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Revelation
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Re: Airbus CEO warns of significant impact from corruption probes

Tue Oct 10, 2017 3:00 pm

Planeflyer wrote:
Revelation, thanks for pointing out the role the current CFO played in revealing the corruption.

Telling that he was from the U.K.

Yes, but as your original question might suggest, that's only part of the story. It's clear the issues being reported started before the current CFO's tenure. It's not clear why the earlier audits did not catch these large money transfers. I imagine that they would have been accounted for as consulting fees or technology offsets, but in those cases there would need to be a paper trail of invoices justifying the expenditures.
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Planeflyer
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Re: Airbus CEO warns of significant impact from corruption probes

Tue Oct 10, 2017 3:12 pm

A good auditor looks very carefully at vendors that receive consulting fees over a long period of time.

In the US it is very routine for auditors to interview purchasing and operational staff re payments to vendors.

Assuming it's the same in Europe, these staff were told to lie to the auditor.

Or the auditor was part of the scheme. As a shareholder I'm wondering what else is being buried under the carpet.
 
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KarelXWB
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Re: Airbus CEO warns of significant impact from corruption probes

Tue Oct 10, 2017 3:34 pm

Revelation wrote:
Planeflyer wrote:
Revelation, thanks for pointing out the role the current CFO played in revealing the corruption.

Telling that he was from the U.K.

Yes, but as your original question might suggest, that's only part of the story. It's clear the issues being reported started before the current CFO's tenure. It's not clear why the earlier audits did not catch these large money transfers. I imagine that they would have been accounted for as consulting fees or technology offsets, but in those cases there would need to be a paper trail of invoices justifying the expenditures.


Perhaps the rabbit hole goes much deeper than one can imagine.

Revelation wrote:
I suppose I'll be told that this is nothing but sensationalism...


:spit:

Please, there's no reason to make drama over it. Not everything needs to be sensationalism and Handelsblatt and Der Spiegel are two different reportings. I understand you take Der Spiegel for granted, but sometimes it doesn't hurt to question the author. What makes you believe the nationalistic angle is correct?
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Re: Airbus CEO warns of significant impact from corruption probes

Tue Oct 10, 2017 4:26 pm

KarelXWB wrote:
Perhaps the rabbit hole goes much deeper than one can imagine.

Seems so. The "Der Spiegel" article quotes Airbus's group general counsel as saying:

It's not just about warplanes and passenger jets. "Unfortunately, we have found similar problems in the other divisions," said John Harrison, the company's group general counsel, at the meeting of top executives in Toulouse. There are good reasons to believe, he went on, "that the investigation goes wider to the other divisions, because we have business partners who worked for all the divisions."

Before that, an unnamed insider called it a "cancerous tumor" whose dimensions are "certainly vast". And of course, the fact that Enders needed to send a communication to every employee warning of "turbulent and confusing times" tells us that this is an exceptional event.

KarelXWB wrote:
What makes you believe the nationalistic angle is correct?

I believe it is correct because (a) indeed it is a well sourced 'long form' article from a well known media outlet that would give such an article a lot of editorial attention (b) we have seen reports that Airbus has had nationalistic infighting pretty much every time a crisis arises (A380, A400M, etc) (c) I have seen nationalistic "hate, anger and distrust run rampant" in my own 30 year career with multi-national corporations -- it'd be the great exception rather than the rule to not have it (d) It'd only be natural to have even more of that kind of thing when different governments own meaningful shares of the corporation, unless you'd suggest that politicians are not likely to have nationalistic feelings?
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DfwRevolution
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Re: Airbus CEO warns of significant impact from corruption probes

Tue Oct 10, 2017 4:53 pm

CARST wrote:
I am 99% sure that this is a thing happening on both sides of the Atlantic. Corruption and bribing are so common in large and even small industry businesses.


Not in my experience. I've spent my entire career in capital equipment split between an American and European company. The attitudes on anti-corruption laws were totally different. The United States has a much longer tradition of enforcing anti-corruption laws going back to the 1970s. Everything from the amount of compliance training to the general attitude of upper management dropped instantly when we were acquired by European ownership.

CARST wrote:
I remember when SIEMENS was busted a few years ago in Germanys largest bribing/corruption scandal ever, that lots of managers testified at court saying that in 2nd and 3rd world country basically every deal can only be made when bribing the right persons.


