Airbus SE (Netherlands)
Relevant Period: April 24, 2015 - December 31, 2020
Deadline: May 31, 2023
Formerly known as the European Aeronautic Defence and Space Company NV (EADS NV), Airbus SE is a Dutch multinational aerospace corporation, operating through its commercial aircraft, defense and space, and helicopter divisions. In terms of revenue, Airbus is the second largest manufacturer of commercial aircraft in the world, slightly behind Boeing, and also manufactures military transports, satellites, and launch vehicles. Airbus shares (ISIN NL0000235190) are listed on the Frankfurt Stock Exchange; the Euronext Paris; and the Spanish stock exchanges in Madrid, Bilbao, Barcelona, and Valencia.
Unbeknownst to investors and the public, from approximately 2008 to 2015, Airbus SE was offering and paying bribes via its employees, executives, and “Business Partners,” to government officials and airline executives around the world in order to obtain illegal business advantages and win orders on hundreds of aircraft. Business Partners were third parties used to increase Airbus’s international footprint and assist Airbus in winning sales to customers in several countries around the world. Airbus disguised and concealed the true purpose of the Business Partners’ engagement in a number of ways, including by creating fake and fraudulent contracts, using fictitious invoices for services that were never performed, creating false activity reports on behalf of Business Partners, and developing certain “special projects” and investment opportunities that were actually designed as elaborate and secret ways to fund Business Partners. In addition, Airbus concealed relationships with certain Business Partners by, among other things, only engaging in oral agreements, using fake non-reimbursable loans, and paying the Business Partners indirectly.
Airbus not only failed to disclose what the Company and its Business Partners were doing from roughly 2008 to 2015, but also falsely assured investors of its performance and ethics compliance in its annual reports and public statements, while promoting a false narrative surrounding its growing international footprint in the relevant emerging markets. The event that led to the external bribery investigations was not initiated by Airbus but rather by the U.K. Export Finance agency (UKEF) on April 24, 2015, when it raised questions to Airbus about the Company’s due diligence procedures and had flagged transactions in Sri Lanka. This eventually led to Airbus disclosing on April 1, 2016 that it had discovered “certain inaccuracies” relating to U.K. export credit financing applications for customer airlines that could result in a disruption in funding, without identifying the nature of the problem.
On August 8, 2016, the U.K. Serious Fraud Office (SFO) announced it had opened a criminal investigation under the U.K. Bribery Act 2010 into allegations of fraud, bribery and corruption in Airbus’s civil aviation business relating to irregularities concerning third party consultants. Thereafter, on March 16, 2017, Airbus announced that the French Parquet National Financier (PNF) had also opened a preliminary investigation into the same subject. Despite these announcements, Airbus continued to assure investors that ethics and compliance was a top priority, and that it had strengthened its anti-corruption programs. On December 20, 2018, it was reported that the U.S. Department of Justice had opened its own investigation based on violations of the Foreign Corrupt Practices Act (FCPA), Arms Export Control Act (AECA), and the International Traffic in Arms Regulations (ITAR) relating to the SFO and PNF’s allegations of corruption against Airbus, raising the stakes of probes already underway in Britain and France.
On January 27, 2020, reports began to emerge of a potential settlement between Airbus and regulators in the U.K., France, and U.S. related to the ongoing bribery and corruption probe, revealing that the Company faced potentially billions of dollars in fines. Then on January 31, 2020, it was reported that Airbus agreed to a deal with all three countries’ agencies to settle the violations for roughly $4 billion total. In return, all three agencies have agreed to suspend prosecution for three years. If Airbus complies with the agreements for the three years (ending January 31, 2023), the prosecutions in each jurisdiction will be discontinued. These disclosures, as well as the reports of potential settlement and the actual settlement, caused Airbus’s stock price and market capitalization to drop significantly.
We are currently analyzing a potential action against Airbus in the Netherlands based on the facts above. For a complimentary and confidential analysis of your transactions in Airbus stock, we are requesting transaction data for ISIN NL0000235190 from April 24, 2015 to December 31, 2020, inclusive, while also including the applicable SEDOL and place of trade.
