The Wall Street Journal - 16.03.2020

THE WALL STREET JOURNAL. Monday, March 16, 2020 |B3

lated to helicopter sales were

deemed as excessive by the

committee, while the level of

remuneration for its agent in

China was ordered to be re-

viewed, according to minutes

of the committee’s delibera-

tions, reviewed by the Journal.

The committee asked for

due diligence of its agents in

Japan and Indonesia to be

checked and updated, accord-

ing to the minutes. All pro-

posed contracts in Brazil were

put on hold, while contracts in

Argentina were initially al-

lowed to proceed under new

compliance rules that were

stricter and limited the

amount payable to the local

agent.

The committee was tasked

with deciding how to deal with

suspect contracts, whether by

continuing to honor them,

through settlements or by re-

fusing to pay. The decisions

were based in part on whether

the amount of money prom-

ised to the agents was justifi-

able, according to the docu-

ments.

ments.

Airbus first conducted an

internal review into the full

extent of its third-party rela-

tionships in late 2013, accord-

ing to prosecutors. An Airbus

audit found “significant

breaches of compliance poli-

cies” in Airbus’s relationship

with its third-party agents,

they said. It reported the is-

sues to investigators and the

company has cooperated in

the various probes.

Airbus decided to freeze all

payments outstanding for

deals in its commercial air-

craft division, which accounts

for the lion’s share of its over-

all revenue. That freeze later

extended to its other divisions,

defense and space, and heli-

copters.

After its internal audit, Air-

bus set up what executives

termed the “liquidation com-

mittee,” in an effort to unwind

relationships with scores of

agents it was using around the

world, prosecutors have said.

Payments to middlemen in

Thailand and South Korea re-

found that none of Airbus’s

current board, including Mr.

Faury, was implicated in any

of the allegations they made

public as part of the settle-

ment. The SFO said it “has no

evidence that the current Ex-

ecutive Committee members

knew of the corrupt practices

or culture of Airbus.”

The documents, which ha-

ven’t been made public and

haven’t previously been re-

ported, include minutes of

meetings by Airbus executives

tasked with reviewing how to

exit contracts with middlemen

that might have fallen afoul of

global bribery and corruption

rules.

Overall, about 110 partner-

ships with third-party agents

working for Airbus’s various

units were flagged by execu-

tives as suspicious in the in-

ternal review, which was then

used to help prosecutors in

their outside probes. British

and French prosecutors

brought forward 13 counts

against the company related to

those deals. None of them was

AirbusSE executives raised

concerns about fees paid to a

number of middlemen working

with its helicopter division, led

at the time by the company’s

current chief executive, ac-

cording to internal documents

related to Airbus’s $4 billion

bribery settlement in January.

In that settlement, U.S., U.K,

and French prosecutors al-

leged Airbus inappropriately

paid middlemen to secure or-

ders at its commercial-aviation

and its defense and space

units. Internal documents sub-

mitted to investigators in the

probe and reviewed by The

Wall Street Journal show Air-

bus executives raised red flags

about payments to middlemen

at the helicopter unit.

The division at the time of

the internal scrutiny was

headed by Guillaume Faury,

who took over last year as Air-

bus’s group chief executive.

Suspect helicopter deals were

flagged for various reasons,

according to the documents.

Some middlemen payments

appeared to executives as ex-

cessive compared with the un-

derlying helicopter orders in-

volved, according to the

documents. Others were

flagged, according to the docu-

ments, for what executives

suspected was improper due

diligence or lack of supporting

paperwork. Airbus executives

made no final determinations

about the propriety of the he-

licopter deals in the docu-

ments viewed by the Journal.

Mr. Faury, who headed the

helicopter unit from 2013 to

2018, declined to comment.

Airbus, citing “legal rea-

sons,” said it couldn’t com-

ment on specific cases covered

by the investigation.

Mr. Faury is one of a hand-

ful of senior executives who

have remained on Airbus’s ex-

ecutive committee in the wake

of the bribery investigation

that led to the biggest-ever in-

ternational settlement of cor-

porate bribery charges.

Britain’s Serious Fraud Of-

fice, the agency that led the

investigation for the U.K.,

The North American private-
equity arm ofMorgan Stanley
Investment Managementhas
agreed to sell veterinary clinic
chainPathway Vet Alliance
LLCto consumer-focused buy-
out firmTSG Consumer Part-
ners, according to people fa-
miliar with the matter.
Although details of the
transaction couldn’t be
learned, the company was ex-
pected to trade hands for at
least $2 billion, including
debt, said other people with
knowledge of the deal.
The transaction is one of a
limited number of mergers
and acquisitions to move for-
ward in an environment still
adjusting to the market up-
heaval of recent weeks.
Fears about the economic
effects of the coronavirus pan-
demic on the world economy
has led to wild swings in the
stock market over the past
five days, with the volatility
making it harder to value and
finance deals.
Large leveraged buyouts of-
ten depend heavily on the buy-
ers’ ability to obtain debt, of-
ten in the form of syndicated
loans or high-yield financing.
However, bankers and deal at-
torneys say the availability of
such debt has all but frozen
over the past week as certain
lenders reassess risk.
It is unclear how much debt
TSG plans to use to finance
the deal.
Investors typically view
pet-care companies as rela-
tively safe bets in a downturn,
however. Such businesses
have attracted billions of dol-
lars in recent years from pri-
vate-equity firms and corpo-
rate acquirers eager to tap
into a fast-growing yet frag-
mented market fueled by in-
creased consumer spending
on pets.

BYWILLIAMLOUCH
ANDLAURACOOPER

Morgan

Stanley

Arm to Sell

Vet Unit

related to helicopter sales.

Prosecutors have said pub-

licly they narrowed the scope

of their probe to concentrate

on the biggest deals with the

clearest evidence of alleged

wrongdoing. They have said

they are now probing the ac-

tions of individuals, after set-

tling with Airbus.

The settlement with prose-

cutors included a deferred

prosecution agreement, in

which Airbus wasn’t required

to admit or deny specific

wrongdoing. Prosecutors said

they won’t investigate any fur-

ther deals that have been dis-

closed by Airbus. Those would

include the helicopter deals

discussed in the internal docu-

About 110

partnerships with

third-party agents

were flagged.

BUSINESS NEWS

BYBENJAMINKATZ

Airbus Copter Deals Scrutinized

A Rega Airbus H145 helicopter lands during an unveiling event by Rega, the Swiss Air-Rescue service in Dubendorf, Switzerland.

STEFAN WERMUTH/BLOOMBERG NEWS

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