EUROFIGHTER DEAL

Austria Charges Airbus with Fraud

FILE PHOTO: Two Eurofighter Typhoon aircrafts fly over the Streif course during an aerial exhibition before the start of the men’s Alpine Skiing World Cup Super G race in Kitzbuehel
Austria's 2003 Eurofighter deal has turned into a boondoggle, picture source: Reuters

It’s a rather costly and embarassing defense deal that was never particularly popular in the mountainous and neutral country of Austria. Now, Vienna is looking for some payback.

Austrian Defense Minister Hans Peter Doskozil, citing a special investigation, has accused Airbus and Eurofighter of using fraud and deception to sell 15 warplanes to the government at an inflated price in the controversial 2003 deal.

“The report that’s available to me makes clear that without fraudulent and deceptive actions by Airbus and Eurofighter, the Republic of Austria would have never decided to buy the Eurofigher in 2003,” Mr. Doskozil said in a statement Thursday.

The defense ministry has filed charges with the state prosecutor’s office in Vienna and is seeking up to €1.1 billion in damages. The compensation claim is calculated from the difference between the operating costs of the Eurofighter in comparison to the hypothetical costs of an alternative jet.

“Offset deals are ideal launch vehicle for corruption and money laundering.”

Hans Peter Doskozil, Defense minister

“The Republic faces enormous damages,” Mr. Doskozil said.

A spokesperson for Airbus dismissed the allegations as a “political maneuver,” saying the company learned about the allegations from the media and has not been contacted by the Austrian defense ministry.

“They appear construed and we forcefully reject them,” the spokesperson said.

Yet the charges against Eurofighter and Airbus are nothing new. The defense ministry commissioned the investigation, known as Taskforce Eurofighter, in 2012. The Bavarian state prosecutor’s office in Munich is investigating the companies on similar charges.

Airbus and Eurofighter allegedly included €183.4 million for so-called offset deals in the €1.96-billion purchase price without informing the Austrian government, which had specifically requested that the two companies calculate such costs separately.

The €183.4 million was used by Airbus and Eurofighter to cover both legal and illegal costs associated with the offset deals, according to the investigation, which alleges that proceeds from the deal were used to benefit a network of consultants and interests.

“Offset deals are an ideal launch vehicle for corruption and money laundering,” Mr. Doskozil charged.

The defense minister also accused the two companies of signing a contract to deliver warplanes in a certain configuration, although in reality they were neither able nor willing to do so.

 

Hans-Peter Siebenhaar is Handelsblatt’s correspondent in Vienna. Markus Fasse is a correspondent for Handelsblatt in Munich. To contact the author: siebenhaar@handelsblatt.com and fasse@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!