VIENNA --- The Austrian Federal Ministry of Defence and Sports (FMDS) has filed a criminal complaint with the Vienna Office of Public Prosecutions today against Airbus Defence and Space GmbH (formerly EADS Deutschland GmbH) and Eurofighter Jagdflugzeug GmbH based on suspected willful and fraudulent deception.
The Republic of Austria represented by the Finanzprokuratur (lawyer and legal advisor of the Republic of Austria) has joined the proceedings against the two Airbus companies as a private party.
The statement of facts presented in the criminal proceedings, joined by the private party, are based on the investigations of the “Task Force Eurofighter” led by Major General Hans Hamberger. The Task Force was formed by FMDS in 2012. The report of the Task Force is published on the website www.bundesheer.at.
Based on the findings of the “Task Force Eurofighter” investigations, the FMDS assumes in the criminal complaint that the two accused Airbus companies have willfully and fraudulently been deceiving the Republic of Austria since 2002, both with regards to the true purchase price as well as to the true ability to deliver and true specifications of the Eurofighter interceptor planes.
Hans Peter Doskozil, Federal Minister of Defence and Sports: “The report that I have received clearly states: Without the fraudulent and deceitful actions of Airbus Defence and Space GmbH and the Eurofighter Jadgflugzeug GmbH, the Republic of Austria would not have decided in favor of the Eurofighter in 2003.
“Furthermore, the settlement in 2007 would not have been agreed. As Federal Minister of Defence, I see it as my duty to report criminal matters that come to my attention and to demand compensation for the damages inflicted on the Austrian taxpayers. This is what we have done today.”
“My concern is the full and final settling of the Eurofighter purchase, which has been subject to corruption allegation for 15 years. I want complete clarification of the case. Taxpayers must be confident that we are careful with their money. Only then they will continue to be prepared to accept investments in the security of our country,” said the Federal Minister of Defence.
Republic of Austria demands compensation for damages
Wolfgang Peschorn, President of the Finanzprokuratur: “The Republic of Austria has today joined the criminal proceedings against Airbus Defence and Space GmbH and Eurofighter Jagdflugzeug GmbH with regards to damages, causality, illegality and culpability. The accused companies will have to compensate the damages.”
The financial damages to the Republic of Austria are the sum of the paid purchase price for 15 Eurofighters plus the difference between the operating costs of the Eurofighter incurred to date and the hypothetical operating costs of an alternative aircraft minus the current value of the 15 Austrian Eurofighters. Based on current knowledge, the damages can therefore amount to up to EUR 1.1 billion. They are definitely at least EUR 183.4 million. In addition, there are damages due to the additional operating costs of the more expensive Eurofighter, which cannot yet be quantified.
Fraud by deceit with regards of the true value of the object of purchase
The statement of facts proves that the two accused Airbus companies never informed the Republic of Austria that the purchase price of EUR 1.959 billion included almost 10 per cent (exactly EUR 183.4 million) of costs for offset transactions. This, despite the fact that the Republic of Austria clearly requested, in the first bidding documents of 2001, that costs for the realization of the requested offset transactions are to be shown separately.
The Republic of Austria always had to assume that the purchase price according to the purchase contract of July 1, 2003 represented the true value and quality of the ordered interceptor planes and that the realization of the requested offset transactions would not have a financial impact.
In reality, the EUR 183.4 million which were fraudulently included in the purchase price were used to cover not just legal but also illegal costs for offset transactions. The public prosecution offices in Munich and Vienna have already been investigating in this context for some time.
Fraud by deceit with regards to the object of purchase
The evidence provided by the Task Force Eurofighter suggests that, since 2002, the two accused Airbus companies promised and entered into an agreement to deliver an object of purchase, despite being in no position and having no intention to deliver the agreed object of purchase. The settlement reached in 2007 between the Republic of Austria and the Airbus companies does not alter the culpability of such fraudulent deceit. Peschorn: “We assume that the Republic of Austria would not have signed the first purchase agreement in 2003 nor the settlement in 2007 with the terms agreed if such facts had been known.”
Austrian air surveillance secured
The rights of the Republic of Austria are clearly safeguarded, given the comprehensive statement of facts presented in the criminal proceedings, joined by the private party, and therefore the statute of limitation is suspended.
Irrespective of the legal proceedings dealing with the past, his primary and most important duty as Federal Minister of Defence is to guarantee the security of the country. Doskozil: “Air surveillance by the Austrian Air Force remains uncompromised. Our air force and our pilots do a fantastic job. They also need effective interceptors. I declare my 100% support for Austrian Armed Forces’ air surveillance duties.”
However, according to Doskozil, the operating costs of the first tranche of Eurofighters are very high. “This year, the operating cost for the Eurofighter will be about EUR 80 million. We also need to replace our Saab 105 OE by 2020. We need to come up with new solutions. For this reason, I have set up a special commission in the Ministry of Defence, under the leadership of the Commander of the Air Force, Brigadier Karl Gruber. It has until the end of June 2017 to examine all the options available to us for ensuring the continued effective safeguarding of our air space at today’s levels, but on a more cost-effective basis.”
About the “Task Force Eurofighter”:
“Task Force Eurofighter” was set up in 2012 to investigate, within the scope of action of the Federal Ministry of Defence and Sports, whether the Republic of Austria was defrauded in the context of the Eurofighter purchase. The investigations of the Task Force were led by Major General Hans Hamberger in close coordination and cooperation with Wolfgang Peschorn, President of the Finanzprokuratur, as well as in cooperation with the Vienna Office of Public Prosecution.
In 2012, the Vienna Office of Public Prosecution had already opened an investigation (file number/Aktenzahl GZ 604 St 6/11f) into suspected corruption and bribery of officials in connection with the Eurofighter purchase.
The Task Force was supported by the following external experts: the US law firm Skadden, Arps, Slate, Meagher & Flom (Skadden), the Austrian law firm Held Berdnik Astner & Partner Rechtsanwälte GmbH, Grant Thornton Unitreu Advisory GmbH for forensic investigations, as well as the civil law experts Univ. Prof. Dr. Christian Rabl und Univ.-Prof. Dr. Andreas Kletécka.
The report of the Task Force is available on the website of the Federal Ministry for Defence and Sport at www.bundesheer.at
Click here for the Task Force report (34 PDF pages, German only) on the Austrian MoD website.
(EDITOR’S NOTE: Prosecutors in Munich, who are conducting parallel investigations, are set to finish their preliminary proceedings later this year, AFP reported from Vienna earlier today.)