Corrupt Egyptair Deal Suspicions of Bribery Cast Shadow Over Airbus
Leaked internal documents from Airbus suggest corruption may have been involved in the sale of several aircraft to Egyptair in 2003. The issues raised by the documents threaten to overshadow the planned departure of CEO Thomas Enders.
For Airbus, the deal signed in April of 2003 was a notable one. Egyptair, one of the company's most important customers in the Middle East, had ordered seven long-haul A330 aircraft.
The French-German aeronautics company celebrated the signing of the contract in Cairo with much fanfare. "The close partnership we have had with Egyptair for well over 20 years is very special to us," Airbus announced.
The roughly billion-euro deal gave Airbus a win in its competition with Boeing, which had long seemed unassailable in the lucrative long-haul aircraft market. The deal also helped secure several thousand jobs at Airbus plants in Hamburg, Bremen and Stade, Germany.
But three months after the celebratory announcement, something strange happened. Airbus surreptitiously signed a consulting contract -- a document dated July 2003 that was never meant to reach the public eye.
An Airbus manager signed the 20-page document, which gave a Lebanese consultancy a juicy commission for the "purchase of seven A330-200" by Egyptair. The timing is enough to arouse suspicions: Why were consultants needed if the deal had been signed months earlier? Who was Airbus really paying?
These questions are also of interest to public prosecutors in Paris who are investigating Airbus. For the last three years, they have been pursuing concrete leads that suggest the company hired an army of consultants over the course of decades to bribe state officials and decision-makers at airlines. The prosecutors and Airbus declined to answer any questions about the details of the investigation.
Since summer 2017, investigators have been in possession of the curious contract with the Lebanese consulting firm, which is named Samit. They suspect the contract has less to do with consulting than with paying bribes that were promised if a successful deal for the aircraft was reached with Egyptair.
Defense Strategy At Risk
Internal documents provided to DER SPIEGEL and the French investigative platform Mediapart reinforce this suspicion. A team from the European Investigative Collaborations (EIC) group spent months reviewing the controversial documents. For the first time, contracts, bank statements and emails show that Airbus apparently didn't just hire and finance external consultants, but the aerospace company also provided precise instructions on who the dubious payments should be made to. It is enough to threaten the defensive strategy the company has thus far followed -- a strategy that has hinged on claims that Airbus had no detailed knowledge of how the consultants it hired actually did their job.
The revelations are particularly unpleasant for one person in particualar: Tom Enders. On April 10, the 60-year-old Airbus CEO will be handing over the reins of the company to his successor, Guillaume Faury. Enders had wanted to leave him a spotless company with more than 130,000 employees around the world and the highest stock value in its history. This week, the departing boss also announced a major victory: China would be ordering 300 aircraft, worth 30 billion euros, from Airbus -- and not from its U.S. competitor Boeing, which has been struggling in the wake of two crashes of its 737 Max aircraft.
Last month, Enders also pulled the plug on one of the company's biggest commercial mistakes: the production of the giant A380 aircraft, which didn't manage to recoup the billions of euros it cost to develop.
Enders wanted to be similarly resolute in dealing with the company's system of bribery, which had emerged under the supervision of his predecessors. One sales division based in Paris, known by the acronym SMO ("Strategy and Marketing Organization"), commanded a bribery apparatus within Airbus. Enders called it the "bullshit castle."
SMO managers handled aircraft sales in "difficult countries," as they were described internally. To do this, they relied on middlemen who, evidence suggests, collected hundreds of millions in euros in secret commissions and helped nudge the deals through if they ran into obstacles.
Enders wanted to end this practice, not only to save his reputation as an executive, but also to limit the enormous corporate risk it represented. The company has been under investigation by public prosecutors in France, the United Kingdom and, since the end of last year, the United States. And it is facing the prospect of billions of euros in fines. If the suspicions are confirmed, the U.S. judiciary could exclude Airbus from the important American market.
Enders described the delicate situation at a management conference about two years ago: "If there are still people in this room that believe we should put the shit under the rug -- then I would have to say, I give up on these people."
But the Airbus CEO had a problem: His eager attempts to clear up the situation came too late. For years, he was, at least formally, accountable for the activities of the "bullshit castle." As previously reported in DER SPIEGEL, documents show that Enders was informed about a system of shell companies involved in the sale of Eurofighter fighter jets to the Austrian military.
It now raises the question of what Enders knew about consultant activity related to the Middle East deals, and about shadowy figures like Abbas Ibrahim Yousef al Yousef.
A Middleman in Dubai
The Dubai-based businessman is at the center of the suspicious events surrounding the sale of the A330 aircraft to Egyptair. A 64-year-old former United Arab Emirates air force pilot, Yousef got started early as a middleman for thorny arms deals and quickly grew wealthy. He once claimed to have earned his first million at the age of 22, as a consultant "in the Western world." Yousef made $195 million in commission on the sale of French Leclerc tanks, which ran on German motors and transmissions, to the United Arab Emirates army. The tank builder said the money was used for "acts of corruption."
But in the past few years, things took a turn for the worse for the middleman in Dubai. He lost at least $48 million in a deal with dubious profiteers promising him the fortune of a former president of the Ivory Coast. He sold two large agricultural operations in Hungary and Spain at rock-bottom prices and he also let the German company Drossbach, which he had purchased from its heirs, slide into temporary bankruptcy.
