World News

Payments in high-value deals not a bribe, Mahathir says about AirAsia probe

KUALA LUMPUR (Reuters) – Malaysian Prime Minister Mahathir Mohamad said on Thursday payments received to offset the costs of a high-value order could not be constituted as a bribe.

Mahathir was replying to questions by reporters on the controversial sponsorship deal that executives of Malaysia’s AirAsia Group Bhd <AIRA.KL> struck with the budget carrier’s sole plane supplier Airbus <AIR.PA>.

Britain’s Serious Fraud Office (SFO) said last week that the European aircraft manufacturer paid a bribe of $50 million to executives of AirAsia and its long-haul arm AirAsia X <AIRX.KL> to win plane orders.

AirAsia is the world’s biggest customer of the A321neo single-aisle aircraft and runs an all-Airbus fleet of 274 planes.

AirAsia co-founders Tony Fernandes and Kamarudin Meranun have both denied wrongdoing and relinquished their executive roles for at least two months while the SFO’s allegations are probed.

Asked about Britain’s investigation into the case, Mahathir said he would not pronounce a verdict, but that any arrangement should be considered as a quid pro quo deal.

“Often when governments buy equipment, we always ask for an offset…If we can get something because we buy something at a high price, why can’t we accept it?” he told reporters.

“If the money we get is pocketed, that is corruption. But if that money is for a certain purpose, it would be an offset instead of a bribe. That’s my view,” Mahathir said.

SFO said that Caterham F1, a now-defunct Formula 1 racing team that was formerly co-owned by Fernandes, was sponsored improperly in 2012 by Airbus’ then-parent EADS.

Fernandes denied the allegations and said that the team was part of AirAsia’s branding campaign.

In a highly regulated industry where its main rival is state-owned Malaysia Airlines, AirAsia relies on government approvals to support its growth plans and has sought to win favor with the government.

In 2018, days after Mahathir ousted then prime minister Najib Razak in a shock election result, Fernandes apologized for endorsing Najib.

Malaysian authorities have also said they are launching their own investigations into the SFO’s allegations.

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

Prime-minister-in-waiting Anwar Ibrahim said AirAsia would have to resolve the corruption case if the airline wanted to continue contending for a partnership.

“You can’t expect us to consider an entity, when allegations are still there. They have to clear that first to be fair, otherwise we’ll be seen to be complicit,” he told Reuters in an interview on Thursday.

(Reporting by Liz Lee, Joseph Sipalan and Krishna N. Das; Editing by Muralikumar Anantharaman and Miyoung Kim)