German prosecutors have fined the arms company Airbus €81.25 million in order to settle an investigation into corruption allegations. The investigations surround the sale of 18 Eurofighter jets to Austria in 2003 (at the time the company was called EADS), and whether the company paid bribes to win the $2billion contract. Eurofighter is built by a consortium of companies led by EADS.
According to Der Spiegel, EADS winning the contract was a surprise - it didn't seem likely to win against the Swedish-built SAAB Gripen, but the Eurofighter came out victorious “against all logic”. In February 2017, the Austrian defence minister filed a law suit against the company, accusing them of “wilful deception and fraud”.
The company denies any wrongdoing and prosecutors have not managed to find evidence of bribes being paid. However, Airbus was unable to account for over $100 million paid to shell companies Vector Aerospace LLP and City Chambers Limited. Vector Aerospace LLP is a two-person company based in London, that received €114 million from EADS – investigators have only been able to account for €9 million of this money, the rest seems to have disappeared into other companies in Hong Kong, Singapore and the British Virgin Islands.
Prosecutors said that these funds were used for “unclear purposes”, and that senior managers at Airbus were guilty of a "negligent breach of supervisory duties", by not ensuring proper controls on that would have prevented payment to “business partners”. Airbus regularly uses the term “business partners” to refer to agents or intermediaries, who have been used to pay bribes, and the company faces many more accusations of corruption and bribery.
An article published in October 2017 by Der Spiegel alleges that the company has been using slush funds to hide assets used to bribe officials, and not just for the Austria deal – according to Der Spiegel, investigators have found evidence of well over 100 bribes. The company is also being investigated by British and French authorities over the sale of commercial jets, and German prosecutors believe Vector Aeospace LLP was responsible for “keeping concealed money available for future corruption needs”.
The CEO – Thomas Enders – only became aware of corruption allegations in 2014, and has said he is committed to reforming the company to make it much more difficult for bribes to be paid. He has has frozen suspicious contracts, closed down a sales division based in Paris he referred to as a “bullshit castle” because he believed it to be responsible for many corrupt deals, and called in a law firm to look through files and hard drives. However, the Der Spiegel article alleges that Enders “wasn't interested” in uncovering corruption for many years, and outlines the complex network of shell companies used to obfuscate deals and make it difficult to track how money is used.