Then you don't pursue that business. It's as simple as that. If you resort to illegitimate sales tactics, then why not sell illegitimate products too? Ask those managers if they would sell cocaine and the answer is "no way." That's the danger of rationalizing unethical behavior.

aviationaware wrote:
When deals are struck in certain parts of the world, there is about a 0.1% chance that it happened without bribes. Airbus was just too stupid to hide it well enough.
[/quote]

No, they were stupid to pay bribes in the first place.

If there's a 99.9% chance you'll commit a crime to win a deal, then don't do business in those parts of the world. I don't respond to Craigslist ads in Chesterfield Square because it's the murder epicenter of Los Angeles.
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Amiga500
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Re: Airbus CEO warns of significant impact from corruption probes

Tue Oct 10, 2017 5:01 pm

I'd well believe it.

I'd also say any other airframe OEM is at the same. Too much money involved for there not to be all sorts of dirty dealing.
 
Planeflyer
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Re: Airbus CEO warns of significant impact from corruption probes

Tue Oct 10, 2017 5:16 pm

Amiga550 (wrote)

I'd well believe it.

I'd also say any other airframe OEM is at the same. Too much money involved for there not to be all sorts of dirty dealing.


For the posters who maintain this is business as usual for the entire industry is there really evidence of this?
 
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KarelXWB
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Re: Airbus CEO warns of significant impact from corruption probes

Tue Oct 10, 2017 9:48 pm

Revelation wrote:
I believe it is correct because (a) indeed it is a well sourced 'long form' article from a well known media outlet that would give such an article a lot of editorial attention (b) we have seen reports that Airbus has had nationalistic infighting pretty much every time a crisis arises (A380, A400M, etc) (c) I have seen nationalistic "hate, anger and distrust run rampant" in my own 30 year career with multi-national corporations -- it'd be the great exception rather than the rule to not have it (d) It'd only be natural to have even more of that kind of thing when different governments own meaningful shares of the corporation


These are the kind of answers I have been looking for.

unless you'd suggest that politicians are not likely to have nationalistic feelings?


We have politicians that are so pro-EU that they love selling their country to Brussels. But that's another debate.
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Planeflyer
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Re: Airbus CEO warns of significant impact from corruption probes

Tue Oct 10, 2017 10:47 pm

Not sure how criminal investigations work in Europe but I doubt prosecutors will look favorably if AB pays people hush money.

A big if as now that they are one part of the duopoly they want to end the black payments.
 
Virtual737
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 11, 2017 8:04 am

KarelXWB wrote:
Virtual737 wrote:
kiramakora wrote:
I think it is high time this is done. Remember, the corruption around RollsRoyce, and Thai and AirAsia? People responsible need to go to jail.


As long as that includes the recipients of said bribes too, otherwise it will achieve nothing.


How would you want to achieve putting recipients in [for example] Thailand and Malaysia in jail?

Ain't gonna happen.


I live in one of those 2 countries and you are correct, it ain't gonna happen. So going after the bribe givers is, IMHO, pointless. You're just reducing the market size for "honest" vendors and the bribe takers will continue to receive their brown envelopes. Sure you can sit back and claim the moral high ground by not giving bibes, but that means sweet jack in the real world.
 
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 11, 2017 12:02 pm

dtw2hyd wrote:
I think Europe and rest of the world need to figure out how to handle these European gifts, which appear to be legal until an investigation starts.


Gifts are one thing and can be perfectly legal; pumping corporate money away via shell companies is nothing more than fraude.

Planeflyer wrote:
The attitude expressed by several posters asserting that bribes are just a normal cost of business gives us an idea on how prevelant this is in some quarters.


Corruption is not good and it should not happen in the first place. At the same time it would be naive to believe that big companies are all brave and honest.
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 11, 2017 1:37 pm

Karel, in my experience in the UK, there has been an increase in bad behavior over many years.

Where I grew up in a farming community, ones word was ones bond. The general view was that if you have to read the small print in a contract, then you should not be doing business with that firm. I have done £million pound deals on the telephone and they were honoured on both sides to the letter. If the quality of our product was challenged and we found a fault, we paid up immediately. If the complaint was unfounded, we then re-considered if we should be dealing with that firm.

We established an honourable reputation, and as a result had high market share as the supplier of choice. We usually had the option given to us by the purchaser as to whether we would let a competitor take the work at his low price, or we could meet that price and do the work. Generally, in our experience of dealing with the privately owned customers, they were more honourable than public companies who were of course bigger, and not much interested in building a relationship of mutual trust.

