Airbus challenges Austrian allegations over Eurofighter deal

By Kirsti Knolle

VIENNA (Reuters) - Airbus denied any wrongdoing in a submission on Monday to Austrian prosecutors investigating allegations of fraud and wilful deception over a $2 billion fighter deal and threatened the country's defence minister with legal action.

Europe's largest aerospace company, which has repeatedly denied the allegations, said Austria's Defence Minister Hans Peter Doskozil had disregarded the presumption of innocence in the case and therefore violated its rights.

Vienna prosecutors are investigating Airbus and the Eurofighter consortium following a complaint by the defence ministry over the 2003 jet purchase.

A final report of a parliamentary inquiry into the jet purchase, how side deals were awarded and whether bribes were paid, is expected on Tuesday.

Airbus has clashed with European governments, notably Germany, before, but the row with Austria is unique in its fury.

An Austrian defence ministry move to consider barring Airbus from a planned tender for 12 small military helicopters and its announcement to end the Eurofighter jet programme early have put extra strain on ties.

And the Austrian probe coincides with British and French investigations into the use of middlemen in plane sales, which some analysts say could lead to a record fine.

OFFSET DEALS

One of Austria's main allegations is that Airbus deceived it about so-called offset deals intended to boost the local economy which were required to agree the purchase.

Offset deals, where a defence supplier will select local companies to do some of the work, are a common requirement of governments looking to support domestic skills and technology.

The ministry has also questioned the companies' ability and desire to deliver some of the planes, suggesting the deal was not economic for the planemakers.

Airbus on Monday said Doskozil had misused the judiciary system by publicly denouncing it and the company's lawyer Peter Gauweiler said he had advised it to hold the minister liable for potential damages resulting from his comments.

But Doskozil, who could lose power at elections scheduled for next month, said in an email: "It is the well-known attempt of the defence group to blame the Republic of Austria for the Eurofighter mess".

The dispute comes at a time when Austria's government has limited room for manoeuvre as key policymakers, including Doskozil, will very likely change after the Oct. 15 election.

A coalition between the Social Democrats and the conservative People's Party is highly unpopular. Top performers in the polls are the conservatives under new leader Sebastian Kurz, who is very likely to form a new coalition government.

But it is not clear whether he would team up with the far-right Freedom Party or with the Social Democrats, which the defence minister is a member of.

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(Reporting by Kirsti Knolle; Editing by Mark Potter and Alexander Smith)