Air Asia X paid $2.3m for fictitious services

In audits, Air Asia X discovered that more than S$2 million had been paid out to a service provider between 2010 and last year for services that were fake. The company has sought legal advice on the courses of action it can take to recover the losses
In audits, Air Asia X discovered that more than S$2 million had been paid out to a service provider between 2010 and last year for services that were fake. The company has sought legal advice on the courses of action it can take to recover the losses and has lodged a police report.PHOTO: BLOOMBERG NEWS

PETALING JAYA • Long-haul budget airline AirAsia X said it has discovered payments for fictitious services during its internal and external audits to the tune of RM7 million (S$2.3 million).

In a filing with Bursa Malaysia, the firm said it found that certain payments had been made to a service provider between 2010 and last year for services which were now established to be fictitious.

The company has appointed independent auditors to carry out a forensic audit, and instructed the management to ensure the availability of all relevant documents and/or key personnel for review and interview, where applicable.

During the course of the forensic audit, the auditor PwCCS discovered 24 payments totalling RM7.01 million had been made to a service provider for fictitious services.

The payments were authorised by a person in a management position within 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," AirAsia X said.

Following the discovery, the company has taken several measures to safeguard its assets and interest.

It has sought legal advice on the possible courses of action the company can take to recover the losses and has lodged a police report. It is also reviewing the current internal control process to ensure that similar transactions will not recur.

For the second quarter ended June 30, the firm took in RM653.03 million in revenue, but made a loss of RM132.94 million. That's compared with a revenue of RM671.61 million and net loss of RM128.79 million in the previous corresponding quarter.

During the quarter, the group recognised unrealised foreign exchange loss on borrowings of RM30.9 million as compared with a gain of RM31.9 million a year earlier due to the weakening ringgit.

It also saw fewer passengers flown, but average passenger fare has increased by 7.2 per cent.

THE STAR/ASIA NEWS NETWORK

A version of this article appeared in the print edition of The Straits Times on August 29, 2015, with the headline 'Air Asia X paid $2.3m for fictitious services'. Print Edition | Subscribe