The attitude too often now is to reach for the lawyer's phone number. This is good for lawyers but is corrosive. There are too many folk who abuse their high status and financial strength. Maybe I was too trusting as a youngster, but I am certainly less so now. The cards are stacked against the little people, so is it not surprising that they are in revolt.
 
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 11, 2017 1:45 pm

Virtual737 wrote:
KarelXWB wrote:
Virtual737 wrote:

As long as that includes the recipients of said bribes too, otherwise it will achieve nothing.


How would you want to achieve putting recipients in [for example] Thailand and Malaysia in jail?

Ain't gonna happen.


I live in one of those 2 countries and you are correct, it ain't gonna happen. So going after the bribe givers is, IMHO, pointless. You're just reducing the market size for "honest" vendors and the bribe takers will continue to receive their brown envelopes. Sure you can sit back and claim the moral high ground by not giving bibes, but that means sweet jack in the real world.


Interestingly, when an airline folds or cuts back staff, everybody says ' ah, poor staff ! ' Does the view from the moral high ground extend to the 2000 staff being laid off by BAE Systems, quite possibly because BAE have missed out on work because they decided they could not pay bribes ?
 
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 11, 2017 2:03 pm

VolvoBus wrote:
Interestingly, when an airline folds or cuts back staff, everybody says ' ah, poor staff ! ' Does the view from the moral high ground extend to the 2000 staff being laid off by BAE Systems, quite possibly because BAE have missed out on work because they decided they could not pay bribes ?

More relevant to this case is the workers SAAB laid off or never hired because Airbus used shell corporations to pay off Austian decision makers in order to sell Eurofighters.

Gripen would have been a very adequate and cost effective system for Austria.

Some fat cat decision makers, some shady middle men, and some Airbus managers have benefited at the cost of the Austrian tax payers.

The Austrian taxpayers have paid more for what most accept to be an overly expensive product whose future is murky.

I hope the the upcoming legal actions result in jail time and stiff penalties.

And yes, I'd hope the same if it were Boeing or LM or any other US corporation.
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 11, 2017 2:56 pm

Revelation wrote:
More relevant to this case is the workers SAAB laid off or never hired because Airbus used shell corporations to pay off Austian decision makers in order to sell Eurofighters.

Gripen would have been a very adequate and cost effective system for Austria.

Some fat cat decision makers, some shady middle men, and some Airbus managers have benefited at the cost of the Austrian tax payers.

The Austrian taxpayers have paid more for what most accept to be an overly expensive product whose future is murky.

I hope the the upcoming legal actions result in jail time and stiff penalties.

And yes, I'd hope the same if it were Boeing or LM or any other US corporation.



I don't know if we should feel too sorry for Gripen, they did win the deal in South Africa for 26 aircraft and that deal* is absolutely tainted in bribes. It should have brought down the President already and people went to jail for it.

*When I say the deal I mean the whole SA Arms deal, not just the aircraft part. I am pointing out in a deal where bribes were paid you have to wonder how the winning party won the deal.
 
Planeflyer
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 11, 2017 3:05 pm

Items that contribute to corruption- government ownership, market concentration, multinational business( easier to firm shells and lax enforcement.

If you want to deter corruption pass strict laws w huge fines and jail time up to the top.

Assuming the article was correct many high level management starting w sales, finance, audit and executives must have been involved.

It's tough to stamp out as evidenced by the many posters who are willing to cast a blind eye. But look no further then almost all of LA and Africa to see the harm a weak legal system causes
 
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 11, 2017 5:10 pm

KarelXWB wrote:
aviationaware wrote:
Leahy was the head of the sales department. If those things happened (who doubts it really...), then Leahy knew _EVERYTHING_ - period.


Not if people were bypassing him. Being head of a department doesn't mean other people cannot do illegal stuff behind your back.


I know the inner workings at Airbus very well, there is no way he didn't know it. There are approval processes that this passed through where he had to give it a nod. The offset deal with Eurofighter GmbH for example passed all approval thresholds, even the group board must have known about that one. And let's face it, that deal made no sense, not even remotely, in itself. Anyone who approved that deal must have at least taken a hint.
 
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Re: Airbus CEO warns of significant impact from corruption probes

Thu Oct 12, 2017 9:00 am

sxf24 wrote:

Boeing and American defense companies do not use middlemen. They may use local consultants, but contracts and payments are made directly between contracting parties.


