Friday, March 17, 2017

France Joins U.K. in Probing Airbus Financing of Plane Sales

Shares in the maker of the world's largest passenger aircraft lost altitude on fears of fines relating to third party consultants' activities in securing financing deals.

Airbus Group SE stock lost altitude Friday after the European plane maker said French authorities had launched an investigation into potentially illegal activities relating to the financing of aircraft sales.

The French probe mirrors an ongoing investigation by the U.K.'s Serious Fraud Office, or SFO, which in August announced that it was looking into possible fraud, bribery and corruption in the civil aviation business of Airbus relating to irregularities concerning third party consults, said Airbus.

The SFO launched its inquiry after Airbus reported evidence of false declarations relating to the use of agents during application for export credits. UK Export Finance, a government agency that provides financing for exporters, responded by suspending export credit to Airbus. That move was followed by France and Germany and has resulted in Airbus having to self-finance some customers in order to secure their orders.

Airbus shares fell 1.3% in the wake of the announcement, before paring declines to 0.83% by 13:00 CET to change hands at €69.73 each.

France's Parquet National Financier, a judicial unit established in 2013 to investigate significant fraud, will run its inquiry both in parallel too and in co-operation with the British inquiry.

The French investigation concerns the same practices as the U.K. probe and is "not a new issue," Airbus CEO Tom Enders told a press conference on a visit to New Delhi to mark the opening of a pilot training facility.

Airbus, which makes the world's largest passenger plane the A380 and it the main competitor to Boeing, could face fines, while individuals could also face criminal charges if the company is found guilty of illegal practices.

Aircraft engine maker Rolls Royce, in January, was fined a record £497 million ($615 million) by the SFO following a four year investigation that resulted in 12 counts of conspiracy to corrupt, false accounting and failure to prevent bribery in relation to the sale of aircraft engines. Rolls Royce was also fined by the US Department of Justice and Brazilian authorities.

France last year introduced regulation enabling it to levy so-called deferred prosecution agreements, which enables prosecutors to suspend criminal prosecution of a company in exchange for agreements to meet certain conditions, typically the payment of a fine and the implementation of procedures to avert further regulatory breaches. The law is designed to avoid prosecutions that could damage a company's ability to tender for certain contracts.

(Paul Whitfield - The Street) 

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