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Nepal Airlines Airbus bribery probe finds US$1.8mn promised, Sri Lanka $16.8mn

ECONOMYNEXT – Airbus, in a deal with Nepal Airlines Corporation, had committed 1.8 million US dollars to agents linked to government officials, a French bribery investigation has found, making it the second South Asian national carrier coming under a multi-country probe.

A UK graft probe found that Airbus had promised to pay 16.84 million dollars to a shell company set up under the name of the wife of a SriLankan Airlines executive in a deal struck in 2013, taking up the alleged improper payments linked to South Asian airlines to 18.6 million US dollars.

Ex-SriLankan CEO Kapila Chandrasena and his wife surrendered to police in Colombo last week in connection with suspected money laundering linked a bank account in Singapore.

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They had denied knowledge of the bank account, state counsel told court.

Nepal Businessmen

In the Nepal Airlines deal, discussions with Airbus first related to the sale of one A330 and one A320 aircraft, which eventually resulted in the sale of two A320 aircraft.

“The investigations have established that Airbus executives liaised with two Nepalese businessmen, who stated that they were in contact with Nepalese public officials and Nepal Airlines executives,” a report by PNF, the French National Prosecutors filed in court said.

The discussion with the first intermediary had started in 2007.

“Unfortunately, till date, we do not have any commitments from EADS (Airbus parent, now renamed) towards us and consequently we have not been able to make any firm commitments to our contacts in NAC,” the probe report quoted one intermediary as writing.

“At a decisive stage, I believe that this will be very detrimental for the Project”.

After a memorandum of understanding was signed for the deal, Nepal had started an investigation whether an advance payment of 750,000 dollars to Airbus was improper, the report said.

“In this context, Airbus was in contact, from 2010, with a second intermediary,” report said.

In an email sent to a manager of SMO International, an Airbus sales unit that was later shut down down, the intermediary had indicated that the lack of “effective convincing from top to bottom and left to right” of the Nepalese authorities needed to be addressed.

“In other emails, a Nepal Airlines executive stated that, according to him, this intermediary needed to “present new proposals with concrete figures” in order to convince the Nepalese administration not to cancel the MoUs,” the court filing said.

“He asked Airbus to “support the project” and “to urgently take the necessary steps in order to make this small project succeed”. ”

The Nepal MoUs were not cancelled and after negotiations, a purchase agreement had been signed on June 2013, to buy two A320 aircraft which were delivered in February 2015 and April 2015.

Embarrassed over payment delays

Emails between Airbus employees and the second Nepal intermediary showed “several options were contemplated” to transfer funds.

“Under the guise of coded language, the goal was to transfer to the second intermediary funds which appeared to be intended for third parties which the intermediary was in contact with,” the court document said.

“In this correspondence, the Nepalese intermediary often referred to the pressure he was under or to the embarrassing nature of the situation created by the delays in payment of the promised funds.”

During this time, Airbus had signed an agreement with a company which was ‘advising on the Sub Indian Continent’, which was suspected to have been used to transfer funds to the second intermediary.

Between February 2014 and April 2015, 340,000 euros had been paid to the company.

Airbus group documents had also showed “a commitment to pay a total of USD 1.8 million in relation to the Nepal Airlines”sale.

The French investigations agency said the information pointed to the “bribery of a foreign public official provided by Article 435-3 of the Criminal Code.”

Airbus agreed to pay 2.0 billion Euros to the French government as part of settlement in several deals involing, Nepal, Korea, Rusisia, Taiwan, Arabsat and Avianca. In total 3.5 billion Euros were agreed to be paid to France, UK and the US. (Colombo/Feb09/2020)

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