Airbus Group SE, a European multinational corporation that designs, manufactures and sells aeronautical products worldwide, announced in a company release that it has discovered “inaccuracies” in filings it made to the U.S. State Department under the International Traffic in Arms Regulations (ITAR). The ITAR imposes reporting requirements on defense contractors that export defense-related “articles and services.” Part 130 of the ITAR requires defense contractors to report all fees and commissions paid related to the sale of the same.
Recent history and high-profile investigations reveal how a company’s suspected or actual noncompliance with the ITAR can serve as a prelude to the discovery of FCPA violations (or vice versa). In 2010, for example, military contractor BAE pled guilty to a conspiracy that involved both violations of the ITAR and making false statements regarding its FCPA compliance program. Among other misfeasance, BAE “made a series of substantial payments to shell companies and third party intermediaries” without due diligence or proper corporate controls. In some instances, BAE concealed the identities of so-called “marketing advisors” on its payroll. After entering its guilty plea, BAE was ordered to pay a $400 million criminal fine.
The possible interplay between violations of the ITAR and the FCPA could be an issue for Airbus, which has since 2016 been embroiled in a criminal investigation run by the United Kingdom Serious Fraud Office. That investigation is looking into allegations of fraud, bribery, and corruption related to “third party consultants.” At present, no U.S. authority has announced opening a formal investigation into Airbus. Airbus said on October 31st that it is cooperating with U.S. authorities generally.