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Airbus-AirAsia Scandal: What You Need To Know
Everyone is talking about Airbus' mega bribery scandal and Malaysia's (more specifically, AirAsia's) link to it.
Here's what you need to know about the whole issue.
How did it start?
According to a report by The Economist on Jan 31, Airbus agreed to a deferred prosecution agreement (DPA) (we'll explain this in a bit) amounting to USD 4 billion (RM 16.464 billion) with prosecutors from the United States, the United Kingdom.
A DPA is a corporate plea deal which basically means that Airbus avoided a trial in court by co-operating with investigators, agreeing to pay fines and changing their company behaviour as agreed in the DPA.
The probe took about four years to complete and during the investigations, Airbus admitted to handing out bribes to officials from five countries specifically Sri Lanka, Taiwan, Indonesia, Ghana and Malaysia.
This was when AirAsia and AirAsia X were brought into the equation..jpg.aspx "Reuters")
Airbus admitted that it had paid senior officials from AirAsia and AirAsia X approximately USD50mil (RM204mil) in kickbacks in exchange for ordering 180 planes from them.
What was "given" to the Malaysian officials?
Airbus admitted that it had paid senior officials from AirAsia and AirAsia X approximately USD50mil (RM204mil) in kickbacks in exchange for ordering 180 planes from them.(In simple terms = I give you money, you ensure I get huge contract k)
The money was reportedly given in the form of sponsorship funds to a sports team jointly owned by two executives of AirAsia Group Berhad referred to as 'AirAsia Executive 1' and 'AirAsia Executive 2' in the court documents.
Various email chains between Airbus employees and the executives were also revealed relating to the kickback.
One email excerpt reads:
AirAsia Executive 1 replied: “Honestly (Airbus Employee 1 (senior)) I’m fed up. You owe me 4 million already and I’m owed 16 million in total. This shd (sic) have been paid (sic) ages ago when I bought three (sic) first 60 aircraft. I want my money and I want compensation…pay up. I want my whole 16 million now…”
Many of the emails were directed to employees from the Strategy Marketing Division (SMO) at Airbus which is a section dedicated to securing sales in emerging markets.
Court documents also revealed that on top of the initial USD50mil, Airbus employees also offered an additional USD55 million to AirAsia, but the payment was never made.
What happened following the disclosures?
After details of the landmark DPA emerged, the Malaysian Anti-Corruption Commission (MACC) then initiated investigations against the corruption allegations involving the AirAsia executives.
MACC chief commissioner Latheefa Koya was reported in The Star saying that the commission would be in touch with authorities in the United Kingdom relating to the case.
Stocks for the low budget carrier also plummetted following the unravelling of information on Airbus' wrongful dealings..jpg.aspx "AirAsia")
How did Air Asia respond?
On 2 February, the budget airline released a statement stating that it "vigorously rejects and denies any and all allegations of wrongdoing". It also added that they were not "given any opportunity to provide any information or clarification" on the matter.
The statement also said that the sponsorship of the sports team (believed to be the now-defunct Catterham F1 team) was "well-known and widely-publicised" and brought "branding and other benefits to Airbus."
According to a report by the BBC on Feb 3, despite denying the allegations, AirAsia owner and chief executive Tony Fernandes along with executive chairman Kamarudin Meranun announced that they would temporarily step down for three months.
In a joint statement, the two said that the decision to step down was made "to facilitate a full and independent inquiry".
What else should you know?
Other than being investigated by the MACC, Fernandes also has to deal with investigations by authorities in India. According to The Straits Times, Indian officials have accused AirAsia of trying to manipulate government policies through corrupt means. They claim that this was done to get an international licence for its Indian venture called AirAsia India.
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