Airbus hits back against Austria in Eurofighter row

https://www.reuters.com/article/us-airbus-austria-lawsuit/airbus-hits-back-against-austria-in-eurofighter-row-idUSKCN1BT120


Airbus press release:
http://www.airbus.com/newsroom/press-releases/en/2017/09/airbus-files-legal-submission-Viena.html

This English translation of the German press release is only for information purposes.  The German version is the official press release.

·         Eurofighter aircraft were delivered as ordered by Austria
·         Austria was neither deceived about the delivery capability and offset business costs, nor was there any error in this respect.
·         Costs for offset transactions which needed to be stated were non-existent, and offset business costs were irrelevant for the award of the final contract
·         The Defence Minister’s public accusations violate fundamental rights – misuse of the judiciary system



Vienna/Toulouse, 18 September 2017 – On Monday, Airbus (stock exchange symbol: AIR) filed a submission to the Vienna Public Prosecutor in response to allegations of deception in the procurement of Eurofighter combat aircraft in 2003, which have been made by Austrian Defence Minister Hans Peter Doskozil. In this submission, the company (Airbus Defence and Space GmbH) denies all allegations made by the Minister in his 16 February 2017 press conference and in his submission of a criminal “statement of (alleged) facts” to the Vienna Public Prosecutor.

Airbus’ initial criticism is about the highly questionable manner which the Defence Minister chose to file the criminal “statement of (alleged) facts”, and the prejudicial information policy which he pursued in this context. These actions constitute violations of economic and fundamental rights.

To raise such allegations, combined with damage claims running into the millions, 16 years after the tender and eight years after delivery of the last Eurofighter aircraft, appears highly abstruse and politically motivated. This is why the Defence Minister refrained from confronting Eurofighter Jagdflugzeug GmbH directly with the allegations before publicly shaming and blaming the company. This characterisation also holds true for the Minister’s attempt to circumvent the statute of limitations, and to justify the unconstitutional retroactive application of the Corporate Criminal Liability Act of 2006 by construing an alleged continuing deception over many years.



“This is a flagrant violation of European principles of the rule of law and of fundamental constitutional principles,” said Airbus Senior Counsel Dr Peter Kleinschmidt.


Government officials must adhere to the principles of objectivity, truthfulness and fairness in their public statements, particularly when – as in this case – the state acts as the alleged victim, the prosecutor and the judge at the same time. “The Defence Minister’s sole intent here is to create a scenario of intimidation in order to generate civil law concessions which would otherwise not be achievable through a proper legal process,” Dr Kleinschmidt said.

More specifically, the Defence Minister raised the following two accusations: Eurofighter Jagdflugzeug GmbH was “neither able nor willing” to deliver the aircraft at the time of the contract’s conclusion in 2003. Furthermore, the Minister alleges that the costs for the offset transactions to be placed by Eurofighter were not stated separately in a proposal dated 2002. On that account, the Defence Minister asserts that he was deceived.


“These accusations are factitious and legally groundless,” Dr Peter Kleinschmidt said. “There was neither any deception, nor any error.”

1. The aircraft were delivered as specified in the contract. From the beginning, the contract allowed the supplier to deliver either aircraft from the earlier production run, known as Tranche 1 (with a defined upgrade obligation) or from a later production run, the so called Tranche 2. As all parties involved were aware that the production Tranches were defined by the Eurofighter Core Nations (United Kingdom, Germany, Italy, Spain), which had invested billions in the development of the Eurofighter programme. Both the ability and the willingness to deliver were given at all times. Delivery began following a reduction in the order quantity from 18 to 15 Tranche 1 aircraft, which was agreed at Austria’s request in 2007. Delivery was completed – as required by the contract – in 2009. It is thus absurd to claim that the manufacturer of Europe’s most modern combat aircraft would not have wanted to deliver such aircraft to its first export customer. It is the business model of Eurofighter Jagdflugzeug GmbH to deliver Eurofighter aircraft.

2. There were no costs for offset transactions beyond the lump sum price (it was only such costs which item 40 of the Request for Proposal referred to) and therefore no such costs could be stated. Furthermore, it was commonly known that offset transactions would trigger operational expenses and had to be included in the overall lump sum price. The Austrian government never specifically asked for any information on the cost of offset transactions during the long-running tender process. That alone speaks for itself. Additionally, the offset transactions were no relevant criterion for the selection of the best bidder and thus could not have an impact on the evaluation of the offers.

Eurofighter clearly won the tender both technically and commercially and was identified as the best bidder (including the purchase price). This was re-affirmed just recently by former Austrian Chancellor Dr. Wolfgang Schüssel. In June 2017, he testified before the Parliamentary Investigative Committee in Vienna that the Eurofighter had come out “lightyears” better in the bidding process than the competing Swedish product. “The Eurofighter was ahead in the ‘must-have’ criteria, and miles ahead in the discretionary criteria. So, it is entirely wrong to believe that these two aircraft are types that are able to operate on more or less the same level [...] The offset transactions were, of course, extremely interesting, but they were not decisive for the decision, which was based solely on the military quality of the aircraft and, of course, on the reasonable price,” Dr. Schüssel said.

Today, Airbus is convinced that the offset volume, which has already been submitted, exceeds its obligations under the offset business contract with the Republic of Austria; this was also confirmed before the Parliamentary Investigative Committee by the representative of the Ministry of Economy, which is responsible for the offset transactions.[1]

The requirement to provide offset business was imposed by the Republic of Austria. The offset transactions have greatly helped Austrian companies to achieve a lasting and successful involvement in the aeronautics business which is a growing industry. Just to mention one example among many, Austrian-based FACC recently signed a contract with Airbus worth over € 500 million as a technology partner for the new A320 “Airspace” cabin.