Airbus under investigation for alleged bribery

Posted on 10 Aug 2016 by Michael Cruickshank

European aerospace manufacturer Airbus Group is under investigation by the UK’s Serious Fraud Office (SFO), according to a newly released statement.

According to Airbus, the SFO’s investigation revolves around allegations of questionable practices undertaken by a number of third-party consultants working for the company.

“Airbus Group has been informed by the SFO that it has opened a criminal investigation into allegations of fraud, bribery and corruption in the civil aviation business of Airbus Group relating to irregularities concerning third party consultants,” the company’s statement read.

It also confirmed that it will be cooperating with the investigation, which has been running since last month.

The company had earlier hinted at issues related to the use of third parties in past statements to regulators, however this is the first time Airbus has admitted to an ongoing government investigation.

Middlemen accused of greasing palms for Airbus

For its part, the company reportedly no longer has a working relationship with the consultants involved, a factor which may help in its defence.

While the exact role of these consultants is currently unclear, the use of middlemen to help smooth large international business deals has come under increased scrutiny in recent years.

The investigation itself has reportedly caused the export credit agencies of the UK, France and Germany to suspend financing for Airbus.

In suspending this financing, the credit agencies have put Airbus in a position where it will find it harder to sell its aircraft in some markets.

Nonetheless, these export-credit assisted deals only make up a small fraction of the company’s total aircraft sales (6%). Moreover, it is expected that the suspensions will only last a matter of months, rather than the full length of the investigation.

Typical SFO investigations of this sort take between 4 to 6 years, meaning it could be some time before a final verdict is reached.

While some fines for the company could be possible down the line, the more immediate damage will be reputational at a time where Airbus is already coping with a number of other problems.

Despite this, investors see little reason to worry, with the company’s share price trading down only around 1% following the announcement.