AirAsia CEO and Chairman relinquish posts as probe into Airbus bribery allegations begin

Airbus allegedly paid a bribe of $50 million to secure aircraft contract from Air Asia and AirAsia X

AirAsia on Monday announced that its Chief Executive Officer Tony Fernandes and Chairman Kamarudin Meranun have given up their roles in the company effective today, as the airline company and authorities investigate charges of corruption by the company's executives. The company has concurrently formed a non-executive independent board committee comprising non-executive members of the board.

This new board will be probing the allegations made on the company's executives and take necessary action. However, both Fernandes and Kamarudin have denied any allegations of corruption or misconduct at the helm of the affairs.

Internal investigations start

AirAsia alerts public on online scam claiming to give free flight tickets
AirAsia Malaysia flights waiting at the airport Reuters

AirAsia has been alleged of receiving a bribe of $50 million from Airbus, which wanted to secure plane orders from the company. Kamarudin and Fernandes were at that time at the helm of the affairs. Following the allegations and the subsequent decision to investigate the charges, the airline company today said that both Kamarudin and Fernandes will be relinquishing their executive position for at least two months.

The non-executive independent board will now probe the allegations and take necessary action. "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," the company said in a statement.

What are the allegations?

File photo of AirAsia flight attendants.
File photo of AirAsia flight attendants. Fly Gosh

AirAsia has been alleged to have received $50 million in bribe from Airbus, which was trying to secure contracts for aircraft with the airline company. The allegations came to fore as part of a $4 billion settlement Airbus agreed with regulators in France, the US and the UK after the aircraft maker was found guilty to have bribed public officials in these countries to secure aircraft contracts.

The fraud came to the light of Britain's Serious Fraud Office (SFO) on Friday. The SFO has now alleged a similar corruption at AirAsia. The allegations concern a sponsorship agreement made between Caterham Formula 1 racing team and Airbus' then parent EADS in 2012. Caterham Formula 1 racing team, which is now defunct, was founded by Fernandes.

Following the revelations, Malaysia's Securities Commission on Sunday said that it would start a probe in the allegations to see if AirAsia flouted securities laws. The airline company has said that it will fully co-operate with the agency in the investigation.

What was Fernandes and Kamarudin's role?

Fernandes and Kamarudin together bought Caterham in 2011. The SFO said that the two were the main decision makers in AirAsia and AirAsia X and were rewarded in respect of the order of 180 aircraft from Airbus". However, both Fernandes and Kamarudin have denied the charges.

The two, in a statement, said, "We would not harm the very companies that we spent our entire lives building up to their present global status," they said. Although both Fernandes and Kamarudin have given up their roles for the time being, they will remain as advisors of the company over the next two months. AirAsia has also appointed Tharumalingam Kanagalingam, its deputy group chief executive officer (CEO) (airlines), as the acting CEO.