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Malaysia's anti-graft agency probes AirAsia's bank loan

Malaysia's anti-graft agency probes AirAsia's bank loan

FILE PHOTO: AirAsia planes are seen parked at Kuala Lumpur International Airport 2, during the movement control order due to the outbreak of COVID-19, in Sepang, Malaysia on Apr 14, 2020. (Photo: REUTERS/Lim Huey Teng/File Photo GLOBAL BUSINESS WEEK AHEAD)

KUALA LUMPUR: The Malaysian Anti-Corruption Commission (MACC) has begun an investigation into a 300 million ringgit (US$72.1 million) loan from Sabah Development Bank Bhd (SDB) to budget airline AirAsia Group Bhd, an officer of the agency said on Wednesday (Oct 28).

MACC director for Sabah state, S Karunanithy, confirmed that the agency was investigating the loan approved by the Sabah state-owned bank but declined to elaborate.

"We have started our investigation to look into whether there had been any violation," he told Reuters in a text message.

Sabah-based newspaper Daily Express reported earlier on Wednesday that the state's recently installed Chief Minister Hajiji Noor had ordered a forensic investigation by an independent audit firm into the bank's decision, and called in the MACC.

The investigation will look into how the funds were disbursed quickly within a few days of the installation of the new state government, the paper said, adding that the loan was approved on Jul 2.

The chief minister's office was unreachable and AirAsia declined to comment on the matter.

READ: Malaysia's AirAsia X seeks to stave off liquidation with US$15 billion debt restructuring

Former Sabah Chief Minister Shafie Apdal said he welcomed the investigation and that there was nothing hidden behind the loan.

"The application was not made overnight but instead SDB had carried out the best and most thorough investigation and consideration before the approval was given," he said in a statement.

AirAsia last Friday said the loan had been approved and disbursed from the bank to its group of companies as part of the fundraising efforts undertaken by the airline, but did not specify when.

More than half the loan amount was to establish and operate a digital food supply chain and cold chain facilities in Sabah, it said.

The pandemic-hit airline has been looking to raise about 2.5 billion ringgit by year-end.

MIDF Research said in a Monday client note that the airline's core business was still in dire straits and that "new funds designated specifically for its aviation business are needed to help the company to stay afloat".

Source: Reuters

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