Airbus might be family but AML/CTF rules mean Airbus cannot deal with Tony Fernandes (and now the AA,AAX board members have implicated themselves)

by Ganesh Sahathevan


This is touching

However, the above and the BDO Governance Advisory finding changes nothing. Additionally, AA and AAX directors may have now implicated themselves.
The real issue here is:How are AA and AAX going to maintain, build and finance their fleets that are comprised entirely of Airbus planes.
END

To Be Read With

Airbus admission prevents further business with Airasia: BDO Governance Advisory findings meaningless. given Airbus admission before the UK Crown Court,and cannot be a substitute for MACC, police, SC investigation

AND 

Airbus-AirAsia admissions made under UK Bribery Act 2010,which gives UK Govt extraterritorial jurisdiction: Tony Fernandes said F1 was very much part of AA, AAX brand building, Fernandes admission may subject AA,AAX to UK Bribery Act jurisdiction

by Ganesh Sahathevan





Tony Fernandes, Catreham F1 and AirAisa captured in 
a single image.


Reacting to the Airbus-Airasia bribery admission Tony Fernandes said:

We built an amazing brand and F1 was a big part of it.

Reuters quoting a statement issued by Fernandes and Kamaduddin Mehranun reported:

“Caterham F1, the company alleged to have been sponsored improperly by Airbus, was at the relevant time a Formula 1 racing team that had gone round the globe promoting amongst others AirAsia, AirAsia X, GE and Airbus,” Fernandes and Kamarudin said in the statement.

The above statements may have brought AirAsia and AirAsiaX within UK Bribery Act jurisdiction, which premises jurisdiction based on business activity , not merely incorporation and business presence.

That the statements have been made by the senior executive directors of the companies involved makes the connection that much stronger. For a simple to read explanation of how the UK Bribery Act 2001 works, see article below.

END 

UK flexes extraterritorial reach with Airbus settlement

• Emmanuel Breen
• February 10, 2020
• 7:38 am

When passed in 2010, the UK Bribery Act was dubbed the “most stringent anti-corruption legislation in the world.” This was due in part to Section 7, which created an unprecedented form of vicarious liability at the time, with a potentially strong extraterritorial reach. Since then compliance professionals have wondered what implications this could have. And then came Airbus.

Section 7 introduces “failure of commercial organizations to prevent bribery” as an offense. In terms of jurisdiction, the text of Section 7 says it applies to “relevant commercial organizations,” a notion that encompasses bodies or partnerships which carry “a business, or part of a business, in any part of the United Kingdom” regardless of where they were incorporated or formed.

The 2011 UKBA Guidance gave a hint: it seemed to take a rather “business friendly” approach by suggesting that “having a UK subsidiary will not, in itself, mean that a parent company is carrying on a business in the UK, since a subsidiary may act independently of its parent or other group companies.” The Ministry of Justice however emphasized in this guidance that courts would be the final arbiter.

On January 31, 2020, Airbus SE announced that it would pay €3.6 billion ($4 billion) to settle global bribery and trade charges with French, U.S., and UK authorities. In the UK, Airbus SE committed to pay €991 million ($1.09 billion) to the Serious Fraud Office. This is pursuant to a deferred prosecution agreement, which, as required by the Crime and Courts Act of 2013, has been duly approved by a Crown Court judgment.

The UK court decision is good place to look for a first judicial interpretation on the extraterritorial reach of Section 7 of the UKBA.

Airbus SE is registered in the Netherlands, has its operational headquarters in France, and admitted to facts that occurred outside of the UK territory.

I read the judgment as adopting a strong pro-extraterritorial stance.

The judgment notes that Airbus SE, the only entity subject to prosecution as the Group’s parent company, had “continuously carried on part of their business in the United Kingdom,” based on the fact that it had two subsidiaries in the UK: Airbus Operations Limited (through Airbus SAS, a French company) and Airbus Military UK Limited (through Airbus Defence and Space SA, a Spanish company). No reference is made either to the percentage of the Group’s turnover in the UK, or to a potential improper behavior of the UK subsidiaries.

The document further highlights that “Airbus Operations Limited and Airbus Military UK Ltd, through Airbus SAS and Airbus Defense and Space SA are subject to the strategic and operational management of Airbus SE.”

However, no line of legal reasoning aims at showing that the powers of Airbus SE over the management of its UK subsidiaries could be linked to control deficiencies in the UK.

Other facts that could hypothetically generate a “UK nexus,” such as a UK potential inadvertent financing of corrupt transactions by UK Export Finance (UKEF) or the potential involvement of UK nationals are lightly touched upon in the judgment, but not weaved into a legal discussion on extraterritoriality.

The judgment notes that UK jurisdiction is “common ground” in the case, suggesting that the judge might be deferring, at least to a certain extent, to the decision of Airbus SE to agree to UK jurisdiction.

Finally, let’s examine the section of the judgment that credits Airbus for cooperating “to the fullest extent possible” in the UK investigation.

Presiding judge Dame Victoria Sharp said, “It is to be noted that through its engagement with the SFO related in the first instance to matters concerning UKEF, Airbus also accepted that the Bribery Act 2010 provided the SFO with extended extraterritorial powers and with a potential interest in facts post 2011. This was an unprecedented step for a Dutch and French domiciled company to take, in respect of the reporting of conduct which had taken place almost exclusively overseas.”

Let’s observe that there might be a bit of a contradiction above: if a legal challenge by a foreign defendant over UK jurisdiction amounts to a lack of cooperation and may end up harming the defendant’s cause, this might put the defendant under a certain pressure not to trigger a judicial battle over jurisdiction. In these conditions, would it really be appropriate for the judge to defer to the fact that the defendant is not challenging UK jurisdiction?

Only time will tell, with further cases and judicial decisions, whether there are limits to the extraterritorial reach of Section 7 of the UKBA or whether the simple fact of having a subsidiary in the UK is enough to legally subject any global company to UK investigations and prosecution.

Emmanuel Breen

Emmanuel Breen is an Associate Professor at Sorbonne University and co-head of the “Compliance Officer” Diploma at Panthéon-Assas University. He is a Senior Counsel at Laurent Cohen-Tanugi Avocats in Paris and advises on complex transnational regulatory and compliance matters. He has written the first book in the French language on the FCPA.