Indonesia claims graft in Garuda deal for French-Italian planes

The irregularities in the procurement contract were unearthed during an audit of Garuda's operations. PHOTO: REUTERS

JAKARTA (AFP) - Indonesia provided prosecutors with proof of graft on Tuesday (Jan 11) in flag-carrier Garuda's deals to lease aircraft made by ATR, a joint venture between Airbus and Italy's Leonardo, the country's state-owned enterprises minister said.

The irregularities in the procurement contract were unearthed during an audit of Garuda's operations as the state-owned carrier struggles to keep flying after being battered by the pandemic.

"It's not just accusations, but facts," Mr Erick Thohir said in a broadcast statement. Garuda has already returned other aircraft before their leases expired as revenue evaporated.

Early last year, it said it was returning 12 CRJ1000 aircraft manufactured by Canada's Bombardier, leased to Garuda by Nordic Aviation Capital (NAC).

NAC, founded in Denmark, also owns 25 ATR 72-600s in Garuda's fleet, which are the subject of the graft investigation. Spokesmen for NAC were not immediately available for comment.

NAC, the world's largest leaser of so-called regional aircraft - smaller models that are suited to domestic or short-haul flights - said last year that it would seek to hold Garuda to its legal obligations in the earlier Bombardier aircraft procurement.

But that deal has already become a target of corruption investigations by the Canadian and Indonesian governments.

Mr Thohir said an audit of Garuda found it had too many aircraft unsuited to servicing the airline's routes, and that costs were way out of line with industry norms.

"Today, it is ATR 72-600 that is being investigated," he said. "Will there be developments with other aircraft procurement processes? It's possible because that's what we want to finish transparently."

Mr Thohir said the investigation into Garuda's procurement had mapped out which deals showed indications of corruption, "or merely have expensive leases - this is our own stupidity".

Garuda's aircraft-leasing costs gobbled up 28 per cent of revenues, Mr Thohir told Kompas TV.

The ATR deals were made in 2013, he said, during the reign of Garuda's former chief Emirsyah Satar.

Satar, who stepped down in 2014, was later jailed for eight years for bribery involving aircraft purchases, including for Airbus and Bombardier planes as well as Rolls-Royce engines.

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