On Friday, January 31, courts in the U.S., U.K., and France approved a multinational deferred prosecution agreement (DPA)1 with Airbus SE to settle bribery and corruption charges in connection with the company’s use of third-party consultants to secure aircraft sales.2 Airbus has agreed to settle charges by paying a record $3.9 billion in combined penalties, which is the largest global bribery settlement to date.3 The case highlights the continuing trend of increasing global penalties levied against companies charged with violating the U.S. Foreign Corrupt Practices Act (FCPA), and is a prime example of successful coordination by DOJ and foreign law enforcement in investigating and resolving such cases. In the U.S., the case also touches on the intersection of corruption and sanctions issues, as Airbus simultaneously settled charges under the Arms Export Control Act (AECA) and its implementing regulations, the International Traffic in Arms Regulations (ITAR).
According to the criminal Information, Airbus engaged in an extensive scheme from 2008 to 2015 to bribe foreign government officials around the world.4 Specifically, Airbus allegedly conspired to pay bribes through a partner in China to secure the sale of its aircraft to Chinese state-owned airlines,5 and provided luxury travel and entertainment to Chinese officials within the U.S. in connection with those sales.6 It is also alleged to have paid bribes in Malaysia, Sri Lanka, Taiwan, Indonesia, and Ghana.7 In the U.S., Airbus faced charges that it violated ITAR by failing to report certain contributions, fees, and commissions paid in connection with the sale of defense articles subject to export controls.8
The case started with a self-disclosure by the company to the Serious Fraud Office in July 2016 about misleading and incomplete declarations it had made regarding payments to third-party sales agents.9 It quickly spread to investigations by France’s Parquet National Financier (PNF) in 2017, and by the U.S. DOJ the following year. The DPA allows Airbus to avoid criminal charges that would have banned the company from public contracts in the U.S. and Europe.
Some of the main takeaways are as follows:
1. The Largest Global FCPA Settlement to Date. At $3.9 billion, the Airbus case is the largest bribery settlement to date, and shows that global penalties paid in connection with international bribery and corruption schemes are likely to continue to increase. The settlement is more than Odebrecht’s $3.5 billion FCPA settlement in 2016,10 and is approximately twice the size of the $1.78 billion Petrobras global settlement of 2018.11 In just the past four years alone, there have been 10 other global FCPA resolutions coordinated with foreign authorities that have resulted in approximately $9.5 billion in fines, penalties, and disgorgements.12 As these cases demonstrate, DOJ and foreign enforcers will likely continue to secure massive penalties to resolve charges involving global bribery and corruption schemes under the FCPA and similar statutes.
2. Continued Coordination Among Foreign Enforcers. In addition to the massive penalties secured against Airbus, the case also highlights successful international coordination among enforcers in foreign bribery cases. Per the agreement, Airbus will pay $527 million to the U.S. for its FCPA and ITAR violations, and $55 million in civil forfeitures for the ITAR-related conduct. It will also pay $2.29 billion to the French regulator PNF and $1.09 billion to the SFO. DOJ will credit up to $1.8 billion of Airbus’s payments to PNF.13 The combined fine is reportedly the first coordinated settlement between DOJ, SFO, and PNF.14
Although, in announcing the settlement, DOJ noted that the U.S. resolution “recognizes the strength of France’s and the United Kingdom’s interests over the Company’s corruption-related conduct,” and that it took into account those countries’ “determination of the appropriate resolution into all aspects of the U.S. resolution,”15 as per its 2018 policy against “piling-on” of penalties, a $3.9 billion fine may not seem like a good example of fairness in this regard.
DOJ touted its international cooperation here signaling that this trend will continue. Assistant AG Brian Benczkowski stated, the “coordinated resolution was possible thanks to the dedicated efforts of [DOJ’s] foreign partners,” and DOJ “will continue to work aggressively with [its] partners across the globe to root out corruption, particularly corruption that harms American interests.”16
DOJ also signaled that companies must self-disclose alleged misconduct to U.S. authorities in addition to whatever disclosures they make internationally in order to receive full cooperation credit. Although DOJ gave “significant benefits”17 to Airbus for its voluntary self-disclosure of its ITAR violations, the company did not receive voluntary disclosure credit for the FCPA-related conduct because it disclosed that conduct only after the SFO began its investigation and it was made public.18 In other words, even though it self-disclosed and cooperated in the U.K., the disclosure must also be made to the DOJ in order to secure the most favorable resolution and avoid criminal prosecution.
