The recent Airbus settlement of €3.6bn in an international bribery probe is, in itself, an extraordinary event. This is a record amount which dwarves all previous corruption related settlements. What is also extraordinary is the manner in which international regulators co-operated not only with each other, but also with external law firms to investigate the facts and negotiate the ultimate outcome.
In the past, it was largely the US Department of Justice (DOJ) and latterly the UK Serious Fraud Office (SFO) that have investigated and prosecuted international corruption cases. What is new in this case is that the French regulator was not only involved, but took the lead in the Airbus investigation. What should be a wake up call to the aviation/aerospace industry is the fact that these regulators worked closely together in developing the case against Airbus and worked closely with Airbus and its outside lawyers to discover the full extent of the conduct which "as [was] acknowledged on all sides was grave".
When I first started in the aerospace industry nearly 30 years ago, there was still a cavalier attitude to the manner in which international business was done. True, the Foreign Corrupt Practices Act (FCPA) in the US had been in force for a decade, but old style marketing types were still trying to find ways to circumvent it, rather than seeing it as an opportunity to clean up the industry. Executives complained that the FCPA put them at a disadvantage because the European competitors were still free to do what they wanted to win contracts. Over time however, that attitude changed. Changes in leadership at the top, enhanced ethics programmes, intense training, hotlines and severe disciplinary action for infringements have led to a shift in corporate culture. It simply would not be culturally acceptable in today’s US Aerospace & Defence industry to have an internally sanctioned corruption campaign. Of course, there are always isolated incidents where an individual or even group of individuals will, for personal enhancement, participate in corrupt activities, but it will not be a corporately sanctioned activity. The US industry learned its lesson the hard way with prosecutions, fines and prison sentences, but today it is a different beast than three decades ago.
European industry has over the past decade been catching up. Since the Organisation for Economic Co-operation and Development (OECD) Guidelines on Anti-Corruption have been issued, European states have been cleaning up their own local laws and putting in place legislation to deal with foreign corruption by their nationals. Not only has legislation such as the Bribery Act in the UK and Sapin II in France been put in place, they are widely viewed as being are more rigorous than the FCPA. . More telling is that the local regulators are now intent on identifying and, if necessary, prosecuting culprits. This puts real teeth into the effectiveness of these measures and clearly puts the global industry under the microscope. Today there is no room for companies to be cavalier. If they are to prosper in this environment, a culture of compliance is absolutely essential. Corporate social responsibility, stakeholders and economic viability will in the end see to this. One need only look at the length that Airbus has gone to in order to investigate and cooperate with the regulators to see how seriously it is embracing this new reality.
It is also timely that the SFO has just reissued the section of its Operational Handbook on "Evaluating a Compliance Programme". This reinforces the messages that the existence and effectiveness of a compliance programme is relevant not only to a decision as to whether an offence under S7 of the Bribery Act 2010has occurred, but also whether a prosecution is in the public interest or whether a DPA is justified. It is important that a programme be proportionate, risk-based and regularly received: even if a business is under close investigation for suspected misconduct an overhaul of the compliance programme may make the difference between a decision to prosecute or the opportunity to enter into a DPA.
So, what lessons can be learned from the new anti-corruption environment?
What can you do to ensure that you meet the challenges of this new era?
This landmark case indicates that the aviation/aerospace industry will come under enhanced scrutiny from regulators in the future. Use this opportunity to ensure that you have robust and adequate procedures in place. It will make you more resilient and give you a competitive edge.
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To find out more, join our webinar 'Compliance in Aviation & Commercial Aerospace: key drivers' on 17 March, 2020.
Author Wolf von Kumberg was the Associate General Counsel for Northrop Grumman Corporation and is now a consultant advising Bird & Bird.