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Enforcing Compliance

AG˼ƻ’ response to investigations into its use of consultants

Compliance is at the heart of everything AG˼ƻ does today – we are putting significant resources and effort into supporting the coordinated criminal investigations by the UK Serious Fraud Office (SFO) and France’s Parquet National Financier (PNF).

This microsite provides all the information we can disclose at this time around the investigations and our efforts to improve compliance. We are not able to comment on details of the investigations themselves while they are ongoing. 

What we are doing

AG˼ƻ is committed to implementing the most effective global standards to combat bribery and corruption in its industry.

We prohibit all forms of bribery and corruption and have a dedicated compliance programme and organisation under the leadership of the AG˼ƻ General Counsel, who has a seat on the Executive Committee and reports to the AG˼ƻ CEO.

We also have appointed an Independent Compliance Review Panel composed of eminent external consultants to help us further improve our processes.

Statement from the Board of Directors - October 2017

Ethics Compliance Denis Ranque  
Ethics Compliance Denis Ranque
09 November 2017

Ethics Compliance Denis Ranque

  • High Resolution
  • Low Resolution

With respect to various press reports and speculations over the last few days, the Board of Directors of AG˼ƻ SE states the following:

  • In 2014 AG˼ƻ management suspended outstanding payments to business partners and instigated a rigorous process for review of all payments prior to release.
  • The payment review uncovered a number of compliance red flags, including misstatements and omissions to UK government agencies.
  • In concert with our values, our code of conduct and our legal responsibilities, the decision was made in 2016 to disclose the identified compliance issues and the surrounding circumstances to government financial oversight and investigation agencies.
  • These decisions were made with the Board’s unanimous approval and actions were all directed by Tom Enders, the company's CEO. The Board has full trust and confidence in Tom and depends on his leadership to continue the transformation of the company and in particular our compliance program alongside our General Counsel, John Harrison.
  • Our internal investigations continue and we, Board and Management, are committed to expose all instances where violations have occurred and to correct the processes and behaviors that enabled these transgressions. The Ethics and Compliance Committee of the Board, composed of Independent Directors and chaired by me, will ensure the unwavering commitment to ethical conduct and compliant behavior of all employees, and the closure of the identified issues relating to business partners.
  • We are doing all this in full and transparent cooperation with the government investigations, led by the Serious Fraud Office (SFO) in the U.K. and the Parquet National Financier (PNF) in France.
  • AG˼ƻ is a great and highly resilient company with a strong and competent management team. Its strategies, structures and resources have never been more aligned. We have no doubt that the company will persevere, continue its dynamic development and remain competitive and successful in the market place.
  • The Board thanks each and everyone in the company who is working hard to help bring this matter to a conclusion and to ensure seamless execution of our business priorities at this challenging time.

Denis Ranque
Chairman of the Board

Questions and answers

What are the SFO and the PNF investigating?

The authorities  are carrying out coordinated investigations into allegations of fraud, bribery and corruption within our civil aviation business, relating to our use of third party consultants. The investigations were initiated following self-reporting by AG˼ƻ.

How were these investigations triggered?

In 2014, as a precautionary measure, AG˼ƻ froze payments to its third party consultants engaged in sales support activities, in order to put them through an enhanced compliance due diligence and screening process. During this process, AG˼ƻ discovered misstatements and omissions relating to information provided in certain applications for export credit financing for AG˼ƻ customers. 

As a result, AG˼ƻ made the decision to “self-report” to the relevant authorities.

What happens next?

AG˼ƻ is working closely and cooperating fully with the authorities to investigate the situation. As part of this effort, AG˼ƻ has engaged legal, investigative, and forensic accounting expertise of the highest calibre to undertake a comprehensive review. Together, they are using some of the most advanced software tools available to analyse a massive amount of electronic and hard copy documents as part of the investigation.

When will you resume payments to third party consultants?

The company will not unfreeze payments to any third party consultant until it has gone through the enhanced due diligence process described above. As a result, certain consultants and other third parties have initiated commercial litigation and arbitration against AG˼ƻ alleging breach of contract and seeking relief. 

We cannot exclude that our comprehensive review and enhancements to our controls and practices lead to additional commercial disputes or other civil law consequences in the future. 

Do you expect any further allegations or issues to emerge?

AG˼ƻ continues to monitor all its activities with regard to ethics and compliance. We will continue to work closely with the authorities during the investigations and will seek to improve internal compliance processes, and if new allegations come to light they will be dealt with appropriately and consistently.

What will happen to those responsible for wrongdoing or misconduct?

AG˼ƻ will take appropriate action against those found to have engaged in any wrongdoing or misconduct as the results of the investigation become available.

