Case File

Airbus: Ghana Aircraft Deals

Author
B. Arneson
Published on
January 13, 2022
(updated February 22, 2022)
Image
Ghana Airforce C-295 Source: Wikimedia Commons
Ghana Airforce C-295 Source: Wikimedia Commons

Contents

Contents

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Introduction

Introduction

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Between 2009 and 2016, Airbus engaged with two main consultants to facilitate and conceal bribe payments for two campaigns to sell three C-295 military transport aircraft. One of the consultants used to secure the sales, was the brother of a high-ranking elected government official in Ghana. The government official that is allegedly involved in these sales is former President John Dramani Mahama, and the consultant is allegedly Samual Adam Foster (aka Samuel Adam Mahama).

During the first campaign to sell two C-295s, Airbus applied to have the consultant, allegedly Foster, recognized as a business partner, but the application was rejected by the company's compliance staff because of the familial ties between him and the official, allegedly Mahama. Subsequently, senior leadership in SMO International and Airbus Defence & Space Division falsified documentation in order to use a Spanish company with no previous ties to Ghana, which seemingly served no other purpose than to funnel money into the hands of the consultants.

During the second campaign to sell one C-295, Airbus tried to use an extension of the consultant agreement between Airbus and the Spanish company from its first campaign, but were unable to because the contract had expired. As a result, another agreement was created in February 2015 between Airbus and the Spanish company, but the Airbus Liquidation Committee prevented the contract from being implemented after the Spanish company declined to participate in a due diligence interview process, which prevented any further “commission payments” to the consultants. The Government of Ghana did sign an agreement with Airbus for one C-295 on 5 March 2015.

The details of this case are loosely transcribed and abbreviated from the Department Of Justice report, United States of America v. Airbus SE, released on 28 January 2020 and supplemented by the United Kingdom´s Royal Courts of Justice report, Director of the Serious Fraud Office and Airbus SE, released 31 January 2020. These reports anonymized the names of the actors.

Case Details

Case details

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Seller country
Spain, United States
Seller company
Airbus (EADS)
Buyer country
Ghana
Goods category
Aircraft
Equipment sold
3 C-295 Aircraft
Deal value
More than 60 million Euros
Sum involved in corruption
5 to 6 million Euros, including an additional “political contribution” to a Spanish foundation related to agricultural development in Ghana
Start year
2009
End year
2019
Outcome status
Deferred Prosecution Agreement(s), Legal Investigation Ongoing

Actors

Actors

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  • Airbus SE: European multinational aerospace corporation based in France.

  • SMO: Strategy and Marketing Organization within Airbus.

  • SMO International: a division of SMO which was in charge of Airbus’s business development activities, including but not limited to the identification, engagement, and supervision of third-party business partners and International Marketing and Development Projects.

  • Individual 1: A high-ranking elected government official in Ghana during the relevant International Traffic in Arms Regulations (ITAR) time period. Individual 1 was influential in having the Government of Ghana approve the purchase of two C-295 aircrafts. According to the Africa Report, Individual 1 allegedly refers to former President John Dramani Mahama.

  • Consultant 4: A citizen of Ghana and the UK, who acted as a third-party consultant for Airbus during the C-295 sales campaign. Consultant 4 allegedly refers to President John Dramani Mahama’s brother, Samuel Adam Foster (aka Samuel Adam Mahama). His CV listed no prior experience in the aerospace industry.

  • Consultant 5: A citizen of the UK, who assisted Consultant 4 in the sale. Consultant 5 has publicly stated that Consultant 4 is his “best friend”. His CV listed his pre-2009 employment as a UK television actor and film director. Consultant 5 allegedly refers to Philip Middlemiss.

  • Consultant 6 and 7: Citizens of the UK who acted as associates to Consultant 4 & 5. There is no evidence that they had any experience in the aerospace industry either. It is unclear as to what their specific roles were, but they are referred to in the investigative reports. Consultant 6 and 7 allegedly refer to Leanne Davis, a former UK television actress, the significant other of Philip Middlemiss, and a Director and shareholder of Deedum Limited, and Sarah Furneaux, who is the significant other of Samuel Adam Foster (aka Samuel Adam Mahama).

