia, Nepal, South Korea, UAE, Saudi Arabia, Taiwan and Russia). The parallel U.S. investigation turned the microscope on Ghana, China, Indonesia, Vietnam and Austria.
- Extended UK and U.S. jurisdiction: As a French and Dutch-domiciled entity, Airbus was acknowledged to have taken an unprecedented step in accepting the SFO’s extraterritorial powers. Similarly, it accepted U.S. jurisdiction for violations with limited U.S. nexus (i.e. involving only emails sent from the U.S. and luxury gifts and entertainment involving two U.S. destinations).
- Self-reporting and cooperation assessed holistically: In keeping with the ruling in Rolls-Royce’s 2017 DPA (see our client note here), it appears that the absence of a “true” self report does not necessarily preclude a DPA where cooperation is exemplary. Despite the fact that an export credit agency, UK Export Finance, was the true catalyst for the 2016 self-report to the SFO, Airbus’ exemplary cooperation – lauded throughout the judgment – meant that a DPA was nevertheless in the interests of justice.
- Exemplary cooperation praised: To be “exemplary”, cooperation must reach a high standard. This settlement reinforces the lofty expectations revealed in the Rolls-Royce DPA. UK authorities want to see complete board overhaul, proactive commitment to cooperation, disciplinary action against individuals, ongoing discourse and disclosure, internal investigations and waivers of privilege over witness accounts. The long list of Airbus’ positive action, including these and other acts of cooperation, was praised in the judgment.
- Compliance and culture overhaul in remediation expected: Company transformation through a compliance and culture overhaul now appears to be the norm. As with Rolls-Royce in 2017, Airbus was praised for its remediation efforts to completely transform the company’s leadership and compliance framework. In circumstances where Airbus’ compliance was found to be good on paper but ineffective in practice, with policies and procedures being easily circumvented, the overhaul of its executive committee, board and ethics and compliance framework was necessarily significant.
- Significant collateral consequences of conviction avoided: The dramatic potential collateral consequences of conviction favoured a DPA rather than prosecution. The judgment noted that debarments in several countries could cause significant detriment to innocent third-parties, including through up to €200bn in lost revenue and ultimately (given Airbus’ size and importance) a reduction in GDP of over €100bn in each of the UK, U.S., Germany, France and Spain.
- Importance of international reporting requirements: The scale of international cooperation demonstrates the breadth of potentially applicable international reporting requirements. Enforcement agencies are creative – the U.S. authorities used disclosure obligations to bring charges in relation to possibly corrupt payments when they were unable to do so in relation to the primary conduct. Nearly half of the total U.S. penalty stemmed from disclosure obligations.
- Sprawling investigation from single self-report: The global reach and depth of the international investigation demonstrates the expansive effect of a single self-report. A problem identified in one area led to scrutiny of markets, concerns, business areas and jurisdictions across almost all of Airbus’ business. Although the indictment was relatively focused and comprised a representative sample of the relevant conduct, the investigation covered all the business partners engaged by the Airbus divisions until 2016, comprising over 1,750 entities across the world.