On January 31, 2020, international enforcement authorities in the United States, the United Kingdom, and France simultaneously approved Deferred Prosecution Agreements (DPAs or the "Agreements") with multinational aerospace giant Airbus S.E. (Airbus) in the largest corruption enforcement action in history. Airbus agreed to pay nearly $4 billion in combined penalties to the U.S. Department of Justice (DOJ), the U.S. State Department, the U.K. Serious Fraud Office (SFO), and the French National Financial Prosecutor's Office (Parquet National Financier or PNF) to resolve a multi-year investigation into the company's alleged use of third-party business partners to bribe government officials and corporate executives to obtain unfair business advantages, including large aircraft contracts, in violation of the U.S. FCPA, U.K. Bribery Act, and France's Sapin II, as well as the U.S. International Traffic in Arms Regulations (ITAR). In addition to the financial penalties, the three-year DPAs impose France's anti-corruption agency as a monitor on Airbus and require ongoing compliance reforms at the company.
In August 2016 the SFO opened its investigation into Airbus after the company disclosed certain irregularities in payments made to third-party business partners and possible incidents of bribery that may have occurred in relation to those payments. In March 2017 the PNF opened its own investigation into the same conduct, stating that it would cooperate with the SFO's investigation into the France-based multinational in an uncommon instance of collaboration between the two enforcement agencies. Airbus subsequently reported to the DOJ that it had uncovered "inaccuracies" in filings made pursuant to the ITAR, the rules that impose requirements on defense contractors trading defense products and services. Specifically, the ITAR require companies dealing in military- and defense-related technology to report political contributions and other payments made in connection with the underlying transactions. After the disclosure the DOJ officially opened its own investigation into the company in December 2018.
Throughout the nearly four-year investigation, Airbus provided extensive cooperation with the multinational enforcement authorities and undertook significant remedial actions relating to the underlying conduct and the lapses in its existing compliance program. The company produced millions of documents in response to requests from the enforcement authorities, ended third-party consultant relationships, terminated over 100 employees associated with the corrupt conduct, replaced the CEO, eliminated the corporate marketing branch of the company, and instituted an independent compliance review panel to address issues relating to the investigation.
Deferred Prosecution Agreements
The three DPAs focused on substantially similar conduct pertaining to the bribery of government officials and private corporate executives in countries across Africa, Asia, the Middle East, and Latin America. The Agreements did not all focus on the same activities in each country involved in the bribery schemes, but nevertheless provide valuable insight into the constantly evolving nature of multilateral resolutions in the international anti-corruption space. Companies operating in multiple countries under the jurisdiction of several regulators and enforcement agencies should take an interest in the lessons learned from the Airbus DPAs.
U.S. Department of Justice DPA
According to the U.S. DPA, company employees, executives, and other agents engaged in a "years-long campaign of corruption" between 2008 and 2015 to facilitate the payment of bribes to corporate executives and foreign officials in numerous countries in order to gain improper business advantages and secure procurement contracts with private and state-controlled enterprises. The U.S. DPA emphasized a scheme involving Chinese government officials, including all-expenses-paid trips to Maui, Hawaii and Park City, Utah for executives of China's state-controlled airlines and their families, as well as the creation of a sham educational fund that was used to finance lavish social events and golf retreats. The U.S. DPA's ITAR violations stemmed from Airbus's failure to report political contributions, commissions, and fees paid to business partners in relation to the sale or export of defense articles or defense services and the failure of third-party business partners to register under ITAR as required by the regulations.
Under the terms of the U.S. DPA, Airbus will pay U.S. authorities approximately $527 million to resolve the criminal FCPA bribery charges ($294 million) and the ITAR violations ($233 million). The penalty is being assessed in consideration of the $2.3 billion the company will pay to French authorities and the $1.1 billion it will pay to the U.K, resulting in a total global monetary penalty of over $3.9 billion, the largest in anti-corruption enforcement history. In addition to the criminal fines, the U.S. DPA requires the continued implementation of Airbus's revamped compliance and ethics program, corporate compliance reporting, cooperation in ongoing and future investigations and prosecutions of individuals, the forfeiture of Airbus's $55 million interest in a bond related to the ITAR violations, and an additional $5 million penalty assessed by the U.S. State Department relating to the ITAR violations.
