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This should have been a bumper year for Airbus, after rival Boeing grounded its 737 MAX aircraft following fatal crashes. Yet the multinational aerospace company reported a troubling loss of $1.5B earlier this month. A key reason for this result is a series record fines for bribery in many countries. The case is a stark reminder of the reputational, regulatory, financial and strategic costs when a compliance program falls short.
Airbus recently agreed to pay a record $4 billion in penalties to the U.S., France and UK. This roughly breaks down as $2.3B to France, $1.1B to the UK, and $582M to the U.S. to settle charges of breaching the Foreign Corrupt Practices Act (FCPA) and International Traffic in Arms Regulations (ITAR).
The reason? Airbus paid bribes in Malaysia, Sri Lanka, Indonesia, Taiwan and Ghana between 2011 and 2015, using used a network of agents to make large ‘backhander’ payments to foreign officials to land high-value contracts. This operation was run by a unit at its French headquarters.
Adding up the costs of non-compliance with anti-bribery & corruption laws
The Airbus case is a reminder of the significant costs of bribery and corruption. For Airbus, these included:
Enforcement trends to watch
This case also demonstrates a number of trends in modern anti-bribery and corruption work which companies should be aware of: