Corruption Allegations

Airbus Boss Strikes Back

Airbus – Vorstandschef Tom Enders
Tom Enders getting feisty in the cockpit. Source: Tobias Hase/DPA

Airbus CEO Tom Enders is going through the worst crisis of his professional life. His company stands accused of corruption in its sales of military and civilian aircraft, with investigations underway in France, Britain, Germany and Austria.

“I’m not glued to my chair,” Mr. Enders told Handelsblatt in an interview. “You can be assured: Once I am no longer part of the solution, and I hope I would realize myself when that is, I will accept the consequences (and step down). But for now, I don’t think we’re at this point.”

The beleaguered multinational, listed in Paris and Frankfurt, could face significant fines as the result of investigations in several European countries. The fear is that the accusations could reach US courts, where billion-dollar judgments have hobbled European industrial companies in the past – a move that Austria’s defense minister, Hans Peter Doskozil, has threatened as he mounts new corruption charges.

Airbus, the main rival of Chicago-based Boeing, was rocked with fresh corruption allegations last week of an alleged system of outside advisers and secret slush funds. Both military and civil aircraft orders are said to have been tainted, with investigations under way in the UK, France, Austria and Germany. Officials probing a 2002 sale of Airbus’ Eurofighter aircraft to Austria said charges were imminent; French investigators suspected something fishy on sales of helicopters to Kazakhstan.

“Once I am no longer part of the solution, and I hope I would realize myself when that is, I will accept the consequences.”

Tom Enders, Airbus chief executive

Chief executive since 2012, Mr. Enders rejected allegations the aircraft maker managed a secret account to bribe officials in return for orders. “I don’t have one and I don’t know of any,” he said.

The German manager has publicly advocated revamping Airbus’ corporate culture, looking to distance it from murky dealings in the past. Airbus claims it is working hard to root out corruption, pointing out how it made voluntary disclosures in 2015 after finance chief Harald Wilhelm found discrepancies in the accounting books.

The Airbus boss, for his part, insists his company has done everything to ensure compliance and transparency, especially in the last four years. He said that in 2013, a decision was made to stop all payments to external agents and consultants, and to vet all financial transactions. As a result, the company spotted irregularities that they voluntarily reported to British police last year. Airbus’s compliance systems were now “state of the art,” Mr. Enders claimed.

Airbus has denied wrongdoing in its 2002 sale of 18 Eurofighter jets to Austria. In the run-up to last weekend’s Austrian election, local politicians claimed Airbus misled Vienna into making illegal payments to third parties. Mr. Enders acknowledged that Airbus had numerous side-agreements with Austrian suppliers as part of the deal, something he said was common in the global arms trade. He said Austria’s defense industry benefitted greatly from that investment.

Other cases have been harder for the company to dismiss, especially the activities of Airbus’ “Sales and Marketing Organisation,” or SMO, an office of its defense arm. It has been suggested the office was a conduit for bribes paid to ease deals in some countries. The company is now under investigation in a joint British-French police operation, and Airbus is cooperating.

49th International Paris Air Show 2011
Eurofighter out on one of its anti-corruption maneuvers. Source: DPA

Mr. Enders refused to comment on specific allegations about SMO, which was supervised by Marwan Lahoud, the company’s head of strategy who resigned earlier this year. The office reported directly to the chief executive of Airbus’s military aircraft division, and was shut down only in 2017, despite company policies on compliance and clean business.

Responses to the scandal have been strikingly different in the two countries. Germany has seen widespread concern that a flagship European firm might have engaged in shady practices. Meanwhile, conspiracy theories have been popular in the French media, which suggests that Airbus’s arch-rival Boeing is behind the accusations, and that Mr. Enders’ policies of openness and self-reporting played into the Americans’ plans – and entrenched German power at Airbus. Although Airbus grew out of a series of multinational mergers, the company remains dominated by French and German camps.

Mr. Enders is attempting a balancing act. On the one hand, he emphasizes the seriousness with which Airbus treats any allegations, and depicts himself as a long-term reformer radically changing corporate culture. But he also plays down the immediate impact of the scandal, saying it has had no effect on Airbus sales in China or other markets, nor had it affected morale.

The CEO will be hoping to ride out the storm quickly and avoid any intervention by the American authorities. A US corruption trial would be the worst possible outcome for Airbus, threatening massive financial damages and possible exclusion from lucrative American markets in civil aviation, satellites and military technology.

Thomas Hanke is Handelsblatt’s correspondent in Paris. Thomas Sigmund is the bureau chief in Berlin, where he directs political coverage. Brían Hanrahan and Jeremy Gray adapted this story for Handelsblatt Global. To contact the authors: hanke@handelsblatt.com and sigmund@handelsblatt.com

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