Airbus Deal: A Hunt For A Nanny Goat?
The term ‘scapegoat’ has its origin in the Old Testament. It is in Chapter 16 of the Book of Leviticus. God instructed Moses and Aaron to sacrifice two goats every year. One goat was to be killed; its blood sprinkled upon the Ark of the Covenant. The High Priest was then to lay his hands upon the head of the second goat and confess the sins of the people. Unlike the first goat, this lucky second goat was not to be killed but released into the wilderness together with its burden of sin, which is why it came to be known as the scapegoat.
The scape goat that we speak of, has a mysterious power. It captures and captivates the curious and the ordinary demanding the quick fix. The scapegoat serves the immediate purpose of appeasing our collective desire to mete out punishment to, to make an example of deserved retribution to the wrong doer or anyone who makes a good substitute for the villain.
Scapegoating is an escape hatch for the authentic villains. The futile exercise is a chase for inconsequential details. Its purpose is to create disorder to botch the grand total of the foul deed.
The illustration in the official Press release of UK’s Serious Frauds Office says it all. It is a graphic outline of the essence of the global settlement reached by Airbus SE with UK’s Serious Frauds Office, France’s Parquet National Financier and USA’s Department of Justice.
The Aircraft manufacturer has been fined in relation to five counts of failure to prevent bribery. Count 2 relates to its dealings with Sri Lankan airlines.
This Deferred Prosecution Agreement “does not prevent any victims that there may be, from claiming compensation.”
It also contains a vital caveat that we should take note of. The Serious Fraud Office had entered into an agreement with PNF- its French counterpart to probe bribery and corruption allegations in relation to Airbus, its business partners, former and current employees and other third parties.
French law No 68-678 of 26 July 1968 (the French Blocking Statue or FBS) prohibits certain disclosures of information by French persons and entities in foreign judicial and administrative proceedings.
It points out further, that under 694-4 of the French Code of Criminal Procedure, French Judicial authorities are also entitled to exclude from their responses in mutual legal assistance requests, information that would be detrimental to the essential interests of France. In the present case, the French authorities concluded this included making specific contract values public. The French authorities also controlled the supply of documents to the SFO to ensure compliance with the French restrictions on such information. That means the SFO has got only part of the story.
The DPA will be in force until 31 January 2023. The SFO has the discretion to initiate action against any individuals should it be required.
In her judgment, Dame Victoria Sharp President of the Queen’s Bench notes “The seriousness of the criminality in this case hardly needs to be spelled out. As is acknowledged on all sides, it was grave. The conduct took place over many years. It is no exaggeration to describe the investigation it gave rise to as worldwide, extending into every continent in which Airbus operates. The number of countries subject to intense criminal investigation by the various agencies, and the scale and scope of the wrongdoing disclosed in the Statement of Facts demonstrate that bribery was to the extent indicated, endemic in two core business areas within Airbus.”
The five counts in the indictment refers to Malaysia, Sri Lanka Taiwan, Indonesia and Ghana in that order. Each of these counts on the Indictment concerns similar conduct explained in the Statement of Facts that should be read along with the approved judgement.
The judgement concludes that “persons associated with Airbus, not exclusively its employees, offered very substantial sums of money by way of bribes to third parties in order to secure the purchase of aircraft, by civil airline companies.
The judgment explains why persons of interest are not named.
“In the Statement of Facts, the identity of the individuals concerned has not been included. There are ongoing investigations in respect of a number of individual suspects in this jurisdiction and abroad. It is appropriate to protect the rights of the suspects to a fair trial.”
UKEF is the UK’s government funded export credit agency. It provides finance and insurance to bolster exports and international trade. The blurb on their website assures that they “support complex international projects through financing, export credits and insurance.”
The UKEF demands strict due diligence criteria.
“We’ll need to understand how the contract was awarded, including any use of third parties or agents, and will require Anti-Bribery and Corruption declarations from counterparties to the transaction. We may be unable to support the transaction if sanctions have been imposed on any of the countries or counterparties involved in the transaction. We’ll also consider the environmental, social, and human rights impact of the project.”
It is the UKEF that alerted the Serious Frauds Office about the jiggery-pokery they sniffed in the Airbus transaction with SriLankan airlines.
The statement of facts which forms a part of the Differed Prosecution Agreement provides an intriguing narrative of how the ‘Fit hit the Shan”. It is a gripping narrative. It begins with the common place recital. “Sometime between December 2013 and November 2015, SriLankan Airlines entered into a sale and lease back agreement with an aviation leasing company, for five of the A330 aircraft.”
Pursuant to this agreement the aviation leasing company would purchase the aircraft from Airbus and lease them to SriLankan Airlines. Four of these aircraft were due to be delivered in February, July, September and December of 2015.
In November 2014 Airbus employees submitted an application for export credit financing to UKEF in respect of the four A330 aircraft the first of which was due to be delivered at the end of February 2015.
The application required disclosure of any agent or consultant involved in the purchase agreement.
Airbus indicated that it had used an agent on the Sri Lankan negotiations. Airbus at this point wished to invoke the Special Handling Process within UKEF.
This Special Handling Process allowed applicants to disclose the identity of an agent in a manner that the identity of the agent would be available only to three members of the UKEF staff.
UKEF discontinued this practice effective April 2017 in the interest of greater transparency and as a measure of its anti-bribery and anti-corruption reforms.
The special handling process ensured that only a small number of individuals within UKEF would perform due diligence on the agent.
On or around 4 February 2015 Airbus submitted the agent details to UKEF.
A senior Airbus employee had assured UKEF that the information could be relied upon. The statement of facts asserts that the information submitted falsely suggested that the ‘intermediary’ was a ‘he’, and that the consultant agreement accurately reflected the total amount Airbus would pay and the .
