The Teflon Airbus sales don
ON Wednesday November 15, in the closing moments of the Dubai airshow, champagne corks began to fly faster than the fleet of 430 Airbus planes the company's ace sales shark had managed to steer past murky torrents of corruption scandals, to close the biggest deal in commercial aviation history. US investment firm Indigo Partners is buying the planes in a $49.5-billion contract brokered by Airbus' chief commercial officer, John Leahy.
As the camera's clicked away and Leahy touted this latest and greatest deal to the BBC as a personal triumph, the scores of other media reporting the bonanza also neatly sidestepped a looming elephant – how such a sales titan has managed to stay so clean amid the shady third-party intermediaries Airbus uses to close deals in nearly every corner of the globe.
However, The New York Times noted that Indigo Partners, a US-based parent company of several low-cost carriers – including Hungary's Wizz Air, Frontier Airlines, Mexico's Volaris, and Chile's JetSmart – had received an undisclosed "fee" for every aircraft "sold" to each subsidiary airline. In this deal, 146 aircraft go to Wizz, 134 to Frontier, 80 to Volaris, and 70 to JetSmart, according to the website www.flightglobal.com.
This new deal indeed crowns the career of Leahy, the Airbus sales titan who took the company's market share from 18 percent in 1993 to 57 percent a decade later. Over his 20-plus years at Airbus, Leahy closed deals on more than 15,000 jets worth an estimated $1.7 trillion. But his latest sales triumph is a reminder that kickback isn't called a kickback when it's structured openly into a sales contract between two Western firms.
Airbus' use of third-party contractors to secure deals in corrupt and autocratic countries has in the past been dismissed as simply necessary for doing business in such areas. Today, however, this "normal" practice is being investigated in a few countries around the world, bringing some optimism to the global struggle against corruption.
Leahy's name has been largely absent in media coverage of the several investigations, but this does not rule out the possibility of it arising later – after his retirement, perhaps – given the unfolding depth and scope of the corruption.
Meanwhile, Airbus CEO Tom Enders has pointed a finger at the Paris sales office as the source of many of the illicit sales practices that have drawn the scrutiny of British, French, and Austrian investigators. For example, the Paris sales office approved a €700-million payment to a Turkish national for securing a $10-billion sale of 160 aircraft to China.
There is also an investigation of several executives in the national airline SriLankan, over massive irregularities during the purchase of 10 Airbus planes in 2013. In Mauritius, the former head of government was bribed to buy six Airbus jets.
The French PNF is investigating Kazakhstan's then-prime minister and current chief of intelligence, Karim Massimov, who received millions in kickbacks for signing a deal with Airbus/ EADS to buy 45 helicopters for the Kazakh government in 2009. In addition to the Kazakh case, the French are also investigating a €70-million payment Airbus made to the son-in-law of Tunisia's ousted president, Zine El Abidine Ben Ali, following the purchase of 16 aircraft.
It's possible that Leahy, based at Airbus HQ in Toulouse, had no idea what was going on at the Paris office. Even in such a benefit-of-the-doubt scenario, Leahy, as head of sales and operations should be held responsible for such gross negligence. But we should also question why the media are now loudly applauding what is essentially the same behaviour in a slightly different context.
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