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Airlines

UPDATE 1-UK agency refers Airbus use of agents to fraud police

(Combines items, adds details, background)

PARIS, April 4 (Reuters) - Airbus faces a freeze on new applications for the use of British government export credits after the country’s export finance authority said it had referred the planemaker’s use of overseas agents to British fraud investigators.

The referral came three days after Airbus said it had discovered inaccuracies in applications for export support and notified UK Export Finance (UKEF), a government agency which helps finance dozens of Airbus jets each year.

UKEF said on Monday the anomalies concerned the use of intermediaries in some Airbus jetliner deals.

“UK Export Finance has received information from Airbus relating to its historical use of overseas agents. UKEF has referred this information to the Serious Fraud Office (SFO),” the agency said in an emailed response to a Reuters query.

“It will be for the SFO to decide whether any further action is necessary.”

The SFO declined comment. It is already investigating Airbus unit GPT Special Project Management over allegations of bribery in connection with a $3.3 billion contract to provide communications and intranet services for the Saudi National Guard.

Following the latest internal Airbus findings, two people familiar with the matter said Britain had stopped processing new applications for export credits involving Airbus jets.

Airbus said on Friday some UK export financing was unavailable but it expected it to resume in the near future.

EXPORT CREDITS

The company and U.S. rival Boeing rely on Western government export credits or guarantees to ease some sales, especially to emerging markets. The guarantees make it easier for airlines to obtain commercial loans.

Such support peaked during the financial crisis when it accounted for almost 40 percent of deliveries, before falling to 6 percent last year. Airbus expects this to remain stable.

Based on its forecast for more than 650 commercial jet deliveries in 2016, any prolonged halt in all UK export support could affect deliveries of 39 or more jetliners this year.

Airbus and UKEF declined to say how many airlines were involved, or what period of transactions was under scrutiny.

UKEF’s total portfolio of aviation finance stood at 1,070 aircraft, involving 78 different airlines and lessors, as of March 31 last year.

Export support for Airbus is divided between Britain, France and Germany, where most of its factories are based.

The UK’s share of each transaction depends on whether the aircraft uses Rolls-Royce engines and typically ranges from 18 to 38 percent, according to UKEF’s annual report.

France and Germany have not so far been provided with the Airbus data, a person familiar with the matter said. An aircraft financing source said that of the three, the UK has the toughest requirements about disclosing intermediaries.

UKEF recently launched a drive to shorten and simplify anti-corruption declarations in application forms, which the British Exporters Association has described as verbose and complex. But some non-governmental organisations have warned that simplifying the process could end up weakening anti-corruption efforts. (Additional reporting by Paul Sandle; Editing by David Clarke and David Holmes)

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