Airbus shares plunge on corruption probe

Shares in European aircraft maker Airbus tumbled more than nine percent yesterday after French daily Le Monde reported it could face record fines of several billion dollars in a US corruption inquiry. The newspaper said the US Department of Justice had opened a probe for “improper practices” at the end of 2017 and informed Airbus it was under investigation at the end of the summer. In a statement, the company said it was cooperating with US authorities.

The inquiry stems from Airbus’s disclosure in early 2016 that it had neglected to inform authorities about payments to middlemen in securing several contracts, in particular in Asia. A few months later Britain’s Serious Fraud Office opened a fraud, bribery and corruption inquiry over alleged “irregularities concerning third-party consultants.” It was cooperating with France’s Financial Prosecutor’s Office (PNF), which also launched an inquiry into the deals.

If the Justice Department inquiry leads to a criminal court case against Airbus and it is found guilty of corruption, it could be excluded from bidding on international contracts for five years, Le Monde said. The use of middlemen to secure contracts is authorised under guidelines set by the Organization for Economic Cooperation and Development, as long as they are clearly identified and their compensation fully disclosed.

Le Monde reported that Airbus had recently dissolved its Strategy and Marketing Organisation (SMO) department, whose directors oversaw the management of middlemen used to facilitate the deals from 2009 to 2013 being probed. If convicted in the US, it would effectively be shut out of defence and civil aviation contracts for years -- a boon for its US archrival Boeing as well as China, which wants to break into the American market, Le Monde said. Airbus is already trailing Boeing in new orders this.