Although the Trump administration unexpectedly imposed record fines under the Foreign Corrupt Practices Act (“FCPA”), it also initiated “fewer and fewer new FCPA investigations”. The National Law Review reports that it expects the incoming Biden administration to “continue the trend of increasing FCPA enforcement settlement values, while also increasing the pace of initiating new FCPA investigations.”
The increase in new FCPA investigations is important in Southeast Asia, particularly with the revelations about the Airbus bribery investigation triggering worldwide reverberations. Reuters reports that:
Prosecution documents agreed by Airbus detailed a global network of agents or middlemen in transactions across the group’s business and run from a cell in Paris where the group had part of its headquarters, split between France and Germany.
The massive fines Airbus agreed to pay are vastly larger than the fines Rolls Royce agreed to pay about four or five years ago in a similar bribery scandal when Rolls Royce admitted to paying bribes to various middlemen to sell aircraft engines to carriers in Southeast Asia, including Thai Airways. According to the Financial Times:
The fine dwarfs the £617m sanction imposed on Rolls Royce in 2017 by regulators in the US, UK and Brazil for similar bribery and corruption offences.
Rolls Royce admitted that “intermediaries” had paid amounts to senior Thai Airways employees to sell jet engines to Thai Airways, but the identity of the persons paid or the intermediaries that arranged those payments remains a secret.
That may change in the Airbus scandal. Thai Airways is in bankruptcy rehabilitation and there is tremendous pressure to pull the blanket away from alleged corruption at Thai Airways. Press reports have linked alleged corrupt payments by Airbus to Thai Airways to the Thai Airways bankruptcy rehabilitation filing. Thai authorities are investigating.
An investigation by the Transport Ministry has revealed that some employees of Thai Airways got quite rich from a major plane procurement deal struck in 2003-2004. Deputy Transport Minister Thaworn Senneam said yesterday that the conclusion came after a team led by a former commissioner of the Metropolitan Police Bureau completed its investigation. Thaworn was assigned by Transport Minister Saksayam Chidchob to announce the results of the investigation to parliament on Wednesday.
He said the focus of the investigation was on the factors that landed the struggling carrier deep in the red. The national flag carrier has run up debts of over 244 billion baht. The Central Bankruptcy Court is hearing from the beleaguered airline’s creditors after it presented a debt rehabilitation plan to the court.
Although the investigation of Airbus led to a deferred prosecution agreement where Airbus will pay nearly US4 billion to U.K, French and U.S. authorities, this is likely only the beginning of the probe. Reuters reported:
“Friday was the end of Act I, now we are seeing the beginning of Act II with possible repercussions on airline relationships,” said a person close to the company.
Airbus declined to comment further after welcoming the agreement on Friday as an opportunity to “turn the page”.
The incoming Biden administration is unlikely to drop an incomplete corruption investigation of this size, and that casts serious doubt on whether Airbus can “turn the page”. There are too many questions that have not been answered yet.
Little information is available about whom received the payments. We do not who in Thailand arranged the payments. And now that Thai Airways is in bankruptcy rehabilitation, the creditors of Thai Airways are highly motivated to independently investigate and seek answers. This is not going away soon.