Canadian aircraft manufacturer Bombardier (BBD-B.TO) is being investigated by the Serious Fraud Office (SFO) over suspected bribery and corruption relating to alleged contracts and orders from air carrier Garuda Indonesia.
It comes after Emirsyah Satar, a former Garuda chief executive, and one of his associates were convicted in Indonesia of corruption and money laundering related to procurement of planes and engines from Airbus and Rolls-Royce in May.
Satar, who served at the helm of Garuda from 2005 to 2014, was given an eight-year sentence and fined by the country’s corruption court. He had previously denied wrongdoing.
Bombardier confirmed that the SFO inquiry will investigate the same transactions that led to Satar’s conviction.
At the centre of the investigation are five procurement processes involving different manufacturers, including Garuda’s purchase and lease of Bombardier CRJ1000 in 2011-2012, its regional aircraft. It sold six CRJ1000 jets to Garuda in 2012.
Bombardier told Yahoo Finance: “No charges have been laid against Bombardier or its employees in connection with this matter.
“In accordance with best practices when such allegations come to our attention, we have launched an internal review conducted by external counsel and we are cooperating with the investigation open by the UK Serious Fraud Office which has contacted Bombardier further to the Indonesian judgments.”
Companies can be offered the chance to escape criminal charges and settle cases with a fine by helping to investigate themselves and implementing internal changes.
The SFO said it could not provide any further comment as it was a live investigation.
The aerospace industry has faced a rising amount of scrutiny over the past few years.
In 2017 Rolls-Royce paid authorities more than $800m (£609m) to settle longstanding corruption charges of allegedly bribing officials in six countries in schemes that last more than a decade.
The company admitted to paying officials of state-run energy companies in Kazakhstan, Thailand, Brazil, Azerbaijan, Angola and Iraq more than $35m in order to win contracts, the US Justice Department and the SFO found. They further found that Rolls-Royce (RR.L) paid a Brazilian official $1.6m through a middleman to win numerous oil equipment contracts from Petrobras.
Meanwhile in January, Airbus (AIR.PA) agreed to pay almost €1bn (£900m $1.19bn) in fines after an SFO investigation into the company’s use of middlemen to secure deals.
The settlement was part of a €3.6bn deal involving payments to authorities in France and the United States. The SFO opened an investigation into Airbus in 2016 after the firm reported itself and asked regulators to look at documentation about its use of overseas agents.
Bombardier on Thursday revealed a 5% fall third quarter revenue to $3.5bn, compared with the year before, due to coronavirus-related disruptions.
It added that it expects higher deliveries of its flagship Global 7500 business jet in its final quarter, forecasting a rise to 12 jets compared with eight during the third quarter.
“We look forward to sharing the details of our plans in the near future, as we finalize our debt management strategy and cost-cutting initiatives to ensure our profitability in the current market and strong growth once the pandemic subsides,” the company said.
“With several contract awards having been delayed globally over the past six months due to the COVID-19 pandemic, we now expect a strong order recovery in the final months of 2020 with a healthy mix of options being exercised as well as service contracts.”
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