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SFO Airbus investigation indicates new normal in financing and compliance

Tom Fox | August 10, 2016

The London Times reported this week that the European aircraft manufacturer Airbus is under investigation by the U.K. Serious Fraud Office (SFO) for allegations of bribery and corruption in passenger plane sales. This new investigation comes on the heels of reports earlier this year that the company was negotiating with the SFO for failing to inform authorities of the use of certain third-party agent's sales. Those sales were backed by the U.K. government’s export financing agency, U.K. Export Finance, which is similar to the U.S. Export-Import Bank. This new investigation expands on those initial disclosures by Airbus to the SFO.

An interesting factor in this matter is the spectre of U.K. government oversight in the loan guarantees. It was not clear from the article if there were loan covenants around anti-bribery compliance programs and the use of third parties. Such covenants, however, are becoming more commonplace in the non-government financing world. Matt Ellis, a member at Miller & Chevalier and well-known anti-corruption expert who specializes in representing Latin American clients, told The Man from FCPA that U.S. private equity companies looking to invest or provide funds to Latin American companies often want to know specifically about those companies' compliance programs. Interestingly, banks are now often requiring borrowers to have a best practices compliance program in place and keep it in place during the pendency of the loan. Such obligations are memorialized in the loan covenants.

However, this information about the U.K. government role and its requirements around anti-bribery programs is the first time we have seen a government requirement around compliance for financing. Such revelation brings an entire new level of scrutiny to Airbus, which has a convoluted European ownership structure—but it also points to one clear fact of life in the international business realm: Anti-corruption compliance programs are becoming mandatory parts of every corporation that desires to do business internationally. This continues the trend of treating anti-corruption legislation and compliance not quite so much as a legal issue, but a business one.

Continue the conversation at Compliance Week Europe: 7-8 November at the Crowne Plaza Brussels. Join us as we look at changes in global anti-corruption regulations, slave labour risks in your supply chain, and how to detect fraud, to name just a few topics. Learn more