Business as Usual for Garuda Indonesia Despite Transnational Bribery Scandal
Updated on Jan. 20 at 3 p.m
Jakarta. Soetikno Soedardjo, the founder of media, lifestyle and entertainment company Mugi Rekso Abadi, was named a suspect for allegedly bribing former Garuda Indonesia chief executive Emirsyah Satar in a series of aircraft procurements between 2005 and 2014.
"After a series of investigations, the KPK [Corruption Eradication Commission] collected enough initial evidence of alleged corruption in the procurement by Garuda Indonesia of aircraft and aircraft engines from Airbus and Rolls-Royce," KPK deputy chairman Laode M. Syarif told the media on Thursday (19/01), as reported by state-run Antara news agency.
Laode alleges that Soetikno, who is also the beneficial owner of Connaught International, an India-centric consultant company, bribed Emirsyah, who reign the airlines from 2005-2014, with more than $3.4 million in cash and other benefits related to the procurement of 50 Airbus A330 jets.
The antigraft agency has named both men as suspects in the case.
KPK investigators have searched Soetikno's home and office, both in Cilandak, South Jakarta, Emir's home in Kebayoran Lama, South Jakarta, and several other homes in Jatipadang and Bintaro – also in South Jakarta.
Despite needing evidence, the national antigraft agency said that it would not seize engines or airplanes from Garuda in building its case.
"It will remain a priority that Garuda continues to be operational, despite the ongoing investigation," Laode told reporters during a press conference in Jakarta on Thursday.
"It's improbable that investigators would confiscate airplanes that are operational, as that would costs our country more," he said.
In a phone message to Reuters, Emirsyah denied wrongdoing but said that it was the authority of the KPK to name him as a suspect and that he will respect the legal process.
"As far as I know, when I was the CEO of PT Garuda Indonesia, I had never done corrupt activities and I did not receive anything that was related to my position," Emirsyah said.
Benny S. Butarbutar, Garuda vice president for corporate communications, said that as a public company the airline has always adhered to strong corporate governance and transparency, and will offer its assistance in the matter.
"The management of Garuda Indonesia will assist the KPK and fully cooperate with the investigators," Benny said in a statement.
Garuda Indonesia's stock dropped 2.26 percent closing at Rp 346 per share on the Indonesia Stock Exchange on Thursday.
"I think this is only a temporary sentiment – that stocks plunged," Bima Setiaji said, an equity analyst at NH Korindo Securities.
"An inference can be drawn that by releasing a statement, the airlines has shown transparency and that it has not affected the company's business activities as it was an individual who was behind this," Bima said.
The airlines have suffered a series of setbacks in recent weeks: the airlines' budget carrier, Citilink was forced to remove a pilot from duty on Dec.28, after the pilot who was set to fly from Surabaya to Jakarta, purportedly showed up to work while intoxicated. The incident prompted Citilink's chief executive Albert Burhan to resign.
Additional reporting by Reuters