The Story So Far ...
After brokering the introduction between Mahathir and Tony Fernandes, political heavyweight Pahamin beat a hasty retreat from official politics. He immediately reemerged as the Non-Executive Chairman of Air Asia - which also happened to be the airline Malaysia's PM sold them for $1.
The Air Asia Company’s evolution as a carrier is best described as existing in two distinct periods, first as a Malaysian Government owned national carrier, and then in its present incarnation under retired political allies of Mahathir.
As the scholarly politicians and corporate elite on the Air Asia board are undeniably experts when it comes to running their hugely profitable operation, then perhaps they could have stepped up to the plate with Air Asia MK1 and worked together to rescue it. No, of course. It wasn't theirs yet, was it?
The PM's friends ended up at the controls of what became an overnight success of such epic proportions you could well argue that if Air Asia 'BF' wasn't groomed to fail, it certainly wasn't assisted to succeed.
Air Asia MKII on the other hand, was afforded such astounding assistance that in comparing the two you must question the intelligence and/or integrity of every public servant in Malaysia. Maybe there was so little cash left in the treasury that nobody could afford a whistle to blow.
Don't let's mistake what Mahathir, Pahamin, Fernandes & Co. pulled-off as a rescue or masterful reincarnation. This swindle has taken hundreds of millions of dollars from everyday Malaysians and made injustice the beneficiary. Oh! And the Board of Air Asia. Illegal? Immoral? You judge!
Meet Air Asia's Politicians!
DATO' PAHAMIN AB. RAJAB
Chairman, Air Asia
TAN SRI DATO' (DR.) R.V.
Independent Non Executive Director
DATO' LEONG SONNY,
Non Executive Director
DATUK ALIAS BIN ALI,
Independent Non Executive Director
Tun Dr Mahathir bin Mohamad
Adviser & Mentor - Honorary
Fernandes said, "I had this desire to start an airline and I thought a low-fare airline would work very well in Malaysia. So I went around and started putting the plans together. I roped in three partners — Datuk Pahamin, Aziz and Kamarudin, for starters. Datuk Pahamin helped arrange a meeting with then Prime Minister Tun Dr Mahathir Mohammad.
"Fernandes pilots AirAsia to greater heights." Kang Siew Li, New Straits Times, Saturday, December 20, 2003
He said it was easy for people to criticise the Government and say they were not given equal opportunities. "Let me tell you that I am living proof of someone who had no political backing. Through sheer hard work and determination, which every one of us is capable of, we can succeed.
Faridah Begum - The Star, March 07, 2008
Air Asia seems to be blessed with what could only be described as a divine almost heavenly relationship with politicians. Why?? Why don't you drop Tony a note and ask him directly firstname.lastname@example.org We'd be fascinated to hear what he has to say for himself and the AirAsia Board. If you get a reply, please send it to us and we'll happily publish it in full .... ....................................................................... [right here]
Air Asia seems to be blessed with what could only be described as a divine almost heavenly relationship with politicians. Why??
Why don't you drop Tony a note and ask him directly email@example.com We'd be fascinated to hear what he has to say for himself and the AirAsia Board. If you get a reply, please send it to us and we'll happily publish it in full ....
That Fernandes is a disingenuous con and a low-life is a given. Regular readers know that we have evidenced it again and again on this website. Frankly, we have bigger fish to fry. Until now, this blog focused entirely on non-political issues and chose not to publicise this story from Ganesh's excellent investigative journalism in his blog. That changes today. Public servants need to be reminded that they are public servants. We reveal a sweetheart deal that is nothing less than scandalous and so morally corrupt as to make you feel like you've just eaten from Air Asia's menu. Today Pahamin and a handful of former politicians sit on the Board of Air Asia and rule the roost of one of Malaysia's most profitable corporations.
The reason why Malaysia was cash strapped post-Mahathir might just become a weeny bit clearer today. Gifting an airline beats the traditional gold watch hands down and so it goes, the Air Asia Myth was born. Courtesy of improper dealing of the highest order, Malaysians were taken for a huge ride. Notice we didn’t say illegal. No, this was done with a brazen degree of in your face transparency. Who would question Dr Mahathir? Who would dare to question him? We'd all be thrown in jail!!
We have Air Asia ‘BT’ [Before Tony] - a lame duck airline with millions in debts in December of 2001 when the meeting with Dr Mahathir happened and the deal was done. It was in the black and turning a profit in less than a year. Well, that’s what we’ve been led to believe. It was turning a profit, but it wasn’t paying a good many bills. Obviously Air Asia were robbing Peter to pay Paul.
DRB-HICOM - the government conglomerate established the airline in 1993 and like most businesses of that magnitude, it took a few years to set up and to ramp up. Air Asia ‘BT’ operated for nine years, amassing what we're told was $US11 million in debt. As we now know it was making US$25 million each year. Was it instead CLEARING debts, say, money owed on those two Boeing 737s that were later written off in the boys' KL fire sale? Again, before anyone should assert that we are politically motivated, please consider this blog has been operating for a year - and with the single exception here of lamenting Malaysia's pathetic contribution to the tsunami relief - there has been no bias whatsoever. Now the gloves are off.
