In the aftermath of Airbus’ $4 billion global settlement, one can’t help but wonder: What preemptive action can a company take to avoid similar entanglements? Here are the five biggest takeaways every company in any industry can benefit from.
Compliance officers must be proactive and have significant capabilities. The Airbus affair unfolded at a time when awareness of compliance issues is growing, and every global company has a compliance officer and sometimes a large compliance team. However, if the compliance officer does not exercise proper controls and is not involved in or aware of all relevant activities, a criminal network can form right under their nose. In the Airbus case, it is still unclear to what extent (if any) the compliance officer knew what was being done by his associates.
Compliance means more than preventing bribery and corruption. The charges against Airbus document a significant number of criminal acts done in violation of U.S. defense export laws and regulations, in that Airbus concealed (even in cases where no bribes were paid) the activities of its agents and consultants in several countries. Compliance officers who focus only on the prevention of bribery, and whose compliance system omits what’s happening in the company in terms of export laws, sanctions or related fields, may find themselves dealing with significant criminal or regulatory problems resulting from such neglected issues.
The days of gifts and holiday bribes are not over. Global companies continue to fall into the trap of offering generous hospitality and overpriced gifts to customers they wish to influence. A significant element of the indictment against Airbus describes holidays provided to high-ranking Chinese government officials, which took place in part in Maui, Hawaii. The officials and their families were flown to a resort, where every day they had half an hour of business presentations. The rest of their time was dedicated to “all-inclusive” activities. Needless to say, the arrival of Airbus executives for meetings during those “holidays” established U.S. jurisdiction over the entire affair.
U.S. authorities will almost always find a way to apply jurisdiction. Airbus is definitely a European company. However, the U.S. authorities spared no effort to demonstrate that the United States had proper criminal jurisdiction over the case. Whether due to Airbus’s subsidiaries’ venue of incorporation, incriminating emails were sent from locations in the United States, or the corruption conspiracy discussions during the Hawaii vacation — the U.S. authorities truly “reached out” to Airbus.
It won’t end in the United States. As a result of U.S. jurisdiction over foreign companies, and because the United States has the strongest investigative capabilities, the country or countries in which an offending company’s “home” is located will gladly join the U.S. investigation to benefit the final settlement distribution. In this case, Airbus was significantly at risk because of its presence across Europe. As the Airbus outcome showed, cooperation between and among law enforcement agencies is reaching new heights, and more national legislation allows arrangements to be reached in countries where this was not possible in the past. The final settlement for Airbus likely exceeded what U.S. authorities would have demanded on their own.
– – –
Airbus is a company with a turnover of billions of euros. This case will not destroy it, but the fines and settlement amounts, along with all the effort and expenses – including attorneys’ and accountants’ fees, hiring consultants and employing PR teams – will surely amount to more than a modest hit.
Building a proper and vigorous corporate compliance system would have prevented a lot of the problems for Airbus — just as it would in any other global enterprise.