Airbus: What on Earth
One aspect of being a BigLaw junior associate is that the opportunities for ineptitude are just bounteous. It can be tough to get your sea legs and become an actually competent lawyer. One way to demonstrate value early on is to be really diligent and keep your eyes open for facts or fragments of case law that could be helpful or dangerous. We can remember a few – maybe just a few – times from those days when we would report something back and hear the partner say, “Good catch.” And we’d think, “Cool, maybe we won’t get tossed out and we can do this for a few more months.” We thought this sort of phenomenon applied all over the place?
Anyway, you probably saw the mammoth Airbus foreign bribery and export compliance case from last week. The company is paying $527 million to resolve the Justice Department’s part of the case, and that’s really only the start. Airbus will also be paying $2.29 billion to the Parquet National Financier in France and over $1 billion to the U.K.’s Serious Fraud Office. It’s the biggest foreign bribery case in all of captivity.
Now, the allegations are sprawling and crazy, as befitting such a mammoth case. They largely took place between 2008 and 2015. 2015 was significant for Airbus because it was the year John Harrison arrived and replaced Peter Kleinschmidt as its General Counsel. Harrison also became the company’s Chief Compliance Officer. He had guided Technip through its own giant FCPA resolution in 2010, so he was well positioned to suss out corruption issues at Airbus. If only his compliance staff had played it straight with him.
Have a look at this beeswax from the Airbus Deferred Prosecution Agreement.
In...July 2015, the newly appointed in-house General Counsel...identified potential issues with the ITAR Part 130 disclosure framework. In response to these concerns, senior export control officers appeared reluctant to change the company’s existing compliance process. Specifically, a senior export compliance executive wrote to the General Counsel that adequate processes and procedures were in place, stating that, regarding DDTC applications: (i) “proper due diligence was done prior to signature” on the application, (ii) templates used “ensure[d]” attention to ITAR Part 130 representations, and (iii) each application was “reviewed carefully to ensure that... [it] meets the obligations of Part 130 whether a required statement needs to be included or not.” These statements were reviewed by senior export compliance management prior to being made.... In fact... , adequate processes and procedures were not in place to ensure compliance with ITAR...during the relevant...time period, and the aforementioned export compliance management knew the same.
See DPA, Attachment A, at A-32.
So, the new boss arrives, points out some potential issues, and “senior export control officers” say, “Eh, no, we’re good.” Things had not been good for years. We truly don’t get it. If you’re a senior export compliance executive in that situation, why would you tell the General Counsel and Chief Compliance Officer – your new boss – that everything was good when everything was pretty far from good? One way to demonstrate the value of your own role is to do the due diligence the compliance program requires (or should require). Or to point out when the program is falling short. You could see a bad thing about to happen and say, “Hey, New Boss, look at the bad thing I just prevented from happening!” and he would say, “Hey, good catch.”
Hmmm . . .
It makes us wonder what incentives were in place to make the compliance staff behave this way. Or what disincentives. Maybe Harrison had walked into a situation where compliance personnel were severely discouraged from even raising problematic issues, and it took some time to fix. If you’re walking into a situation like that one, consider what you’re not being told by people who seemingly have every reason to tell it to you. Then think about what you need to do to encourage them to tell you.