DO-228 manufacturer sues Swiss Company
General Atomics Europe Sues Swiss Defense Firm RUAG Over Alleged Fraud in Do228 Acquisition
In August 2024, General Atomics Europe filed a lawsuit against Swiss defense conglomerate RUAG, alleging deception during the 2020 acquisition of RUAG's Oberpfaffenhofen facility, which produces the Do228 aircraft. The German company claims it was misled by RUAG, resulting in financial discrepancies amounting to €40,453,192.99.
Background of the Acquisition
In 2020, RUAG International sold its German-based business aviation and helicopter MRO operation, along with the Dornier 228 production line, to General Atomics Europe. This strategic move was part of RUAG's efforts to restructure and streamline its operations.
Allegations of Financial Misrepresentation
General Atomics Europe contends that RUAG's 2019 financial statements, which were pivotal during the acquisition negotiations, were significantly overstated by approximately €40 million. The German firm alleges that RUAG delayed the release of these financial statements beyond the legally mandated timeframe, hindering due diligence processes. Post-acquisition audits purportedly revealed that certain assets, including obsolete aircraft parts, were overvalued, and necessary financial provisions were omitted.
Legal Actions and Accusations
Beyond the civil lawsuit, General Atomics Europe has filed criminal charges against former RUAG executives involved in the transaction, accusing them of deliberate deception and providing inaccurate information during the sale process. The allegations extend to two KPMG auditors, who are suspected of complicity in the purported financial misrepresentations.
RUAG's Response
RUAG has firmly denied the allegations, asserting compliance with all legal requirements during the sale. The company describes the fraud accusations as unfounded and baseless. KPMG has refrained from commenting on the matter.
Future of the Do228 Program
Despite the ongoing legal dispute, General Atomics Europe remains committed to advancing the Do228 program. The company is developing a modernized version of the aircraft, the Do228 NXT, featuring enhancements such as Synthetic Vision Systems in the cockpit and an improved autopilot. This initiative aims to rejuvenate the Do228 platform and expand its capabilities in the aviation market.
The outcome of this legal confrontation could have significant implications for both companies and the broader aerospace industry, particularly concerning the integrity of cross-border acquisitions and the due diligence processes that underpin them.