by Ganesh Sahathevan
involved deals with Rolls Royce
At the Paris Air Show in 2011, the European aircraft firm Airbus snagged a historic order. Air Asia, a Malaysian low-cost airline, signed a deal to buy 200 Airbus 320 Neo jetliners, the largest deal ever in Airbus history. Shortly after this record deal Tony Fernandes, CEO of Asia Air, bought the Caterham Formula 1 motor racing team and much to everyone’s surprise, Airbus logos sprouted on the racing cars’ tail fins as a team sponsor.
Handelsblatt has learned that Airbus gave a total of €100 million ($122 million) to Caterham, which never won a race. Fernandes sold Caterham in 2014, but much of the Airbus sponsorship money is still unaccounted for. “It’s unclear what happened to our investment,” said an Airbus internal document seen by Handelsblatt.
The improper payment consisted of $50 million (and Airbus employees also offered but did not pay an additional $55 Million) paid to directors and/or employees of AirAsia and AirAsia X airlines as sponsorship for a sports team. The sports team was jointly owned by AirAsia Executive 1 and AirAsia Executive 2 but was legally unrelated to AirAsia and AirAsia X. The additional improper payment was prevented by the October 2014 freeze on payments to BPs described at para 29 above.
The above matters raise accounting issues for both AirAsia and AirAsiaX for legal or not, the money earned was due the two companies. These were decisions made for the companies, and with consequences for their assets and liabilities.
These are matters for the Securities Commission but the SC has shown itself unwilling to investigate matters involving AirAsia and AirAsiaX. In addition to the Caterham F1 issue, there is still outstanding the matter of the Caterham Jet, investigated by the SFO and made public in 2017 in another decision of the UK Crowm Court (see story below).
That matter gained much publicity internationally in 2017, but the SC refused to act. It appears that the MACC's investigations into AirAsia and AirAsiaX should include the SC officials responsible.
END
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UK's Serious Fraud Office (SFO) has named AirAsia Group as one of several foreign parties involved in bribery cases with jet engine manufacturer Rolls-Royce PLC.
AirAsia Group, in an immediate response, told Malaysiakini that it had complied with procedures in its dealing with Rolls-Royce.
The bribery in the AirAsia deal was one of 12 charges brought against Rolls-Royce after a four-year investigation into its dealings with clients in Indonesia, Thailand, India, Russia, China and Malaysia.
Rolls-Royce, in a Deferred Prosecution Agreement with the SFO on Tuesday, agreed to a disgorgement of 258.17 million pounds (RM1.42 billion) in illegal profits and an additional 239.08 million pounds (RM1.32 bilion) in financial penalty.
The profit disgorged from Rolls Royce's deal with AirAsia amounted to 17.08 million pounds (RM94.03 million).
In his judgment over the matter, Queen's Bench Division president Brian Leveson said that Rolls-Royce employees "took steps to pressure both junior sales and internal compliance personnel to create and approve corrupt arrangements" in the Malaysia case.
According to the Statement of Facts filed with the Crown Court at Southwark, Rolls-Royce failed to prevent its employees from providing an AirAsia Group executive with credits worth US$3.2 million (RM14.2 million) for the maintenance of a private jet.
This was despite Rolls-Royce employees believing that the credits would lead the AirAsia Group executive to perform his function "improperly".
"This financial advantage was given at the request of the AirAsia group executive, in return for showing favour towards Rolls-Royce in the purchase of products and services provided by Rolls-Royce and its subsidiaries, including Total Care Agreement services to be supplied to AirAsia X, a subsidiary of AirAsia Group," it said.
The document said the credits for the private jet used by the AirAsia group executive was solicited through an AirAsia X senior employee in 2011.
It also alleged that there was an attempt to conceal the fact that the credits, given to AirAsia X in 2013, would be used for the the private jet, which was unrelated to the AirAsia Group.
The document did not name who the AirAsia Group executive was.
AirAsia denies deal was concealed
AirAsia Group head of communications Audrey Progastama Petriny, in a statement to Malaysiakini, said AirAsia and AirAsia X board of directors and management were kept informed at all times of the transactions relating to the jet.
"The upkeep for which was also clearly spelt out in the annual reports for both companies and AirAsia X initial public offering prospectus," she said.
Petriny said the credits were obtained according to procedure and used to offset the operational costs of the corporate jet which was used by senior AirAsia X executives for business travel.
"The cost of maintaining and operating the aircraft has been fully borne by AirAsia and AirAsia X.
"AirAsia Berhad has acquired the aircraft in 2016 as announced on the Malaysian bourse," she said.