...and these local consultants are paid what? Peanuts? Rest assured it is millions. And what happens with these millions after they are in the consultants accounts? Who knows if not part or most of it ends up in the koffers of one very influential official who will greenlight the acquisition of whatever Airbus is proposing..... It's an old game and everyone is playing.....
 
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Re: Airbus CEO warns of significant impact from corruption probes

Thu Oct 12, 2017 9:05 am

aviationaware wrote:
I know the inner workings at Airbus very well, there is no way he didn't know it. There are approval processes that this passed through where he had to give it a nod. The offset deal with Eurofighter GmbH for example passed all approval thresholds, even the group board must have known about that one. And let's face it, that deal made no sense, not even remotely, in itself. Anyone who approved that deal must have at least taken a hint.


Apparently you are just an imposter. Leahy had absolutely no busines with the military part of Airbus, particularly Eurofighter. You might notice, that all news reports point to an "Office" in Paris, which is the Marketing & Sales Office (former EADS) and had(!) nothing to do with Customer Affairs in Airbus (Commercial) which Leahy led.
 
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Re: Airbus CEO warns of significant impact from corruption probes

Thu Oct 12, 2017 11:13 am

InsideMan wrote:
aviationaware wrote:
I know the inner workings at Airbus very well, there is no way he didn't know it. There are approval processes that this passed through where he had to give it a nod. The offset deal with Eurofighter GmbH for example passed all approval thresholds, even the group board must have known about that one. And let's face it, that deal made no sense, not even remotely, in itself. Anyone who approved that deal must have at least taken a hint.


Apparently you are just an imposter. Leahy had absolutely no busines with the military part of Airbus, particularly Eurofighter. You might notice, that all news reports point to an "Office" in Paris, which is the Marketing & Sales Office (former EADS) and had(!) nothing to do with Customer Affairs in Airbus (Commercial) which Leahy led.

#32 has info about a lot of Airbus Commercial sales that are being investigated that one can easily imagine Leahy had knowledge of. It's his job to know the terms and conditions the aircraft are being sold under.
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Re: Airbus CEO warns of significant impact from corruption probes

Thu Oct 12, 2017 11:47 am

I will be saddened if it turns out JL has feet of clay.
 
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Re: Airbus CEO warns of significant impact from corruption probes

Thu Oct 12, 2017 12:10 pm

Bricktop wrote:
I will be saddened if it turns out JL has feet of clay.

Allegations against Leahy or any other senior executive in any large corporation would not surprise me, especially if they have the benefit of plausible deniability. They see so much money fly by and feel entitled to take as much as they can get without putting themselves at too much personal risk. That's why financial crime needs to be tied to some jail time. These people have so much money, losing some is no big penalty. They rarely even lose access to their vast pensions when they get caught.

BTW Leahy and many other Airbus execs were targets of a French inquiry after they sold a bunch of Airbus stock before the news of the A380's problems became public. Such things are hard to prove so they case did not go anywhere, but it is still curious how so many make similar decisions in the same time period.

If Leahy gets ensnared, some here will be glad they can blame it on an American. You watch, that is how it will go down.
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sxf24
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Re: Airbus CEO warns of significant impact from corruption probes

Thu Oct 12, 2017 12:31 pm

InsideMan wrote:
sxf24 wrote:

Boeing and American defense companies do not use middlemen. They may use local consultants, but contracts and payments are made directly between contracting parties.


...and these local consultants are paid what? Peanuts? Rest assured it is millions. And what happens with these millions after they are in the consultants accounts? Who knows if not part or most of it ends up in the koffers of one very influential official who will greenlight the acquisition of whatever Airbus is proposing..... It's an old game and everyone is playing.....


US companies pay foreign sales consultants a flat salary plus reasonable expenses. They do receive a commission, because that could be seen as a bribe.
 
aviationaware
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Re: Airbus CEO warns of significant impact from corruption probes

Thu Oct 12, 2017 8:13 pm

InsideMan wrote:
You might notice, that all news reports point to an "Office" in Paris, which is the Marketing & Sales Office (former EADS) and had(!) nothing to do with Customer Affairs in Airbus (Commercial) which Leahy led.


That's just a fantasy with no basis in reality. The truth is, the Airbus commercial sales team and EADS International/SMO worked hand in hand securing deals in those red flag countries. If you think even for one moment that Leahy did not know about those dealings then you are deluding yourself. Proof of corruption in a civil deal = Leahy's head on a pike.
 