What steps is AG˼ƻ taking to ensure this never happens again?

AG˼ƻ continues to revise and implement improved anti-corruption compliance policies and procedures, including those with respect to its engagement of consultants and other third parties. The lessons learned as part of the SFO and the PNF investigations will be fed back into our compliance programme in order to strengthen it for the future. We also have appointed an Independent Compliance Review Panel composed of eminent external consultants to help us further improve our compliance processes, policies, organisation and culture.

Who is in charge of dealing with this situation at AG˼ƻ?

John Harrison, AG˼ƻ General Counsel, and head of the Legal & Compliance team is leading the upgrade of AG˼ƻ’ compliance programme and supporting the authorities with the investigations. He has a seat on the Executive Committee and reports to the AG˼ƻ CEO.

Is the Eurofighter investigation related to these investigations?

No. The Eurofighter investigation is not related to the coordinated investigations by the SFO and the PNF. It is a separate historical issue and we cannot see any foundation in particular for the allegations of bad faith and fraud made by the Austrian Federal Ministry of Defence concerning it.
(read more

On 9 February 2018, the Munich Public Prosecutor (Staatsanwaltschaft München I) has terminated its investigation which had been ongoing since 2012 and did not confirm the allegations of bribery (read more)

Timeline of compliance enforcement

Ethics Compliance Prevent  
Ethics Compliance Prevent
09 November 2017

Ethics Compliance Prevent

  • High Resolution
  • Low Resolution

AG˼ƻ aims at preventing, detecting and responding to Ethics & Compliance risks.

The evolution of AG˼ƻ’ compliance programme has been a long and complex process. It not only covers various businesses across multiple jurisdictions with individual governance and compliance structures, but has also evolved to adapt to organisational changes that the company has implemented over the past years.

Initially set up as EADS (European Aeronautic Defence and Space Company), AG˼ƻ has managed to reduce organisational complexity over time – from the elimination of the initial co-leadership approach in 2007 through a significant change in the ownership structure in 2013 to the reorganisation and renaming of the Group to 'AG˼ƻ' in 2014.

Concerning the compliance programme, changes also started from 2007 onwards with the introduction of an enhanced anti-corruption policy as the company began to unify under a more cohesive corporate governance structure.

The company works continuously towards ensuring that employees act in a compliant manner. In the past three years alone, AG˼ƻ has conducted more than 160,000 awareness trainings covering – amongst others – the topics of anti-corruption, fraud, antitrust, export compliance, and confidential information.

Compliance initiatives

The timeline below provides a snapshot of the numerous developments in compliance from 2007 to the present day.

  • From 2001 to 2007, the newly created EADS Group implements numerous compliance policies covering risk areas such as Anti Bribery and Corruption, Export Compliance, Mergers & Acquisitions.

2007

  • Comprehensive compliance review launched for EADS to reinforce a culture of anti-bribery and to protect the company against any legal, financial or reputational risk. This was carried out while selecting business partners and conducting M&A operations or investment projects.

2008

  • EADS and AG˼ƻ nominate Chief Compliance Officers reporting to their respective CEOs.
  • AG˼ƻ adopts 'Global Principles of Business Ethics' developed by the European and US trade associations.

2009

  • AG˼ƻ International Compliance Office develops and implements the 'AG˼ƻ Business Ethics Policy and Rules.'
  • AG˼ƻ becomes an active participant in a number of forums, such as the United Nations Global Compact and International Forum on Business Ethical Conduct for the Aerospace and Defence Industry, of which AG˼ƻ is a co-chair.
  • Cassidian, Astrium and Eurocopter nominate Divisional Chief Compliance Officers.
  • EADS develops an EADS Group-wide Code of Ethics called 'Integrity & Transparency'.

2010

  • EADS OpenLine is launched, enabling employees to confidentially raise their concerns via the internet or by phone.

2011

  • EADS issues Policy for Compliance Allegation Investigation.

2012

  • EADS issues the EADS Business Ethics Anti-Bribery Compliance Guidelines for M&A.
  • EADS Anti-Bribery Compliance Programme is audited by Ethic Intelligence and receives certification.

2013

  • EADS Business Development Policy is updated and renamed into EADS Business Ethics Policy, Processes and Guidelines.
  • EADS replaces its existing Code of Ethics 'Integrity and transparency' and all related documents existing across the EADS Group with one unique reference document called 'Standards of Business Conduct' (SOBC). The SOBC supersede any existing similar documents in all divisions and subsidiaries.
  • 'Our Integrity Principles' (OIP): A reader friendly leaflet summarising the key values of the SOBC. The leaflet is sent to 13,500 managers across the Group, who are required to distribute to their teams and deliver a team talk presentation. Overall, more than 150,000 copies are shipped across the Group to more than 120 destinations.

