legitimate or bribes?

Airbus corruption investigation focusing on suspect investments

Airbus suspect investments
Malaysia's Caterham Formula One racing team never won a race despite receiving €100 million from Airbus. Source: Reuters

At the Paris Air Show in 2011, the European aircraft firm Airbus snagged a historic order. Air Asia, a Malaysian low-cost airline, signed a deal to buy 200 Airbus 320 Neo jetliners, the largest deal ever in Airbus history. Shortly after this record deal Tony Fernandes, CEO of Asia Air, bought the Caterham Formula 1 motor racing team and much to everyone’s surprise, Airbus logos sprouted on the racing cars’ tail fins as a team sponsor.

Handelsblatt has learned that Airbus gave a total of €100 million ($122 million) to Caterham, which never won a race. Fernandes sold Caterham in 2014, but much of the Airbus sponsorship money is still unaccounted for. “It’s unclear what happened to our investment,” said an Airbus internal document seen by Handelsblatt.

The Air Asia affair is just one of several questionable deals that have come to light involving Airbus investments in seemingly worthless enterprises whose owners were either being courted to buy Airbus airplanes or had already done so as a way of “improving commercial perspectives.” Airbus financed schools in Greece, wind farms in Germany and office buildings in Lebanon.

“Investments were made without clear or consistent justification.”

Auditor, Airbus

Investigators in the United States, Britain, France and other countries are now closely examining these deals to determine whether they amounted to bribes paid to secure the sale of aircraft. According to Handelsblatt’s own investigation, it’s clear that top management of Airbus knew about the questionable payments and approved them.

In one case, Airbus has already paid an €80 million fine to the Munich public prosecutor’s office after revelations of dubious Airbus payments made to secure a deal to sell jet fighter aircraft to the Austrian military.

Britain’s Serious Fraud Office opened investigations into “fraud, bribery and corruption” in Airbus’s civil aircraft business in 2016. Airbus then launched an internal investigation because of suspicious reports submitted to British export authorities. Last March, Airbus confirmed that France’s financial prosecutors were also conducting an investigation and last autumn, US prosecutors began looking at the suspicious payments as possible bribery.

Airbus CEO Tom Enders asserts that Airbus became aware of accusations of bribery in 2012 at the strategy and marketing division in Paris, which he described as the “bullshit castle,” and he put a halt to questionable practices there.

But by 2014, when the company was supposed to have been cleansed of bad actors, an auditor raised the alarm about still ongoing problems. “The situation is unsustainable,” the auditor said in a memorandum seen by Handelsblatt. The auditor said management must act or the company will continue to invest in the “improvement of commercial perspectives” that he said were “without clear or consistent justification.” The memo was sent to Mr. Enders, his former deputy, Marwan Lahoud, CFO Harald Wilhelm and other top executives.

Rather than being closed down, the strategy and marketing office in Paris was used as a parallel sales organization, brought in to close deals when the mainstream sales organization could not cut prices any further, which would open the company to charges of unfair competition. The strategy office then became involved and cut the questionable deals for investments in return for airplane sales.

In many cases, most of Airbus’s so-called “investments” were completely written off shortly after the start of the project, adding to the suspicion they were covers for bribes. “The company is almost bankrupt,” wrote one auditor about a company called Deccan. “Nearly no cash in company,” said another report on the wind farms.

When one executive asked why such projects with little chance of success were funded, he was told, “That is not your concern.”

Thomas Hanke is a Handelsblatt correspondent in Paris and Charles Wallace is an editor for Handelsblatt Global in New York. To contact the authors: hanke@handelsblatt.com and C.Wallace@extern.handelsblatt.com.

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