3rd Feb 2020 | Emmanuel Kojo
Airbus, Europe’s largest aerospace multinational, has admitted paying huge bribes in order to secure contracts in Ghana, under the erstwhile Mills-Mahama administration.
Airbus was found guilty by a High Court in London and is to pay a fine of 3 billion pounds (£3bn) as penalties. Anti-corruption investigators according to The Guardian Report, have described the court’s decision as to the largest ever corporate fine for bribery in the world after judges declared that corruption was “grave, pervasive and pernicious.”
The Serious Fraud Office’s (SFO’s) investigation related to bribery offences in Malaysia, Sri Lanka, Taiwan, Indonesia, and Ghana. The PNF’s investigation related to bribery and corruption offences in China, Colombia, Nepal, South Korea, the United Arab Emirates, Saudi Arabia (Arabsat), Taiwan and Russia.
The joint investigation team (JIT’s) investigation was vast in scale and in scope. It covered all of the BPs engaged by the Airbus divisions until 2016 – more than 1,750 entities across the world. The JIT focussed particularly on about 110 BPs for which red flags had been identified, from amongst which the JIT selected several investigation priorities.
The French Parquet National Financier (PNF) focused its investigations on Airbus and/or its divisions’ conduct in the United Arab Emirates, China, South Korea, Nepal, India, Taiwan, Russia, Saudi Arabia, Vietnam, Japan, Turkey, Mexico, Thailand, Brazil, and Kuwait.
The SFO focused its investigations on Airbus and/or its divisions’ conduct in South Korea, Indonesia, Sri Lanka, Malaysia, Taiwan, Ghana, Colombia, and Mexico. Within this scope, the PNF and SFO selected a representative sample of the markets and concerns involved.
“The planemaker agreed to pay the penalties on Friday after reaching settlements with investigators in the UK, France and the US to end inquiries that started four years ago,” the report stated.
Dame Victoria Sharp, who is the President of the Queen’s Bench Division, approved the settlement struck with the UK’s Serious Fraud Office (SFO).
She stated: “The seriousness of the criminality in this case hardly needs to be spelt out. As is acknowledged on all sides, it was grave.”
She noted that the scale of the wrongdoing demonstrates bribery was “endemic in two core business areas within Airbus.”
Airbus is reported to have “used a network of secret agents to pay large-scale backhanders to officials in foreign countries to land high-value contracts.”
“Allison Clare, for the SFO, told the court the company had paid bribes in Malaysia, Sri Lanka, Indonesia, Taiwan and Ghana between 2011 and 2015.”
Ghana under late President John Atta-Mills in 2011 and former President John Mahama in 2015, acquired three Airbus C295 planes from the company as part of an effort to augment and modernize the fleet of the Ghana Armed Forces.
It emerged that the first order of the military aeroplane arrived in the country on November 17, 2011, followed by a second on March 19, 2012. The last order arrived in the country on December 4, 2015.
President John Dramani Mahama, in November 2014, announced that Ghana was to acquire an additional C295, in addition to other aircraft, including five Super Tucanos, Mi-17s, and four Z-9s.
A total of about $150 million was spent in acquiring all the three aircraft, one of which overshot the runway recently. Ghana’s Ministry of Defence stated that the accident happened because the aircraft had not gone for its scheduled maintenance.
Prosecution on Ghana
The full dossier on Ghana is outlined in paragraphs 52-56 in a deferred prosecution agreement with Airbus.
Count 5: Ghana
- The fifth count alleges that contrary to section 7 of the Bribery Act 2010, between 1 July 2011 and 1 June 2015 Airbus SE failed to prevent persons associated with Airbus SE from bribing others concerned with the purchase of military transport aircraft by the Government of Ghana, where the said bribery was intended to obtain or retain business or advantage in the conduct of business for Airbus SE.
- Between 2009 and 2015 an Airbus defence company engaged Intermediary 5, a close relative of a high ranking elected Ghanaian Government official
(Government Official 1) as its BP in respect of the proposed sale of three military transport aircraft to the Government of Ghana. A number of Airbus
employees knew that Intermediary 5 was a close relative of Government Official 1, who was a key decision-maker in respect of the proposed sales. A number of Airbus employees made or promised success-based commission payments of approximately €5 million to Intermediary 5. False documentation
was created by or with the agreement of Airbus employees in order to support and disguise these payments. The payments were intended to induce or reward “improper favour” by Government Official 1 towards Airbus. Payments were eventually stopped due to the arrangement failing the due diligence processes required by the Liquidation Committee.
- Airbus, through one of its Spanish defence subsidiaries, conducted two campaigns to sell its C-295 military transport aircraft to the Government of Ghana: the first campaign ran from 2009 to 2011, the second from 2013 to 2015. Intermediary 5, a UK national with no prior expertise in the aerospace industry, acted as the BP for Airbus in both. Company D was the corporate vehicle through which Intermediary 5 and his associates provided services to Airbus.
His associates were Intermediaries 6 and 7, also UK nationals and there is no evidence they had any aerospace experience either. In August 2011, the purchase agreement for the sale of the two C-295 aircraft was signed by the Spanish defence subsidiary and the Government of Ghana, and it contained a declaration of compliance with the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, as well as a declaration that no more than €3,001,718.15 would be paid to BPs in connection with the contract (broadly, a 5 percent commission).
- After Company D made a formal BP application to Airbus in May 2011, Airbus commissioned an external due diligence report. In September 2011 this report identified Intermediary 5 as a shareholder of Company D. The report raised the possibility that he was a close relative of Government Official 1 and concerns that there was a risk of non-compliance with the OECD Convention. The reaction of a number of Airbus employees, including senior employees, and those involved in compliance, in an email chain in October 2011, is set out at para 188 of the Statement of Facts. In short, it was that the business should be conducted through a new third party, a company, already audited and engaged in the same area. A Spanish company, already an Airbus BP (Intermediary 8) and which had no previous links or experience of working in Ghana for any Airbus entity, was duly selected. A number of Airbus employees (two of them senior, and one involved in compliance) thus agreed to deliberately circumvent the proper compliance process by falsely representing that the work in the First Campaign had been done by Intermediary 8, which could, in turn, make the money available to Intermediary 5 and others. Further, the sum paid to Intermediary 8, and then by Intermediary 8 to Intermediary 5 exceeded (in the latter case by about €850,000) the agreed commission amount set out in the declaration of compliance referred to above.
- Similar false representations to those detailed above were made in February 2014 and then in May 2015, in respect of work allegedly done by Intermediary 8 in respect of a further proposed purchase by the Government of Ghana of a C295. In this case, however, the Liquidation Committee requested further due diligence before any payments were made; an external due diligence report was completed in respect of Intermediary 8, and Intermediary 8 declined to participate in interviews by external counsel Airbus had engaged to conduct extended due diligence interviews. Intermediary 8, therefore, failed due diligence; Airbus did not enter into a second written contract or make any further commission payments (disputing Intermediary 5’s later claim that he was owed €1,675,000).
Key actors in Airbus corruption scandal in Ghana
- Government Official 1 (high ranking and elected)
- Intermediary 5 (British national and close relative of Government Official 1)
- Company D (corporate vehicle for Intermediary 5 – shareholder)
- Intermediary 6 (British national and associate of Intermediary 5)
- Intermediary 7 (British national and associate of Intermediary 5)
- Intermediary 8 (Spanish company and front for Intermediary 5)
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