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Indonesia fines Garuda after CEO fired over smuggled Harley Davidson

Stock MarketsDec 06, 2019 05:55AM ET
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2/2 © Reuters. FILE PHOTO: The logo of Garuda Indonesia is pictured on an Airbus A330 aircraft parked at the aircraft builder's headquarters of Airbus in Colomiers 2/2

By Maikel Jefriando and Jessica Daminana

JAKARTA (Reuters) - Indonesia will fine flag carrier PT Garuda Indonesia (JK:GIAA) for violating aviation rules after its chief executive was accused of smuggling a Harley Davidson motorcycle onboard a new plane, state news agency Antara cited the transport minister as saying.

A day earlier, State-Owned Enterprises Minister Erick Thohir said CEO Ari Askhara would be dismissed over the allegations.

"We have sent a letter to fine Garuda because it carried items without including them in the cargo list," Transportation Minister Budi Karya was quoted as saying on Friday.

He did not say how much the airline would be fined, but said that although the incident was not on a commercial flight, cargo must be listed, Antara reported.

Askhara is accused of trying to evade tax on a Harley Davidson motorcycle worth 800 million rupiah ($57,000) that was found on the plane. Two expensive bicycles were also discovered.

Askhara did not respond to multiple emails, text messages and phone calls seeking comment.

Thohir said on Thursday that an initial investigation found a Garuda employee in Amsterdam helped pay for the motorbike and assisted in the delivery.

He said the State-Owned Enterprises Ministry would continue to investigate.

Chief financial officer Fuad Rizal will take over as acting chief executive of Garuda, the company said in a statement on Friday, until a shareholders' meeting to appoint a new chief is held "in the near future".

The statement added that Garuda will continue to evaluate its business processes, conduct good corporate governance and comply with regulations.

Even in a country used to frequent graft cases, the story of the smuggled bikes has stirred intense public interest.

Flower arrangements supporting the actions of the SOE Ministry have even been sent to its offices in Jakarta.

"We support the SOE Minister in the firing of Garuda Indonesia's chief executive," a tag on one of the arrangements read.

The airline's cabin crew union IKAGI welcomed the decision to remove the CEO.

Garuda's next chief would be its fourth in the last five years.

The airline has been struggling to improve its profitability. In June, Indonesia's financial regulator ordered Garuda to "fix and restate" its 2018 financial results over accounting errors.

Indonesia fines Garuda after CEO fired over smuggled Harley Davidson
 

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