Monday, 12 February 2018

$99 million fine for “unaccounted payments” in Eurofighter sale to Austria


By Ajai Shukla
Business Standard, 12th Feb 18

Over the preceding week, India’s political landscape has been roiled by accusations that the government favoured French aerospace vendor, Dassault, with a multi-billion order for 36 Rafale fighters, ignoring a cheaper bid belated submitted by European consortium, Eurofighter Jagdflugzeug GmbH (hereafter Eurofighter) for its Typhoon fighter.

But now Eurofighter too is battling damaging scrutiny over corruption allegations. On Friday, German prosecutors ordered Airbus to pay Euro 81.25 million ($99 million) to settle charges that the firm bribed Austrian politicians in 2003 to buy the Typhoon in a contract worth $2 billion.

Eurofighter is made up of aerospace corporations from four European nations. The German and Spanish entities of Airbus Defence & Space own a majority 46 per cent stake, UK-headquartered BAE Systems owns 33 per cent, while Italian corporation, Leonardo S.p.A. – earlier named Finmeccanica, and still banned in India – holds the remaining 21 per cent.

According to Reuters, “The settlement includes an administrative fine of 250,000 euros and “disgorgement” – which legal experts broadly define as the recovery of ill-gotten gains – of 81 million euros.”

German prosecutors stated they found no evidence of bribery in the Eurofighter sale to Austria, but Airbus “had been unable to account for over 100 million Euros in payments to two shell companies.”

The prosecutors stated that these funds were sent for “unclear purposes”, evading internal control mechanisms within the company.

This puts a new light on Eurofighter’s “unsolicited bid”, submitted on July 4, 2014 to the newly elected National Democratic Alliance (NDA) government, reducing the cost of the Typhoon fighter by 20 per cent, making it in retrospect significantly cheaper than the Rafale. The bid was apparently offered a path to bypass the deadlock over pricing with Dassault.

In 2011, Dassault’s Rafale and Eurofighter’s Typhoon fighters were the only two aircraft to have passed Indian Air Force (IAF) flight trials in its global contest to buy 126 medium multi-role combat aircraft (MMRCA). In 2012, Dassault’s commercial bid was adjudged the lowest offer (L-1 bid) by India’s defence ministry.

The Defence Procurement Procedure did not permit the government to reintroduce Eurofighter into the negotiating process after Dassault’s bid was declared L-1. However, once the government scrapped the deadlocked MMRCA procurement and opted instead to buy 36 fighters over-the-counter, it had the option to reintroduce Eurofighter into a competitive bidding process. Instead, it opted for a single-vendor procurement from Dassault, under a government-to-government umbrella.

Besides the financial penalty imposed on Airbus in Germany, a separate investigation is underway in Vienna, where Austrian prosecutors are enquiring into Airbus and its chief executive, Tom Enders, who headed the company’s defence business from 2000-2005. Airbus and Enders deny any wrongdoing, and accuse the Austrian government of playing politics.

4 comments:

satish pradhan said...

Another not of alarming and negative journalism by Congressi Shukla. Don't understand why u hate modi so much? Pls I am not a not that your neta aka Rahul baba uses. Be brave and post this comment.

Nikhil said...

Sorry folks but Tejas and then AMCA is the only answer to our VOWS and rest is only waste of time and money whatever one would say. India does not need to spend on costly foreign weapon system and it has no need to worry about foriegn invasions too as our most respected President Dr Kalam has left India with a legacy of an independent , most efficient and affordable missile program that no adversary would dare put an eye over our motherland without fearing devastating results on its own.It provide us a security no other weapon can. No aircraft could ever match the destructive power of our offensive missiles and provide safety like our ballistic missile defense shield if they are given proper resources and due consideration.

