Airbus did not admit that offset arrangements with the Malaysian Government were bribes:Only payment to AirAsia, AirAsia X have been admitted to as bribes
by Ganesh Sahathevan
Dr Mahathir Mohamad said that asking for an offset in a business transaction is a normal practice, provided the money is not pocketed.
The prime minister said normally when the government procures equipment, they would ask for an offset.
“And whether you regard an offset as a bribery, that’s up to you,” he told reporters after an event here.
….Mahathir wondered why getting something in return when purchasing an item at a high price could not be accepted
“If the money goes into our pocket, that is corruption. But if the money is channelled to other things, it is an offset.
“That is my personal view.”
While Airbus has entered into a number of offset agreements with the Malaysian Government over the years (see photo and caption above and story below) it has been very clear that the payments Caterham F1 was a a bribe, and not part of any government offset agreement. As reported yesterday, how Malaysian authorities choose to characterise the payments is irrelevant:
EADS Sees Asia-Pacific Strategy Paying Off As It Sells A400Ms to Malaysia
December 9, 2005
Airbus A400M concept
(click to view full)
Deputy Prime Minister Datuk Seri Najib Tun Razak said the new aircraft would supplement the aging fleet of 15 C-130 Hercules (according to Scramble, 13 x C-130H or stretched C-130H-30, 2 x C-130T tankers) aircraft currently in service. The C-130, he said, would continue its role until it is no longer economical to operate the aircraft. So how did EADS bring in this deal, and how does it fit into EADS’ larger strategy?
Industrial offsets were a major component of this deal. In November 1990, a firm called Composites Technology Research Malaysia Sdn Bhd (CTRM) was established, in line with the government’s aspiration to start manufacturing composite parts for the aerospace industry. Within the framework of this contract, Malaysian industry will receive high-technology work packages worth initially 1 billion Ringgits, (about EUR 225 million/ $265 million) for the design and manufacture of A400M airframe components to be delivered worldwide.
Deputy PM Najib noted that “the procurement must be seen as a package, not only to fulfill the armed forces’ needs but also as an effort to expand the nation’s aerospace industry.”
The Malaysian decision brings the number of firm orders for the A400M to 192 aircraft.
Through its divisions and joint ventures, EADS has already developed a suite of partnerships with the Malaysian aerospace industry. These relationships formed a base that enabled the delivery of the above-mentioned offset agreement, and also gave EADS additional negotiating leverage with the Malaysian government.
EADS Airbus has worked with CTRM in the field of composite materials, starting with the manufacturing of fixed trailing edge for the A300 passenger jet and followed by A320 leading and trailing edge lower panels. CTRM is also designing and building the new A380 fixed leading edge lower panels, and will now add A400M related work to that list
Malaysia operates the EADS Eurocopter EC355 Ecureuil, and that airframe also sees some commercial use around the offshore oil platforms found near Borneo. EADS opened its Eurocopter Malaysia regional industrial and maintenance center in 2004, establishing partnerships with more than 15 Malaysian companies and launching an ambitious training program with the Malaysian Institute of Aviation Technology aiming to train 100 students over the next four years.
EADS has also developed cooperation in the field of Satellite Ground Receiving Stations and in the field of Secure Network and defense products with Technology Park Malaysia (TPM).
Jean-Paul Gut, EADS COO for Marketing, Strategy and International added: “Our major achievements in Asia Pacific in the civil and military aviation business are direct results of our partnership and investment strategy in the region during the last 10 years.”
Christian Duhain, Head of the EADS International marketing organization, added: “Asia Pacific is one of the key growth regions for EADS. In the next five years we’ll see the Asia Pacific share of our turnover reaching 20% and by 2015 we expect 30% portion of our sales to come from Asia Pacific.” Corporate release.
AirAsia rebounds following PM’s comments
KUALA LUMPUR: Shares of AIRASIA Group Bhd rose to a high of RM1.25 in afternoon trade on Thursday as investors took heart from comments by the Prime Minister over the low-cost carrier’s business deals.
At 2.37pm, its share price was up seven sen to RM1.23. There were 65.66 million shares done at prices ranging from RM1.17 to RM1.25.
The 30-stock FBM KLCI rose 10.88 points or 0.71% to 1,547.67. Turnover was 1.82 billion shares valued at RM1.10bil. There were 541 gainers, 261 losers and 331 counters unchanged.
Tun Dr Mahathir Mohamad said on Thursday it was normal to ask for an “offset” in business dealings provided the money is not taken for personal use.
Even the government, when making purchases for equipment, would ask for an offset.
“For instance, when we buy planes we will ask for an offset.
“Whether you consider an offset as bribery, it is up to you, ” he told reporters after a session with Education Ministry staff on Thursday (Feb 6).
He questioned why an offset should not be accepted when making a purchase on a high-priced item.
“But if the money received is pocketed, then that is corruption, ” he pointed out.
The Prime Minister was commenting on media reports over allegations of corruption involving AirAsia and Airbus.
It was reported that Airbus will pay a series of record-breaking settlements including nearly €1bil (RM4.5bil) to the United Kingdom’s Serious Fraud Office after admitting to “endemic” levels of bribery across its international business.
Legal documents attached to the settlement revealed Airbus paying hundreds of millions ringgit to sponsor a sports team linked to two unnamed executives described as “key decision makers” at AirAsia and AirAsiaX, but unrelated to the airline business.
AirAsia Group rejected allegations of wrongdoing after reports cited legal documents showing Airbus paid US$50mil (RM204mil) and offered US$55mil (RM225mil) more, to sponsor a sports team linked to the two AirAsia and AIRASIA X executives.
On Feb 4, AirAsia Group said its founders Datuk Kamarudin Meranun and Tan Sri Tony Fernandes have relinquished their executive posts as the budget carrier forms a committee to review the allegations against them.
Kamarudin is the airline’s executive chairman and Fernandes its chief executive officer.
AirAsia’s top executives have claimed that the company was never reached out to even once by the UK Serious Fraud Office (SFO) during the four-year investigation regarding the Airbus scandal, for any explanation or clarification.
Kamarudin and Fernandes said it was a clear violation of the fundamental legal principle of fairness and access to justice.
“We categorically deny all allegations of wrongdoing or misconduct on our part as executives and directors of AirAsia, ” they said.
They said that Caterham F1, the company alleged to have been sponsored improperly by Airbus, was at the relevant time a Formula 1 Racing team that had gone round the globe promoting among others AirAsia, AirAsia X, GE and Airbus.
Throughout the period Kamarudin and Fernandes were shareholders in Caterham, the company made no profits and was eventually disposed of in 2014, as from start to finish it was a branding exercise and not a venture to make profits.
“So as to facilitate a full and independent inquiry by AirAsia, we are relinquishing our executive roles with immediate effect for an initial period of two months which may be extended at the discretion of the AirAsia board as they deem fit based on the prevailing circumstances then.
“At the request of the board of AirAsia, we have agreed to continue to assist AirAsia in an advisory capacity as and when required, ” they added. – ANN