Paris anger

Airbus scandal spoils Franco-German romance

Macron, Merkel, Airbus scandal
Talking about Airbus? Chancellor Angela Merkel and President Emmanuel Macron. Source: Reuters

The late German Chancellor Konrad Adenauer once quipped that the friendship between France and Germany is “like a rose bush that is constantly producing new blooms,” but he quickly added that “roses also have thorns.” Airbus, which makes jumbo jetliners and advanced military aviation, may become one of those prickly thorns.

A source close to French President Emmanuel Macron told Handelsblatt that Mr. Macron wants to exert more state influence over the company, in which both France and Germany have a 10-percent shareholding. The Spanish government also owns 5-percent of the shares in the company.

There has been no response so far from Chancellor Angela Merkel, but leaders of the parties she hopes to include in a new coalition government strongly disagreed with the French idea of letting politicians have more sway over the firm, whose share price has quadrupled since the company became free from government interference in 2013.

“Politicians are not better than corporate executives.”

Michael Theurer, Deputy head of the FDP group in parliament

It’s a surprising turnabout for Mr. Macron, a former banker for Rothschild who is a strong advocate for getting the state off the back of French business. In fact, it was Mr. Macron, who as an economic adviser to former President François Hollande helped devise the present management structure of the company.

What appears to have triggered Mr. Macron’s change of heart is a growing conviction in Paris that the current Airbus management, led by CEO Tom Enders, a German, has embarked on an anti-corruption campaign that they feel is aimed at removing senior French executives from decision-making and instead bestowing more influence on executives imported from the United States.

The anti-corruption campaign began when Mr. Enders asked the British government’s Serious Fraud Office to investigate persistent accusations that Airbus’s long-standing use of sales agents in Middle East and African countries was in reality a mechanism for paying bribes to government officials to obtain contracts. The Airbus executives involved in many of those deals were primarily French.

The mushrooming scandal could now have severe repercussions for Airbus because it admitted last week to finding “irregularities” in reporting to American authorities for what’s known as the International Traffic in Arms Regulations (ITAR). Although most violations of ITAR receive a small fine, Airbus is concerned that it could be barred from access to sensitive US equipment used in weapons systems, hurting its competitive position against archrival Boeing.

The unfolding scandal has led to calls in France for the replacement of Mr. Enders and his management team. One candidate who has already thrown his hat into the ring to take over as CEO is the firm’s No. 2 executive, Chief Operating Officer Fabrice Brégier, who is, of course, French.

Company sources told Handelsblatt that Mr. Brégier is maneuvering against his boss by telling French media that Airbus’s board of directors has doubts about whether the CEO can go on running the company, given that he was partly responsible for the scandal. That allegation is the subject of a separate investigation in Austria.

Ms. Merkel is seeking to gain Mr. Macron’s support for a sheaf of projects.

Fearing that Airbus, a rare example of Europe’s technological prowess, may be derailed by the scandal, Mr. Macron is pressing Ms. Merkel to join in putting more government officials as watchdogs on the company’s board of directors. France, Germany and Spain already have one board member each whose candidacy they can approve to ensure that their country’s interests are represented.

Ms. Merkel and then French President Nicolas Sarkozy agreed in 2007 to end the partisan bickering that forced Airbus to give equal power to French and German executives in Airbus management in the interests of more efficiency. But it’s now her potential coalition partners – the business friendly Free Democratic Party and the Greens – who are pushing back against the French.

“Politicians are not better than corporate executives,” said Michael Theurer, deputy head of the FDP faction in parliament. The Green party’s defense expert, Tobias Lindner, was also scathing in his criticism. “I see no added value in having more state influence on the board of directors,” he said.

Ms. Merkel is seeking to gain Mr. Macron’s support for a sheaf of projects ranging from European defense to forging a separate foreign policy in contrast to America under President Donald Trump. As a result, she is unlikely to reject Mr. Macron’s overtures outright, but seek to placate his fears about too much of a German tilt at Airbus.

Donata Riedel writes about economic policy for Handelsblatt, Thomas Sigmund is Handelsblatt’s bureau chief in Berlin, and Klaus Stratmann covers energy policy for Handelsblatt in Berlin. To contact the authors: riedel@handelsblatt,com, sigmund@handelsblatt.com and stratmann@handelsblatt.com.

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