Garuda Indonesia faces corruption lawsuit over ATR deal
Garuda Indonesia (GA, Jakarta Soekarno-Hatta) saw its mountain of challenges grow ever higher when Indonesia’s government filed a lawsuit on January 11 accusing it of corruption. In a separate development, however, an Indonesia media and finance tycoon has offered to top up the carrier’s capital after its restructuring process is completed.
Erick Thohir, the country’s state-owned enterprises minister, handed audit documents to the Attorney General’s Office which he said implicated the flag carrier in graft linked to lease contracts for ATR72-600 turboprops. There are also indications of wrongdoing involving other suppliers, he added.
“We know based on valid data that in the procurement process for aircraft and leasing there are corruption indications with various brands,” he told reporters outside the office. “We are providing evidence from an investigative audit, so this is not an accusation. It is not only about arresting or punishing related individuals but about improving the overall administration.”
In a statement issued on the same day, Garuda Indonesia CEO Irfan Setiaputra confirmed his support for the ministry as it continued to report cases related to the carrier’s former management to the attorney general in an effort to “clean up” the company and promote transparency.
According to the ch-aviation fleets advanced module, Garuda Indonesia currently operates thirteen of the Avions de Transport Régional turboprops. It launched a sub-brand, Garuda Explore, in late 2013 to market its regional network along with the induction of the first aircraft of the type into its fleet.
Later, in July 2020, as efforts to downsize the airline’s fleet commenced, the government agreed on a bailout for the carrier while compelling it to return its ATRs and CRJ1000ERs “because these two types of aircraft are incompatible with Garuda Indonesia,” as Setiaputra put it at the time. Nordic Aviation Capital provides all thirteen of the ATRs as well as twelve of the eighteen Bombardier Aerospace CRJs.
Nordic Aviation Capital did not immediately respond to ch-aviation’s request for comment and Avions de Transport Régional declined to comment.
The lawsuit adds to Garuda Indonesia’s list of challenges as it undergoes a court-led debt restructuring in which creditors have submitted claims of about IDR198 trillion rupiah (USD13.85 billion), a provisional total that is due to be verified next week. The case will not impede the restructuring process, Thohir promised.
The corruption investigation follows the conclusion of a previous one in which former Garuda chief Emirsyah Satar was sentenced to eight years in prison in May 2020 for bribery involving aircraft and parts procurement, including for Airbus and Bombardier Aerospace jets and Rolls-Royce engines. In June 2021, former technical director Hadinoto Soedigno was handed a sentence of at least 12 years in prison also for corruption.
Meanwhile, also on January 11, 2022, billionaire businessman Chairul Tanjung pledged to raise his stake in Garuda Indonesia once it completes its debt restructuring. The media, finance, and agribusiness tycoon holds a 28.26% stake in the airline through his vehicle Trans Airways, making him its second-biggest shareholder after the government.
“We hope the court process will be finished soon. Once it’s done, our plan is to increase capital to strengthen it,” he said during a broadcast via one of his media outlets without further elaboration.