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Wirecard AG (Germany)
ISINs: DE0007472060, DE000A2YNQ58
Relevant Period: July 10, 2012 - June 25, 2020
Deadline: June 30, 2023
Wirecard AG (“Wirecard”), was formed in 1999 and is considered one of the world’s leading payment system companies. Wirecard provides electronic payment and risk management solutions as well as services in the areas of mobile payments, e-commerce, digitization and financial technologies. In 2018, Wirecard had transaction volumes of over €150 billion and a market capitalization of over €20 billion. Since early 2019, Wirecard has been the subject of accounting fraud allegations and has lost about 90% of its market capitalization.
The downslide of Wirecard started with a report by the Financial Times (“FT”) on January 30, 2019, which referenced an internal presentation of Wirecard describing suspicious and most likely fraudulent money flows at Wirecard’s Singapore branch between 2014 and 2018. Another FT article on February 7, 2019 alleged that Wirecard generated sales revenues at its subsidiaries in the Asia-Pacific region using sham transactions in order to meet profit targets there. Over this short period from January 29, 2019 to February 8, 2019, Wirecard’s share price lost over 40% in value. However, Wirecard denied all allegations and accused the FT of assisting short-sellers with making profits off incorrect news. Wirecard even started lawsuits to quiet negative news and involved the German police to go after persons spreading negative information.
Wirecard’s price eventually recovered during 2019 until further accounting fraud allegations surfaced in an October 15, 2019 FT article, which alleged that Wirecard fraudulently inflated sales and profits at its Dubai and Ireland businesses. The FT even disclosed documents supporting its allegations of accounting fraud, resulting in another 12% drop in Wirecard’s stock price, starting a downward trend that continued well into December 2019.
This prompted Wirecard to engage KPMG for an external audit, which ended in a report published on April 28, 2020. While Wirecard was promising that the KPMG report would quiet any doubters, it revealed many gaps in Wirecard`s accounting and reporting, including a statement, that KPMG “cannot make a final judgment on whether the documentation and information are complete, correct and free of contradiction” due to incomplete documentation provided by Wirecard. This caused the stock price to drop another 26% from its April 27, 2020 closing price. Prompted by Wirecard to calm the market, KPMG published an addendum to the report on May 3, 2020, but it was inconclusive and only confirmed Wirecard’s unwillingness/inability to provide KPMG or its auditors EY with enough documentation to make a final determination and to be transparent to investors. Not surprisingly, EY withdrew its sign-off on the financial statements of Wirecard for its 2019 annual report, which was announced for June 4, 2020 but postponed to June 18, 2020. In the meantime, Wirecard’s offices were raided on June 5, 2020 amidst investigations into potentially fraudulent transactions, insider trading and other crimes committed by CEO Markus Braun and other executives at the company.
On June 18, 2020, Wirecard delayed the publication of its 2019 annual report once more, because its auditor, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (“EY”), was unable to confirm an amount of €1.9 billion in Wirecard’s balance sheet, representing almost a quarter of its consolidated total assets. On June 22, 2020, Wirecard confirmed that the €1.9 billion allegedly held in a trust account with banks in the Philippines do not exist, retracting previous statements regarding its TPA business as well as preliminary numbers of its 2019/2020 financial results. Wirecard also informed the market that it was potentially facing immediate debt payment obligations of approximately €2 billion. These events resulted in a drop of 85% in the company’s stock value from €99.50 (Xetra opening price on June 18, 2020) to close at €14.44 (Xetra) on June 22, 2020. Finally, on June 25, 2020, Wirecard informed that it had filed for bankruptcy. It is becoming increasingly clear that the Wirecard case is one of the biggest economic scandals in Europe in recent years. The German financial supervisory authority BaFin is investigating if the fraud goes back to the annual report 2016 and additional defendants such as its auditor EY have come into the spotlight for their failures in the connection with the downfall of the company.
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