  • Organization 1: A Spanish-based third-party business partner of Airbus, which Airbus has previously used on other Defence & Space campaigns.

Allegations

Summary of Corruption Allegations

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First, Airbus paid bribes or promised payments of 5 to 6 million Euros to two main third-party consultants, including payments to the brother of a high-ranking official in connection with the purchase of the C-295s. The Office of the Special Prosecutor – Ghana has launched an investigation to determine whether or not offenses such as bribery of public officials and the use of public office for private profit have taken place. Second, when Airbus’ compliance staff rejected an agreement between Airbus and Consultant 4 and 5’s company because of the familial connection mentioned above, Airbus used Organization 1 solely as an intermediary to hide the involvement and payment of Consultant 4 in sales transactions. Finally, ITAR is a U.S. regulatory regime to ensure that defence and military-related technologies meet export requirements. Airbus’s C-295 aircraft were manufactured in the company’s subsidiary in Spain, but certain ITAR-related defence articles were exported to Spain from the U.S. When these items are exported, the U.S. suppliers have to file an export license application with the Directorate of Defence Trade Controls (DDTC). When Airbus completes the production of the C-295 and sells it to a customer, the company must file a subsequent export license that alerts the DDTC who the new end user is. As part of these re-export applications, Airbus has to include statements regarding ITAR Part 130, which refers to whether or not the company paid, offered, or agreed to pay political contributions, fees, or commissions in connection with these sales. Airbus filed false re-export license applications to the DDTC for the first sales campaign regarding Part 130, and Airbus did not file the re-export license with the DDTC for the second sales campaign because it did not meet the requirements of ITAR Part 130.

Timeline

Timeline

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2009
  • JanAirbus Defence & Space Division's Spanish subsidiary contracted with Consultant 4 to help Airbus with the C-295 sales. Airbus initially agreed to pay Consultant 4 3,5000,00 Euros for the Ghana C-295 sales campaign, through a company owned by Consultant 4 and 5, which is allegedly Deedum Limited. Airbus worked with Consultant 4 and 5 for two years before submitting a business partner application to Airbus’s compliance staff.
2011
  • 3 SepThe first contract between Airbus and Ghana was signed for two C-295s. The agreement contained a declaration of compliance with the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The agreement also stated that no more than 3,001,718.15 Euros would be paid to the business partners.
  • OctAirbus’s compliance staff rejected the agreement between Consultant 4 and 5’s company because of the familial ties between Consultant 4 and Individual 1. Airbus was concerned that it would be unable to do business in Ghana for years to come due to the company’s inability to secure the agreement. However, senior leadership in SMO International and the Defence & Space Division developed a plan to circumvent Airbus’s compliance rules in order to pay Consultant 4 via Organization 1. Airbus used Organization 1 in order to hide the involvement and payment of Consultant 4.
2012
  • 20 MarAirbus entered into a contract with Organization 1 to provide Consultant 4 money for his support on the C-295 campaign. Under the contract, Organization 1 would be provided a “success fee” for the C-295 aircraft sale. The “success fee” was calculated to be approximately 3,0001,718 Euros, which was a similar amount to what was previously promised to Consultant 4 (3.5 million Euros). Organization 1 took 1,800,000 of that money prior to the transfer. Consultant 4 claimed that 71,393.40 Euros was still owed to him in relation to this sale.
  • Initially, Airbus tried to arrange a sale of two C-295 aircraft to an Irish aircraft finance leasing company on behalf of the Ghanian government for its second sale campaign. When this arrangement failed, the Government of Ghana made the decision to purchase one more C-295 directly from Airbus.
  • 28 MarAirbus made “political contributions” to the amount of 62,200 Euros to a Spanish foundation related to agricultural development in Ghana. This contribution was not initially disclosed in the ITAR license applications with the DDTC; however, Airbus disclosed this contribution to the U.S. Department of State “out of an abundance of caution”. There has been no direct link between these “political contributions” and the C-295 sales thus far, but the DOJ report does refer to Airbus’s contribution in its general allegations.
2014
  • FebAirbus management at SMO International and the Defence & Space Division try to extend the contract with Organization 1, but Airbus’s compliance staff reject the contract and insist that a new contract is signed.
  • OctAirbus froze all payments arranged by SMO International to business partners.
  • NovThe press reported that the Government of Ghana was buying one C-295 from Airbus, but the contract did not get signed until March of 2015.
2015
  • MarA new contract was submitted to Airbus in order to pay Organization 1, 1,665,000 Euros for the 2015 sale of one C-295 aircraft in Ghana. Consultant 4 subsequently demanded from both Airbus and Organization 1 a payment of 1,675,000 Euros in connection with the 2015 sale.
  • MayAirbus’s moratorium on payments is extended to the Defence & Space and Helicopter division. A Liquidation Committee is set up to review, approve, or reject any outstanding payments.
  • MayThe Liquidation Committee carried out an investigation into Organization 1 before further payments were made, which included a request to conduct due diligence interviews. However, Organization 1 declined to participate in the interviews. As a result, Airbus did not enter into a second written contract with Organization 1, which prevented Consultant 4 from receiving the payment of 1,675,000 Euros. In other words, Airbus was unable to pay any bribes associated with the third C-295.

