Billions: Airbus and the future of DPA’s
- The New Year has brought some much-needed positive headlines for the Serious Fraud Office (‘SFO’) in the form of a record-breaking deferred prosecution agreement (‘DPA’) for bribery against the global aerospace company Airbus SE, but only time will tell whether the authority is able to follow up on this success by securing the conviction of any individuals for their part in the criminality.
- This DPA, the seventh agreed since the procedure was introduced in 2013, concludes almost four years of investigation by the SFO into the Dutch-registered firm and was part of a joint probe with the French authorities and run in parallel to US investigations. All three jurisdictions have resolved matters by way of various forms of settlement agreement.
- The SFO investigation revealed that, between 2011 and 2015, persons associated with Airbus, not exclusively its employees, offered very substantial bribes to third parties in order to secure orders for aircraft from various airline companies and, in one instance, from the Ghanaian government. The five counts in the (now suspended) indictment charge Airbus with failing to prevent this bribery, contrary to s.7 of the Bribery Act 2010 (‘the Act’).
- Dame Victoria Sharpe’s judgment approving the DPA (31 January 2020) is damning in its description of the extent and seriousness of the company’s wrongdoing, describing it as “grave” and noting that bribery was, “endemic in two core business areas within Airbus.” Although Airbus had anti-bribery policies and procedures, at the material time they, “were easily bypassed and breached and there existed a corporate culture which permitted bribery by Airbus business partners and/or employees to be committed throughout the world.” Because the market is dominated by only two companies (Boeing being the other) and due to the nature and scale of the corruption, the Judge found it unarguable that the offending, “has resulted in substantial harm to the integrity and confidence of markets.”
- Nonetheless, although recognising the, “egregious nature of the conduct engaged in”, the court felt able to conclude that the interests of justice were best served by a DPA rather than a prosecution for three principal reasons.
- Firstly, after a “slow start”, Airbus’ provided “exemplary” co-operation, including accepting that the Act provided the SFO with extended extraterritorial powers, reporting conduct that had taken place almost exclusively overseas and facilitating access to 30.7 million relevant documents.
- Secondly, Airbus had transformed itself since the offending, including parting company with no less than sixty-three of its top and senior management figures and making significant changes to its internal processes.
- Thirdly, although observing that “no company is too big to prosecute”, the collateral effects of a prosecution on the company (stemming largely from discretionary disbarment from public contracts) was an important factor. The deleterious effects could extend beyond Airbus’ UK employees, share price, pensioners and supply train to overseas employees and might even significantly lower the GDP of several countries.
- In addition to the usual undertakings as to continued co-operation and corporate compliance, Airbus must pay €585,939,740 as profit disgorgement and €398,034,571 as penalty. Together with SFO costs of €6,989,401, this means that Airbus owes HM Treasury almost one billion euros (or over £850 million, part of a circa €3.6 billion global resolution) which, as the Judge noted with evident satisfaction, is, “greater than the total of all the previous sums paid pursuant to previous DPAs and more than double the total of fines paid in respect of all criminal conduct in England and Wales in 2018.” Airbus was allowed thirty days to pay, not wholly unreasonable in the circumstances.
- No doubt the Treasury will be delighted with such a generous and timely donation to its coffers. The SFO will be hoping (with some justification) that the haul might be sufficient to quell the ever-present rumblings from some quarters as to the utility and future of the authority.
- However, once the excitement subsides, the interesting question will be whether this admittedly impressive corporate settlement can be followed by the criminal prosecution of any culpable individuals. Precedent is not favourable. At the end of last year, the founder and two former employees of a UK seismic device company called Gurlap Systems Ltd (‘Gurlap’) were acquitted by a jury of charges that they had conspired to bribe a South Korean official.
- Gurlap had agreed a DPA with the SFO which had received the court’s blessing (approved judgment 22 October 2019) a matter of weeks before the trial of the three individuals took place, the details of which were released only following the conclusion of that trial. Significantly, the draft indictment against Gurlap charged it as a co-conspirator with the three individuals and also with failing to prevent their corrupt conduct. In his DPA judgment, Davis J remarked that, “the criminal conduct was planned by senior officers and employees of the company.” The subsequent acquittal of the individuals led some to question (again) whether, (i) the result sits comfortably as a matter of logic or legal principle, (ii) the incentive for a corporate to self-report has been (further) undermined and, (iii) the individuals should have been named as wrongdoers in the DPA given the verdicts of the jury.
- After all, this is but the latest example of no convictions being obtained following a DPA – the Tesco and Sarclad cases concluded in the same way and no individuals were even prosecuted in the Rolls-Royce investigation. The UK DPA scheme was supposed to work in tandem with the prosecution of individuals in appropriate circumstances and, to that extent at least, it is not functioning.
- In Airbus, the Judge emphasised that, “the wrongdoing involved a number of very senior, senior and other employees, including employees with compliance responsibilities” and that some of their conduct included the, “creation of false invoices, false payment and other compliance material and the deliberate circumvention of…compliance procedures.” Given this, it is perhaps unsurprising that there are, “ongoing investigations in respect of a number of individual suspects in this jurisdiction and abroad.” We must wait to see if any are charged or convicted.