In June last year, AirAsia Berhad reportedly purchased a Bombardier BD-700-1A10 Global Express which had been used by AirAsia Berhad executive chairperson Kamarudin Meranun and group chief executive officer Tony Fernandes since 2012.
The private jet (photo) was purchased from Caterhamjet Global Ltd (CJG), a company in which Kamaruddin and Fernandes held a 18.56 percent indirect stake and is also a member of the Tune group.
According to the details of the case, an AirAsia X senior employee had approached a Rolls-Royce employee in August 2011 about the maintenance of a new private jet which the AirAsia Group executive was planning to purchase.
In November 2011, a Rolls Royce senior employee who met with the AirAsia Group executive reported that the latter was "very offended" due to the high Corporate Care rate that was offered for his new Global jet...
Airbus corruption investigation focusing on suspect investments
Airbus spent hundreds of millions of euros on office buildings in Beirut, wind farms in Germany and Malaysian Formula One racing cars as inducements to buy airplanes. Investigators think they may have been bribes.
03/20/2018 - 08:14 PM
Malaysia's Caterham Formula One racing team never won a race despite receiving €100 million from Airbus.
At the Paris Air Show in 2011, the European aircraft firm Airbus snagged a historic order. Air Asia, a Malaysian low-cost airline, signed a deal to buy 200 Airbus 320 Neo jetliners, the largest deal ever in Airbus history. Shortly after this record deal Tony Fernandes, CEO of Asia Air, bought the Caterham Formula 1 motor racing team and much to everyone’s surprise, Airbus logos sprouted on the racing cars’ tail fins as a team sponsor.
Handelsblatt has learned that Airbus gave a total of €100 million ($122 million) to Caterham, which never won a race. Fernandes sold Caterham in 2014, but much of the Airbus sponsorship money is still unaccounted for. “It’s unclear what happened to our investment,” said an Airbus internal document seen by Handelsblatt.
The Air Asia affair is just one of several questionable deals that have come to light involving Airbus investments in seemingly worthless enterprises whose owners were either being courted to buy Airbus airplanes or had already done so as a way of “improving commercial perspectives.” Airbus financed schools in Greece, wind farms in Germany and office buildings in Lebanon.
Investments were made without clear or consistent justification.Auditor, Airbus
Investigators in the United States, Britain, France and other countries are now closely examining these deals to determine whether they amounted to bribes paid to secure the sale of aircraft. According to Handelsblatt’s own investigation, it’s clear that top management of Airbus knew about the questionable payments and approved them.
In one case, Airbus has already paid an €80 million fine to the Munich public prosecutor’s office after revelations of dubious Airbus payments made to secure a deal to sell jet fighter aircraft to the Austrian military.
Britain’s Serious Fraud Office opened investigations into “fraud, bribery and corruption” in Airbus’s civil aircraft business in 2016. Airbus then launched an internal investigation because of suspicious reports submitted to British export authorities. Last March, Airbus confirmed that France’s financial prosecutors were also conducting an investigation and last autumn, US prosecutors began looking at the suspicious payments as possible bribery.
Airbus CEO Tom Enders asserts that Airbus became aware of accusations of bribery in 2012 at the strategy and marketing division in Paris, which he described as the “bullshit castle,” and he put a halt to questionable practices there.
But by 2014, when the company was supposed to have been cleansed of bad actors, an auditor raised the alarm about still ongoing problems. “The situation is unsustainable,” the auditor said in a memorandum seen by Handelsblatt. The auditor said management must act or the company will continue to invest in the “improvement of commercial perspectives” that he said were “without clear or consistent justification.” The memo was sent to Mr. Enders, his former deputy, Marwan Lahoud, CFO Harald Wilhelm and other top executives.
Rather than being closed down, the strategy and marketing office in Paris was used as a parallel sales organization, brought in to close deals when the mainstream sales organization could not cut prices any further, which would open the company to charges of unfair competition. The strategy office then became involved and cut the questionable deals for investments in return for airplane sales.
In many cases, most of Airbus’s so-called “investments” were completely written off shortly after the start of the project, adding to the suspicion they were covers for bribes. “The company is almost bankrupt,” wrote one auditor about a company called Deccan. “Nearly no cash in company,” said another report on the wind farms.
When one executive asked why such projects with little chance of success were funded, he was told, “That is not your concern.”
Thomas Hanke is a Handelsblatt correspondent in Paris and Charles Wallace is an editor for Handelsblatt Global in New York. To contact the authors: hanke@handelsblatt.com and C.Wallace@extern.handelsblatt.com.
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