Airbus, the European aerospace company, paid at least 340,000 euros in bribes to Nepali businessmen and officials in order to secure contracts for two narrow-body Airbus A320 jets for Nepal Airlines Corporation, according to a settlement document released by the French National Financial Prosecutor’s Office.
The settlement, which alludes to a total financial commitment of $1.8 million, says that this payment is “likely to qualify as bribery of a foreign public official”. It is unclear whether the total $1.8 million, equivalent to Rs200 million, was paid to Nepali intermediaries and officials, but 340,000 euros were paid to a third-party that is believed to have routed the payment to Nepali officials.
At the Dubai Air Show in November 2009, then managing director of Nepal Airlines, Sugat Ratna Kansakar, signed a memorandum of understanding with Airbus to purchase a wide-body A330-200 and a narrow-body A320 jets. As per the agreement, the A330 and A320 were to be delivered in two years. But after $750,000 was sent to Airbus as an advance payment, Kansakar was jailed for financial irregularities and for not following procedure.
The Commission for Investigation of Abuse of Authority, in 2010, filed a case against Kansakar at the Special Court accusing him of corruption in the Airbus purchase deal. But in 2012, the Special Court acquitted Kansakar.
The parliamentary Public Accounts Committee had also been investigating the case on suspicion of fraud since the very beginning.
Lawmaker Dharmasila Chapagain, who is a member of the Public Accounts Committee, said she was not aware of the settlement but stressed investigation if there are charges of corruption in the Airbus deal.
“The House committee had received complaints and held an internal discussion on whether to launch a formal investigation, but it never materialised,” Chapagain told the Post. “Now the issue has become outdated.”
Nonetheless, if the report suggests bribery or the receipt of commissions in the Airbus deal, the Nepali authorities should take up the issue seriously, she said.
Nepal Airlines’ $42 million Airbus deal, later revised to $47 million, was revived in June 2013, and this time, the order was changed to two A320s with the Employees Provident Fund chipping in Rs10 billion for the purchase.
After the 2013 deal, none of the anti-corruption watchdogs, despite complaints of corruption filed, paid attention to the deal as sentiments ruled that Nepal Airlines has not been able to purchase jets in the last two and a half decades. By 2015, most of the files were closed.
But the European planemaker was on the radar of the French, British and US authorities regarding alleged corruption over jet sales between 2004 and 2016.
According to documents filed in court by the French National Financial Prosecutor’s Office on January 29, between February 2014 and April 2015, the Toulouse-based company bribed 340,000 euros ($376,140) to a third party formed by Nepali businessmen to facilitate the transmission of funds to Nepali officials.
According to the report, Airbus’ 150-person Strategy and Marketing Organisation facilitated payments to third parties who then routed the funds to public officials in 16 countries, including Taiwan, Sri Lanka, Malaysia, Indonesia, Japan and Russia, in addition to Nepal.
The UK-based Serious Fraud Office’s investigation related to bribery offences in Malaysia, Sri Lanka, Taiwan, Indonesia and Ghana, while the French Parquet National Financier’s investigation related to bribery and corruption offences in China, Colombia, Nepal, South Korea, the United Arab Emirates, Saudi Arabia, Taiwan and Russia.
Airbus used the department, which had a $300 million annual budget, to illegally sway government officials and other decision-makers on airplane sales, boosting profit by more than $1 billion in a long-running bribery campaign, according to documents filed in the biggest corporate bribery case on record.
The investigation into Airbus’ dealings was prompted in 2016 by the Serious Fraud Office, after the company itself reported financial inaccuracies. The investigation then grew to include departments in the US and France. With the settlement, the European planemaker avoids criminal penalties and will pay $4 billion in fines.
Anti-corruption investigators have described the court’s decision as the largest ever corporate fine for bribery in the world after judges declared the corruption was “grave, pervasive and pernicious.”
In Nepal’s case, there were two Nepali businessmen acting as middlemen.
“The Airbus executives exchanged with two Nepali businessmen, who told them that they were in contact with Nepali government or public officials and Nepal Airlines executives,” the settlement document says.
Exchanges with the first “intermediary” started in 2007, when Airbus was considering officially engaging the businessman as an agent.
In 2009, however, following verification by the Airbus compliance department, the agent indicated in an email to an Airbus executive: “We unfortunately have no commitment from Airbus, and therefore we have not been able to make firm commitments to our contacts at Nepal Airlines. At a decisive stage, I think this will be very detrimental to the project.”
After Nepali authorities initiated an investigation into Kansakar’s aircraft procurement process, Airbus connected with a second intermediary, starting in 2010. In an email, this intermediary indicated that the lack of “real top-down and left-to-right dialogue” within the Nepali authorities needed to be remedied.
In other emails, a Nepal Airlines executive indicated that, in his view, the intermediary should “present new proposals with concrete figures” in order to convince the Nepali administration not to cancel the protocol. This is believed to mean that top officials in government and in Nepal Airlines should be convinced by the “commission” or bribe amount.
The executive requested that Airbus “support the project” and “urgently take the necessary steps to make this small project a success.” This coded language is believed to mean that the second intermediary is requesting the transfer of funds that were ultimately intended for third parties with whom he was in contact.
Ultimately, the MoU went through and negotiations continued until “the signing of the contract of June 27, 2013 for the sale of two A320 aircraft, both delivered respectively in February 2015 and April 2015.”
At this time, Madan Kharel was leading Nepal Airlines after being appointed as the managing director through open competition in December 2012. It was under his tenure that the corporation’s new Airbus A320 jets landed in Kathmandu.
“The government can pick up the case citing the French settlement and launch a fresh investigation,” said one private sector businessperson who served on the Nepal Airlines board at the time of the deal. “After 2013, the deal went smoothly and none of the anti-corruption watchdogs bothered to look into the issue closely.”
The official, who only agreed to speak on condition of anonymity, told the Post that the second jet arrived on April 30, 2015, after the twin earthquakes struck Nepal, carrying relief materials from Germany.
“If there were any complaints regarding the Airbus deal,” the official said, “they were eclipsed because the entire country was grieving.”