Airbus Must Be 'Grounded'

Airbus Must Be 'Grounded'
(Etat-Major des Armees via AP)
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“Grounded” is one of those words with multiple meanings. If your teenager misbehaves, he may be “grounded.” If an airliner is judged to be dangerous, it may be “grounded.” Well, the European aerospace company Airbus deserves to be grounded, at least in the first sense.

It’s not that the company’s planes are necessarily dangerous. Perhaps they are, but that isn’t the point here. What we know for certain is that the company is guilty of misbehavior when it comes to defense contracting. It should be grounded — should not be eligible for any new defense contracts — for the foreseeable future, until it can prove it has changed its ways.

The background makes for fascinating reading.

Just two years ago, the World Trade Organization slapped Airbus with a $7.5 billion fine because of the subsidies European governments had been giving the company for more than a decade. That final judgement seems like a huge amount, but it was not a huge surprise to anyone in the military aviation business. Four previous panel and appellate reports, stretching back to 2011, had also found Airbus was taking unfair subsidies. It was only a matter of time before the company had to pay a price.

“The Arbitrator calculated this amount based on WTO findings that EU launch aid for Airbus is causing significant lost sales of Boeing large civil aircraft, as well as impeding exports of Boeing large aircraft to the EU, Australia, China, Korea, Singapore, and UAE markets,” a news release from the U.S. Trade Representative explained. There is no way to tell how much this all harmed American manufacturers, but there can be no doubt they lost potential contracts over the years.

That isn’t the only big fine Airbus will be paying, though.

Last year, the U.S. Justice Department announced Airbus, “has agreed to pay combined penalties of more than $3.9 billion to resolve foreign bribery charges with authorities in the United States, France and the United Kingdom arising out of the Company’s scheme to use third-party business partners to bribe government officials, as well as non-governmental airline executives, around the world and to resolve the Company’s violation of the Arms Export Control Act (AECA) and its implementing regulations, the International Traffic in Arms Regulations (ITAR), in the United States.”

The company admitted it was bribing Chinese officials and covering up those bribes. Not only is Airbus doing business in China — the main defense competitor to the U.S. right now — but it is cheating to do so.

This was the largest global foreign bribery resolution in American history, but it might not be the last one. “The Department will continue to work aggressively with our partners across the globe to root out corruption, particularly corruption that harms American interests,” an assistant attorney general warned. So Airbus could face even more fines ahead.

Finally, a former Airbus subsidiary will pay more than $42 million to the British government after it admitted it was guilty of corruption over its contracts to provide services in Saudi Arabia. “The resolution of the corporate case, after a near nine-year investigation, was described by pressure group Spotlight Corruption as a ‘stunning and hard-won victory’ for the U.K. Serious Fraud Office (SFO), which prosecuted the case,” the Reuters news agency reported this year.

All this cheating hurts its competitors when they play by the rules. Airbus is getting unfair subsidies, passing along bribes, and crowding out fair competition. And yet, it is still allowed in the bidding process for American military contracts. That makes no sense.

Airbus admits it cheats. It is paying massive fines for cheating. It has damaged international competition. Instead of trusting it with American lives and military contracts, Pentagon policymakers should put it into a sort of timeout. Until the company can come clean and prove it isn’t cheating, Airbus needs to be grounded from military bidding.

Lynn Haueter served as Deputy Chief of Staff to Congressman Ron Estes-R Kansas and Executive Assistant to Ways and Means Ranking Member Congressman Kevin Brady-R Texas, as well as advising other Members of Congress. Haueter has a Master’s degree in education, served as Chair of an international non-profit educational foundation, and taught in both the public and private sectors.

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