Each of the two Boeing 737-300 aircraft Mahathir gifted his friends were valued by our technical consultant at anywhere between US$30-50 million each. That is the tip of the financial ice berg. This was an out-of-the-box airline. Like a Harvey Norman computer it came bundled with an operating system boasting administrative and booking teams, ground staff and catering, pilots and flight crew; systems, hardware, licenses and much more.
But why take our word for it?
Tony Fernandes: "I think Dr Mahathir's vision was all about turning companies around as opposed to starting new ones. And it was the greatest thing that could ever have happened because one, AirAsia has a strong brand. Two, it was a good airline that DRB-HICOM had started. Operationally, the airline is a safe airline, with good pilots and good staff. "So, we didn't have to go through the painful process of recruiting and training people. We had a working model from day one. We just had to change the strategy a bit."
But why take our word for it?
What sort of strategy? We'd call it a questionable one. Anyhow, what a steal, hey? Magically, new routes suddenly appeared out of thin air on both the domestic and international scene. Dr Mahathir was like an American Presidential nominee [Ouch!] and off negotiating open skies agreements for Pahamin's new outfit. Of course there were unbelievable tax breaks - literally and metaphorically - and rather a few other benefits one might think. Who can forget the deal with Thailand's fugitive former PM. History shows what disaster resulted from that deal. Emerging through a fog of smoke and mirrors and PR rhetoric was Fernandes. Again, our friend Ganesh's own sedition edition digs up the dirt in his NEW tax expose here.
The laissez fair libertine has a lend of the government, the taxpayer, the customer and laughs all the way to the bank
Fernandes and the politicians have been siphoning off huge profits while making a ludicrously half-baked attempt to repay their creditors. The big question would be, was this incredible deal illegal? You'd surmise that in any other civilized country they'd all be in jail. But not in Malaysia. Of course, Mahathir will say that it was for the good of the country and friend Pahamin was free to enjoy his 'retirement' any which way he pleased.
It wasn't for the good of Malaysia. Just look at how much money is owed by Air Asia, the laughable escalation of debts that to all intents and purposes never get repaid. Air Asia employ less staff than most airlines in the world. Those staff earn less than the majority of companies pay their people. The group walk all over people with no fear of repercussions. They test the law at every turn. Frankly it is unconscionable that Fernandes and his merry bunch of former politicians charge a disabled passenger 12RM for a wheelchair; when they are worth hundreds of millions of dollars.
With no disrespect to Air Asia's passengers who are not even remotely affluent - has tourism benefited significantly because Air Asia exists? Nope. What about KLIA? Surely the airports have prospered? Quite the contrary! So, what good has Air Asia brought anybody other than those people running a privately owned, government gifted airline?
Fernandes has bulletproof shield that verges on Diplomatic Immunity. A quick look at who is sitting on the Air Asia Board goes a long way in explaining it. Grave safety incidents go mostly unreported – which we will expose in part three. The US$30 million debt only came to light after Air Asia's blow up with Malaysian Airlines stopped just shy of a dogfight.
CNN: When you purchased the airline, it was millions of dollars in debt. Were you that rich?
Fernandes: No, I wasn't, and everyone thinks there was some invincible man behind this. We purchased the airline for a ringgit. In fact we took over a lot of debt with three major suppliers that were owed money: Petronas, Malaysian Airlines, and Malaysian Airports. We did not ask for haircuts, because we wanted to respect the creditors. We thought we had a long relationship with them so we asked for time to pay them off, which they gave us because I think they thought they didn't have a lot to lose. We restructured the business model and we were cash positive from day one and that was able to pay the debt off -- we paid it off in full.
There you go telling lies again, Tony. Do we need to chat to MAS and Malaysian Airports and see what they have to say on the matter? And to say there wasn't an invincible man behind it is bullshizzle, isn't it? Credit where credit's due. You have to ask yourself why the debt remained a secret for so long. Take the example of the Air Asa jet that crashed in Malaysia - Malaysia's press miraculously failed to notice. We have irrefutable evidence that Bedawi's private jet literally had to pass within yards of the stricken wreck. How is it that the only group or journalist who mentioned the story was a blogger? Reporting facts in Malaysia is hazardous. We at Fly Air Asia? Not Me have taken precautions with our lawyers and Smith & Wesson on this one. As we have a couple of dozen contributors and 200,000 subscribers - and growing - we think they'll need to build a new jail just to hold us.
We digress. To say that airline had been grossly undervalued by Mahathir is as laughable as it is despicable. The Malaysian people – the taxpayers - were hardly going to be consulted. From the very beginning the protectionist policies and advantages flowed like wine. Oh, but didn't Fernandes put on a good show about how unfair life was for their little airline. Mahathir's political friends were discovering that private enterprise beats public service.
This is the same aircraft as the Boeing 737's that Mahathir gifted his friends, only with Lufthansa's livery. If we were to believe our forgetful friend Fernandes' assertions, he inherited two 'aging' aircraft. For the record, it remains one of the most widely used LCC aircraft on the planet today.
