Airbus bribery case topples founder of Malaysian carrier AirAsia

AirAsia Group Bhd Founder Tony Fernandes became the first marquee airline executive to lose his post in the aftermath of planemaker Airbus SE’s record $4 billion bribery settlement.

Fernandes will depart from his role as chief executive officer of the Malaysian carrier for two months while the government probes corruption allegations, according to a statement Monday. Chairman Kamarudin Meranun also stepped down, as airlines begin to feel the sting of allegations emerging from the long-running Airbus case.

The European planemaker reached a settlement with French, British and American prosecutors on Friday, triggering publication of prosecution documents citing corruption as Airbus tried to illegally sway decisionmakers in aircraft sales. Now the airlines and the countries tagged in the case are embarking on their own reckoning.

In Sri Lanka, prosecutors are seeking the arrest of the state-owned airline’s former top boss and his wife. The attorney general’s office said Kapila Chandrasena, the ex-CEO of SriLankan Airlines Ltd., and his wife Priyanka Niyomali Wijenayaka were suspects in a money-laundering case linked to aircraft sales at Airbus. Sri Lankan police were ordered to obtain an arrest warrant, according to a statement Monday.

AirAsia’s Fernandes and Meranun denied allegations of wrongdoing, after Malaysia’s anti-graft agency said Saturday that it was looking into corruption at the airline. Chandrasena didn’t respond to multiple calls seeking comment.

The repercussions reached across the globe. Colombia’s Avianca Holdings SA said Monday it had retained a law firm to conduct an independent internal investigation into the carrier’s relationship with Airbus, and whether it was the victim of wrongdoing.

‘Unfortunate’ Truth

The investigations into corrupt practices at Airbus ran several years, after the company reported itself to the U.K.’s Serious Fraud Office in 2016. Court documents from the three jurisdictions give numerous examples of bribery allegations.

In all the activities, centered on a now-defunct Airbus unit with a $300 million annual budget, boosted profit by more than $1 billion, prosecutors said in court documents.

Without naming anyone, the documents published by the U.K. Serious Fraud Office allege that the wife of a SriLankan Airlines official received a $2 million bribe through a Brunei shell company to secure an aircraft order.

The SFO also alleged that Airbus misled the U.K. Export Finance funding agency about her name and sex, with email exchanges showing that UKEF realized the intermediary contracted by Airbus had the same name as the wife of the airline executive, which Airbus dismissed as a coincidence.

U.K. Export Finance wasn’t satisfied with the explanation, prompting an Airbus employee to email another saying “the truth is most unfortunate.” Airbus withdrew its application from UKEF in March 2015. On the first of April, the U.K. agency reported the company to the SFO.

Formula One Team

In the Malaysian case, the probe adds to the pressure on Fernandes, who has also been summoned on bribery charges in India. Prosecutors at the SFO said the European planemaker paid $50 million in sponsorships to a sports team jointly owned by two AirAsia executives as a reward for an order of 180 aircraft, later amended to 135.

AirAsia has repeatedly denied wrongdoing. Its shares sank 10% to a four-year low on Monday after Malasyian authorities said they would investigate the matter.

In 2009, Fernandes and Meranun, together with Nasarudin Nasimuddin, chairman of car assembler Naza Group, founded the Caterham Formula One Team, which later counted Airbus among its sponsors. By 2015, the team started auctioning its assets after failing to find a buyer.

Airbus’s sponsorship of the sports team was “a well-known and widely publicized matter bringing branding and other benefits to Airbus,” AirAsia said in the statement on Saturday, without naming F1.