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SriLanka airline ex-chief Chandrasena faces arrest, Tony Fernandes steps aside after Airbus revelations

ECONOMYNEXT – Sri Lanka’s Attorney General has sought the arrest ex-SriLankan Airlines chief executive Kapila Chandrasena and his wife, while AirAsia’s boss Tony Fernandes has stepped down in the wake of UK bribery probe on Airbus, an aircraft maker.

Sri Lanka’s Attorney General has asked police to get a warrant and arrest Chandrasena and his wife Priyanka Wijenayaka as suspects on charges of money laundering, related to the acquisition of Airbus aircraft for SriLankan Airlines.

The AG also asked police criminal investigation department to share investigation results with Sri Lanka’s anti-bribery office.

Airbus agreed to pay around 3.5 billion Euros to the governments France, UK and US in a settlement following a joint investigation for alleged bribery in sales.

Court documents in UK said Airbus had engaged as a business partner the wife of a SriLankan Airlines executive in 2013 identified as ‘Intermediary 1’, though she had no aviation experience.

Airbus had also misled the UK export credit agency over the intermediary’s identify and sex, the documents said.

The intermediary was offered a total of 16.8 million US dollars for each airline delivered and later to ensure that no business went to ‘competitors’, the documents show.

A ‘straw company’ had been set up in Brunei on October 2012, to receive payments under a contract signed in March 2013, on an order for a fleet of 6 Airbus A330, 4 A350 aircraft and the lease of another 4 A350 aircraft.

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The company of ‘Intermediary I’ would get a million dollars for each A330 when delivered, 1.16 million dollars for each A350 and 300,000 dollars for each A350 leased by SriLankan Airlines.

“On 26 August 2013, the Company of Intermediary 1 submitted an invoice for the first US$1 million pursuant to the consultant agreement,” the court document said.

“However, as Airbus only paid agents in Euros, the Company of Intermediary 1 was required to set up a Euro account at Standard Chartered Bank to receive payment.

“In agreeing this change, Airbus employees corresponded with SLA Executive 1, using his private Gmail account and on 13 November 2013, SLA Executive 1 submitted a replacement invoice.

“Airbus received from SLA Executive 1 a further invoice for an additional US$1 million on 2 December 2013.

“Payment was approved by Airbus employee 1 [senior] and Airbus employee 9 [senior] (Airbus SMO) and US$2 million was paid in Euros to the Company of Intermediary 1 (i.e. €1,454,651.24) on 27 December 2013.”

A part of the deal relating to A350s was cancelled following a change of government in 2015 in another controversial deal.

The documents said Airbus offered a lump sum payment 5 million dollars to ensure that SriLankan Airlines “did not purchase any competitor aircraft,” in a “market share” agreement in October 2015.

In Malaysia, AirAsia in a stock exchange filing said Chief Executive Tony Fernandes and executive chairman Kamarudin Meranun would leave their positions for two months or some such other period that the company may deem fit,” following the UK probe.

The airline’s board has set up a committee to review the allegations. The two had denied wrongdoing.

Court documents filed in the UK said between October 2013 and January 2015, Airbus had paid 50 million dollars as sponsorship for a sports team jointly owned by two executives identified as AirAsia Executive 1 and AirAsia Executive 2).

The sports team had no legal connection to the airline group.

Between 2005 and November 2014, AirAsia and AirAsiaX had order 406 aircraft from Airbus, of which 180 orders had been ‘secured by improper payments’ and offer for further payments, the documents said.

“AirAsia Executive 1 and AirAsia Executive 2 were key decision makers in AirAsia and AirAsia X, and were rewarded in respect of the order of 180 aircraft from Airbus,” the documents said.

“The payments to the Sports team were intended to secure or reward improper favour by them in respect of that business.”

UK and French investigators also probed aircraft deals with a number of other Asian airlines. (Colombo/Feb04/2020)

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