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Airbus “high risk” with use of agents

LONDON: August 08, 2016. Airbus says it continues to cooperate with the UK Serious Fraud Office and its new criminal investigation into allegations of fraud, bribery and corruption relating to third party consultants.

In a report published in July, corruption watchdog Transparency International (TI) noted that agents and other intermediaries acting on behalf of companies are frequent conduits for bribes and so present a high risk for firms.

A350XWB TI also noted that the use of 'facilitation' payments are part of a cycle of bribery that corrodes public and business standards that can lead to larger-scale public sector bribery and state theft.

"More and more, companies are recognizing that facilitation payments may pose legal and reputational risks and have a cost that is not insignificant. As a result, these companies have adopted a zero-tolerance policy with respect to facilitation payments. Emerging market companies should follow suit," the report declared.

Katherine Dixon, director of TI's Defense and Security Program added: "The use of agents is one of the biggest corruption risks across the defense and aerospace sector, and Airbus is just one of a long line of companies that have run into trouble. The failure of Airbus to declare its agents highlights the weakness of self-disclosure requirements and why governments can and should use export policies to reduce the influence of corrupt middlemen."

Airbus shareholders include Germany and France where export credit agencies reportedly require less information than their UK counterpart in respect to export guarantees.

The Airbus Group reported revenue of €28.75 billion for the first half of 2016, basically unchanged from the previous year. Net income was €1.76 billion, a rise of 16 percent over the same period last year.

"The first-half underlying financial performance reflects our well-flagged back-loaded aircraft delivery schedule this year," said CEO Tom Enders. "We continue to see good demand for our products as shown by the brisk order intake at the Farnborough Airshow."

Enders also acknowledged an additional charge of €1.02 billion against Airbus's military A400M program due to "lagging industrial efficiency", and a further €385 million against the group's A350 program. Speaking at Farnborough last month, Qatar Airways CEO Akbar Al Baker expressed his concern Airbus would be able to produce the 10 A350s due for airline delivery by the end of 2016.

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