On Monday (9/12), the Chief Executive Officer of the airline leader in Indonesia, PT Garuda Indonesia, I Gusti Ngurah Askhara Danadiputra, and four other board directors - including the director of human capital, director of operations, and director of cargo - were fired from their position by the State-Owned Enterprises Minister, Erick Thohir. The firing came as reports of mismanagement and abuse of company power were found. Ari Askhara was dismissed after the airline’s audit committee and the customs directorate found out that there were unregistered cargos, including one Classic Harley Shovelhead motorcycle and two high-end Brompton bikes, inside a Garuda A330-900 NEO aircraft that had just been purchased by the state-owned airline from a European manufacturer in France (5/12). The act, considered as a direct violation of the principles of Garuda’s Good Corporate Governance (GCG), opened a veil of shady practices, with several reports of sexual assault to flight attendants, confusing flight routes, and how the five directors held a handful of positions as commissioners in other state enterprises, that has led to a restructuring of the airline’s top offices.
Since the case was revealed by Soekarno – Hatta Airport Customs, Garuda’s stock price plummeted 17.26% to the price level of Rp484/unit (6/12), from Rp585 / unit before the case was revealed (15/11). However, the effort of the Minister of State-Owned Enterprises to improve Good Corporate Governance practice by responding to the reports assertively and quickly led to a GIAA stock price rise, to 2.07% or the level of Rp494/unit after the dismissal of the former CEO on Monday (9/12). The volume of stocks traded is at 6.1 million units, considered relatively large, valued at Rp3 billion.
Responding to the dismissal of the former CEO – Ari Askhara, the Ministry of State-Owned Enterprises appoints former Director of Finance and Risk Management, Fuad Rizal as the temporary official CEO (Plt.) to replace the CEO’s role for the next 45 days. The permanent replacement of the five directors will be announced later in January 2020.
Sources: CNN Indonesia CNBC Indonesia Bloomberg
What would you like to learn next week? Comment, Like, & Share!