Former Airbus India Head invokes French law to stall ED probe

MUMBAI: Former Airbus India president Kiran Rao, under investigation over money laundering charges, has invoked the French Blocking Statute, which prevents companies based there from sharing sensitive details with other countries, said people with knowledge of the matter.

The Enforcement Directorate (ED) had moved court, seeking Rao’s arrest for his alleged role in the Rs 8,000 crore purchase of 43 Airbus planes by state-owned Indian Airlines in 2005 that was negotiated by an empowered group of ministers. The carrier was merged with Air India, also state-owned, in 2007.

Rao has submitted that he’s not an Indian citizen and that he wouldn’t be able to provide any details on the deal due to the statute, said the people cited above.


The ED would have to approach the Parquet National Financier (PNF, or National Financial Office) if it wanted to get the information. The ED hasn’t approached the PNF or any other French government arm, said the people.

Specific Permissions from PNF
The PNF, which is the country's financial prosecutor, would be required to intervene and give specific permissions in any matter related to bribery or corporate governance in which a French company is involved, sources said.

ET was first to report on October 29 that the ED had reopened an earlier case and could be looking at questioning Rao along with half a dozen other accused in the case. Rao had been issued a summons around the same time to appear before the ED.

Rao told the court through his lawyers that he wouldn’t be able to make a statement to the ED unless the Indian agency approached the French authorities.

This was merely “an excuse for now to avoid joining the investigation,” said an official. “Rao is deliberately not cooperating in the investigations.”

Airbus told ET: “We do not comment on any ongoing investigation.”

The ED, which is seeking Rao’s arrest under the Prevention of Money Laundering Act (PMLA), has been trying to question the former Airbus executive for the past few months and have summoned him several times, officials said.

Separately, the Central Bureau of Investigation (CBI) had in 2013 initiated investigations into alleged irregularities in the aircraft order and questioned seven executives of the former Indian Airlines. Rao had been named as one of the co-accused in the case involving allegations of corruption and the company being favoured over its rivals.

CBI personnel had even travelled to London to question Rao in 2014, ET reported at the time.

But the investigation agency had not made any allegations of kickbacks or money laundering against Rao.

ET first reported the ED’s accusations on November 13. Airbus had hired London-based BCL Solicitors and Mumbaibased Trilegal, while Rao hired MZM Legal, a Mumbai-based law firm headed by Zulfiquar M Memon, in the case.

Bengaluru-born Rao, a well-known face in the international aviation industry, had been tipped to replace John Leahy as sales head of Airbus early 2017 but didn’t get the job.

According to Airbus officials, Rao hasn’t been part of the company since December.