Long-haul budget airline AirAsia X uncovers RM7m of fake payments

AirAsia X said its auditors had recently discovered that certain payments made to a service provider between 2010 and 2014 were for fictitious services.
AirAsia X said its auditors had recently discovered that certain payments made to a service provider between 2010 and 2014 were for fictitious services.PHOTO: BLOOMBERG

PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - Long-haul budget airline AirAsia X Bhd has discovered payments for fictitious services that adds up to RM7 million (S$2.33 million).

In a filing with Bursa Malaysia, the firm said its internal and external auditors had recently discovered that certain payments had been made to a service provider between 2010 and 2014 for services which were now established to be fictitious.

"Following the discovery of the irregularities, the board has on the recommendation of the audit committee appointed 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, where applicable," the aviation firm said.

During the course of the forensics 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.

Among others, it has sought legal advice on the possible courses of action the company can take to recover the losses and lodged a police report.

On top of that, it is reviewing the current internal control process to ensure that similar transactions will not recur.

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

During the quarter, the group recognised unrealised foreign exchange loss on borrowings of RM30.9 million as compared to 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.