To Pay or Not to Pay Is Airbus' Dilemma as Bribery Probes Loom

(Bloomberg) -- Airbus SE is being forced by French courts to pay millions of dollars to partners who it alleges used corruption to broker aircraft deals in strategic countries.

In one case, the manufacturer was made to settle an outstanding $825,000 bill from a go-between that helped secure sales in China even after Airbus said it had evidence the business relationship was “tarnished” by corruption, according to an unreported ruling released earlier this month. Airbus argued this “called for suspending all payments.”

The court proceedings have put Airbus in a seemingly contradictory situation. The planemaker is under investigation for paying bribes to secure overseas contracts and says it’s cooperating and turning over evidence from an internal investigation. But judges have stymied the company’s efforts to cut off brokers who it suspects have facilitated questionable payments.

The Commercial Court in Toulouse, where Airbus is based, said in a mid-March ruling it had no choice but order the payment after Airbus failed to substantiate its accusations. Indeed, citing ongoing British and French criminal investigations, Airbus refused to show French judges the findings of an internal probe it says could corroborate its allegations.

Claims against Airbus have been piling up at the Toulouse court after it suspended payments to middlemen it used to rely on amid allegations these foreign agents may have been paying bribes to secure deals. The planemaker, one of Europe’s flagship companies, faces scrutiny from criminal authorities across the globe and could reportedly be made to pay more than $1 billion in fines.

In this month’s Toulouse court ruling, Airbus was also ordered to pay 10,000 euros ($12,400) to cover the legal fees of an Asian intermediary.

Hong-Kong Intermediary

In a separate March decision, Toulouse judges ordered Airbus to pay another intermediary -- Engine2go Ltd. -- more than 250,000 euros even after the planemaker had mentioned the internal investigation as a reason to end all business relations in May 2017 and leave an outstanding bill unpaid.

The Hong Kong-based intermediary’s lawyer, Julien Lecat, said the court’s decision is hardly surprising given that Airbus provides no evidence of any corruption to suspend the payments.

“The fact remains that services were indisputably rendered by these intermediaries and the legally binding nature of the contracts mean they must be paid,” Lecat said in a phone interview. “The general context may be one of corruption but there’s no proof and the court can’t base its decision on that.”

In June 2017, the Toulouse court had already ordered the planemaker to pay $1.8 million to another Hong Kong business, Asian Sky Group.

A spokesman for Airbus declined to comment, and a lawyer for Asian Sky Group didn’t immediately respond to calls and an email seeking comment.

Airbus is hiding “behind the existence of an internal audit it triggered in link with criminal investigations it faces worldwide for alleged corruption” to avoid paying its bills, the judges said. The court said the audit was decided “unilaterally and cannot be used against Asian Sky Group, especially given that Airbus SAS doesn’t provide proof to question the legitimacy and the amount” of the bills.

The corruption probes are ongoing and no criminal findings have been issued.

©2018 Bloomberg L.P.

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