Planeflyer
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Re: Airbus CEO warns of significant impact from corruption probes

Thu Oct 12, 2017 10:27 pm

Not sure if commercial deals were involved but if they were, Leahy knew.

Based on what Enders has said, I'm assuming commercials deals were tainted.
 
jupiter2
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Re: Airbus CEO warns of significant impact from corruption probes

Thu Oct 12, 2017 11:46 pm

If anybody thinks this is just military contracts being involved, they're delusional.
 
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Re: Airbus CEO warns of significant impact from corruption probes

Fri Oct 13, 2017 4:35 am

Like I said before, this will likely take down many people and some will could even end up in jail.

Should be fun to watch the dominos fall.
 
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InsideMan
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Re: Airbus CEO warns of significant impact from corruption probes

Fri Oct 13, 2017 9:26 am

aviationaware wrote:
InsideMan wrote:
You might notice, that all news reports point to an "Office" in Paris, which is the Marketing & Sales Office (former EADS) and had(!) nothing to do with Customer Affairs in Airbus (Commercial) which Leahy led.


That's just a fantasy with no basis in reality. The truth is, the Airbus commercial sales team and EADS International/SMO worked hand in hand securing deals in those red flag countries. If you think even for one moment that Leahy did not know about those dealings then you are deluding yourself. Proof of corruption in a civil deal = Leahy's head on a pike.


No doubt Leahy knew about any shady deal in commercial, he probably even facilitated it. What I am saying is, that Leahy had no hand in the Eurofighter deal with Austria!
 
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Re: Airbus CEO warns of significant impact from corruption probes

Fri Oct 13, 2017 10:44 am

Revelation wrote:
If Leahy gets ensnared, some here will be glad they can blame it on an American. You watch, that is how it will go down.


The first half of your comment is fine; "some here will be glad..." - undoubtedly correct.
I might have phrased it as "an unfortunate minority will be glad....", which also serves to place a little scorn on their actions.
The second half of your comment is less forgiving; "You watch, that is how it will go down". This implies that Leahy, as an American, will somehow carry all the blame and as a consequence save Airbus from too much shame. I neither support that view, nor believe it will come to pass, even here on a.net

I confess I do share a modest smile at the thought that a US citizen is involved, possibly up to his neck. But that is less to do with damning America, and much more to do with recognising that the modern world features a global economy, and aircraft manufacturing especially so. I would exhibit the same glee at seeing a Brit caught up in this affair, just to forestall all those on the English side of the English Channel, who do so love to point fingers at the French (& others) making mistakes "over there"..

Indeed, only this morning I had difficulty explaining to my son that even after Brexit, Britain will still be part of Europe, as it has been for several hundred million years.

Somewhere in the Bible I believe it says something about "those without blame casting the first stone". There seems to be a lot of people around who see themselves, their country & their culture, as totally without fault.
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KarelXWB
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Re: Airbus CEO warns of significant impact from corruption probes

Fri Oct 13, 2017 11:58 am

Regarding possible costs of a settlement:

Airbus is also conducting its own internal investigation in the hope of being offered a deal by UK prosecutors as a reward for co-operation and sharing results with investigators.

Legal experts say any settlement could cost significantly more than the roughly 700 million pounds paid by Rolls-Royce under a similar deal earlier this year.


The board expressed full coincidence in Enders:

The board expressed full trust and confidence in Enders on Thursday, but two people familiar with the matter said it only did so after commissioning its own study of top management.


Ref https://uk.reuters.com/article/us-airbu ... KKBN1CI1CB
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Re: Airbus CEO warns of significant impact from corruption probes

Fri Oct 13, 2017 12:21 pm

KarelXWB wrote:
Regarding possible costs of a settlement:

Airbus is also conducting its own internal investigation in the hope of being offered a deal by UK prosecutors as a reward for co-operation and sharing results with investigators.

Legal experts say any settlement could cost significantly more than the roughly 700 million pounds paid by Rolls-Royce under a similar deal earlier this year.


Also:

Speaking separately to Le Monde, Airbus Chairman Denis Ranque said the board was mindful of the fact that a conviction could cost Airbus, a major defense and space supplier, access to public markets.

This shows why a deal is so attractive: an actual conviction would be devastating, whereas a deal usually comes with no admission of guilt.

The prosecutors should only make a deal if they feel their case is not strong enough to be likely to result in a conviction.

In reality it's just simpler and safer to make a deal, and in this case, Airbus pretty much has no choice but to pay whatever price the prosecutors deem necessary.

