06/28/2022, 14.31
INDONESIA
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Jakarta: new cases of corruption linked to the national airline

by Mathias Hariyadi

The attorney general accuses Garuda Indonesia’s former CEO of buying jets at inflated prices. Meanwhile, a commercial court approves the company's restructuring plans. The government says the airliner has halved debts and has plans to ensure profitability.

Jakarta (AsiaNews) – The former CEO of Garuda Indonesia, the country’s international airline, and one of his business partners have been accused of bribery over alleged irregularities in the purchase of Bombardier and ATR aircrafts, Indonesia’s Attorney General announced.

Meanwhile, In Jakarta, a Commercial Court accepted the company’s restructuring plan, which will cause creditors to lose billions of dollars.

Emirsyah Satar, chief executive officer of Garuda Indonesia from 2005 to 2014, had already been convicted and sentenced to eight years in prison in 2020 in for bribery and money laundering in connection with the purchase of aircrafts from Airbus and engines from Rolls-Royce.

Together with his partner Soetikno Soedarjo, CEO of the Mugi holding Rekso Abadi, Satar bought 23 Bombardier CRJ-100 and ATR 72-600 between 2011 and 2021 at inflated prices, causing losses of 8.8 trillion Indonesian rupiahs (US$ 595 million).

“This huge money loss was caused by rampant corruption in our national flag carrier Garuda Indonesia," said Attorney General Sanitiar Burhanuddin at a news conference.

The US Justice Department and the UK's Serious Fraud Office are also investigating suspected bribery related to the sale of jets by Canadian aircraft manufacturer Bombardier to Garuda between 2011 and 2012.

The government also announced that the state-owned company would undergo a third restructuring, halving its debt and making major cuts to ensure its profitability.

The company turned to financial investors and foreign airlines to increase its capital, Kartika Wirjoatmojo, deputy minister of state-owned enterprises, told reporters.

Under court supervision, Garuda also renegotiated the terms of the aircraft orders and leasing contracts.

“Garuda was rarely profitable, because of its low fleet utilisation and high lease costs," the deputy minister said. However, “With an efficient fleet, optimised domestic routes and reduced lease rates, Garuda can make a profit".

Still, the company expects major challenges ahead related to soaring fuel prices.

At the end of 2021, a Commercial Court accepted a creditor's bankruptcy petition allowing Garuda Indonesia to go into a formal court-supervised restructuring process.

However, as recently as last week, two creditors continued to object to the restructuring plan put forward by Garuda's administrators.

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