Outcomes

Investigation Outcomes

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2020
  • 31 JanAfter a four-year investigation by French, British, and U.S. authorities, Airbus admitted to their long-running bribery and corruption scheme involving sales to at least 19 markets. Airbus agreed to pay almost $4 billion in fines in a so-called Deferred Prosecution Agreement (DPA). Under the terms of the DPA, Airbus itself avoids criminal conviction, but individual employees of Airbus may be prosecuted for their involvement in the bribery and corruption scheme. No Airbus employees have been prosecuted thus far, and it is unlikely that they will be in the future, which may risk setting a precedent where individuals are not held accountable for their involvement in endemic corruption despite it being known to investigating authorities. While this settlement is a monumental case in anti-corruption within the global arms trade, it elucidates the ways in which transnational corporations can buy their way out of harsher consequences. With a net worth of $107.2 billion, a $4 billion fine for endemic bribery and corruption still seems miniscule; however, the cooperation among countries that took place during the investigation of the case to hold Airbus financially responsible is a potential step forward in anti-corruption efforts.
  • 4 FebGhana’s first Special Prosecutor, Martin Amidu, opened an investigation into corruption and corruption-related offences of bribery of public officers and the use of public office by public officers for private profit.
2021
  • SepThe UK’s Serious Fraud Office dropped charges against Philip Middlemiss for lack of evidence, which may seriously harm the Office of the Special Prosecutor’s case.

References

References

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  • “Airbus Agrees to Pay over $3.9 Billion in Global Penalties to Resolve Foreign Bribery and Itar Case.” The United States Department of Justice, January 31, 2020. https://www.justice.gov/opa/pr/airbus-agrees-pay-over-39-billion-global-penalties-resolve-foreign-bribery-and-itar-case.

  • “Airbus Scandal: Is Samuel Adam Mahama 'Intermediary 5'?” Whatsup News, February 10, 2020. https://whatsupnewsghana.com/2020/02/10/airbus-scandal-is-samuel-adam-mahama-intermediary-5/.

  • “Airbus Scandal: People Are Taking Weird Decisions Just to Please Akufo-Addo - Amaliba.” GhanaWeb, July 20, 2020. https://www.ghanaweb.com/GhanaHomePage/NewsArchive/Airbus-scandal-People-are-taking-weird-decisions-just-to-please-Akufo-Addo-Amaliba-1011802.

  • Andrews, Luke. “Coronation Street's Des Barnes Actor Philip Middlemiss 'Is Wanted by Police in Ghana'.” Daily Mail Online. Associated Newspapers, May 13, 2020. https://www.dailymail.co.uk/news/article-8317555/Coronation-Streets-Des-Barnes-actor-Philip-Middlemiss-wanted-police-Ghana.html.

