by Ganesh Sahathevan
New MAS Chairman Wan Zulkiflee Wan Ariffin should have learnt from his time at Petronas the folly of paying too much
In the ongoing discussion about AirAsia and AirAsiaX, and their likely merger with Malaysian Airlines so as to "save" all three, the Malaysian Government seems to have decided that AA and AAX, like MAS, are protected species and must not be allowed to fail.
This attitude is incomprehensible, especially given the impossible position that AA and AAX are in given the Airbus admissions (See story below).
On the other hand, letting AA and AAX fail and go into liquidation will make ample sense, especially for MAS who can then takeover AA and AAX's assets (primarily its fleet), without the burden of the Airbus admission. Merging MAS and AirAsia on the other hand could mean MAS inheriting the Airbus related problems, akin to eating cyanide laced durian.
It will be interesting to hear why the Malaysian Government does not think the bove is not in its best interest.
TO BE READ WITH
Saturday, March 21, 2020
Airbus admission prevents further business with Airasia: BDO Governance Advisory findings meaningless. given Airbus admission before the UK Crown Court,and cannot be a substitute for MACC, police, SC investigation
by Ganesh Sahathevan
The Edge and others have reported:
BDO Governance Advisory Sdn Bhd, appointed by the board committee of AirAsia Group Bhd and AirAsia X Bhd (AAX) to assist in undertaking an independent review on corruption allegations related to the Airbus scandal against their co-founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, has given the duo the all clear.
Following this, Fernandes and Kamarudin have been reinstated to their posts as group chief executive officer (CEO) and executive chairman of AirAsia respectively.
In separate bourse filings today, AirAsia and AAX said BDO had on Monday (March 16) presented their report on the findings of the independent internal inquiry.
BDO found that the group has a robust aircraft procurement process and that the acquisition of aircraft was “justifiable and at prices favourable to the company” and that its sponsorship of the sports team by Airbus was disclosed to and supported by the board of directors of AirAsia at the relevant time.
The report said the sponsorship showed demonstrable benefits to the AirAsia group and was not linked to any purchase decisions by AirAsia and that both Fernandes and Kamarudin had properly disclosed their interests to AirAsia’s board and abstained from discussions or decisions relating to the said sponsorships.
The above is meaningless given Airbus's admission to the UK Crown Court. Additionally, BDO cannot possibly take any legal precedence of the UK Courts, and the MACC and Malaysian Police who are reported to be pursuing an investigation of the matter.
An SC investigation is also ongoing.
Airbus would still be prevented from dealing with AirAsia,given its UK Court admission.
END
Wednesday, February 5, 2020
Airbus cannot continue dealing with AirAsia and AirAsiaX, regardless of what MACC and other Malaysian authorities decide : $ 4 Billion fine means business cannot be conducted with current management and board; AA & AAX management board must be purged, given AA &AAX Airbus fleet
by Ganesh Sahathevan
Airbus has estimated that the damage from its bribery conviction is likely to be in the region of USD 220 Billion.The record setting USD 4 Billion fine is only the start (see story below).
In Malaysia on the other had there is still the sense that Airbus admission needs to be "investigated" and "proven". MIDF Research has gone as far as to speak of a "golden opportunity for both co-founders to strengthen their trustworthiness back in the company and subsequently, the airline industry".
Malaysian authorities, investment houses and various persons in the ruling elite seem unable to comprehend that regardless of what they conclude about AirAsia and AirAsiaX, Airbus will be severely constrained in how it deals with AA and AAX. Dealing with current management and directors as if nothing happened would be contrary to the admission of guilt, and the penalty.
These matters cannot but concern AA and AAX management and boards for both airlines have Airbus fleets.Short of swapping their planes for Boeings or China made C919s, the only logical step is for AA's and AAX's management and board to be purged and replaced with fresh faces who can be proven to be independent of the current structures.
External administrators need to be appointed and the companies restructured.
END
Airbus put potential damage from bribery conviction at €200bn
Airbus has estimated that the damage from its bribery conviction is likely to be in the region of USD 220 Billion.The record setting USD 4 Billion fine is only the start (see story below).
In Malaysia on the other had there is still the sense that Airbus admission needs to be "investigated" and "proven". MIDF Research has gone as far as to speak of a "golden opportunity for both co-founders to strengthen their trustworthiness back in the company and subsequently, the airline industry".
Malaysian authorities, investment houses and various persons in the ruling elite seem unable to comprehend that regardless of what they conclude about AirAsia and AirAsiaX, Airbus will be severely constrained in how it deals with AA and AAX. Dealing with current management and directors as if nothing happened would be contrary to the admission of guilt, and the penalty.
These matters cannot but concern AA and AAX management and boards for both airlines have Airbus fleets.Short of swapping their planes for Boeings or China made C919s, the only logical step is for AA's and AAX's management and board to be purged and replaced with fresh faces who can be proven to be independent of the current structures.
External administrators need to be appointed and the companies restructured.
END
Airbus put potential damage from bribery conviction at €200bn
Airbus analysis estimated that the damage impact from a criminal conviction arising from bribery charges levelled against the company could have reached €200 billion across its commercial aircraft, defence and helicopter divisions.
The airframer has agreed to pay a €3.6 billion ($4 billion) fine to settle the case under a three-year deferred prosecution arrangement, a deal intended to avoid a costly fraud trial and potential collateral damage affecting the workforce.
Airbus stood accused of failing to prevent bribery in a number of countries following an extensive investigation. The probe covered over 1,750 entities which were engaged by Airbus as business partners, third parties used to increase the airframer’s international reach and assist in winning sales contracts. Of these, 110 were the subject of particular concerns.
Conviction could have resulted in discretionary – and, in some states, mandatory – debarment from tendering for public-sector contracts.
“What matters here is not the potential loss of contracts…but the effect this will have on the company financially and on its [innocent] employees, and the wider effects this will have on innocent third parties,” remarked the president of the UK High Court’s Queen’s Bench Division, Dame Victoria Sharp, regarding the case.
Airbus had examined the value of contracts for which it could be banned from tendering if debarred, the effects of which could last up to 15 years.
This analysis showed that, in the worst case, the total future revenue at risk could exceed €200 billion.
Such an extensive financial impact would have put thousands of jobs at risk – at the airframer and its suppliers – across the 15-year timeframe, and would have affected Airbus substantially in terms of market presence given its position as one of the two players in a global commercial aircraft duopoly.
Financial firm Deloitte estimates, in a study commissioned by Airbus, that the indirect impact on the economies of countries including France, Germany, the UK, Spain and the USA could adversely affect their GDP by over €100 billion, said Sharp.
The reduction in competition from Airbus’s absence in public tenders, she added, could also result in additional public spending amounting to “many billions” of euros.
“Notwithstanding the seriousness of the conduct in this case, I consider the public interest factors against prosecution clearly outweigh those tending in favour of prosecution,” Sharp said.
She referred to Airbus’s “exemplary” co-operation in the matter, noting its voluntary submission to the UK Serious Fraud Office regarding overseas conduct and highlighting 24 individual areas in which it subsequently provided full assistance to the subsequent investigation – a factor which helped to halve the penalty portion of the UK fine to €398 million, resulting in a total sanction of €991 million.
This co-operation included providing access to over 30 million documents relevant to the probe. Independent investigation did not identify any additional documents not already brought up by Airbus’s own efforts.
“Airbus has, to use a colloquial phrase, truly turned out its pockets and is now a changed company to that which existed when the wrongdoing occurred,” added Sharp.
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