2014  

  • SOBC and OIP are available in 7 different languages.
  • AG˼ƻ Group issues a new Sponsorship and Donation Policy.
  • AG˼ƻ Group issues Guidelines for the assessment of corruption risks when selecting a business partner.
  • AG˼ƻ Group halts all payments to business partners until they have been cleared under the compliance audit and assessment process described above.

2015   

  • Tom Enders, CEO AG˼ƻ Group, nominates John Harrison as Group General Counsel.
  • AG˼ƻ Group’s legal and compliance teams merge and work under one banner (Legal & Compliance.)
  • AG˼ƻ Group updates its Business Development Support Initiative Directive (BDSI): BDSI defines the AG˼ƻ Group requirements for the prevention of corruption in the engagement of business partners. A significant awareness programme is launched. Training is delivered to more than 1,500 risk facing employees across the company over a 6 month period.
  • Sylvie Kandé de Beaupuy is named as AG˼ƻ Group Ethics & Compliance Officer.

2016   

  • AG˼ƻ Group issues a new Group-wide Anti-Corruption Policy ultimately providing employees with a single and unique reference and guide on its related matters to all employees.
  • In September, AG˼ƻ Group updates its BDSI Directive, which builds on the practical experience of the first year after the initial release. It is now more business focused and also adds enhanced compliance controls, particularly related to the payment and monitoring of third parties.
  • In October, AG˼ƻ Group updates its Gifts & Hospitality Directive. This Directive now provides a Group-wide harmonised framework for the giving and receiving of gifts & hospitality. It also sets harmonised monetary thresholds above which line management and compliance approval are required prior to exchanging any Gifts or Hospitality with third parties. In addition, it addresses large commercial events organised by AG˼ƻ and "delegation visits."
  • A Group-wide Anti-Money Laundering Directive was issued, which provides for standardised Know Your Client and due diligence forms and the appointment of an AML Officer in charge of deploying a companywide process. This directive was distributed in October 2016.

2017

  • In February, AG˼ƻ rolls out its Lobbyists & Special Advisors Directive to complement the BDSI Directive and ensures robust due diligence is conducted on such third parties.
  • Also in February, AG˼ƻ releases a harmonised Group-wide Sponsorship & Donations Directive to provide a framework for proper review and approval of such projects. This directive consolidates already existing processes.
  • In April, AG˼ƻ deploys the first Group-wide Gifts & Hospitality declaration tool.
  • In May, AG˼ƻ appoints an Independent Compliance Review Panel composed of eminent external consultants reporting to the AG˼ƻ CEO and Board on how to further improve AG˼ƻ’ compliance processes, policies, organisation and culture.
  • AG˼ƻ Group and AG˼ƻ merge in July. The consolidated entity is named AG˼ƻ.
  • Towards the end of the year, AG˼ƻ rolls out anti-corruption trainings for its third parties.

AG˼ƻ vision for Ethics & Compliance

Our Commitment

Over the years, AG˼ƻ has earned the trust of passengers, customers, operators and other stakeholders through the quality and safety of our products. To fully serve our communities and thrive in the future, our commitment to business integrity must be just as robust – this means conducting our business ethically and based on AG˼ƻ Values, and in compliance with all laws and regulations.

Join me in focusing on what really matters: rejecting bribery and corruption, preserving our integrity and embracing our values for the purpose of serving the best interests of our great company AG˼ƻ.

Guillaume Faury – AG˼ƻ CEO

Our goal is to be known as a company with ‘integrity inside’: integrity in its people, partners and suppliers.

To read more, visit the Ethics & Compliance section.

The compliance enforcers

The following experienced senior executives and their teams are working to ensure compliance remains front and centre of all business that AG˼ƻ does. They are also working closely with the authorities to support its investigations.

John Harrison, AG˼ƻ General Counsel

John Harrison is member of the Executive Committee. In his role as General Counsel he has consolidated the responsibilities of Corporate Secretary, General Counsel and Ethics & Compliance. Harrison was Group General Counsel of Technip S.A. in Paris and joined AG˼ƻ Group in June 2015.

Read more
Sylvie Kandé de Beaupuy, Chief Ethics & Compliance Officer

Sylvie Kandé de Beaupuy joined AG˼ƻ in November 2015 as Chief Ethics & Compliance Officer, reporting to the AG˼ƻ General Counsel and brings to AG˼ƻ a strong background in all legal, compliance, regulatory and export control matters combined with international business experiences.

