January 20, 2017 / 7:12 AM / a year ago

Indonesia watchdog says former CEO of airline Garuda a bribery suspect

JAKARTA (Reuters) - Indonesia’s anti-corruption agency said on Thursday it was treating the former chief executive of airline PT Garuda Indonesia Tbk (GIAA.JK) as a suspect in a bribery case.

FILE PHOTO Former CEO PT Garuda Indonesia Emirsyah Satar talks to reporters during a news confrence at Garuda Indonesia's head office in Tangerang, Indonesia, December 12, 2014. Picture taken December 12, 2014. REUTERS/Beawiharta/File photo

Indonesia’s Corruption Eradication Commission (KPK) said in a statement the CEO of Garuda from 2005 to 2014 was suspected of taking bribes related to the purchase of planes and machines from Airbus (AIR.PA) and Rolls-Royce (RR.L).

The KPK did not refer to the former CEO by name but, as is its custom, used initials - in this case “ESA”. The CEO of Garuda from 2005 to 2014 was Emirsyah Satar, who is now chairman of Indonesian conglomerate Lippo Group’s e-commerce platform MatahariMall.com.

In a phone message to Reuters, Satar denied wrongdoing but said that it was the authority of the KPK to name him as a suspect and that he will respect the legal process.

“As far as I know, when I was the CEO of PT Garuda Indonesia, I had never done corrupt activities and I did not receive anything that was related to my position,” Satar said.

MatahariMall said it supported the legal process in Indonesia, but declined further comment. Rolls-Royce did not immediately respond to a request for comment. A spokesman for Airbus said the company had no comment on the issue.

The KPK said it found evidence that “ESA” had received 20 billion rupiah ($1.5 million) of cash and items worth $2 million in Singapore and Indonesia from another suspect.

KPK Chairman Agus Rahardjo said at a news briefing its probe was directed against individuals, and would not affect Garuda’s operations.

Garuda’s vice president for corporate communication, Benny S. Butarbutar, said the airline would cooperate with the KPK, adding the investigation “has no connection to our corporate activities”.

Garuda shares closed 2.3 percent lower on Thursday, underperforming the broader market .JKSE which was little changed. They were down 0.6 percent on Friday.

Rolls-Royce agreed to pay authorities more than $800 million to resolve charges of bribing officials in six countries in schemes that lasted more than a decade, the U.S. Justice Department and Britain’s Serious Fraud Office (SFO) said in statements on Tuesday.

Britain’s SFO last year launched an investigation into suspected fraud, bribery and corruption in some Airbus aeroplane sales, following discrepancies found during an internal company audit of applications for UK government export credits. Neither the UK authorities nor Airbus has said which airlines’ aircraft are affected by the probe. ($1 = 13,368.00 rupiah)

Reporting by Cindy Silviana, Fransiska Nangoy and Tim Hepher; Additional reporting by Fergus Jensen; Writing by Eveline Danubrata; Editing by Mark Potter, Keith Weir and Muralikumar Anantharaman

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