Category Archives: Financial Performance

Sweden’s anti-corruption agency launches investigation into suspicious Ericsson payments in Iraq

Ericsson is facing a preliminary investigation from Sweden’s National Anti-Corruption Unit as pressure continues to mount over the company’s handling of an alleged yearslong bribery spree in Iraq, ICIJ media partner SVT reported today.

Though Swedish prosecutor Leif Görts did not explain why the investigation was initiated, the move was expected, as the corruption allegations come from Ericsson’s own investigation, according to SVT.

The internal company report, leaked to ICIJ and shared with 30 media partners, describes a widespread pattern of alleged corruption and graft in Iraq between 2011 and 2019, and the lengths the global telecom company took to capture the Iraqi market.

Ericsson sought permission from the terrorist group known as the Islamic State in Iraq and Syria to work in an ISIS-controlled city and paid protection money to smuggle equipment through ISIS-held zones on a route known as the “Speedway,” according to the Ericsson List investigation.

The report obtained by the International Consortium of Investigative Journalists revealed Ericsson made tens of millions of dollars in suspicious payments in Iraq, financing slush funds, trips abroad for defense officials, and payoffs to executives at corporate customers and possibly terrorists.

Since the Swedish anti-corruption investigation is in its earliest stages, Görts did not provide details but said an investigation was also underway for similar allegations against Ericsson in China.

Ericsson has been hit by a financial and legal hailstorm since the Ericsson List revelations. Shareholders voted last month to allow Ericsson CEO Börje Ekholm and board members to be held personally liable for mishandling the company’s Iraq scandal.

The company also stated last week that it expects to face new fines from the U.S. Department of Justice for breaching the terms of a billion-dollar corruption settlement by failing to disclose misconduct in Iraq.

Elsewhere in Sweden, officials are prosecuting four former Ericsson executives for suspected bribery in Djibouti.

Chinese authorities take aim at overseas telecom fraud located in Cambodia

The investigations of five major trans-border telecom fraud cases have been placed under the joint oversight of the Supreme People’s Procuratorate and the Ministry of Public Security, sending a strong signal that China will punish such crimes severely.

The cases were registered in Zhejiang, Fujian, Henan and Hunan provinces, as well as Chongqing municipality, and each involve a large number of victims and caused severe harm to the public, the SPP said on Tuesday.

In one case, police in Zhejiang studied evidence against overseas telecom fraud gangs in December 2020 and uncovered a group entrenched in Cambodia.

The preliminary investigation showed that the group set up a false investment platform overseas to defraud Chinese citizens. So far, more than 400 people from the group or associated with the group have been arrested, involving a total fraud of over 150 million yuan ($23.6 million).

In recent years, procuratorial and public security organs have worked closely to crack down on telecom fraud and related crimes, effectively safeguarding the legitimate rights and interests of the people. However, there is still a high incidence of such crimes, which seriously affects people’s sense of security, the SPP said.

Criminals will be targeted regardless of whether they are based locally or overseas, with both online and offline efforts to be explored by procuratorial and public security authorities.

Authorities are committed to capturing and cracking down on key financiers of such criminal groups and relevant criminals, and to the capture, extradition and repatriation of fraud fugitives on the run overseas, according to the SPP.

People who provide criminal groups with personal information, technical support, payment and settlement assistance are also targets.

In a stern warning, the authorities urged criminals staying abroad to forget about evading punishment and return to China to turn themselves in as soon as possible.

iPhone maker Pegatron halts Shanghai production over Covid

Key iPhone maker Pegatron has halted operations at two subsidiaries in the Chinese cities of Shanghai and Kunshan, as global supply chains feel the pinch of Beijing’s strict zero-Covid measures.

The business hub of Shanghai has become the heart of China’s biggest Covid-19 outbreak since the virus surfaced more than two years ago.

The city of 25 million has remained almost entirely locked down since the start of the month.

“We have temporarily suspended work,” said Pegatron in a filing to the Taiwan Stock Exchange yesterday.

The Taiwanese firm said it “actively cooperates with local authorities” and would try to resume operations as soon as possible.

The suspensions apply to two of its subsidiaries, in Shanghai and nearby Kunshan city.

Stay-at-home orders and stringent testing rules have strained supply chains in and around Shanghai, home to the world’s busiest container port and a critical gateway for foreign trade.

China reported nearly 28,000 local virus cases today, the vast majority in Shanghai.

