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German prosecutors think EADS paid bribes in Austria deal

The first of Austria’s 15 new Eurofighter Typhoons on the approach to the military airport in the small Styrian village of Zeltweg, July 12, 2007. German prosecutors are investigating European defence company EADS, manufacturer of the Eurofighter, on suspicion of bribery in the Austrian contract.


German prosecutors believe European aerospace group EADS paid at least €50-million ($63.5 million U.S.) in bribes to Austrian officials to secure a $2-billion deal for Eurofighter jets, according to a document seen by Reuters.

Authorities in Germany, Austria and Switzerland raided EADS sites earlier this month in connection with investigations into suspected bribery, money-laundering and fraud related to the 2003 deal for 15 jets.

The deal depended on EADS guaranteeing offset deals meant to generate twice the value of the deal for the Austrian economy through suppliers, related services or education projects.

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Allegations surfaced almost immediately that many of the supposed offset deals did not bring in any business for Austria but that the money ended up in the pockets of politicians, civil servants and other individuals.

An internal document prepared by German prosecutors that was the basis for this month's raids said at least €71.5-million was paid by EADS managers to a company called Vector Aerospace, a business with a London postal box address that was set up to arrange the side deals.

From there, a minimum of €50-million was paid to five brokers between 2005 and 2008, according to the document, which was shown to Reuters by a source close to the investigation.

"No advisory or procurement services to achieve the counter-trade volume actually resulted through these so-called brokers," prosecutors wrote.

"In fact, it concerned bribes that had been agreed to influence decision-makers (civil servants) in the granting of the contract to supply fighter jets to Austria."

Vector Aerospace has since been liquidated.

EADS declined to comment.

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The Munich prosecutor's office said it never comments on documents relating to current investigations.

According to the source close to the investigation, much of the information in the document, prepared in October, came via Austrian prosecutors from Peter Pilz, an Austrian opposition Green lawmaker who is working with prosecutors in Vienna, Rome and Munich.

Mr. Pilz headed a committee set up by Austria's parliament to examine the affair in 2006. Following its report in 2008, Vienna prosecutors took up the case last year. Mr. Pilz says he has calculated that at least €170-million was paid in bribes.

European group EADS had competed with Sweden's Saab and U.S. weapons company Lockheed Martin to win the contract.

Austria's defence minister said on Friday Austria might try to cancel the deal or seek damages if it found bribes were paid, and the economy minister, who is responsible for the counter-trades, said he was sure the deal was not clean.

(Additional reporting by Jens Hack in Munich.)

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