AirAsia X lodges police report over RM7 million ‘fictitious’ payments

AirAsia X’s share price has fallen more than 87% from its IPO price of RM1.25 to 16 sen today. The company is now investigating claims of irregular dealings between it and a certain service provider. – AirAsia X pic, August 27, 2015.

AirAsia X Bhd says its auditors have discovered 24 payments totalling RM7.01 million made to a service provider, which are now established to be fictitious.

The long-haul discount arm of AirAsia Bhd said the payments were authorised by a person in a management position within the company, but did not name him or her.

It said the board of directors could not make any announcement earlier as it did not have sufficient evidence to substantiate the allegations and to assess with certainty the financial and operational impact on the company.

Following this discovery of irregularities, AirAsia X has lodged a police report, adding that it has sought legal advice on recovering the losses.

"(We have also) reviewed the current internal control process to ensure that similar transactions will not recur," it said in a filing with Bursa Malaysia today.

AirAsia X said the irregular dealings between the company and a certain service provider was first discovered in the course of its statutory audit for the financial year-ended December 31, 2014 (FY14).

"(Our) internal and external auditors had discovered that certain payments have been made to a service provider between 2010 and 2014 for services which are now established to be fictitious," it said.

Following the discovery of the irregularities, AirAsia X appointed PwC Consulting Services Sdn Bhd (PwCCS) to carry out a forensics audit and instructed the management to ensure the availability of all relevant documents and/or key personnel for PwCCS review and interview.

"The findings of the forensics audit established that the irregularities have been confined only to a sum of RM7.01 million," said AirAsia X.

"The board is of the opinion that the amount involved in the irregularities does not have any material financial or operational impact on the company."

During the period between 2010 and 2014, AirAsia X was helmed by Azran Osman-Rani (pic), currently chief executive officer (CEO) of iflix Malaysia and the chief operating officer of iflix Group.

When contacted today, Azran declined to comment on whether he was aware of the said dealings between the company and a certain service provider during the period he was CEO of AirAsia X.

“I cannot comment because I have just been made aware that the case has been filed in court,” he said.

Azran left AirAsia X after the company posted its fourth consecutive quarterly loss since its listing in June 2013.

The company’s share price has been on the decline since its initial public offering (IPO), falling 87.2% from its IPO price of RM1.25 to 16 sen today. – The Edge Markets

- TMI