Airbus has been hit with a £6.4 million fine in the UK after copping to multiple breaches of rules meant to keep sensitive goods like military hardware out of the wrong hands. The European aerospace giant, which is basically the beating heart of the continent's defence industry, said it paid up to HM Revenue and Customs after self-reporting a series of record-keeping failures that occurred before November 2022.

HMRC said the offences boiled down to Airbus not keeping proper records of exports or transfers of controlled technology over a sustained period. The UK's export control licensing regime is designed to stop strategic goods - think military items and stuff that could be used in weapons of mass destruction - from being sold overseas or to sanctioned individuals and countries.

The £6.4 million payment is the highest out-of-court settlement HMRC has ever wrangled for strategic export offences, and it's more than 10 times the £569,100 that an Aberdeen-based division of Petrofac paid last month for breaching Russia sanctions. So, you know, it's a big deal.

While Airbus cooperated with the investigation, its failure to follow the rules is especially eyebrow-raising given its pivotal role in Europe's defence sector. The company works on projects like the Eurofighter Typhoon fighter jet and the A400M heavy cargo aircraft. You'd think they'd want to keep track of that stuff.

“The UK operates a strict licensing regime to ensure military equipment does not fall into the wrong hands,” said Edwige Hill, deputy director of HMRC’s fraud investigation service, in a statement that basically translates to: "We're watching you." She added, “This settlement shows we will not hesitate to take action.”

The specific breaches included failing to keep accurate records of transfers of controlled technology under three Open General Export Licences (Ogels), multiple failures to keep registers related to those Ogels, and a failure to comply with conditions on a Standard Individual Export Licence (SIEL). For the uninitiated, an Ogel is a reusable pre-approved licence for low-risk stuff, while an SIEL is a more specific permission requiring government approval for a particular quantity of items going to a named end-user.

The fine was levied against Airbus Operations Limited (AOL), a UK division of the French-headquartered company. In a statement to investors, AOL said it “fully cooperated with the investigation and implemented appropriate remediation measures,” adding that the settlement “closes and fully resolves the matter.”

Sanctions lawyer Nigel Kushner, chief executive of law firm W Legal, warned this would rattle complacent exporters. “This is a wake up call for UK exporters. It is not enough to obtain licences or rest on your laurels utilising pre-approved licences available to all,” he said. “It is critical to comply with the licence terms, in particular record keeping and updating registers. The failure to do so is an offence in itself as Airbus have been reminded to its cost.”

This isn't Airbus's first brush with financial penalties. In 2020, the company agreed to pay a record £3 billion after admitting it had paid huge bribes on an “endemic” basis to land contracts in 20 countries. So maybe they should invest in a better filing system.