Also, it should be made clear too that If Euro-fighter did not have the capacity to develop into true multi-role till the time it is actually induced in IAF, Airforce would have not selected it to be among the two aircraft technically complaint with its requirements. Euro-fighter was in fact considered to have scored more points than Rafael as it had much more development potential and it could much more easily operate than Rafale in rarified atmosphere of leh-laddhak airfields. But it is much more complex technology and thus has high life cycle cost.
Rafale was also sufficient for our requirements though not as technically superior to Eurofighter but was cheap and non complex. Also was the factors of strategic independence of France, its non dependence and non influence on U.S. policies like that of U.K, its potential in helping India developing single crystal blade aeronautical engine technology or even ceramic blade aircraft engine technology , very much perceived support in rectifying faults in India's thermonuclear weapon, future perceived help in developing UAV, nuclear submarines and nuclear aircraft carriers , that tilted board in french favour. But greedy french are demanding their pound of flesh for every such expectation from the pockets of our poor hungry masses.
Surely though if it was not the pressure and influence of Anil Ambani over our P.M. Euro-fighter with its renegotiated discounted price would have been a much better option for India life cycle cost wise specially when it is a much better multirole aircraft of latest vintage with much better and advanced technologies going into it and it was discovered that both Rafale maritime and F18 could not fit into lifts of available India's aircraft carriers and could not easily operate thus so loosing their edge over Euro fighter for not having a maritime version.

Nikhil said...

Naval tejas seemed to be the only viable solution now but vested interst are hell bound on destroying it. If somehow Dassault could come with a solution in reducing Rafale M (naval) wingspan then i would say purchasing Rafale could be a facesaving decision for spare part commonality between air-force and navy which some naive commentators never thought of. Also LCA being a aircraft of delta design like Rafale would also benefit if Dassault is forced to share the technology for the same as then naval LCA would also be able to operate from smaller front lift of Vikramaditya. Alas current naval brass is too short sighted as it has lost true strategic minded assets like of Admiral D.K. Joshi who understood the importance of Naval Tejas and its significance for even existence of a future naval AMCA programme. I know Rafale with its high cost (and even more costly manufacturing line if ever built in India) thanks to Conman Anil Ambani would be financial blunder for Indian Navy and air-force but India has already burnt its hands and would now never be able to negotiate with France on its own terms.

Ignorant commentators never understand the importance of theater commands and the need for bringing commonality within all arms of military. Even U.S is trying very hard to have a common platform in form of F35, and Rafale was purely developed as France desperately wanted a naval version too unlike other European powers.

Having more and more aircraft types like that of F18, F35, air or naval version or even F16 or Gripen would be a maintenance and logistical disaster and would push Indian military preparedness into a black-hole. Even western countries with multi fold per capita incomes could not afford such a blunder. Gripen otherwise a good and somewhat cost effective aircraft has a potential to destroy future tejas export prospects beyond repair.

Nikhil said...

An autocratic P.M. who listened only to an influential but failed businessman rather than air warfare experts did a deal for an insufficient 36 aircraft rather than a full fledged aircraft production forcing India into now buying Rafale aircraft only for commonality of its fleet but at prices its economy would never be able to sustain.If at all a foreign aircraft was needed Gripen would have been a good choice that Indian economy would have been able to afford. Now when french have been given an upper-hand by Anil Ambani they will demand unreasonable terms with India loosing its edge and negotiating power. Even thinking of inducting more aircraft types other than present one would be a logistical and maintenance nightmare and a blunder too devastating to handle.

Modi has done a blunder just like Mulayam Singh did with India during Sukhoi deal.Semi literate, egoistic and narcissist Modi is no better than Mulayam Singh Yadav rather even more intellectually bankrupt. He can only utter speeches written by others in his Man KI Baat and would throw national interest to dogs just like he did with Demonetization just to save few close loan defaulters through recapitalization of banks at the cost of ordinary citizens and taking money out of pocket of tax payer.He never cared for 50+ citizens loosing lives and destroying numerous MSME's, destroying crops and pushing farmers into loan spirals and making lakhs of people jobless.
If an intelligent man like Manohar Parrikar would not have been present to negotiate atleast a face saving deal otherwise the semi litterate P.M. Modi have already put indian airforce into permanant disaster mode just to satisfy greed of a known conman & a failed buisnessman Anil Ambani.

Tejas and only Tejas is only answer to all our needs. May almighty save my country from greed of self interested politicians.