BA Boeing Co

By Robert Wall 

LONDON -- Britain's top corruption investigator has opened a formal probe into plane maker Airbus Group SE's use of consultants, escalating an investigation that has been simmering for months.

Airbus said the U.K.'s Serious Fraud Office had opened a criminal probe into the company related to irregularities concerning third-party consultants that the British government identified back in April.

The company said Sunday the probe is centered on allegations of fraud, bribery and corruption in the civil-aviation business of the plane maker, the world's No. 2 behind Boeing Co. Those allegations are related to irregularities related third-party consultants, the SFO and Airbus said.

Airbus said in its statement it continues to cooperate with the SFO, which confirmed the investigation on Sunday. The SFO, which said it formally launched the probe last month, is soliciting further information if it is available. SFO probes can drag out for years.

The U.K. government disclosed in April that it was seeking information from Airbus over how it used overseas agents. It said at the time it was assessing whether to launch a formal, fraud probe. The company disclosed at the time it had submitted flawed information for export credit financing applications to U.K. Export Finance, the government agency that provides financial backing to some of the European plane maker's deals. That government organization referred the information to the SFO to determine if further action is required.

U.K. Export Finance said at the time, that it was "seeking assurances around Airbus's current practice with regard to overseas agents." The use of such agents is permitted, but needs to be fully disclosed, the government office said.

Airbus has been cut off from export credit financing in the U.K. amid the review. U.K. Export Finance said it hoped to conclude the review quickly, without saying how long financing support would be suspended.

That has been a drag on cash flow, and Airbus executives have said they are working with the agency to restore credit financing. That process is separate from the fraud investigation.

France and Germany also temporarily have frozen export credit to Airbus.

The plane maker has said it expected the suspended financial backing for some exports to be restored before year end.

This is the second SFO probe into Airbus activities. The anticorruption agency also is investigating the business dealings of a small Airbus unit in Saudi Arabia. The SFO investigation into that case was announced in 2012. Airbus has said it is cooperating in that probe as well.

Government-backed export credit agencies provide financing for some Airbus jetliner deals to help foster exports. They also can help ease airlines' access to commercial lending.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

August 07, 2016 16:22 ET (20:22 GMT)

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