News 02 November 2017

Airbus faced with potential US probe

Aerospace and defence group Airbus has admitted that it has breached US arms export regulations in filing inaccurate reports to the US State Department over payments to middlemen.

Europe’s largest aircraft manufacturer is already under investigation by the Serious Fraud Office (‘SFO’) in the UK and France’s Parquet National Financier (‘PNF’) for its use of agents to win jetliner sales, with the company warning that it could face ‘significant penalties.’ The company is also facing other investigations in Austria and Germany.

Airbus may have fallen foul of the US’s International Traffic in Arms Regulations (‘ITAR’), which govern the export of defence goods and data. The ITAR is primarily aimed at preventing sensitive US arms technology being sold or re-exported to countries that are assessed to be a risk, or covered by arms embargoes.

The ITAR also has secondary obligations relating to disclosure and transparency: companies dealing in goods which fall under the ITAR must declare the use of sales agents. A US investigation has yet to be launched, with Airbus hoping to minimise financial and reputational damage by voluntarily disclosing the inaccuracies to the US authorities.

Airbus has already conducted an internal investigation, which was completed in July 2017. There may be more to come. In September, The Guardian newspaper uncovered a series of unexplained transactions which resulted in a £19m payment, most of which went to an unknown company in a tax haven. The company was unable to provide an explanation, simply stating that: ‘As part of our ongoing compliance upgrade and investigation into historic business practices within the company, Airbus is determined to uncover any non-compliance and improper practices to ensure that they can never happen again.’