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SriLankan Airlines’ Airbus bribery case: UK agency faces serious questions over delays
View(s):UK Export Finance (UKEF), Britain’s export credit agency, faces “serious questions” over its officials taking more than one year to report evidence suggesting that Airbus may have paid US$ 17mn to the wife of a SriLankan Airlines’ official in return for aircraft orders, The Times reported this week.
UKEF Officials received emails as far back as February 2015 suggesting Airbus might have paid US$ 17mn to the wife of then SriLankan Chief Executive Officer Kapila Chandrasena, the British newspaper said. But documents reviewed by Source Material, an investigative news service, show the evidence was not passed on until April 2016, once Airbus had conducted its own internal investigation.
The aerospace manufacturer paid a record €3.6 billion to settle corruption allegations in the UK, France and the United States this year following an inquiry triggered by the email exchange, The Times said.
The judge who signed a deferred prosecution agreement–in which a company accepts in the High Court that it has been involved in egregious corruption, but pays a fine rather than go through a court case — praised Airbus for its cooperation with the Serious Fraud Office (SFO) and described UKEF’s watchfulness as “the true catalyst” of the investigation. She described the period before the investigation as a “slow start”, however.
The Times quotee Adam McGibbon of Global Witness, a campaign group, as saying the timeline “raises serious questions about UKEF’s commitment to tackling international corruption.”
But UKEF has said it was misleading to suggest it had withheld evidence from the SFO as Airbus had lied to its officials. In the Airbus case of 2015, the SriLankan CEO’s wife was found to have set up a straw company in Brunei to receive commission for the purchase of ten aircraft and the lease of four more.
When UKEF raised a concern that the agent shared a name with the wife of the SriLankan Executive, Airbus’s employees lied and said the agent was a male with a similar name, The Times states.
On February 13, 2015, UKEF asked follow-up questions and received a reply that referred to the agent as both a “he” and a “she” and failed to mention a second commission agreement. UKEF’s questions prompted unease at Airbus, with one employee writing to another on March 2 that “the truth is most unfortunate”.
Ten days later, Airbus withdrew its request for export credit financing, but it was not until April 1, 2016, that UKEF and Airbus reported concerns to the SFO, the Times outlines.
Airbus asked for funding from UKEF for a deal with SriLankan in 2015 and wanted a “special handling process” to be used — “a controversial system the agency had in place for protecting the identities of confidential agents or intermediaries”. This allowed UKEF to turn a blind eye to corruption by its customers.
Meanwhile, Sri Lanka’s own investigation into the Airbus deal — ordered in February this year by President Gotabaya Rajapaska — appears to have stalled. The President told officials to initiate a full inquiry into allegations covering all aspects of the deal and to report back to him.
In Sri Lanka, anti-corruption campaigners have been pushing for mandatory reporting of suspicious transactions for tender awards and significant acquisitions by both State and private sector. “Banks and the Financial Investigation Unit (FIU) must insist on full disclosure of local and foreign agents and their commissions,” one expert said, requesting anonymity.
There must also be declaration of any connected or related parties and conflicts of interests so that trade-based money laundering and illegal channeling of funds to tax havens on imports and exports are minimised by banks, Customs, Inland Revenue and the FIU acting effectively. At present, there are no such controls.