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Airbus shakes up international marketing unit amid fraud probe

Airbus shakes up international marketing unit amid fraud probe
February 16, 2017
PARIS - European planemaker Airbus is shaking up its international marketing organisation amid a UK investigation into suspected irregularities in the use of intermediaries to help it land new orders, three people familiar with the matter said. The move is part of a wider internal reorganisation as Chief Executive Tom Enders tries to turn the group into a leaner and simpler company, but is also gaining top-level management attention in its own right as the company carries out a sweeping review of its sales practices, they said. Airbus, the world's second largest planemaker, has for years relied on sales teams in its planemaking unit backed up in some cases by a headquarters team of international marketers to sell jets to areas including parts of Asia and the Middle East. Like many exporters, it has also relied on a network of external consultants with local business knowledge, a practice which is legal but subject to international guidelines designed to ensure transparency and avoid a risk of corruption. Aircraft engines maker Rolls-Royce (RR.L) last month agreed to pay 671 million pounds ($837 million) to settle charges of bribery involving the use of intermediaries following a four-year investigation by Britain's Serious Fraud Office (SFO). Last year the SFO also launched an investigation into discrepancies over declarations by Airbus about the use of such agents in applications for UK export credits, which require exporters to disclose the amounts paid and to whom. The probe focuses partly on paperwork prepared in what until recently was the international arm of the former parent Airbus Group, three people familiar with the matter said. An employee involved in the process left the company last year. The centralised international marketing operations are part of a broad set of functions under the overall authority of strategy chief Marwan Lahoud, who last week said he would leave at the end of February at the end of his current contract. Lahoud, 50, said he was leaving after completing what he described as the "ultimate merger" - a combination of Airbus and its parent company Airbus Group, formerly known as EADS, which reflects a decision to focus mainly on commercial aircraft. Two people close to Lahoud stressed his decision to leave was not related to the SFO probe, which extends beyond the activities he managed and has not yet targeted any individuals. Chief Executive Tom Enders paid tribute to Lahoud, who is credited with corporate governance reforms that limited the influence of French and German government shareholders in 2013. But his departure heralds a significant reduction in the scope of Airbus's international department, leaving it mainly with the task of managing overseas affiliates and triggering further departures in the coming months, the people familiar with the matter said. Oversight of external consultants is expected to pass from the headquarters unit to the divisions. EXPORT CREDITS REMAIN FROZEN Immediately following Lahoud's decision to step down, defence sales chief Jean-Pierre Talamoni, who ran Airbus Group International for seven years until 2015, announced his retirement internally last week, the people said. "Jean-Pierre Talamoni is retiring at 60," a spokesman confirmed. For now, Enders is taking a more direct role until a new international structure is in place, two of the sources said. An Airbus spokesman declined to discuss details but said any changes would be part of the company's planned reorganisation. "It is part of project Gemini," he said. Enders has also launched an aggressive compliance campaign across the company aimed at strengthening anti-corruption rules. However, Airbus still faces uncertainty over when the system of European export credits, used to help airlines that otherwise could not finance deliveries, will be restored. These were withdrawn in Britain, France and Germany after Airbus discovered the paperwork problems and reported them to the UK authorities. UK Export Finance, a government agency responsible for issuing the credits, is seeking assurances about enhanced compliance practices at Airbus before reopening the system. "The process is ongoing. We are not in a position to speculate on how long it is likely to take," a spokeswoman said on Wednesday. Airbus said last year it expected export credits to resume in the fourth quarter, but this slipped into 2017. As a result, analysts expect Airbus to report a spike in customer financing to around 750 million euros for 2016 as it helps airlines who would otherwise get government support. The company reports its 2016 results on Feb 22. -Reuters
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