UK: Airbus Pleads Guilty to Corruption in Saudi Arabia, Fined $42M

A subsidiary of Airbus SE was fined a total of £30.3 million ( approx. US $42.1 million) after pleading guilty to one count of corruption relating to contracts awarded in Saudi Arabia.

On 30 July 2020 the UK Serious Fraud Office charged  GPT Special Project Management Ltd. (GPT) with corruption. GPT is a UK company and subsidiary of Airbus that operated in Saudi Arabia and ceased operations in April 2020

Joint charges have been also brought against three individuals Jeffrey Cook, former Managing Director of GPT, John Mason, the financial officer and part owner of foreign-registered companies Simec and Duranton, subcontractors to GPT, and Terence Dorothy for aiding and abetting that offence. The individuals will face trials in May 2022.

GPT pleaded guilty on Wednesday to one count of corruption for violations of Section 1 of the Prevention of Corruption Act before the Honorable Justice Bryan at Southwark Crown Court.

GPT will pay a £20.6 million ($28.6 million) confiscation order, £7.5 million ( $10.4 million) fine, and £2.2 million ($3.1 million) in costs.

The Misconduct

The SFO started an investigation into GPT in August 2012 regarding the award of a £2 billion contract (U.S. $2.8 billion). According to the SFO, the corrupt activity occurred between December 2008 and July 2010.

At the center of the SFO eight-year probe were allegations the Saudi-based subsidiary paid bribes to win a 2 billion-pound ($2.8 billion) contract to provide high-level intranet and communications and training services for the Saudi National Guard on behalf of the UK defense department.

Airbus acquired GPT in 2007 from Swedish telecommunications company Ericsson who was also the subject of a US Department of Justice investigation and fined $1 billion in 2019 for widespread corruption which spanned 17 years and across several countries in Asia and the Middle East.

“The SFO’s investigation related to contractual arrangements originating prior to GPT’s acquisition by Airbus and continuing thereafter,” an Airbus spokesperson said in a statement. Airbus’s “cooperation with the SFO and GPT’s acceptance of responsibility reflects a commitment to confront and learn from the mistakes of the past and build on the significant compliance reforms implemented.”

Last year, Airbus agreed to pay a combined €3.6 billion ($4.2 billion) to prosecutors in France, the U.K. and the U.S. to settle bribery and corruption allegations spanning its aerospace business in more than a dozen countries. The allegations involving GPT weren’t part of that deal, and the subsidiary’s guilty plea won’t affect the Deferred Prosecution Agreement Airbus made with the SFO last year to settle bribery allegations.  The charges in that case stemmed from the use of intermediaries in securing aircraft orders.

Politically Sensitive

The case was a politically sensitive one for the UK. In an eerily similar position as in the BAE Systems corruption probe, the GPT case was viewed as a potential threat to the country’s military relationship with Saudi Arabia, a key ally in the Middle East. A decision on the SFO’s six-year probe, which was opened in August 2012, languished for about two years with the country’s attorney general.

“This is a stunning and hard-won victory for the SFO, after years of successive Attorney Generals sitting on this case for political reasons,” said Susan Hawley, executive director of Spotlight on Corruption. The transparency group has called for an urgent Parliamentary investigation into the defense department’s involvement in the scandal.

A spokesperson for the U.’s defense ministry said it has a zero-tolerance approach to fraud, bribery and corruption and it expects all staff to stand up against unethical behavior.

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