Airbus agrees to settle bribery cases for $3b in three countries

Bloomberg

Airbus SE reached an agreement to settle long-running bribery investigations in the UK, France and the US in a deal that could cost the European airplane manufacturer in the range of
$3 billion.
A final agreement could be announced as early as this week, according to people familiar with the matter. The preliminary deal remains subject to approval by courts and authorities in the three countries, Airbus said in a statement on Tuesday.
The charges involve the use of intermediaries in securing jet orders, a practice that Airbus employed as it tried to reach parity with US rival Boeing Co.
A settlement, among the largest for corporate corruption in recent years, would allow Airbus to move past a probe that has shadowed the company for years, doing so at a time when Boeing is struggling with the grounding of its 737 Max aircraft following two deadly crashes.
“In the near four years this investigation has been going on, the world has moved on and the backdrop has changed,” said Sandy Morris, a research analyst at Jefferies International. “Perhaps Airbus can steal a march on Boeing while Boeing is preoccupied.” The European planemaker said that for legal reasons it can’t comment on the details of the discussions. The UK Serious Fraud Office (SFO) declined to comment, as did the US Department of Justice and representatives at the office of France’s financial prosecutor, the Parquet National Financier.

Record Fine
The UK part of the settlement is set to surpass the record 500 million-pound ($651 million) fine paid by jet-engine maker Rolls-Royce Holdings Plc, the Financial Times reported earlier.
Airbus said it hasn’t previously booked any earnings provision for anticipated costs of the probe and settlement. It’s scheduled to report year-end results on February 13.
The company has enough cash withstand the financial impact, Morris said in a note.
Airbus’s corruption saga has lasted almost four years. The company reported itself to authorities in 2016 after then-CEO Tom Enders launched an internal probe. The SFO opened its investigation that year, followed by its French counterpart and, late in 2018, the Department
of Justice.
The fallout reached high into the ranks at Airbus and was partly responsible for an exodus of top management.
One focus of the UK inquiry was Airbus’s failure to disclose its use of third parties to the country’s Export Finance agency, which arranges credit guarantees for overseas sales.
The decision to cooperate
allowed Airbus to keep receiving government-backed loans. But it also forced Enders to clean house before retiring last year.
Airbus’s sales staff weathered a major shakeup. Kiran Rao, who had already been announced as the replacement to longtime sales chief John Leahy, was sidelined and has since left the company.
Progress towards a settlement has been slowed by numerous issues, including the availability of judges in France and the UK, holiday scheduling and procedural differences,
according to a person familiar with the situation.