Business Maverick

Business Maverick

Airbus Is Near Settlement of Bribery Cases

The Crimea-bound Airbus A321 on Aug. 15. Photographer: Russian Investigative Committee/TASS/Getty Images

Airbus SE is nearing an agreement with U.K. authorities to settle bribery allegations that have shadowed the European airplane manufacturer for years, according to people familiar with the matter.

Airbus talks, aimed at resolving long-running British, French and U.S. investigations of alleged contract kickbacks, are still in flux and the timing of any settlement is uncertain, said the people, who asked not to be named discussing private negotiations. Airbus is seeking a global settlement of the charges, which cover plane sales in numerous countries, the people said.

Airbus, based in Toulouse, France, and the U.K. Serious Fraud Office declined to comment, as did the U.S. Department of Justice and representatives at the office of France’s financial prosecutor, the Parquet National Financier.

Settling the probes would put to rest corruption allegations that reached high into the ranks at Airbus and were partly responsible for an exodus of top management.

A global accord could cost the manufacturer an estimated 3 billion euros ($3.3 billion), the Financial Times reported earlier, citing analysts, and is set to surpass the record 500 million-pound ($653 million) U.K. fine paid by jet-engine maker Rolls-Royce Holdings Plc.

“That would be a welcome move from a standpoint of derailing the issue,” said Richard Aboulafia, an analyst with Teal Group. “Here’s the price we’re going to pay, end of story.”

The charges involve the use of intermediaries in securing jet orders, a practice that Airbus relied on as it tried to reach parity with U.S. rival Boeing Co. Last year, Airbus canceled publication of a book it had commissioned on the company’s 50-year history, because a chapter that addressed the bribery episode could have interfered with the cases.

As the probes geared up, Airbus abruptly stopped using the agents and said it would cooperate. Most of its top management has been replaced or retired, including former Chief Executive Officer Tom Enders.

Progress toward a settlement has been slowed by numerous issues, including the availability of judges in France and the U.K., holiday scheduling and procedural differences, one of the people said.

The U.K. settlement is unlikely to cause material damage to Airbus, said George Ferguson, a Bloomberg Intelligence analyst. The timing is good for the European company, with rival Boeing still in crisis with its 737 Max grounded for close to one year.

“If you’re going to get a charge like this and put it behind you, right now is good, while your competitor is having problems,” he said.

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