MIAMI – A bribery controversy involving Airbus is still raging on, with one of the affected airlines filing a lawsuit against the planemaker this week. SriLankan Airlines (UL) is suing Airbus for US$1bn in damages over bribery allegations involving an order for six A330s, four A350s, and four more A350s to be leased.
The sum requested is for damages, loss of reputation, and expense and interest repayment. The problem stems from a Crown Court ruling in the UK that found Airbus guilty of bribery in connection with aircraft deals.
In addition to the billion-dollar payout, UL seeks to cancel four A350-900 planes that haven’t been delivered yet and recover US$19m from pre-delivery payments.
Following the conclusion of the UK investigation, the Serious Fraud Office of the United Kingdom and Airbus agreed to a Deferred Prosecution Agreement (DPA). This involved a US$4.3bn settlement, to be divided between France, the United Kingdom, and the United States, and this was announced in January 2020.
According to Simple Flying, the bribery scandal is said to have affected many nations, including Sri Lanka. Taiwan, Indonesia, Malaysia, Nepal, Russia, China, and Colombia were among the nations spanned in the offenses. The AirAsia Group, TransAsia Airways (GE), Garuda Indonesia (GA), and the Ghanaian government’s aviation arm were among the airlines affected.
Airbus was alleged of offering US$16.84m in bribes to a Brunei-based straw company in relation to widebody aircraft contracts with UL. Six A330-300s, four A350-900s, and four more A350-900s are to be leased. According to reports, only US$2m of the intended bribe was paid.
Transparency International Sri Lanka (TISL) has been urging UL to prosecute Airbus for bribery. Asoka Obeyesekere, TISL Executive Director, said at the time of the UK Crown Court decision.
The Director said, “It’s worth remembering that the cancellation penalties associated with this contract are said to have cost more than 17 billion rupees (116 million dollars). Given the fact that the procurement process was tainted by corruption, steps must be taken both internationally and locally to hold Airbus and its agents responsible for the losses incurred by Sri Lanka.”
Following FT’s report last week that the airline was taking Airbus to court, TISL said it was pleased with the decision. The company also said in a statement that it was important to keep those accountable for the substantial damages caused to the Sri Lankan public as a result of this incident.
The cancellation fees for the four A350-900 lease contracts cost the company US$98m. This money, according to TISL, could be used to purchase COVID vaccines for the Sri Lankan people. It was calculated that 24.5 million doses were imported for this price.
SriLankan Airlines eventually received the A330s from the Airbus contract. It has, however, been trying for years to get out of the A350 purchase agreements, starting the process only two years after the contract was signed.
It has also tried to move these purchase orders to A330neo aircraft, which are better suited to its activities, but the contract is still legally binding. It’s unclear how far the company will go in its pursuit of Airbus for such a large sum in compensation.
Featured image: SriLankan Airlines 4R-ALM Airbus A330-343. Photo: Alberto Cucini/Airways