For some prospective, Wiki gives Airbus 2016 results as:

Revenue‎: ‎€66.58 billion (FY 2016)
Profit‎: ‎€1.00 billion (FY 2016)
Operating income‎: ‎€2.26 billion (FY 2016)

So we're talking about penalties that could wipe a year's profits off the books.
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aviationaware
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Re: Airbus CEO warns of significant impact from corruption probes

Sat Oct 14, 2017 4:48 am

InsideMan wrote:
What I am saying is, that Leahy had no hand in the Eurofighter deal with Austria!


That remains to be seen. The cash from that offset deal was the primary means of paying bribes for quite some time by way of Vector, if he used Vector he knew about it.
 
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Re: Airbus CEO warns of significant impact from corruption probes

Sat Oct 14, 2017 2:06 pm

aviationaware wrote:
KarelXWB wrote:
Leahy is not even part of the story, the investigation is about middlemen who seem to be involved in suspicious transactions


Leahy was the head of the sales department. If those things happened (who doubts it really...), then Leahy knew _EVERYTHING_ - period.

Having said that, there is simply no way for foreign companies to do business in certain areas of the world without bribing everyone and their mother. That's not an Airbus specific problem, it also goes for Boeing. When deals are struck in certain parts of the world, there is about a 0.1% chance that it happened without bribes. Airbus was just too stupid to hide it well enough.

It is legal to pay everyone with documented fees, under the table bribes are a violation. Part of the rules is to stop the practice.

I've had 7 years of training why this very practice will lead to huge fines. The training notes the various authorities recognize that companies always use middlemen to pay the bribes.

Airbus knew it was wrong. It is time to stop the practice. For all that happens is that corrupt government overpays for the publicly known product to fund the bribes. No company would bribe to lose money...

Personally, I'm a huge fan a transparency international. They're publication of fraud/corruption and their corruption index is helping end corruption.

Lightsaber
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aviationaware
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Re: Airbus CEO warns of significant impact from corruption probes

Sat Oct 14, 2017 3:38 pm

lightsaber wrote:
It is legal to pay everyone with documented fees, under the table bribes are a violation. Part of the rules is to stop the practice.

Airbus knew it was wrong. It is time to stop the practice.



Well, to Airbus' defense: They introduced a very comprehensive BDSI policy a few years ago that heavily regulates payments to business partners. The re-certification process for serious business partners in countries like Pakistan took a lot of time and only started to finish about a year ago. The general idea is to limit use of those business partners to the absolute minimum, even in cases where there is no indication of bribes having been paid.
So there is problem conscience at Airbus, but it might be too little, too late for Tom Enders to save his neck. We will see. After all, Tom Enders was head of Defense & Space, which is where this scandal originated, before he became group CEO (where he is still responsible for everything that happens at Defense & Space, obviously).
 
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enzo011
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Re: Airbus CEO warns of significant impact from corruption probes

Sat Oct 14, 2017 6:13 pm

aviationaware wrote:
lightsaber wrote:
It is legal to pay everyone with documented fees, under the table bribes are a violation. Part of the rules is to stop the practice.

Airbus knew it was wrong. It is time to stop the practice.



Well, to Airbus' defense: They introduced a very comprehensive BDSI policy a few years ago that heavily regulates payments to business partners. The re-certification process for serious business partners in countries like Pakistan took a lot of time and only started to finish about a year ago. The general idea is to limit use of those business partners to the absolute minimum, even in cases where there is no indication of bribes having been paid.
So there is problem conscience at Airbus, but it might be too little, too late for Tom Enders to save his neck. We will see. After all, Tom Enders was head of Defense & Space, which is where this scandal originated, before he became group CEO (where he is still responsible for everything that happens at Defense & Space, obviously).



Wonder how the SAA deal that was on, then off, then changed all falls into this? If I remember correctly some problems came up as SAA wanted to change the deal with Airbus after they had previously agreed to change a order of 10 A320s to 5 A330s leased from Airbus themselves. It was approved but then blocked by the Chairperson of SAA who wanted a African company involved with a sale and leaseback deal. Airbus rejected this deal as they had already agreed a previous deal where the airline would lease the aircraft directly from Airbus.

TIMELINE: The controversial SAA-Airbus deal

Oct 2015 - SAA's chairperson proposes that Airbus sell the A330s to an African leasing company, which would then lease the aircraft to SAA. Airbus rejects the proposal as it fails to meet its internal compliance standards.


