After 8 years, a deal has finally been reached in Airbus’ bribery and corruption investigation. It came via a Deferred Prosecution Agreement (DPA) between Airbus and UK, US and French regulators last month. But, looking beyond its substantial €3.6 billion price tag, what does it mean for multinational firms looking to globally settle disputes?
Deferred Prosecution Agreements (DPAs) – a means by which corporates can seek to avoid prosecution by cooperating with authorities to expose and remedy criminal wrongdoing – are proving to be increasingly valuable.
In short, a DPA is an agreement between a corporate entity and a prosecutor, whereby the prosecutor agrees to suspend any prosecution (for a defined period) providing that the company complies with the terms of the DPA. These often involve the payment of a fine, compensation and/or costs, and ongoing remediation of its compliance programme and culture, sometimes under the supervision of a monitor. When considering whether to offer a company a DPA, prosecution authorities take into account various factors, including the extent to which the entity self-reports misconduct, cooperates with the agency’s investigation (including with the identification and removal of culpable directors and employees), and engages in a comprehensive remediation programme.
DPAs are a useful tool, particularly with listed companies, to avoid the potentially catastrophic damage of a public trial and disbarment from public tendering. However, they remain controversial as they can be seen to be avoiding the public scrutiny normally associated with being tried for crimes committed.
Airbus was the subject of criminal investigations in several jurisdictions, including the UK, US and France, after it was suspected of paying bribes to win large contracts around the world, giving it an unfair competitive advantage against rivals. Many of these bribes were paid through shell companies and were concealed by creating fraudulent contracts, accepting fake invoices for services not performed and creating false activity reports. Through disclosure from Airbus to authorities throughout the investigation, it became apparent that the activity was known to, and involved, senior executives within the company. Airbus admitted to a number of bribery and corruption offences, including bribes made to various airlines, dating back as far as 2008, and involving countries such as Sri Lanka, Malaysia, Taiwan, Indonesia and Ghana.
In the UK High Court judgment, Dame Victoria Sharp highlighted the truly global extent of this criminality, stating that: “the conduct took place over many years. It is no exaggeration to describe the investigation it gave rise to as worldwide, extending into every continent in which Airbus operates. The number of countries subject to intense criminal investigation by the various agencies, and the scale and scope of the wrongdoing disclosed in the Statement of Facts, demonstrate that bribery was to the extent indicated, endemic in two core business areas within Airbus”.
Throughout the investigation, Airbus is said to have cooperated fully with authorities in the UK, the US and France, including the disclosure of almost 30 million documents. The company was fined almost €3.6 billion, including €991 million to be paid to the UK Serious Fraud Office (SFO) and €2.085 billion to the French Parquet National Financier (PNF), while also agreeing to full cooperation with law enforcement partners in future investigations.
A global wingspan
The size of this financial settlement will be remembered, but so will the investigation’s truly global reach. Involving a number of jurisdictions, it has highlighted the significant steps that authorities are now willing to take to cooperate with one another in an effort to fight international corruption. The finer details of the investigation between the UK, US and France are yet to be explicitly outlined, but the outcome of their cooperation is clear: a substantial settlement was achieved simultaneously.
To date, cooperation between countries in a DPA-style system has primarily involved the UK, US and France, although Brazilian authorities received part of the settlement in the Rolls Royce case in 2017 as well. The US has led the way, but now the UK and France are catching up, with both the SFO and the PNF having each issued or obtained vast settlements or penalties from corporates in recent years. The UK introduced DPAs in 2014, but a similar legal reform was only introduced in France in late 2016 following several previous US actions against French companies. It is the introduction of these DPA regimes that presents opportunities for global settlements on the scale seen in the case of Airbus.
Global settlements have clear benefits, both for the prosecuting authorities and the company under investigation. More widely, the UK courts have noted the importance of such coherent penalties in preventing forum shopping, and ensuring that companies are tried in the appropriate jurisdiction for their crime.
For the company under investigation, a swift and final resolution to enforcement action is a key objective. A global settlement offers just this, enabling it to draw a line under the misconduct in each jurisdiction and provide greater certainty to stakeholders about the size of any fine and its effect on the company’s future trading. Synchronised investigations and concurrent settlements across jurisdictions are fundamental to achieving this goal. Notably, on the day of the public announcement of the DPA, the share value of Airbus rose; Rolls Royce’s experience was similar.
In the UK, the conclusion to Airbus’ investigation will be seen as a great victory for the SFO as the settlement figure eclipses any other sums previously reached with DPAs. It bolsters the SFO’s position in international law enforcement and demonstrates the power of its extra-territorial reach, afforded through the UK’s Bribery Act and DPA regime.
Thanks to globalisation, most corporates now have cross-border operations. Effective law enforcement therefore requires multi-jurisdictional cooperation, both in investigations and coordinated outcomes. It is no surprise that the trend in recent years is for more countries to implement their own DPA regimes to facilitate this; in 2018, Canada, Singapore and Japan all introduced DPAs. As legal frameworks around the world adjust, inter-agency cooperation and global settlements are likely to become increasingly commonplace.
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