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Anti-bribery update: after Airbus

Overview

Airbus's recently-concluded Deferred Prosecution Agreement ("DPA") with the Serious Fraud Office ("SFO") and regulators in France and the United States ended a long-running corruption probe with a record-breaking €3.6bn global settlement, of which €991mn relates to fines and costs in the UK.

The sheer size of the settlement indicates the potential rewards of conducting investigations into global enterprises such as Airbus. As Dame Victoria Sharp, President of the Queen's Bench Division, pointed out in her judgement, the sanction "is greater than the total of all the sums paid pursuant to previous DPAs and more than double the total of fines paid in respect of all criminal conduct in England and Wales in 2018." However, questions remain from the settlement about the use of DPAs by the UK enforcement agency and their accessibility to smaller organisations, as well as providing insights into the future of cross-border prosecutor cooperation.

Practice points
  • Consider your risk profile – the Airbus DPA related to its activities in Sri Lanka, Indonesia, Taiwan, Ghana and Malaysia, the majority of which jurisdictions do not score highly in Transparency International's Corruption Perceptions Index. Companies should assess their global risks to determine which parts of their operations are likely to require greater oversight.

  • Prevention is better than cure – keep ABC policies and procedures under regular review and make sure they are being implemented correctly in practice. This means ensuring staff across the company are trained on the potential bribery and corruption risks and specialist training should be considered for staff in higher-risk jurisdictions and roles (such as financial or sales roles).

  • Report and reform – if any issues should arise, early self-reporting and full cooperation with regulators have shown to play a crucial role in the route to obtaining a DPA and/or reduced sanctions.

What happened?

Airbus was found to have paid huge bribes between 2011 and 2015 to land airlines' business, including a $50,000,000 "sponsorship fee" to a sports team owned by airline executives and a $2,000,000 "consulting fee" to the wife of an executive with no aviation experience. The bribes were paid through Airbus's "Strategy and Marketing Organisation" and were concealed through elaborate payment chains via shell companies and tax havens. The unit, which managed a team of consultants, was found to have created fraudulent contracts, falsified activity reports and accepted invoices for non-existent services. French prosecutors stated that the company increased its profits by €1bn as a result of violations uncovered by their investigation.

DPA: a "Deep Pockets Advantage"?

Although the SFO has reserved its right to prosecute individual wrongdoers and/or to recommence the prosecution if Airbus breaches the terms of the DPA, its decision to suspend its prosecution has led to renewed criticism of the DPA regime for allowing those with the deepest pockets to buy their way out of criminal convictions. Recent comments from the French prosecutor suggest decisions on whether to charge individuals will be made in the coming months, once further information has been received, although which country's courts will take charge of that process remains to be seen. Daniel Bruce, Chief Executive of Transparency International UK, has said that "individual prosecutions in this case are vital to ensure that justice is seen to be done. Failing to go after those involved will give the impression that big companies play by a different set of rules and can simply buy their way out of trouble".

Also of note is the suggestion by Deloitte, in a report commissioned by Airbus, that conviction could lead to disqualification from tender for public contracts, with wider-reaching consequences for Airbus employees and those whom the judge described as "innocent third parties". What does this mean for smaller organisations whose prosecution would not have the same knock-on effect on a global workforce and international supply chain?

Approving the terms of the DPA, Dame Victoria Sharp remarked that the aerospace giant's conduct had involved "grave" criminality and "endemic" bribery. Airbus was also found to have delayed in self-reporting when it first became aware of these issues. Nonetheless, the penalty was significantly discounted because of Airbus's "exemplary" cooperation with all three investigating authorities and ongoing improvement of its compliance procedures. Consequently, by agreeing to the DPA Airbus avoided potentially much higher costs had the case progressed to trial, and has been able to cap its liability at a fixed amount. 

The future of cross-border cooperation

Allowing Airbus to resolve charges in three jurisdictions at once is a prime example of the international nature of corporate enforcement and the strong extra-territorial reach under the Bribery Act (which extends to offences committed abroad by persons with a close connection to the UK). Authorities in the UK, US and France were required to take significant steps, including information sharing and data gathering, to ensure that enforcement could take place.

It is not yet clear what (if any) impact Brexit might have on the prosecution of international criminal activity and the processes by which international enforcement agencies share sensitive information with their British counterparts.

Currently, cross-border enforcement in EU member states relies on EU measures such as the European Investigation Order and the European Arrest Warrant (the "EAW"). The EAW will continue during the transition period, but the UK government has signalled its intention to withdraw from the EAW when the transition period runs out (which is expected at the end of December 2020) and enter into an arrangement similar to that currently in place between the CJEU and Norway and Iceland. However, given that negotiations for the Iceland/Norway EU Arrest Warrant that entered into force last year began in 2001, it remains to be seen how long such an agreement will take to put in place.

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