Last week’s news that Airbus will pay nearly $4 billion in penalties associated with a long-running bribery investigation was huge. But that penalty did not cover any individuals associated with the company or its customers. This week the collateral damage is starting to accrue. The first hit is at AirAsia. CEO Tony Fernandes and Chairman Din Meranun will step down for two months, “or such other period that the company may deem fit” in order to “facilitate a full and independent” internal investigation.
Responding to the initial consent decree, AirAsia issued a statement noting it “was neither involved in any way whatsoever with the [UK Serious Fraud Office] investigation of Airbus nor given any opportunity to provide any information or clarification to the SFO.”
The reports summarizing the Airbus penalty suggest that some aircraft purchases were tied to Airbus sponsorships of sports teams owned by AirAsia executives. Specifically, Airbus spent $50 million from October 2013 to January 2015 to sponsor the Caterham Formula 1 racing team owned by Fernandes and Meranun. The pair formed the ream in 2010 and rebranded to Catherham in 2011. The airline challenged that assertion, noting:
[E]ach aircraft purchase agreement was never made by any single individual decision, but instead arrived at through careful evaluation, deliberation and the collective decision of the board members after taking into account technical specifications, aircraft flight performance and operating economics. The superiority and reliability of the aircraft and increasingly attractive pricing being offered to maintain our competitive edge in the airline business were key considerations. As a customer of Airbus since 2005, AirAsia never made purchase decisions that were premised on an Airbus sponsorship.
The accusations suggest that AirAsia’s A330neo and A320neo deals dating to 2014 are part of the bribery investigation. They cover 180 aircraft.
The two executives have been core to the AirAsia success story. They defined the product, growth plans, branding and more. The carrier would certainly continue even without them, but it would undoubtedly be a very different experience. Especially if the transition is forced to occur without a proper succession period.
In addition to the accusations from the UK SFO, the Malaysian Anti-Corruption Commission (MACC) is now investigating the deal. MACC Chief Commissioner Latheefa Koya confirmed in a statement that the organization is in contact with its UK counterparts and that a probe is underway.
Fernandes and Meranun indicated intentions to “assist AirAsia in an advisory capacity as and when required” during this investigative period.
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