The businessman's economic decline triggered the events that would endanger Airbus and Enders. Yousef's group of companies got into such dire financial straits that even his own family grew worried. Consultants hired by his relatives began investigating the patriarch's network of companies, not only uncovering a growing number of debts, but also the business relationship with Airbus.
The family members must have been extremely disturbed by what they found. Yousef's son and the son's financial advisor provided testimony to investigators as a way of protecting themselves.
The way that Airbus seems to have arranged the alleged bribes in the case of Egyptair conform to standard practice. The company tapped Yousef as an intermediary to influence Egyptian officials and he also apparently passed along at least some of the money. This strategy was potentially meant to allow the company to cover up any trace of a relationship between itself and those it was allegedly bribing. Now, though, the first indications have emerged that Airbus may have provided precise instructions on who the money was supposed to flow to.
In July 2003, the company signed the consultancy contract with Samit International. The main shareholder and chairman of the supervisory board of the Lebanese company was Saif Fares Ghanem Al Mazrouei -- who was, according to emails, merely a straw man of Yousef's. Officially, Samit had been commissioned by Airbus to "arrange for meetings between company's representatives and high level government representatives" from Egypt, organize negotiations over the sale of the seven A330 aircraft and assist Airbus with the sale of A320s. Remuneration was to be 1.5 percent of all proceeds.
In 2006, there was another contract between Airbus and Samit. The mandate this time encompassed the sale of various models, including to the Egyptair subsidiary Air Cairo. It was Samit's job to "maintain all conditions for a political environment favourable to the Company's Products."
As Samit's chairman, Al Mazrouei signed a declaration that he would follow the rules of the OECD's anti-bribery convention and would not do anything that could cause problems for Airbus. But those assurances seem dubious.
The fact that the consultancy contracts weren't signed until after Airbus and Egyptair had sealed their deals isn't the only thing that sticks out. The flow of money is also suspicious. According to the documents, Samit submitted invoices between 2003 and 2008 for over 10 million euros, which Airbus was supposed to transfer to one of Samit's accounts in Lebanon. Starting in 2005, Tom Enders was co-CEO of EADS, as Airbus' parent corporation used to be known. A large portion of the payments were made during his tenure.
Al Mazrouei and his partner Yousef seem to have only been willing helpers, since Airbus apparently had control over the deals and accounts, as various documents suggest. In those documents, there is a table from Yousef's trustee with the header "payments made for AB" -- an acronym which in this context likely stands for Airbus. Thirteen money transfers are noted totalling more than 9.5 million euros. There was more than one reference to faxes from supposed Airbus executives or conversations with them under the header "Instructions."
Getting Closer to Enders
One of those is from May 11, 2005. On the left-hand side of the table, there is note of a money transfer for more than 670,000 euros to a company named Slon LLC. Right next to it was written "Meeting" between "BRE" and "JCC." According to insiders, BRE stands for Abbas' trustee Alexander Breuer. JCC was likely Jean-Claude Cadudal, a manager of Airbus' notorious "bullshit castle" in Paris.
According to the documents, a total of six companies received large payments. The last transfer, made on Dec. 18, 2006, bore the note: "according to instruction JCC meeting 1.12.06," likely referring, again, to Jean-Claude Cadudal of Airbus. At the behest of the manager, the documents indicate, 3 million euros flowed to a company called Malana Holding SA.
It is up to investigators in Paris to establish who was behind the recipients and whether they kept the money or passed it along.
Malana Holding appears in another instance involving Airbus and Yousef, one having to do with the companies Avinco and Eolia, which are in the used-airplane and used-helicopter business and were both secretly controlled by Airbus. Yousef was officially the majority stakeholder at Avinco. In January 2007, 19.4 million euros flowed from Eolia to Yousef, around 16 million of which he then transferred to Malana.
The investigative platform Mediapart got in touch with Malana back in 2017. The Lebanese company is run by a Frenchman who was involved in the corruption affair surrounding the French oil company Elf Aquitaine. The man claims that he is merely a wealth manager for his family. He admits to having conducted business with Yousef, but he denies any ties to Airbus.
At the very least, it's clear that contact between Airbus and Yousef was not broken off. Minutes of multiple meetings in 2014 show as much. Airbus manager Olivier Brun, who is currently under investigation in France, as well as Yousef's trustee Alexander Breuer, were apparently in attendance.
The participants came up with new plans, the minutes show. Airbus could potentially require "some services" of Yousef's in connection with Kuwait. Or Yousef could become active elsewhere in the Middle East, where there were a few "difficult countries," according to the minutes. The agent's special skills were apparently needed. To that end, Yousef was in touch with "Jean-Pierre." The person in question is presumably the former Airbus manager and head of the SMO, Jean-Pierre Talamoni.
That means that the circle of executives who were part of the suspicious network may have been dangerously close to the Airbus board of executives -- and to Tom Enders.
Two SMO managers, including Olivier Brun, told Mediapart that Yousef had not been used as an intermediary since around 2008. Other people who were involved did not respond to requests for comment.
In 2016, Ender restructured the infamous SMO division, likely putting an end to the specter of consultants like Yousef. It won't be clear until the end of the year whether he was too late to save himself from the toxic effect of the scandal. That's when observers expect investigations to be wrapped up and charges to be filed -- or for a deal to be negotiated that allows Enders to save face.