AirAsia on defense after Airbus-related bribery allegations

According to the “Statement of Facts” that accompanied announcement of the settlement Jan. 31, between July 2011 until June 2015, Airbus failed to prevent persons associated with Airbus from bribing others, “namely directors and/or employees” concerned with the purchase of aircraft by AirAsia and AirAsia X airlines. The court documents allege between October 2013 and January 2015, Airbus paid $50 million to sponsor a sports team that was jointly owned by two AirAsia executives in Malaysia “but was legally unrelated to AirAsia and AirAsia X.”

The Statement of Facts did not identify the AirAsia executives but revealed them as members of the board of directors and “substantial shareholders” at AirAsia X. It also said the AirAsia executives were rewarded with an order of 180 aircrafts from Airbus “secured by way of improper payments.”

“The payments to the sports team were intended to secure or reward improper favor by them in respect of that business,” the court documents stated.

Court documents further describe how Airbus employees were going to offer an additional $55 million in bribes until a review of third-party relationships led to a freeze of payments. “This offer was not finalized, and no payment was made,” according to the statement.

On Saturday, Malaysia’s Anti-Corruption Commission announced it had launched an investigation into the matter, alongside the U.K. Serious Fraud Office. “Under the Malaysian Anti-Corruption Commission (MACC) Act, we are empowered, and have jurisdiction, to investigate any act of corruption committed by any Malaysian citizen or permanent resident in any place outside Malaysia,” said MACC Chief Commissioner Latheefa Koya. “In the case of the Airbus-AirAsia disclosures, I confirm that the MACC is in touch with the U.K. authorities and is already investigating the matter.”

AirAsia responds

In a reply statement, AirAsia said it “wishes to clearly state that it was neither involved in any way whatsoever with the SFO’s investigation of Airbus, nor given any opportunity to provide any information or clarification to the SFO.” AirAsia added it “vigorously rejects and denies any and all allegations of wrongdoing.”

“The entering into of each 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,” AirAsia said. “As a customer of Airbus since 2005, AirAsia never made purchase decisions that were premised on an Airbus sponsorship.”

AirAsia continued, “We also wish to emphasize that all negotiations and dealings leading to the signing of any aircraft purchase agreement have been undertaken directly with Airbus on an arm’s length basis and without the involvement of any third parties or intermediaries. AirAsia executives negotiated rigorously in the interests of the company and had at all times acted in good faith.”

Taking things a step further, AirAsia disclosed to the Malaysian stock exchange Monday that its board has formed an independent committee to investigate the allegations. CEO Tony Fernandes and Chairman Kamarudin Meranun will step aside from their executive roles for at least two months while an investigation is conducted, though they will continue to serve the company as advisers.

“We categorically deny any and all allegations of wrongdoing or misconduct on our part as directors of AirAsia,” the duo stated.

Fernandez and Meranun added, in reference to Airbus’ deferred prosecution agreement, “This agreement and the contents were arrived at without any reference to us; neither were any explanations sought from us. … This is in clear violation of fundamental legal principles of fairness.”

Tharumalingam Kanagalingam will serve as acting CEO. AirAsia’s stock fell as much as 11 percent Monday.