On January 31, 2020, France, the United Kingdom, and the United States announced a settlement with Airbus SE (“Airbus”), the French aircraft manufacturer, in relation to bribery allegations and, in the US and France, export controls violations. The combined penalties total $3.9 billion, which is the largest anti-corruption settlement in history. The settlement offers insight into corruption enforcement in the different countries and, perhaps more importantly, a view of the future of coordinated multi-jurisdictional investigations and enforcement.
The case illustrates the trends that we are seeing in our practice: (i) regulators and prosecutors are increasingly working together to investigate and resolve issues; (ii) the ambit of extra-territorial jurisdiction is being continually expanded; and (iii) common global standards for effective compliance programs are emerging.
In this case a joint international investigation team was appointed by French and U.K. authorities to establish a coordinated investigation strategy, to facilitate the collection of evidence and technical analysis of data, to ensure the sharing of relevant information between prosecuting authorities, as well as to use such evidence for criminal prosecution or the conclusion of settlement agreements.
The investigation, conducted with the assistance of Airbus’ advisors, involved collection and review of 156 million documents, over 300 interviews, dawn raids and multiple requests for mutual legal assistance, including in relation to tracing financial flows. It was established that, between 2004 and 2016, Airbus paid more than €2 billion in commissions to intermediaries. These intermediaries were in turn responsible for redistributing funds to public decision makers and airline managers via a labyrinth of shell companies.
In France, Airbus was subject to France’s Convention judiciaire d’intérêt public (“CJIP”), a criminal settlement procedure which allows the French Public Prosecutor to offer companies a judicial agreement rather than pursue prosecution. The Airbus CJIP is the tenth and the largest ever imposed, with a fine of twice the amount as the previous five CJIPs concluded with the French authorities combined (c.€2bn). As part of the coordinated investigation team effort, France led the investigation into bribery schemes in certain jurisdictions in the Middle East, Asia and South America.
The U.K.’s Deferred Prosecution Agreement (“DPA”) with the Serious Fraud Office (“SFO”) covers five counts of failure to prevent bribery across five jurisdictions between 2011 and 2015. In the U.K., Airbus agreed to pay a total of €991 million, which the judge said reflected the gravity of the conduct, Airbus’ cooperation and the program of reform put in place by new leadership.
The U.S. Department of Justice (“DOJ”) announced that it had entered into a €525m DPA with Airbus to resolve foreign bribery charges under the Foreign Corrupt Practices Act (“FCPA”), as well as conspiracy to commit violations of the U.S. Arms Export Control Act (“AECA”) and International Traffic in Arms Regulations (“ITAR”). While the potentially improper payments took place in multiple countries across the globe, the U.S. investigation focused primarily on payments made by third-party brokers on behalf of Airbus to Chinese officials between 2013 and 2015.
- Only A Little Piling On
As U.S. Attorney Jessie K. Liu stated, “[t]his case exemplifies the ability of [U.S.] prosecutors and law enforcement to work with our foreign counterparts to ensure that corruption around the world is prevented and punished at the highest levels.” The U.S.’s approach to this investigation was consistent with the DOJ’s announcement in May 2018 that it would try to avoid “piling on.” Piling on refers to avoiding duplicative penalties by crediting and apportioning penalties, fines, and forfeitures among the relevant authorities and jurisdictions. In announcing this policy, the DOJ noted that “sometimes, penalties that may appear duplicative really are essential to achieve justice and protect the public.” The Airbus settlement is a prime example of this point. In court documents, the DOJ conceded that its “territorial jurisdiction over the corrupt conduct is limited.” As such, the DOJ received a smaller portion of the global settlement, with the bulk of the penalty going to French authorities. Additionally, for the first time, the SFO and DOJ agreed that monitoring of Airbus’ compliance and anti-corruption program will be carried out by the French Anti-Corruption Agency (“AFA”) on behalf of the 3 regulators. Another monitor (with dual U.S. and French nationality) will be responsible for Airbus’ compliance with regards to ITAR regulations on exports of military equipment
- Multi-National Business Means Broad Multi-National Jurisdiction
As well as the increased cooperation between prosecutors, the case also underscores the ever-expanding jurisdictional reach of corruption laws. The PNF had relatively clear jurisdiction over Airbus’ conduct as it is a French company.
For the U.K., the judgment reflects a very broad approach towards the “failure to prevent bribery” corporate offence under the U.K. Bribery Act. Section 7 of the Bribery Act applies only to a “relevant commercial organisation”, that is the specific corporate body or partnership that “carries on a business, or part of a business” in the U.K. The relevant “organization,” therefore, is an entity rather than a group of entities. The judgment refers to the business of Airbus as having been “carried on in the United Kingdom” on two separate bases: (1) a Spanish subsidiary of Airbus SE, Airbus Defence and Space SA, owns a U.K. company (Airbus Military U.K. Limited); and (2) Airbus Military UK Limited and another U.K. company (Airbus Operations Limited) are “subject to the strategic and operational management of Airbus SE”. According to the U.K. Ministry of Justice Guidance, the first basis is insufficient for Airbus SE to be deemed to carry out part of its business in the U.K. Whether or not the second basis is enough turns on whether the employees or third parties allegedly paying the bribes were associated with (and paid bribes for the benefit of) Airbus SE, rather than one of its subsidiaries. Arguably, the SFO would have had difficulty establishing jurisdiction against Airbus SE had this not been accepted by the company. Indeed the Judge highlighted, as an example of Airbus’ “exemplary co-operation,” its “unprecedented…submission to the SFO in respect of conduct overseas”.
