This article first appeared in The Edge Financial Daily on February 4, 2020
KUALA LUMPUR: AirAsia Group Bhd’s co-founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, who collectively hold 32.1% stake, have decided to relinquish their executive roles in the low-cost carrier.
The decision will be in effect for two months from yesterday, or until “such other period that the company deems fit”, AirAsia said in a stock exchange filing.
This came after corruption probes by authorities into the company’s executives.
This means Fernandes, who was chief executive officer (CEO) cum executive director, has been redesignated as non-executive director, while Kamarudin, who was AirAsia’s executive chairman, is now the company’s non-executive chairman.
The group has also formed a non-executive independent board committee, which comprises non-executive members of the board, to review all allegations linked to executives of the company in Airbus SE’s corruption case.
In the interim, AirAsia has appointed its deputy group CEO (airlines) Tharumalingam Kanagalingam as acting CEO, following the committee’s recommendation.
“The committee’s main objective will be to review the allegations therein so far, as it concerns AirAsia Group Bhd, and to take any necessary action based on the review,” AirAsia said.
Fernandes and Kamarudin, however, will be retained as advisors of the company during the two-month period, “in view of the current difficult economic circumstances facing the airline industry”.
“As advisors, they will not have executive authority within the group,” said AirAsia.
Mavcom to assess fitness, propriety of AirAsia’s execs
Meanwhile, the Malaysian Aviation Commission (Mavcom) has become the third authority in Malaysia to launch a probe on the executives at the two airlines.
In a statement yesterday, Mavcom said it is going to assess whether the two executives with AirAsia and its sister company AirAsia X Bhd (AAX), who were implicated in the graft allegations against Airbus, are fit and proper to continue holding their posts in the companies’ board of directors.
The commission, which announced in a statement yesterday that it is going to assess whether the two have contravened the Malaysian Aviation Commission Act 2015 and the commission’s Guidelines on Fit and Proper Person following the revelation of the graft case, will also use the results of the assessment to evaluate whether the airlines are eligible to be granted a licence or permit when they apply for it.
Mavcom said AirAsia and AAX, being holders of air service licences issued by the commission, and their key responsible persons are subject to the act and the guidelines.
“The allegations touch on the jurisdiction of multiple agencies in Malaysia and therefore, the commission will cooperate and work with all relevant authorities on this matter,” it added.
It has been reported that Airbus had allegedly bribed the two executives at AirAsia and AAX US$50 million (about RM204.8 million) to secure lucrative contracts to supply aircraft to the Southeast Asian budget carriers.
“Upon completion of the fit and proper person assessment, the commission may factor the results of the assessment in evaluating the licence or permit application to determine whether an aviation service provider is eligible to be granted a licence or permit.
“The result of a fit and proper person assessment is part of the commission’s internal procedure and shall be disclosed to the applicant, if the result of the assessment is unfavourable. Such information shall not be provided to any other party,” the guidelines read.
On Sunday, the Securities Commission Malaysia (SC) said it will review the bribery and corruption allegations against the executives at AirAsia and AAX involving the case of Regina versus Airbus, which had disclosed several allegations against the two.
“As both are listed on Bursa Malaysia, the SC will examine the allegations and review all available evidence to determine if there is any breach of securities laws,” SC chairman Datuk Syed Zaid Albar said.
“Under Section 317A of the Capital Markets and Services Act 2007, a director of a public listed company (PLC) who does anything with the intention of causing wrongful loss to the PLC or its related corporation commits an offence which is punishable with imprisonment and fine,” he added.
Yesterday, The Edge Financial Daily, citing court documents, reported that Airbus had allegedly bribed two “key decision makers” at the budget airlines by providing sponsorship worth US$50 million for sports team owned by these individuals in exchange for the purchase of its aircraft.
AirAsia Group has denied the bribery and corruption allegations against both airlines.