3. Misconduct Involving Export Controls. In addition to bribery and corruption charges under the FCPA, DOJ also brought charges against Airbus for its alleged failure to comply with U.S. export control laws under AECA and ITAR. Between 2011 and 2016, Airbus had applied for, and received, licenses to sell military aircraft (which included regulated defense articles subject to ITAR) to various foreign countries and their armed forces. Under ITAR, Airbus was required to disclose political contributions, fees, and commissions paid in connection with the sale of those defense articles, but allegedly violated these requirements by making such payments in connection with least forty transactions in countries including Ghana, Indonesia, Vietnam, and Austria, and also failing to report such payments to the U.S. government.19
This is the first FCPA case in a decade to also include ITAR charges. It is also DOJ’s first case since it released the Export Control and Sanctions Enforcement Policy for Business Organizations in December 2019, which largely tracks DOJ’s FCPA Corporate Enforcement Policy, and emphasizes self-disclosure, cooperation, and remedial action.20 The case may thus signal a renewed focus on investigating companies that engage in foreign sales subject to export controls. Indeed, in announcing the settlement, Principal Deputy Assistant AG David P. Burns of DOJ’s National Security Division emphasized that “[i]nternational corruption involving sensitive U.S. defense technology presents a particularly dangerous combination,” and that the case “demonstrates the Department’s continuing commitment to ensuring that those who violate our export control laws are held to account.”21
1 Deferred Prosecution Agreement, United States v. Airbus SE, Case No. 1:20-cr-00021-TFH, ¶ 9 (Jan. 28, 2020), available at https://www.justice.gov/opa/press-release/file/1241466/download.
2 See Richard Crump, Airbus Wins Court OK For €3.6B Global Bribery Settlement, Law360 (Jan. 31, 2020), https://www.law360.com/whitecollar/articles/1239450/airbus-wins-court-ok-for-3-6b-global-bribery-settlement.
3 Dep’t of Justice, Press Release, Airbus Agrees to Pay over $3.9 Billion in Global Penalties to Resolve Foreign Bribery and ITAR Case (Jan. 31, 2020), https://www.justice.gov/opa/pr/airbus-agrees-pay-over-39-billion-global-penalties-resolve-foreign-bribery-and-itar-case (“Jan. 31 Press Release”).
4 Information, United States v. Airbus SE, Case No. 1:20-cr-00021-TFH, ¶ 22 (Jan. 28, 2020), available at https://www.justice.gov/opa/press-release/file/1241491/download.
5 See, e.g., id. ¶¶ 39, 42.
6 Id. ¶¶ 43-44.
7 See Jan. 31 Press Release.
8 See id.
9 See Richard Crump, Airbus Agrees To Settle US, UK, French Bribery Probes, Law360 (Jan. 28, 2020), https://www.law360.com/articles/1238156/airbus-agrees-to-settle-us-uk-french-bribery-probes.
10 See Dep’t of Justice, Press Release, Odebrecht and Braskem Plead Guilty and Agree to Pay at Least $3.5 Billion in Global Penalties to Resolve Largest Foreign Bribery Case in History (Dec. 21, 2016), https://www.justice.gov/opa/pr/odebrecht-and-braskem-plead-guilty-and-agree-pay-least-35-billion-global-penalties-resolve.
11 See Richard L. Cassin, Petrobras Reaches $1.78 Billion FCPA Resolution (Sept. 27, 2018), https://fcpablog.com/2018/09/27/petrobras-reaches-178-billion-fcpa-resolution/.
12 See Ephraim “Fry” Wernick & Pete Thomas, How Companies Can Respond to the Boom in FCPA Enforcement Fueled by International Cooperation, Vinson & Elkins (Oct. 30, 2019), https://www.velaw.com/Insights/How-Companies-Can-Respond-to-the-Boom-in-FCPA-Enforcement-Fueled-by-International-Cooperation/.
13 Deferred Prosecution Agreement, supra note 1 ¶ 9.
14 See Richard Crump, Cooperation Is More Than Just a Buzzword In Airbus Case, Law360 (Feb. 3, 2020), https://www.law360.com/articles/1239867/cooperation-is-more-than-just-a-buzzword-in-airbus-case.
15 Jan. 31 Press Release.
18 See Deferred Prosecution Agreement, supra note 1 ¶ 4.a.
19 See Information, supra, note 4 ¶ 22.
20 See Dep’t of Justice, Export Control and Sanctions Enforcement Policy for Business Organizations (Dec. 13, 2019), https://www.justice.gov/nsd/ces_vsd_policy_2019/download.
21 Jan. 31 Press Release.