EADS North America sends missive to Pelosi defending its reputation

In a letter to Speaker Nancy Pelosi (D-Calif.), EADS North America defended itself against rival Boeing’s attempts to portray the company as a potential security threat.

Boeing is urging lawmakers and Pentagon officials to factor national-security implications into their decision in the competition to win a $35 billion Air Force tanker aircraft.

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“Boeing clearly has resorted to the use of falsehoods as their only tool to prevent the fair competition that the Department of Defense has committed to for the selection of a replacement aerial refueling tanker for the U.S. Air Force,” EADS North America Chairman Ralph Crosby wrote to Pelosi on Wednesday.

EADS North America is a wholly owned subsidiary of the European aerospace and defense conglomerate EADS NV with headquarters in Germany and France. The governments of France, Germany and Spain all hold stake in the conglomerate.

Boeing officials are distributing literature on Capitol Hill singling out EADS NV as not having to abide by U.S. laws on corporate integrity and for trying to market its wares to Iran. EADS North America is subject to the Foreign Corrupt Practices Act.

The laminated, pocketbook-sized handouts Boeing is giving to lawmakers also claim that for reasons of national security, the United States has never bought a critical military system from a foreign-owned or -controlled company.

“The Boeing Co. … has made allegations of impropriety by EADS, specifically regarding trade with Iran,” Crosby wrote to Pelosi. “I assure you that these allegations are untrue. EADS scrupulously abides by the laws and regulations that govern the sales of our products — which include the U.S. Foreign Corrupt Practices Act.”

Sean O’Keefe, the CEO of EADS North America, said his company has all the security arrangements to handle the sensitive and classified technologies for the U.S. government.

Timothy Keating, Boeing’s vice president for government operations, on Thursday characterized EADS North America as a “holding company” for the European parent company, citing EADS North America’s own description on its website. EADS North America is “a shell, if you will,” he said in an e-mailed statement.

Keating this week raised concerns that the European parent company still calls the shots for its North America subsidiary and would have input in the Air Force tanker contract, because parts of it would be built in Europe and then assembled in Mobile, Ala. In a crisis situation, Keating said, the U.S. government would have less leverage to compel EADS to continue building the tanker or supplying parts for the tankers over the years.

“In the past, foreign governments have not agreed with U.S. policy and then withheld material goods and support,” Keating said Tuesday.

In his letter to Pelosi, Crosby also tried to parry efforts by Boeing’s congressional supporters to use the defense authorization bill to compel the Pentagon to factor into the competition a dispute before the World Trade Organization (WTO) regarding illegal government subsidies to Airbus, which is owned by EADS. Airbus builds the A330 that EADS is offering in a modified version for the U.S. tanker contract.

“This initiative is designed to be prejudicial against the EADS North America bid. If passed, this legislation would violate the WTO treaty, which forbids punitive action taken on trade matters being adjudicated by the organization,” Crosby wrote.

EADS and Boeing have been publicly arguing over whether the Pentagon should take into account the WTO’s finding that European governments have helped Airbus with launch money for its products. The European Union has to appeal the case and the WTO has to recommend the remedies the United States should take after the whole process is finalized.

The EU also has a suit against the United States claiming Boeing received about $24 billion in subsidies and tax breaks from Washington state over the past two decades, plus non-repayable benefits from military and space contracts. The WTO has not yet issued its preliminary ruling in that case.

This story was originally posted at 2:13 p.m. and was updated at 7:08 p.m.