  • Cassin, Harry. “Airbus Pays $4 Billion to Settle Global Bribery and Trade Offenses.” The FCPA Blog, January 31, 2020. https://fcpablog.com/2020/01/31/airbus-pays-4-billion-to-settle-global-bribery-and-trade-offenses/.

  • “Deferred Prosecution Agreement Airbus .” Serious Fraud Office , January 31, 2020. https://www.sfo.gov.uk/download/airbus-se-deferred-prosecution-agreement-statement-of-facts/.

  • Farivar, Masood. “Airbus Agrees to Pay Nearly $4 Billion to Settle Bribery Case.” VOA. Airbus Agrees to Pay Nearly $4 Billion to Settle Bribery Case, January 31, 2020. https://www.voanews.com/a/economy-business_airbus-agrees-pay-nearly-4-billion-settle-bribery-case/6183520.html.

  • “Ghana Faces Setback as UK SFO Drops All Charges against Airbus Suspect Due to Lack of Evidence.” GhanaWeb, September 4, 2021. https://www.ghanaweb.com/GhanaHomePage/NewsArchive/Ghana-faces-setback-as-UK-SFO-drops-all-charges-against-Airbus-suspect-due-to-lack-of-evidence-1348930.

  • Holmey, Olivier. “Ghana: John Mahama Splashed by Airbus Corruption Affair.” The Africa Report, May 11, 2020. https://www.theafricareport.com/27714/ghana-john-mahama-splashed-by-airbus-corruption-affair/.

  • “How Ghana Parliament Debated the Loan to Buy Two C-295 Airbus Military Aircraft.” Ghana Business News, February 3, 2020. https://www.ghanabusinessnews.com/2020/02/03/how-ghana-parliament-debated-the-loan-to-buy-two-c-295-airbus-military-aircraft/.

  • “Judicial Public Interest Agreement between The French National Prosecutor’s Office At the Paris District Court and AIRBUS SE.” Ministère de la Justice, January 29, 2020. https://www.agence-francaise-anticorruption.gouv.fr/files/files/CJIP%20AIRBUS_English%20version.pdf.

  • Lartey , Nii Larte. “There's Reasonable Suspicion of Corruption, Bribery in Airbus Scandal – Martin Amidu.” Citi Newsroom, February 10, 2020. https://citinewsroom.com/2020/02/theres-reasonable-suspicion-of-corruption-bribery-in-airbus-scandal-martin-amidu/.

  • Martin , Guy. “Ghana Acquires Third C295 as Airbus Finalises Further African Orders.” defenceWeb, November 12, 2015. https://www.defenceweb.co.za/aerospace/aerospace-aerospace/ghana-acquires-third-c295-as-airbus-finalises-further-african-orders/.

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  • “SFO Enters into €991m Deferred Prosecution Agreement with Airbus as Part of a €3.6bn Global Resolution.” Serious Fraud Office, September 8, 2020. https://www.sfo.gov.uk/2020/01/31/sfo-enters-into-e991m-deferred-prosecution-agreement-with-airbus-as-part-of-a-e3-6bn-global-resolution/.

  • Smith, N. Craig. “Whistleblower Ian Foxley Takes Beating, Still Looks Himself in the Eye.” The FCPA Blog, December 17, 2014. https://fcpablog.com/2014/12/17/whistleblower-ian-foxley-takes-beating-still-looks-himself-i/.

  • “Today in History: Airbus Scandal: John Mahama Is Government Official 1 – Amidu.” GhanaWeb, November 3, 2021. https://www.ghanaweb.com/GhanaHomePage/NewsArchive/Today-in-History-Airbus-scandal-John-Mahama-is-Government-Official-1-Amidu-1393966.

  • “United States of America v. Airbus SE.” The United States of America Department of Justice , January 31, 2020. https://www.justice.gov.