Paying Off Van Gogh and Fu Fu: Inside the Airbus Bribery Web
(Bloomberg) -- Airbus SE has long since disbanded the so-called strategy and marketing unit at the center of its record $4 billion bribery settlement, but for years it had quite a heyday.
According to documents filed by U.S. prosecutors on Friday, the 150-person team used its $300 million annual budget to fund bribes and win aircraft sales in a slew of countries around the globe. The payoffs went to government officials, airline executives and their relatives -- all to illegally influence decision makers on deals that could reach into the tens of billions of dollars.
French prosecutors allege that Airbus boosted its profits by 1.05 billion euros ($1.2 billion) over the course of 13 years. As part of the settlements, the Toulouse, France-based company admitted to the allegations in each jurisdiction. It said in a statement that it “has taken significant steps to reform itself and to ensure that this conduct will not re-occur.”
Here is a sample of the activities uncovered by prosecutors in Paris, London and Washington in the largest bribery settlement on record.
Between 2013 and 2015, Airbus paid $50 million in sponsorships to a sports team jointly owned by two executives of Malaysia’s AirAsia Group Bhd, even though it was “legally unrelated” to the company.
The executives were key figures and the funding was a reward for an order for 180 aircraft from Airbus, which was later amended to 135.
In one 2013 email discussing the payments, a senior Airbus employee said to another: “We need to get this done. If not we don’t have a 25 A330 deal,” referring to one of the company’s wide-body models.
National flag-carrier PT Garuda Indonesia previously featured in the Rolls-Royce Holdings Plc bribery case and has been subject to a long-running probe into suspected corruption in the procurement of aircraft and engines.
Airbus now acknowledges that between 2011 and 2015, the company’s business partner paid more than $3.3 million to senior employees of Garuda and its low-cost subsidiary. These executives were instrumental in buying 55 Airbus planes -- almost all of the orders from Garuda in the period between 2009 and 2012.
In March 2012, a Garuda executive’s bank flagged a payment to a company he owned with his wife as potential money-laundering. The executive responded that it was a property scheme in which he and the Airbus intermediary arranging the payments were jointly invested.
When forwarded the explanation, the intermediary responded, “Bravo boz! Let’s wait for their reaction ... hee hee!”
Fu Fu and Van Gogh
Airbus executives paid an intermediary nicknamed Fu Fu $2.3 million, money then used to bribe an executive at Taiwan’s TransAsia Airways Corp. nicknamed Van Gogh to help secure the purchase of 20 aircraft between 2010 and 2012, according to the U.K. judgment.
An Airbus official was referred to as Dr. Brown, who in emails pretended to “prescribe medication and dosages” -- code for cash payments, the judgment said.
Using several consultants, Airbus moved funds through Lebanon to Chinese companies with political connections to win orders for its passenger planes, according to U.S. prosecutors.
It helped set up a fund in 2011 for pilot education and aviation-management sessions, but the money was really used to pay for social events for government officials and Chinese airline executives.
Airbus also used suppliers that were owned by one of the government officials and the airlines to organize golf trips and other non-educational activities.
To win successive Korean Air orders between 1996 and 2000, SMO used at least three different schemes to pay a former top executive at the carrier about $15 million via money provided to Korean and U.S. universities linked to him, a payment through an intermediary, and investments in a structure owned by his son.
Airbus used locally connected middlemen and companies to win contracts in Ghana, Vietnam and Indonesia that gave it a gross gain on the planes of about $165 million, according to the U.S. allegations.
It hired the brother of a Ghanaian elected official as a consultant when it was selling airplanes to the country’s military. The sales were illegal because the company paid or offered at least 3.6 million euros in political contributions or commissions. The strategy and marketing organization created a unit in Spain to deliberately circumvent Airbus’s internal compliance rules.
In Indonesia, the company paid 16.1 million euros in political contributions, which helped lead to the sale of nine military planes. It also hired a local company with complex ownership behind which lay links to the nation’s leadership.
In Vietnam, a Hong Kong company with connections to the Vietnamese leadership was hired, and 6.2 million euros in political commissions were paid.
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