U.K. Serious Fraud Office DPA
The U.K. SFO's investigation focused on wide-ranging bribery schemes of government officials and private corporate directors and executives in Taiwan, Malaysia, South Korea, Indonesia, Sri Lanka, Ghana, and Mexico, particularly through the use of third-party business partners and intermediaries in violation of the U.K. Bribery Act. According to the U.K. DPA, despite Airbus's then-existing compliance protocols intended to prevent the conduct in question, Airbus employees and executives circumvented the compliance programs by providing false information regarding business partners' relationships to customers to the internal corporate organization responsible for evaluating due diligence, and in some cases the individuals involved in the misconduct were involved in compliance evaluations of the underlying transactions.
In addition to the total $3.9 billion fine ($1.1 billion of which is to be paid to the U.K), the U.K. DPA requires the continued implementation of Airbus's new compliance and ethics program, ongoing cooperation in the SFO's investigation, self-reporting of fraud and other wrongdoing for the duration of the 3-year DPA, and the imposition of the French AFA as a corporate monitor (discussed below).
French National Financial Prosecutor's Office DPA
The PNF's resolution with Airbus included admitted bribery-related misconduct in India, Saudi Arabia, Turkey, Kuwait, the United Arab Emirates, China, Taiwan, South Korea, Nepal, Thailand, Russia, Vietnam, Japan, Mexico, Brazil, and Colombia. The French DPA, called a Judicial Public Interest Agreement, included several charges, such as bribery of foreign public officials, conspiracy to defraud, misuse of corporate assets, money laundering, and several forgery-related offenses. The French DPA focused on the misconduct of Airbus's marketing arm and the involvement of management in the circumvention of the company's compliance procedures. In addition to the total fines imposed under the global settlement, the resolution imposes the French Anti-Corruption Agency (Agence Française Anticorruption or AFA) as a monitor of Airbus's compliance program, including targeted audits of the company's compliance program, continued cooperation in related investigations, and the ongoing implementation of the company's new compliance and ethics program.1
Implications for Global Anti-Corruption Enforcement
In addition to the record-setting penalty included in the global settlement, there are a number of lessons for in-house counsel, compliance professionals, and other anti-corruption and investigations practitioners:
- Companies must regularly update and monitor the effectiveness of their compliance programs to avoid a "paper program." The Airbus DPAs focused on the numerous failures in the company's original compliance program and the lack of commitment throughout the company to anti-corruption efforts. Programs which exist on paper only or are not periodically revised to address significant corruption risks identified through risk assessment are likely to be viewed as inadequate by enforcement authorities when they are assessing penalties.2
- The DOJ is increasing international cooperation but will not abdicate its enforcement authority. The DOJ was willing to allow non-U.S. enforcement authorities to once again take the lead in a corruption investigation and resolution where those authorities had a stronger jurisdictional basis and the resolve to do so. DOJ required a resolution in a United States District Court, however, and a substantial payment to the U.S. despite Airbus not being an "issuer or domestic concern" under the FCPA.
- The DOJ and SFO are willing to allow foreign agencies to take the lead on compliance monitoring. The DOJ and SFO did not impose independent corporate monitors on Airbus despite the pervasiveness of the wrongdoing and the company's failure to proactively disclose the misconduct. Where a competent monitoring agency such as the French AFA is more properly situated to monitor compliance efforts, the DOJ and SFO are prepared to defer to their monitoring authority.
- The use of third-party business partners is still a leading corruption risk; and the provision of gifts and entertainment is on DOJ's radar. The global settlement focused on the widespread use of intermediaries to funnel bribes to government officials and corporate executives. Despite this focus in the U.K. and French resolutions, the DOJ also emphasized the provision of non-business-related luxury travel and entertainment for Chinese government officials and their families to the United States as a bribery mechanism.
- The DOJ and SFO resolutions confirm the value of early remediation and cooperation. Despite the record-level global fine, the penalty could have been much higher had Airbus not provided extensive cooperation with the government's investigation and taken quick remedial action. The DOJ's DPA confirms the 2019 Corporate Enforcement Policy's declaration that prompt investigation and ongoing cooperation with the government's investigation will result in discounted criminal fines, even in instances where the company does not proactively disclose wrongdoing. The SFO's DPA Code of Practice, which also emphasizes these factors in assessing penalties, was similarly reinforced in the Airbus settlement.
With a compliance program tailored to a company's particular needs in place, companies are more likely to avoid running afoul of international bribery laws. Where violations do occur, the existence of such a program will give the company the best possible position to investigate and remediate the misconduct, and, if necessary, cooperate with enforcement authorities for the best resolution possible.
- Airbus will bear the cost of the AFA's monitoring up to €8.5 million.
- See the DOJ Evaluation of Corporate Compliance Programs.