Many factories have been forced to halt operations as virus cases have surged, while some staff have been living in their workplaces as businesses struggle to operate.

Pegatron’s suspensions mark the latest blow to Apple, which has seen disruptions at other suppliers’ assembly lines in recent months as Chinese cities struggle to curb virus outbreaks.

In March, another major supplier Foxconn halted operations in the Chinese tech hub of Shenzhen.

Foxconn has “resumed fundamental operations” in Shenzhen as of late March, the company said.

Chinese authorities have struggled to maintain the flow of goods across the country as tough virus controls slow movement.

A Transport Ministry circular issued late Tuesday barred the “blocking of road transportation” vehicles and personnel, ordering more efficient Covid-19 screening along transport routes.

Anxious about the spring farming season and food supplies, officials in virus-hit areas such as the northeastern province of Jilin have also issued travel passes to let agricultural workers return to farmland on chartered buses.

“The Chinese economy has been facing a rising risk of recession since mid-March”, Nomura analysts warned this week, citing severe disruptions to the delivery of exports, with coastal areas hit hard by controls to rein in the virus. — AFP

Malaysia Airlines launches fly now pay later

Malaysia Airlines has entered into a regional partnership with hoolah, an omnichannel Buy Now Pay Later (BNPL) platform.

Through this collaboration, travelers in Malaysia, Singapore and soon Hong Kong, will be able to book their getaway with Malaysia Airlines online and pay for their flights via hoolah’s flexible three-month, interest-free payment option.

This means that travelers can fly to their destination and enjoy their vacation before paying for the ticket in full, spreading the cost over three monthly interest-free installments.

Arvin Singh, CEO and Co-Founder of hoolah, said, “We are thrilled to be partnering with Malaysia Aviation Group in Asia and support their business objectives as we push forward together to accelerate the recovery and growth of the travel and tourism industry. As countries in the region gradually open up their borders, we look forward to making travel more accessible and affordable for travelers, along with the flexibility to pay for their holiday over time.”

Malaysia’s borders are expected to reopen on April 1 following a two-year closure brought on by the COVID-19 pandemic.

Hoolah’s BNPL is also available in Malaysia on Journify, an integrated one-stop travel and lifestyle digital platform through which travelers can discover new places such as attractions, food and more; plan their trips around Malaysia; and shop local products.

Lau Yin May, Group Chief Marketing and Customer Experience Officer of Malaysia Airlines, said, “We are excited to collaborate with hoolah as it provides another payment option and flexibility for customers to book their flights with Malaysia Airlines and shop on Journify. This marks our first-of-its-kind partnership with a BNPL provider in Asia, and it couldn’t be timelier as we anticipate growing demands for travel with the reopening of our borders soon.”

For more information and to book your next getaway, visit the official Malaysia Airlines website at http://www.malaysiaairlines.com and be sure to download the Malaysia Airlines’ App to get the latest promotions conveniently at your fingertips anytime and anywhere.

AirAsia to launch ride-hailing platform in Thailand, expand digital services in Asean

Bangkok ride-hailers can grab a new option next month. AirAsia’s parent holding company Capital A plans to launch its ride-hailing platform in the Thai capital this month, as it continues an aggressive foray into non-aviation businesses after the Malaysian airline suffered significant pandemic-era losses.

The new service, dubbed AirAsia Ride, will begin with some 5,000 taxis in Bangkok, before expanding to private drivers and other key cities, according to the company’s regional CEO Lim Chiew Shan.

AirAsia Ride first launched in the Malaysian capital of Kuala Lumpur last August. It currently covers all of Malaysia’s major cities, with monthly bookings in the six digits for its 30,000 registered drivers, all of whom are fully-vaccinated for Covid.

The platform’s total rides increased on average more than 60% each month since launch in 2021, recording more than 700,000 rides to date. Notably, drivers take 85% of the net fares, excluding toll fees, which the company claims is more than any other “e-hailing” platform on the market.

‘Grab’-ing hold of the market

In a post-pandemic world, the company plans to conquer the road as much as the skies. In Southeast Asia, that means snatching ground from the market’s biggest player — Grab.

Since Uber’s exit from Malaysian in 2018, Grab has been the country’s dominant e-hailing player. According to the Singaporean company’s initial public offering documents, it controlled more than 70% of the local market in 2021.

