In the corruption scandal surrounding the sale of Eurofighter jets to Austria, more and more information suggests that European defense giant EADS may have played a role in bribery aimed at securing the lucrative contract. The affair has the potential to damage the company's image and its bottom line.
When Tom Enders receives mail from Vienna these days, he doesn't expect it to contain good news. And so it was again last week, when the CEO of European aerospace and defense group EADS read with some trepidation a letter from Austrian Economics Minister Reinhold Mitterlehner.
In his missive, Mitterlehner spoke of doubts and suspicions -- and he had a concrete demand. He urged Enders to personally clear up the matter as quickly as possible.
The letter concerns the largest defense deal in Austria's history: the purchase of 15 Eurofighter jets for some €1.7 billion ($2.2 billion). The sale has been dogged by corruption allegations for years.
But the affair took a dramatic turn last month when public prosecutors in Munich and Vienna ordered over half a dozen searches, including at EADS offices and the homes of former managers. If investigators' suspicions are confirmed, German industry will be shaken by yet another bribery scandal, with significant financial risks for the defense giant.
The corruption probe focuses on countertrade agreements worth twice the value of the defense deal -- in other words, some €3.5 billion. That's the amount of business that the EADS deal had to generate for Austrian companies in return for Vienna's approval of the Eurofighter sale. It is precisely these agreements that prompted Mitterlehner to write his letter. It turns out that a sizable proportion of the arranged offset deals could be suspect. "No stone will be left unturned," vows the economics minister.
There is speculation that kickbacks flowed in both directions. On the one hand, officials were allegedly bribed so Austria would decide to purchase the relatively expensive Eurofighter. On the other hand, companies purportedly received payoffs in exchange for declaring follow-up deals to the Economics Ministry that, in reality, never existed. (end of excerpt)
Click here for the full story on the Spiegel Online website.