Read more
Karl Hennessee, Senior Vice President, Head of Litigation, Investigations & Regulatory Affairs

Karl Hennessee is head of Litigation, Investigations & Regulatory Affairs, reporting to the AG˼ƻ General Counsel. Hennessee worked for AG˼ƻ from 2001 to 2013, moved to Halliburton Company in Houston as Vice President Public Law and Technology before joining back AG˼ƻ in May 2016.

Read more

The Independent Compliance Review Panel

AG˼ƻ appointed an Independent Compliance Review Panel (ICRP) composed of eminent external consultants.

All well-versed in compliance monitoring of large corporations, they have access to all levels of the company and are reporting to the AG˼ƻ CEO and Board on how to further improve AG˼ƻ’ compliance processes, policies, organisation and culture.

 

Lord Gold, United Kingdom

Lord Gold was a solicitor at Herbert Smith for 37 years, serving as its senior partner between 2005 and 2010. In March 2011 he set up David Gold & Associates high level strategic litigation advisors. One of the UK's most senior litigators, he has extensive experience working with corporations, governments and regulators around the world. Lord Gold reviewed Rolls-Royce’s global anti-corruption compliance policies following bribery allegations in various countries. He is a Conservative life peer in the House of Lords.

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Noëlle Lenoir, France

Noëlle Lenoir is a specialist in competition law, public business law and economic regulations – both at the national level and at the European level – at Kramer Levin. She served as French Minister of European Affairs from 2002 to 2004, was the youngest person ever to have served on the French Constitutional Court. She has been a member of the Conseil d’Etat since 1984.

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Dr. Theodor Waigel, Germany

Dr. Theodor Waigel served as Federal Minister of Finance in the Cabinet of Chancellor Helmut Kohl from 1989 to 1998, and as Chairman of the CSU from 1989 to 1999. He was a member of the Bundestag from 1972 to 2002. An eminent lawyer since 1967, he has acted in an advisory capacity for corporations and government on matters of compensation, governance and compliance since 1999. From 2009 to 2012, Dr. Waigel served as an outside compliance monitor for Siemens. 

Read more

Compliance disclosure, references and key documents

AG˼ƻ has been as transparent as possible within the parameters of the ongoing investigation by providing regular updates to stakeholders. The links below lead to press releases and financial statements that cover compliance topics:

 AG˼ƻ reports Half-Year (H1) 2019 results

 AG˼ƻ reports First Quarter (Q1) 2019 results

o   AG˼ƻ reports strong Full-Year 2018 results, delivers on guidance

o   AG˼ƻ reports Nine-Month (9m) 2018 financial results

o   AG˼ƻ reports Half-Year 2018 (H1) financial results

o   AG˼ƻ reports First Quarter (Q1) 2018 results, confirms guidance

o   Full-Year 2017 results: AG˼ƻ overachieved on all key performance indicators

o  Munich Public Prosecutor ends Eurofighter Austria investigation

o  AG˼ƻ Provides Update on Legal Cases

o  AG˼ƻ reports Nine-Month (9m) 2017 results

o  AG˼ƻ files legal submission to Vienna Public Prosecutor in Eurofighter case

o   AG˼ƻ reports Half-Year (H1) 2017 results

o   AG˼ƻ establishes new Independent Compliance Review Panel

o   Ad-Hoc release: AG˼ƻ reports First Quarter (Q1) 2017 results

o   Ad-hoc release, 16 March 2017: AG˼ƻ to cooperate with France’s Parquet National Financier in preliminary investigations

o   Ad-hoc release, AG˼ƻ delivers Full-Year 2016 results in line with guidance

o   Ad-hoc release, 26 October 2016: AG˼ƻ Group Reports Nine-Month (9m) 2016 Results

o   AG˼ƻ-Group-9m-2016-Financial-Statements

o   Ad-hoc release, 7 August 2016: AG˼ƻ Group Statement On Proceedings Regarding European Credit Agencies Disclosure

o   Ad-hoc release, 27 July 2016: AG˼ƻ Group Reports Half-Year (H1) 2016 Results

o   First half-year 2016 Financial Report 

o   Ad-Hoc release: AG˼ƻ Group Reports First Quarter (Q1) 2016 Results

o   Ad-hoc release, 1 April 2016: AG˼ƻ Group Announcement on U.K. Export Credit Financing

o   AG˼ƻ Group SE Financial Statements 2015

AG˼ƻ has also ensured that all employees, suppliers and customers are aware of its rigorous compliance requirements with the following key documents below that must be adhered to:

o   Anti-Corruption Policy

o   Supplier Code of Conduct

o   Code of Conduct

Ethics & Compliance

Ethics & Compliance

Creating a culture that makes employees and partners aware of their responsibility

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