Malaysia probes allegations that Airbus bribed AirAsia bosses

© Reuters. A woman walks past an AirAsia counter at Kuala Lumpur International Airport in Sepang

By Krishna N. Das and Liz Lee

KUALA LUMPUR (Reuters) - Malaysia's anti-graft agency is investigating allegations by Britain's Serious Fraud Office that Airbus paid a bribe of $50 million to win plane orders from Asia’s largest budget airline group, Malaysia-based AirAsia, it said on Saturday.

The SFO said on Friday that Airbus had failed to prevent individuals associated with it bribing executives linked to AirAsia Group and its long-haul arm, AirAsia X.

AirAsia said it had never made any purchase decisions that were premised on an Airbus sponsorship, and that it would fully cooperate with Malaysia's Anti-Corruption Commission.

In a statement, it said it had not been involved with the SFO’s investigation of Airbus or given any opportunity to provide clarification.

"AirAsia vigorously rejects and denies any and all allegations of wrongdoing," it said.

"As AirAsia and its executives have no visibility on Airbus’ internal processes, we cannot comment on or be associated with any alleged failures or lapses on the part of Airbus to comply with its own policies or applicable legal requirements."

Airbus declined to comment.

On Friday, Airbus agreed a record $4 billion settlement with France, Britain and the United States after prosecutors said it had bribed public officials and hidden the payments as part of a pattern of worldwide corruption.

The deal allowed Airbus to avoid criminal prosecution that could have led to it being barred from public contracts in the United States and the European Union.

The disclosures came after an investigation spanning sales to more than a dozen overseas markets.

"Under the Malaysian Anti-Corruption Commission (MACC) Act we are empowered, and have jurisdiction, to investigate any act of corruption committed by any Malaysian citizen or permanent resident in any place outside Malaysia," MACC Chief Commissioner Latheefa Koya said in a statement.

"In the case of the Airbus-AirAsia disclosures, I confirm that the MACC is in touch with the UK authorities and is already investigating the matter."

MALAYSIA AIRLINES SEEKS PARTNER

The investigation comes as the Malaysian government evaluates five strategic investment proposals, among them one from AirAsia, to partner with the ailing national carrier, Malaysia Airlines.

AirAsia runs an all-Airbus fleet of 274 planes.

The SFO's allegations concern a 2012 sponsorship agreement between the now-defunct Caterham Formula 1 racing team, founded by AirAsia boss Tony Fernandes, and Airbus's then-parent, EADS.

The SFO said on Friday that between October 2013 and January 2015, EADS paid $50 million to sponsor Caterham, which was jointly owned by two people described as AirAsia Executive 1 and Executive 2. It said Airbus employees offered an additional $55 million, though no payment was made.

Fernandes bought Caterham together with his partner Kamarudin Meranun, AirAsia's chairman, in 2011. Fernandes and Kamarudin could not immediately be reached for comment.

The SFO said that Executives 1 and 2 were "key decision makers in AirAsia and AirAsia X, and were rewarded in respect of the order of 180 aircraft from Airbus".

"The payments to the sports team were intended to secure or reward improper favor by them in respect of that business."

The airline's statement said that "all negotiations and dealings leading to the signing of any aircraft purchase agreement have been undertaken directly with Airbus on an arm’s length basis, and without the involvement of any third parties or intermediaries".

Malaysia has been trying for years to recover billions of dollars allegedly stolen https://www.reuters.com/article/us-malaysia-politics-mahathir-1mdb-expla/explainer-malaysias-mega-1mdb-scandal-that-has-scalded-goldman-sachs-idUSKBN1YE0KS from the state fund 1Malaysia Development Bhd.

(This story was refiled to remove extraneous words 'the SFO said' in paragraph 19)