Nov 5 (Reuters) - The UK Serious Fraud Office announced on
Thursday it was investigating Canadian industrial group
Bombardier over suspected bribery in airplane sales to
Garuda Indonesia, widening a global anti-corruption
drive in aerospace.
The plane and train maker is the latest aerospace group to
face scrutiny over the use of middlemen after authorities struck
a record bribery settlement with Europe's Airbus in January and
a 2017 plea deal with British engine maker Rolls-Royce
Both settlements involved sales of planes or engines to
Garuda and airlines in other countries.
"The SFO is investigating Bombardier Inc over suspected
bribery and corruption in relation to contracts and/or orders
from Garuda Indonesia," the agency said on Thursday.
"As this is a live investigation, the SFO can provide no
further comment," it added.
In Montreal, Bombardier said it had been informed about the
SFO probe several weeks ago and would cooperate. It has
appointed external lawyers to run an internal review.
Shares in the company, which also reported results on
Thursday, fell more than 3% after the SFO's announcement. They
ended down 1.7%.
At the centre of the case, Bombardier said, are five
procurement processes involving different manufacturers,
including the 2011-2012 acquisition and lease of Bombardier
CRJ1000 regional aircraft by Garuda.
Bombardier, which has undergone several changes of
leadership after costly industrial bets in the past decade, said
the SFO was investigating the same transactions that led to a
former CEO of Garuda Indonesia being convicted in May.
It sold six CRJ1000 regional jets to Garuda in 2012 and
simultaneously leased a number of similar jets. Garuda now has
18 of the jets in its fleet, according to its website.
Irfan Setiaputra, Garuda's current CEO, said in a statement
on Friday the airline would cooperate with relevant authorities.
Indonesia's state-owned enterprises minister Erick Thohir also
said the government would cooperate.
An Indonesian court in May handed Emirsyah Satar, Garuda
chief executive from 2005 to 2014, an eight-year jail sentence
for bribery and money-laundering related to procurement of
planes and engines from Airbus and Rolls-Royce.
In 2017, Rolls-Royce agreed to pay more than $800 million to
defer charges after an investigation by the SFO and U.S. Justice
Department into alleged bribery of officials in six countries.
Airbus in February agreed to pay a record $4 billion in
fines after reaching a plea bargain with prosecutors in Britain,
France and United States over alleged bribery and corruption
stretching back at least 15 years.
SFO APPROACHED BOMBARDIER
Under a system of deferred prosecution agreements available
to the SFO, companies can be offered the chance to settle cases
with a fine and escape corporate criminal charges by helping to
investigate themselves and undergoing radical internal changes.
Bombardier Chief Executive Eric Martel, who started his role
in April, told reporters the SFO had come to Bombardier with its
suspicions.
"We got contacted a couple of weeks ago and were going to
offer our support so they can do the investigation they need to
do," he said.
"We were not aware of any issue internally," he added.
Under the system of plea bargains used in UK corruption
cases, companies can be at a disadvantage if the probe was
thrust upon them but win more lenient fines if they bring
potential wrongdoing to the attention of authorities themselves.
Nonetheless, Rolls-Royce avoided a larger fine by
demonstrating what a British judge described as "extraordinary"
co-operation even after the probe was instigated by the SFO.
Airbus has undergone a radical overhaul of its top ranks
since reporting itself to the SFO in 2016. The four-year probe
however weighed on sales and relationships with airlines and led
to in-fighting over who should carry the blame for using agents.
Bombardier has already undergone significant upheaval since
2015 while trying to bring a larger narrowbody jet to market.
It completed an exit from commercial aviation this year by
selling its money-losing regional jet business to Japans
Mitsubishi Heavy Industries to focus on more profitable
business jets.
(Reporting by Yadarisa Shabong in Bengaluru, Kirstin Ridley in
London, Allison Lampert in Montreal, Tim Hepher in Paris,
Bernadette Christina Munthe in Jakarta; Writing by Kirstin
Ridley and Tim Hepher; Editing by Emelia Sithole-Matarise, David
Gregorio and Edwina Gibbs)