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Airbus Case Spurs Hopes for Indonesian Anti-graft Agency

 - February 10, 2020, 10:57 PM

Indonesia’s anti-graft watchdog, the Corruption Eradication Commission (KPK), embraced high expectations over the weekend concerning Airbus’s $4 billion Deferred Prosecution Agreement (DPA) and how it would reinforce its own investigation into allegations of bribery involving former airline executives of Garuda Indonesia.

According to the KPK, the Approved Judgment and the Statement of Facts in Regina vs Airbus SE were in line with “the facts found in the handling of Garuda cases” by Indonesia’s corruption agency.

“KPK believes [the] DPA will strengthen the evidence in the investigation and prosecution of alleged bribery cases related to the procurement of aircraft engines of PT Garuda Indonesia,” KPK said in a statement.

The January 31 judgment against the European manufacturer states that between 2011 and 2014, a business partner of Airbus had paid more than $3.3 million to employees or family members of Garuda and/or to the airline’s low-cost arm Citilink. Those employees were considered “key decision-makers” during Airbus’s business dealings with the flag carrier, namely Garuda/Citilink’s purchase of 55 Airbus aircraft.

“The last of the relevant purchase agreements was dated 20 December 2012 and was for 25 A320s,” said the UK judgment. “The payments were intended to secure or reward improper favor by those Garuda/Citilink employees in respect of that business.”

KPK’s recent statement in the wake of the Airbus DPA comes amid an ongoing investigation into Hadinoto Soedigno—a former technical maintenance director at Garuda and one of three suspects identified in a lengthy bribery case related to the procurement of aircraft and aircraft engines between 2008 to 2013. In August 2018, KPK alleged that Soedigno received bribes for the procurement of Airbus and Rolls-Royce contracts through Indonesian businessman Soetikno Soedarjo, who in turn supplied payment to ex-Garuda CEO Emirsyah Satar. According to KPK, Soedigno acted as a business consultant for Rolls-Royce, Airbus, and ATR and received “commission” from the three manufacturers, as well as from Bombardier’s sale representative in Hong Kong, Hollingsworth Management International. The contracts implicated include the Rolls-Royce Trent 700 engines and the engine maker’s Total Care program as well as the acquisition of A330-200s, A330-300s, ATR 72-600s, and Bombardier CRJ1000s.

Satar and Soedarjo were found guilty of bribery and money laundering charges in a corruption court in December 2019 after KPK learned the former boss had received over $3.3 million in illicit payments from Soedarjo. According to prosecutors, Soedarjo had received bribes from Rolls-Royce, Airbus, and Bombardier to procure aircraft and maintenance projects when Satar served as Garuda's CEO from 2005 to 2014. Soedarjo had allegedly given gifts to Satar and Soedigno in the form of money and goods and though his companies, including Singapore-based Connaught International. Satar and Soedarjo are now facing trial in Jakarta while KPK continues its investigation into Soedigno.

Airbus, Rolls-Royce, and ATR did not immediately respond to AIN's request for comment, however, Bombardier told AIN in a note last week that it denied “any wrongdoing in connection with the sale of CRJ aircraft to Garuda”, adding that the Canadian airframer “had not been approached by any authorities about these allegations.” 

Indonesia’s current probe is a spinoff from an SFO-led corruption investigation involving engineering giant Rolls-Royce. In the documents setting out the charges, the court learned Rolls-Royce gave two payments totaling $2.25 million and a Rolls-Royce Silver Spirit car to a “to an intermediary or company controlled by that intermediary” in 1991 in exchange for a Trent 700 engine contract to Garuda. Later, two additional payments totaling $779,784 were paid to the managing director of the same intermediary company in 1997 in relation to the procurement of Rolls-Royce engines for Garuda’s A330s.

In 2017, Rolls-Royce admitted to systematically using intermediaries to pay millions of dollars in bribes to secure maintenance and engine orders in six countries, including Indonesia, China, and Russia. Under the terms of its DPA, the engine maker agreed to pay penalties totaling more than $812 million to avoid going to trial.