Graft allegation adds to Garuda woes amid debt restructuring

Indonesia’s government has filed corruption allegations against its flag carrier, adding to PT Garuda Indonesia’s woes as the airline undergoes a debt restructuring process. 

The Attorney General will investigate the file submitted by State-Owned Enterprises Minister Erick Thohir on Tuesday. The case is linked to Garuda’s procurement ATR 72-600 aircraft, although Thohir said there are indications of corruption involving other suppliers.

The graft allegation adds to the struggling airline’s list of challenges as the company undergoes a court-ordered debt restructuring process. Its creditors submitted about 198 trillion rupiah ($13.8 billion) in claims, which is set to be verified next week.

The corruption case shouldn’t hinder the restructuring process, Thohir said, as the government has marked out the leasing contracts that show signs of being linked to corruption. His submission is based on the ministry’s audit and the national financial supervision agency.

It’s not the first time that Garuda’s been embroiled in a graft case. Its former chief Emirsyah Satar was sentenced to eight years in prison for bribery involving aircraft purchases, including for Airbus SE and Bombardier Inc. jets as well as Rolls-Royce Holdings Plc engines.

Garuda will support the investigation as well as efforts to improve transparency and accountability in every business activity, it said in a statement on Tuesday.