Similarly, Airbus’ conduct had, as admitted by the DOJ, a “limited” U.S. nexus. That nexus was based primarily on Airbus’ employees and agents sending emails related to the scheme while in the U.S. and providing luxury travel to foreign officials visiting the U.S. However, Airbus also violated the AECA by willfully failing to disclose the bribe payments that secured the sale of defense articles and services to foreign armed forces. In combining the settlement in this manner, it is apparent that the U.S. interest in this settlement was to emphasize the serious threat posed to U.S. national security by such a large scale international corruption scheme involving sensitive U.S. defense technologies and foreign armed forces. It is also clear that the DOJ will not completely withdraw from prosecuting international corruption when U.S. interests are threatened.
- Cooperation and Voluntary Self-Reporting
Airbus was rewarded for its cooperation and voluntary self-reporting.
The French authorities decided to apply a 50% reduction on the public interest fine (i.e. the punitive part of the fine) due to Airbus’ exemplary cooperation. Other factors contributing to this 50% reduction included that Airbus conducted a thorough internal investigation in coordination with the judicial investigation and built a tailored and corrective compliance program.
Likewise, Airbus primarily obtained a DPA in the U.K. because of its extensive cooperation, as well as its remediation and the broader public interest factors including it avoiding debarment. As the judgment notes “the list of all that has been done by Airbus is a long one”, including collecting voluminous documents from hundreds of custodians, cooperating with interviews, confirmation of compliance concerns and identification of corruption red flags, as well as making relevant external accountants available to explain financial processes.Indeed Airbus and its advisors appear to have taken on much of the investigative work (as anticipated by the SFO’s July 2019 Cooperation Guidance); it seems they collected, reviewed, and summarized the data, conducted the interviews and accepted that the SFO has jurisdiction over the case. It is notable that the judgment states that the SFO did not find a document that had not already been identified by the company.
However, the Airbus DPA also raises questions about the benefit of self-reporting to the SFO. Airbus received a 50% discount, i.e. the same level of discount as Serco and Tesco in their recent DPAs (both self-reported very quickly) despite: (1) the self-report having been delayed (Airbus was aware of issues since at least 2014, but only self-reported in 2016); and (2) the self-report having been effectively prompted by U.K. Export Finance, who said it would report its suspicions to the SFO.
In the U.S., despite the seriousness of the alleged violations, the DOJ similarly commended Airbus for voluntary and timely self-reporting pursuant to the National Security Department’s revised Export Control and Sanctions Enforcement Policy as well as commending it for its ongoing cooperation and remediation efforts. Airbus also received cooperation credit concerning the FCPA violation. It did not, however, receive voluntary self-disclosure credit for the FCPA violation because that violation was disclosed to the DOJ only after the U.K.’s investigation into the corruption-related activities became public.
The case highlights the need to assess self-reporting on a global basis – and quickly.
- Compliance Programs and Remediation
The U.K. judgment details the extent to which Airbus “is now a changed company”. While the extent of the remedial measures is of course driven by Airbus’ situation, certain aspects show the emerging expectations for global compliance programs and provide companies with guidance on what they should be aiming for when designing and enhancing their compliance programs. These include:
- conducting a company-wide comprehensive risk assessment;
- commissioning an independent review of its ethics and compliance procedures (including site visits and employee focus groups);
- ensuring compliance is adequately resourced and sufficiently independent from the business;
- significantly reducing the use of third parties;
- a targeted programme of training for medium/high risk employees; and
- ongoing monitoring and review of the effectiveness of the compliance program.
Compliance programs need to be designed, implemented and assessed by companies according to all relevant standards, which for many companies will include the DOJ Guidance published in March 2019 and the SFO Guidance published in January 2020. The U.K. and many are other jurisdictions are increasingly demanding more of companies’ compliance programs and global expectations are emerging.
Taking Off: Global Approach to Compliance and Enforcement
The Airbus case highlights that in many jurisdictions (and in many sectors), corruption remains endemic. Companies operating internationally must ensure that they implement robust and demonstrably effective compliance programs or else expect to face multi-jurisdictional investigations and significant fines across the globe.
With more than 50 offices across the globe, Norton Rose Fulbright has one of largest disputes legal practices in the world, with significant experience in investigations and enforcement actions for clients across all industry sectors. We have acted on some of the world’s highest profile domestic and multijurisdictional investigations, including high-profile regulatory inquiries, regulatory enforcement, criminal investigations and prosecutions. Our lawyers both prevent and resolve disputes by providing clients with practical, creative legal advice that focuses on their strategic and commercial objectives. We have a unique offering of our ‘on the ground’ strength, advising clients on disputes issues across emerging markets including Africa, the Middle East, Asia and Latin America, together with deep experience in the mature markets of the United States, Europe, Australia and Canada. Members of our team offer fluent capabilities in more than 20 languages across the globe. The worldwide footprint of our firm makes us exceptionally poised to handle multi-jurisdictional investigations globally.
 “Organisations that do not have a demonstrable business presence in the United Kingdom would not be caught…having a UK subsidiary will not, in itself, mean that a parent company is carrying on a business in the UK, since a subsidiary may act independently of its parent or other group companies.”