SAA Airbus swap deal goes Nene's way

The Airbus deal was the first major test for Gordhan since returning to Treasury last week. The deal, which was originally struck in 2002 and renegotiated in 2009, required SAA to make pre-delivery payments of $40m (R603m) on new Airbus aircraft by Monday.

The contract was one of the key factors driving the airline to bankruptcy. Arresting the situation was critical, sources close to management explained to amaBhungane.

SAA would have been relieved of this obligation under the “swap transaction” negotiated by Treasury during former minister Nhlanhla Nene’s tenure. But after the SAA board failed to ratify the deal (until Monday), and Myeni proposed a new structure, SAA was once again liable for the $40m.


Seems like in 2015 Airbus did not want to go ahead with a deal that included some shady dealings from the SAA side. For Airbus it would have been a sale either way, but they didn't just go for the sale.
 
Planeflyer
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Re: Airbus CEO warns of significant impact from corruption probes

Sat Oct 14, 2017 7:52 pm

Interesting to SAA come up. How about the earlier deals for the 340's?
 
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enzo011
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Re: Airbus CEO warns of significant impact from corruption probes

Sat Oct 14, 2017 9:01 pm

Planeflyer wrote:
Interesting to SAA come up. How about the earlier deals for the 340's?



How do you mean? The competition was between the 777 and the A340 and due to the altitude of JNB and I believe the restrictions you have with the 777 operations there it made sense to order the A340. At the moment you have Ms Myeni as chairperson and she is very close to Jacob Zuma, who has had those close to him sent to jail for corruption already. The path is clear for the recent past at least.
 
Planeflyer
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Re: Airbus CEO warns of significant impact from corruption probes

Sat Oct 14, 2017 10:23 pm

Enzo011, did not realize the 777 was not suitable for JNB. Thanks for pointing this out.
 
CX747
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 12:35 am

Handelsblatt is reporting that Airbus is looking at $2 Billion in fines for what has been found up to this point. While scoring the CSeries could be a win, I wonder if that was also a certain percentage "Wag The Dog" show.
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 1:00 am

CX747 wrote:
Handelsblatt is reporting that Airbus is looking at $2 Billion in fines for what has been found up to this point..

If so, it'd wipe two years profit off the books (see earlier post above for references).
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CX747
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 2:13 am

In addition, the case has just begun. Also something to think about. Let's say you make $100,000 a year after taxes. How much of that $100,000 is truly available to you at any one moment? How much of that $100,000 is already earmarked on the mortgage, car payment and other monthly bills? If you needed to pay a fine of $100,000 the reality is you don't have it and that debt would be hard to pay off even over time.

Two years profit at this stage and Ender's name is already seen involved in the fraud......Not things one wants hanging over their head on the way into the office each morning.
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WIederling
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 1:20 pm

CX747 wrote:
In addition, the case has just begun. Also something to think about. Let's say you make $100,000 a year after taxes. How much of that $100,000 is truly available to you at any one moment? How much of that $100,000 is already earmarked on the mortgage, car payment and other monthly bills? If you needed to pay a fine of $100,000 the reality is you don't have it and that debt would be hard to pay off even over time.

Two years profit at this stage and Ender's name is already seen involved in the fraud......Not things one wants hanging over their head on the way into the office each morning.


As a private person any fine is paid out of your after taxes income.
As a commercial entity any fine reduces profits before taxes are deducted.

Quite the difference.
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hayzel777
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 1:24 pm

So sad to hear about this! It will be a bad thing if Leahy is also caught in the midst. He best quickly retire.
There are now quite a few civil aviation deals under scrutiny too!
Despite all this, the French can only continuously make conspiracy theories that this is a ploy by Boeing! Sad!
 
CHI87LG
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 1:27 pm

CX747 wrote:
Handelsblatt is reporting that Airbus is looking at $2 Billion in fines for what has been found up to this point. While scoring the CSeries could be a win, I wonder if that was also a certain percentage "Wag The Dog" show.

This was exactly my thought when I heard the news about Bombardier. Quite a lot to put on leadership's plate!
 
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william
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 1:47 pm

http://www.livemint.com/Companies/FA55n ... ery-p.html

CEO Enders may step down if neccessary. I'm betting he will be stepping down when all is said and done as part of wide ranging "house cleaning". It makes for good PR.
 
Planeflyer
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 3:06 pm

In the US fines are not tax deductible events either for individuals or corporations. If they are in Europe this is goes a fair way to explaining why bribes are more accepted.

