Thales denies wrongdoing as Anglo-French authorities investigate bribery and corruption allegations in joint probe

French defence and technology firm Thales has denied bribery and corruption allegations brought to its attention after Britain's Serious Fraud Office (SFO) announced a joint investigation with French authorities.

Thales said on Friday that the Anglo-French probe concerned "the performance of a contract in Asia" and focused on four "entities in France and the UK", without giving further details.

"Thales denies the allegations brought to its knowledge," the company said in a statement.

It did not give any more details about the allegations or say when it first learned of them and how. It also did not say whether it was conducting its own internal probe.

The company said in a recent corporate report that it had "zero tolerance" for corruption.

In October, Thales won a lucrative contract to build an Australian facility for the production of artillery shells.

The deal had followed months of controversy surrounding one of its staff members being accused of soliciting champagne and handing over secrets to the company from 2016 to 2017 while previously employed by Australian Defence.

A Thales spokesperson said the company was cooperating with authorities in the latest Anglo-French probe and always complied with national and international laws.

A French judicial source told Reuters earlier that the probe was related to an arms contract in Asia and centred on possible charges of bribery of a foreign public official, influence trafficking, handling stolen goods and money laundering.

Two people familiar with the case said it at least partially involved a business deal in Indonesia.

Indonesia's Defence Ministry told Reuters in a message late on Saturday that it was aware of news of the investigation.

A ministry spokesman said all Thales contracts with the ministry and the country's defence industry followed rules of transparency, accountability and good governance, and the ministry had not seen any indication of those contracts breaking any law.

The SFO declined any comment beyond its late Thursday announcement.

"At this point, the related contract under investigation remains unknown, making any potential assessment of the risk challenging," Jefferies analysts said in a note.

Privatised in the late 1990s, Thales is effectively controlled by the French government and aeroplane maker Dassault Aviation, which together hold a majority.

Thales's military and civil products range from sub-hunting sonars to biometric identity systems for banks, and from satellites to seat-back entertainment systems for airlines.

It also provides cybersecurity services and radar for French Rafale warplanes and is involved in two satellite ventures with Italian aerospace group Leonardo.

It has 16 sites in Britain, with more than 7,000 staff. In September, it said its local CEO had expressed his wish to leave the group with a replacement taking office this month, without giving further details.

Latest probe separate from June raids

The latest investigation appears to come on top of two earlier probes by France's PNF financial prosecutor, as well as an ongoing investigation inherited from the acquisition of chipmaker and digital security firm Gemalto in 2019.

In June, searches were carried out at sites in France, the Netherlands and Spain as part of two preliminary investigations by France's PNF, Thales said in its mid-year results, adding that it was cooperating with those probes.

The French judicial source said the latest investigation was separate from the raids carried out in June.

The company has also faced controversy in Australia.

In June, an Australian National Audit Office (ANAO) report detailed "unethical conduct" involving a 10-year contract for Thales to run two Commonwealth munitions facilities, prompting the Department of Defence to refer the matter to the corruption watchdog.

At the start of November, defence officials confirmed in Senate estimates that the NACC was still investigating the Thales matter, after Defence Industry Minister Pat Conroy had declared his department found no evidence to substantiate the claims.

Former defence minister Linda Reynolds, who served in the role between 2019 and 2021, said she had taken an intense interest in the ANAO's scathing findings earlier this year about probity in the department.

"When I read this audit report and remembered what had actually come up to me in the [ministerial] brief it almost made me feel ill at what I was told, and that is very consistent with the advice that is in this report about what went to a different minister in 2017," Senator Reynolds had said.

"The fact is, you are now issuing new contracts to the same company [Thales], so this is why this is so important, I think, for your organisation, because you've inherited a smell, a big smell."

Reuters/ABC