Fernandes clearly boasts an economy with the truth and integrity that many would conclude are prerequisite hallmarks of a politician in Malaysia, a country infamous for nepotism and abuses of privilege. His being an 'independent' and perceived as a jolly battler ostensibly kept this political sweetheart deal under the radar for the most part.
This is the same Tony Fernandes who today says that he's, 'living proof of someone who had no political backing'. Incredible as it may seem, Two Faced Tony Fernandes is notorious for shooting his mouth off and not following the script provided by the Air Asia Board. His role has been hugely exaggerated and was improbable from the beginning. Yes, Fernandes' story is great PR fodder. He's like a retarded moth in a kerosene lamp. He frequently trots out that old story that he knew absolutely "0" about running an airline. Consider this ! Did Fernandes' lack of experience matter to the Prime Minister and the Government cronies who brokered the deal in an official capacity?
Imagine you're the PM. You've just written down the value of an asset worth a hundreds million to less than a dollar. Presumably you have been assured that this reincarnated Air Asia MKII will provide employment and increase tourism. [Of course, this move has the added benefit of seeing you hold favour with your political support system - and future Air Asia Board members. Say you need to get someone put away for re-sodomy.]
You surely wouldn't, however, take a risk with the taxpayers money and accept the pitch of a record company executive with no airline experience, would you? We'll grant you that the ownership was being transferred by Mahathir to the 'private sector'. But he was tasking a rookie with paying off the airline's reputed debt of $11 million that was owed to the taxpayer. It seems more than just a little cavalier risking stuffing up a second time, doesn't it?
Consider Mahathir's personal blog and his utter disgust over MV Augusta:
Click to enlarge!
No - we will not give him link love.
Mahathir being Prime Minister between 1981-2003 you'd think he might have set Air Asia 'BT' [Before Tony] – or perhaps that should be 'BF' [Before Friends] - on the runway to recovery. That is, rather than divesting Malaysia and her taxpayers of it for less than a buck. Who ultimately has to take responsibility for its demise? The Head of State.
It would be Anwar, but he was wallowing in jail. History shows us that Tony & Pahamin achieved better results in months than MKI had in years! It makes you think. The early incarnation of the airline was let go. Nobody intervened. It didn't rise from the ashes like some rusty Phoenix. It was in perfectly good shape. The pressing question is how this white elephant could be reverse engineered to turn a titanic profit in the time it takes a stockbroker to act on a hot tip. Remarkably, while his friends' airline skyrocketed, it was MAS that was now on the slide:
"In the two decades of Mahathir’s rule, one financial scandal after another beset the country ... "Malaysia’s state-owned airline was driven to near bankruptcy with RM9.5 billion (US$2.94 billion) in debt under a Mahathir appointee, Tajuddin Ramli. The government bailed out Tajuddin by buying his 29 percent stake in 2001 for RM1.79 billion at RM8 per share when the market price was just RM3.62. When Badawi brought in Idris Jala as chief executive officer in 2005, the airline had booked a loss of RM1.3 billion in that year alone." [The Asia Sentinel]
The stench is indeed very bad! While Fernandes has always been the TV front man, the huge Government involvement in pushing a private enterprise barrow to the benefit of a group of politicians is undeniable. What is despicable is the unpatriotic motivation of the players and their complicity in arguably the greatest scam in Malaysian history. And not a law was broken. It goes down hill from there. One character is conspicuous by his absence in our story to date. Where was Bad Boy Bedawi throughout this whole episode? Notwithstanding his bitch slap sissy fighting with Mahathir these days, he was the Prime Minister's golden boy back then. Was he privy to the wheeler dealing of Malaysia's greatest scam? Bet your bottom dollar.
Forbes Asia valued Fernandes' personal wealth at $300+ million, so he and the ludicrisly rich politicians could be forgiven for losing track of loose change. “AirAsia did not agree with the outstanding balance and had asked for a lower rate, so the matter has been forwarded to the Finance Ministry,” said Transport Minister Datuk Ong Tee Keat. He said, "AirAsia owes Malaysia Airport Holdings Berhad (MAHB) more than RM100mil for all the airports it has utilised in the country."
- reported by Malaysia's Star newspaper.
An argument broke out between Deputy Transport Minister Datuk Seri Lajim Ukin and Wee Choo Keong over the RM100mil owed by AirAsia to Malaysia Airport Holdings Bhd (MAHB) for use of its airports in the country. Wee questioned why MAHB did not initiate legal action against AirAsia to recover the money owed since 2002. Among finger pointing and Yes Minister demarcation issues, Wee said the figures claimed by AirAsia are different than those stated by the airport, and here's the kicker ...
"The AirAsia rates also included discounts which it had requested, but were not agreed to by MAHB,”
The Air Asia Board of Directors aren't simply visionaries and airline entrepreneurs, these former politicians have pioneered a whole new approach to finance. Rack up huge debts ... and then negotiate with the creditor. Isn't that what bankrupt company's in Alitalia 's position do as a last resort? All that expertise at the table and that's the best they can come up with? The question must be, why has this been allowed to continue unabated? Tune in next week to find out how fabulously the Government under Bedawi handled the situation.
- COMING SOON -
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