Having said, that I’m a bit skeptical they are tax deductible events.
 
wingman
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 3:23 pm

Planeflyer wrote:
Enzo011, did not realize the 777 was not suitable for JNB. Thanks for pointing this out.


This is now off topic but just want to clarify that the 340 won that old sales campaign and a key event during the process was an engine out/RTO by the visiting 777 (DL bird?). It's hard to imagine such a rare event from impacting an unbiased technical analysis, but it surely did affect the overall Boeing sales effort. Other factors may have come into play and as we all admit, things are done in their own special way in many African countries. Perhaps something will come out of tis investigation that includes details on sales to SAA.

In the end though, the 777 has proven to be extremely suitable into and out of JNB and I would wager that in its passenger/distance class it is probably the the MOST suitable plane for JNB until the arrival of the 350-1000 and the 777X. I know for certain that AF, EK and DL all fly the 777 into JNB today.
 
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enzo011
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 3:50 pm

wingman wrote:
Planeflyer wrote:
Enzo011, did not realize the 777 was not suitable for JNB. Thanks for pointing this out.


This is now off topic but just want to clarify that the 340 won that old sales campaign and a key event during the process was an engine out/RTO by the visiting 777 (DL bird?). It's hard to imagine such a rare event from impacting an unbiased technical analysis, but it surely did affect the overall Boeing sales effort. Other factors may have come into play and as we all admit, things are done in their own special way in many African countries. Perhaps something will come out of tis investigation that includes details on sales to SAA.

In the end though, the 777 has proven to be extremely suitable into and out of JNB and I would wager that in its passenger/distance class it is probably the the MOST suitable plane for JNB until the arrival of the 350-1000 and the 777X. I know for certain that AF, EK and DL all fly the 777 into JNB today.



In hindsight you could perhaps argue that the 777 could have been an option for SAA, but it wasn't just the engine that had an issue. It seems that tire speed is a problem for the 777 when you are at altitude. Now you have to look at it from the perspective of SAA in the 2000's when they were evaluating the order and not now. SAA still had lots of long routes and the A340 is just better than the 777 at hauling payload from JNB. Its one of the few missions where this is applicable so the A340 order isn't really a surprise when you take all of this in consideration.

http://www.airliners.net/forum/viewtopic.php?t=605377

This from post 19

sunrisevalley wrote:
Tire speed is still a constraint. Rather depends on what routes they would look to use them on. So far as I can tell they would be limited to about 320t MTOW. or 5250nm at max passenger load. Probably good for anywhere in Europe but certainly not JFK and PEK. No doubt the A340-600 is doing a much better job on these routes.
 
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Polot
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 4:02 pm

There is a big difference between EK, DL, AF, etc "roughing" it with the 777 for one long haul route in their network versus having to deal with the 777's issues at JNB's height/temp for basically all your routes.

This is all very off topic though.
 
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Re: Airbus CEO warns of significant impact from corruption probes

Wed Oct 18, 2017 5:31 pm

william wrote:
http://www.livemint.com/Companies/FA55nQRw5p4Vv3CPWeSTtM/Airbus-CEO-Tom-Enders-says-wont-cling-to-job-amid-bribery-p.html

CEO Enders may step down if neccessary. I'm betting he will be stepping down when all is said and done as part of wide ranging "house cleaning". It makes for good PR.

https://global.handelsblatt.com/compani ... aft-840108 says:

“I’m not glued to my chair,” Mr. Enders told Handelsblatt. “You can be assured: Once I am no longer part of the solution, and I hope I would realize myself when that is, I will accept the consequences (and step down). But for now, I don’t think we’re at this point,” Mr. Enders said.

And

Mr. Enders, CEO since 2012, rejected allegations the airplane maker managed a secret account to bribe officials in return for orders. “I don’t have one and I don’t know of any,” he said.

So he's "doubling down" on his claims of innocence.

https://global.handelsblatt.com/compani ... ack-840345 is interesting:

Responses to the scandal have been strikingly different in the two countries. Germany has seen widespread concern that a flagship European firm might have engaged in shady practices. Meanwhile, conspiracy theories have been popular in the French media, which suggests that Airbus’s arch-rival Boeing is behind the accusations, and that Mr. Enders’ policies of openness and self-reporting played into the Americans’ plans – and entrenched German power at Airbus. Although Airbus grew out of a series of multinational mergers, the company remains dominated by French and German camps.

No, no nationalism to see here, move along...
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