Airbus And The Risks Of Bribery Across Borders

Syedur Rahman and Nicola Sharp examine the risks of bribery
in international trade and how corporates should respond if they face such
allegations.

Aerospace giant Airbus is now facing corruption allegations
in a fifth country.

Airbus, which was already under investigation in the UK,
France, Germany and Austria for suspected corruption, has announced that it has
found "inaccuracies in filings" made with the U.S. Department of
State under the International Traffic in Arms Regulations (ITAR). The French
aircraft maker has said it has brought the problem to the attention of the US
authorities and has said it will cooperate with investigators.

ITAR require exporters to disclose to the US State
Department any payments made to third parties for certain overseas sales.

In 2016, the UK Serious Fraud Office (SFO) opened an
investigation into Airbus regarding fraud, bribery and corruption. The SFO
stated that the allegations related to “irregularities concerning third party
consultants."

In April last year, the UK’s Export Finance agency suspended
funding for Airbus because of a lack of transparency regarding its third-party
payments. France and Germany also took similar action.

In March this year, it was announced that French
investigators had begun investigations into the same allegations that the SFO
were probing. Investigators in Germany and Austria are examining possible
irregularities in the 2 billion Euros sale of fighter jets to Austria.

Airbus’ problems are not unique. In 2010, BAE paid the US
Department of Justice a $400M criminal fine for impeding investigators, making
false statements about its Foreign Corrupt Practices Act compliance program and
violating the Arms Export Control Act and ITAR. It also paid the SFO a £30M fine in a negotiated resolution. In 2011,
BAE was fined $79M by the US State Department for violating the Arms Export
Control Act and ITAR. The penalties were
due to payments made regarding the sale of fighter planes to Saudi Arabia and
Eastern Europe.

But while Airbus’s problems may not be unique, they are
certainly major. If it sells aircraft to a country and there is then a
suggestion of wrongdoing, there is the possibility of at least two countries
conducting investigations. Airbus’ situation (and the international nature of
the whole aerospace industry) illustrates the risks of bribery across
jurisdictions – and the need to tackle those risks.

Coordination

There may be many in business who can recount instances from
the past where bribery in another country may have gone unpunished, unnoticed
and even accepted or encouraged as a way of securing deals.

The Airbus case, like many other recent investigations,
shows that there is no way such an outcome is likely anymore. Countries the
world over are more alert to the dangers of bribery. Their investigating
agencies are swifter to act and more likely to work with similar bodies in
other countries. Bribery very often crosses borders – and the authorities are
now better at conducting appropriate responses to this. They are more attuned
to the signs of bribery and able to share information with foreign counterparts
on a far quicker and more regular basis than in previous years. In simple terms,
tackling international bribery has become coordinated.

It would be foolish to keep thinking that bribery is a
harmless tool to boost foreign trade – something that will be ignored or
condoned. Anyone taking such an approach could find themselves facing an
international investigation.

If that is the case, they will require legal advice from
solicitors who have:

* The ability to put together an international defence case.

* The knowledge of business crime law in a number of
countries.

* The skills to conduct negotiations with a number of
investigating agencies from various nations.

Coordination is crucial to any successful defence against
international bribery allegations.

Negotiation

While devising a cross-border defence case and knowing the
law in many countries are essential prerequisites for any legal team
representing a client facing allegations of international bribery, negotiation
is an area which should not be ignored. Its importance should not be
underplayed.

Logical, persuasive and informed negotiation with the
authorities can be as important as any other aspect of a defence case when
looking to obtain the most favourable outcome.

Earlier this year, Rolls-Royce paid £671M to settle
allegations that it had used widespread bribery in many countries to win
contracts. It did not report the wrongdoing to the Serious Fraud Office (SFO)
and the evidence against it was compelling. And yet it avoided prosecution, was
given a deferred prosecution agreement (DPA) and received a discount on the
fines it had to pay.

This was because Rolls-Royce offered what the DPA settlement
called “extraordinary cooperation’’ to the authorities. It helped investigators
establish what had happened, removed many senior staff with links to the
bribery and devised and introduced tougher preventative measures; even hiring
Lord Gold to examine its anti-corruption measures.

But Rolls-Royce also emphasised to the authorities that its
50,000 employees – and many, many more in its supply chain – would be harmed if
it as punished too harshly.

Rolls-Royce had little defence to the allegations it faced.
But it negotiated itself away from what could have been a potentially
catastrophic criminal prosecution.

International

The international nature of bribery means, as we have
outlined here, that companies who face such allegations require skilled
international legal representation.

It is an area that may well grow, as many countries start to
uncover and act upon evidence of large-scale bribery that has been committed within
their borders over the years. The Rolls-Royce case, for example, involved
bribery carried out between 1989 and 2013.

For those who find themselves accused of bribery, the right
choice of legal representation can make a vast difference to the outcome of the
investigation. The likes of Airbus and Rolls-Royce should serve as a reminder
of the seriousness of the allegations and the need to make the right legal
choices.

But for companies that are certain they have not indulged in
bribery anywhere or at any time in their history, such high-profile cases can
be a useful reminder of the need to avoid such problems in the future. Anyone
doing business abroad faces the risk of being embroiled in – or at least of
being asked to be involved in – bribery.

The risks may vary wildly from country to country and from
business sector to sector. But all companies must:

* Seek informed, expert advice about the dangers of bribery
in the sectors and countries they operate, or plan to operate, in.

* Devise and introduce appropriate workplace practices that
prevent any member of staff or company representative being able to either
offer or receive a bribe or make it possible for anyone else to do so.

Legal help is available for companies looking to take such
precautions when trading abroad. The Airbus case alone should make everyone
trading across borders think long and hard about their anti-bribery measures.

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