It’s a similar picture here in Thailand, where Grab controls the lion’s share of the e-hailing market and is also a main platform for food delivery. Grab has some 1,339,154 users in Thailand, with more than 60 percent of customers being women between the ages of 18 and 34, according to Start.io.

In a bid to attract more female drivers, AirAsia Ride launched its LadiesONLY community earlier this month, giving female passengers in Malaysia the option of booking cabs for women only. It may be a sign of how the new e-hailing platform hopes to shake up the market in Thailand.

When the new e-hailing platform launched in Malaysia last August, Amanda Woo, CEO of airasia Super App, emphasized budget mindedness and expanding northward into Thailand…

“Airasia Ride inherits the DNA of running a low cost model which enables savings to be passed on to guests and strives to offer the lowest fares on the road, introducing great value to the highly competitive e-hailing ecosystem. This is part of our continuous digital transformation journey to become Asean’s top super app through our regional expansion into Thailand and potentially Indonesia very soon.”

Desperate times, diversified measures

In July last year, AirAsia announced that AirAsia Digital had acquired the Thailand operations of Indonesian tech company Gojek. The all-share deal worth US$50 million gave Gojek a mere 5% stake in AirAsia Digital, and laid the groundwork for logistical platforms like AirAsia Ride to eventually expand into the Thai market this year.

At the time, the digital business division of AirAsia was valued at US$1 billion, earning it the coveted venture status of “unicorn.” But it wasn’t enough to make up for the airline’s billions of dollars in losses during two consecutive years of pandemic.

As the company looked to digital businesses for additional revenue, it became much more than just an airline. And it needed a name change to reflect its new identity. Tony Fernandes, founder of budget carrier AirAsia, rebranded the airline’s parent holding company as Capital A in January this year, saying…

“Over the past two years we have spent the downturn in flying building a solid foundation for a viable and successful future, which is not solely reliant on airfares alone. Capital A signals an exciting new era for our airlines and all of our other portfolio businesses within the Group as we embark on a significant new growth phase.”

Fernandes began expanding full-throttle into non-airline businesses two years ago, when the pandemic started stymying air travel in spring 2020. AirAsia Ride is just one of the resulting non-aviation subsidiaries under the company’s wide umbrella…

“While the airline will always underpin the AirAsia brand, it has long been my firm intention, well before Covid hit, to leverage the strong data we have built up over 20 years and incorporate industry-leading new technologies to offer a broad range of products and services, over and above selling just airfares. The pandemic has allowed us to accelerate that strategy. “

Fernandes initially branched out into online travel agency and cargo logistics businesses, before building an diversified digital business empire encompassing food, groceries, restaurants, parcel delivery, insurance, micro-lending and, of course, e-hailing services. A total of 16 such services are available though the airasia Super App…

“We are already one of the top three online travel agents (OTAs) in Asean and our super app is on track to become the leading lifestyle app in the region very soon. All of our portfolio businesses are well on the way to becoming industry leaders in their respective fields across Southeast Asia, including BigPay, our aircraft engineering division Asia Digital Engineering (ADE) and logistics venture Teleport.”

Weathering the storm

But it hasn’t been a smooth transition for the aviation tycoon. Fallout from the COVID-19 pandemic and the resulting travel restrictions saw the company’s revenue decrease from 11.9 billion ringgit in 2019 to 3.1 billion ringgit in 2020.

Worst of all, the company has wracked up staggering net losses of 5.1 billion ringgit and 3.1 billion ringgit in 2020 and 2021, respectively.

In January, Capital A was put on watch by the Bursa Malaysia stock exchange, which ordered the rebranded company to undergo a financial restructuring within one year or be automatically delisted, according to a report by Nikkei Asia.

Meanwhile, AirAsia (the airline) plans to reopen flights between Malaysia and Thailand in the coming months, as the two countries ease Covid-19 travel restrictions and reopen their shared border.

Time will tell if Fernandes’ pandemic-era restructuring will keep his company afloat in a post-pandemic Southeast Asia. Flight bookings — and ride hailing — will be a part of the equation.

The company aims for it digital businesses to provide half of its total revenue in the medium term — if it can get there. Fernandes is optimistic…

“Importantly, the best is yet to come. We have pivoted, we have transformed and we have a five year plan in place which will see non airline revenues contributing around 50 percent of overall Group revenue by 2026. Once the airlines return to pre-Covid levels in the near future all of our other lines of business will benefit significantly and will all soar to new heights in tandem with one another.”