Mavcom to assess fitness, propriety of AirAsia, AAX executives following US$50m graft claims

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KUALA LUMPUR (Feb 3): The Malaysian Aviation Commission (Mavcom) says today it will assess whether there is any contravention of the Malaysian Aviation Commission Act 2015 [Act 771] and the commission’s Guidelines on Fit and Proper Person pertaining to the judgment by the UK Court on graft allegations involving European planemaker Airbus SE and two executives related to low-cost carrier AirAsia Bhd and its long-haul sister airline AirAsia X Bhd (AAX) on Jan 31.

In a statement today, 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 jurisdictions of multiple agencies in Malaysia and therefore, the commission will cooperate and work with all relevant authorities on this matter," it added.

It is understood that if the two executives are found to have contravened the guidelines, the commission has the authority to have them remove from the airlines' board of directors or factor the results of the assessment in evaluating the licence or permit application to determine whether the airlines are eligible to be granted a licence or permit. 

Under the Guidelines on Fit and Proper Person, it is stated that key responsible persons of an aviation service company are identified as the board of directors; senior management team; and any other person who directly or indirectly holds 10% or more of shares of the applicant; or who has the power to make decisions in the company.

The commission will assess the fitness and propriety of a person in three areas:
(a) Probity, reputation and integrity;
(b) Competency and capability; and
(c) Financial integrity

"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.

Mavcom is the third authority to launch probe on executives at the two airlines. Yesterday, the Securities Commission Malaysia (SC) said it will review the bribery and corruption allegations against executives at AirAsia and AAX involving the case of Regina vs Airbus, which had disclosed several allegations against two executives of the two airlines.

"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 & Services Act 2007, a director of a public listed company 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.

Earlier on Saturday (Feb 1), Malaysian Anti-Corruption Commission (MACC) chief commissioner Latheefa Koya said the anti-graft agency is in touch with the UK authorities and is already investigating the matter.

Today, The Edge Financial Daily, citing court documents, reported that Airbus had allegedly bribed two “key decision makers” at the budget airlines — who are only identified as AirAsia Executive 1 and AirAsia Executive 2 — by providing sponsorship worth US$50 million for sports team owned by these individuals in exchange for the purchase of its aircraft.

However, AirAsia Group has denied the bribery and corruption allegations against both airlines.

The group said it was neither involved in any way whatsoever with the UK Serious Fraud Office (SFO) investigation of Airbus nor given any opportunity to provide any information or clarification to the SFO.

“AirAsia vigorously rejects and denies any and all allegations of wrongdoing,” the group said in a statement yesterday.

At 4.01pm, AirAsia shares were down 15 sen or 10.49% at RM1.28, with 49.26 million shares done, bringing a market capitalisation of RM4.28 billion. AAX's stock fell one sen or 7.69% to 12 sen, with 25.09 million shares done, valuing it at RM497.78 million.

This is on the back of a 4.7% decline in Malaysia's benchmark stock index to 1,526.36 points as at 4.36pm, amid fears about the spreading coronavirus and its economic impact.