Malaysia's probe into failed budget carrier MYAirline widens to alleged fraud, money laundering

KUALA LUMPUR: A high-priority police investigation into the affairs of little-known businessman Allan Goh Hwan Hua is expanding from the recent collapse of low-cost carrier MYAirline into suspected money-laundering, unlicensed deposit-taking schemes and fraud.

The widening probe on Mr Goh’s dealings are also presenting some awkward governance challenges that Prime Minister Anwar Ibrahim’s government must quickly tackle at a time of flagging foreign investor sentiment in the Malaysian financial markets.

Chief among them is how a businessman, whom Malaysian government officials privately acknowledge has been under the surveillance radar of a number of regulatory agencies for the last two years, managed to secure approvals to operate an airline.

Transport Minister Anthony Loke said this week that the government is investigating how the license for MYAirline was awarded by the previous government, just days before Mr Anwar was sworn in as premier on Nov 24 last year. 

He also publicly chastised the national aviation licensing agency, the Malaysia Aviation Commission (MAVCOM), for the abrupt closure of the airline’s operations on Oct 12 that left over 10,000 passengers stranded when they showed up to unmanned ticketing counters at the airport on a day when there were 39 flights scheduled. 

"This is definitely something that MAVCOM has to be answerable. They have to be accountable in terms of the process of granting the licence," Mr Loke told the Malaysian media this week, following the growing public outcry over MYAirline owing passengers over RM25 million (S$7.17 million) in pre-booked tickets.

MYAirline had launched in early December 2022 with scheduled services between Kuala Lumpur, and Kota Kinabalu, Kuching and Langkawi, and later expanded its operations in Thailand and Bangkok. There were reportedly plans to increase the fleet to 26 aircraft by end-2023, up from nine. 

MAVCOM has said it is cooperating with the government in the ongoing investigation. 

Police arrested Mr Goh, 57, his wife Neow Ean Lan, 55, and his son Sean Goh Tze Han, 26, last week, before freezing bank accounts and seizing luxury items in the investigations into alleged money laundering and fraud. The Gohs have since been released on police bail.

Another unnamed person was arrested this week in the ongoing investigations that have now expanded into a scandal-ridden e-commerce firm, known as i-Serve Online Mall, which is majority-owned by the Gohs.

Mr Goh, a low-key businessman known to be close to senior leadership of the Malaysian Chinese Association (MCA), the country’s long-established ethnic Chinese party, controls a 31.7 per cent interest in i-Serve Online Mall.

Through other privately held entities with peculiar names, such as Zillion Wealth and Trillion Cove Holdings, the businessman controls 98 per cent of MYAirline. 

IN THE CROSSHAIRS

Even before MYAirline’s surprise move to cease operations two weeks ago, Mr Goh was already entangled in the crosshairs of Malaysia enforcement agencies. 

Companies in the stable of entities controlled by e-commerce company i-Serve Online Mall were raided in November 2021 in a multi-agency operation led by the central bank, Bank Negara Malaysia. 

At the time, enforcement officers from Bank Negara, the Securities Commission, the Malaysian Anti-Corruption Agency and the police, raided 22 premises linked to i-Serve Online Mall and its related affiliates before freezing 45 accounts in seven banks and seizing RM118 million.

In early September this year, Bank Negara broke its silence over the i-Serve Online Mall case and said in a statement that the company and seven of its affiliates have been slapped with a compound of RM50 million ringgit for accepting deposits without a license and enticing investors with high monthly returns.

The central bank added that the compound was over offences conducted by the company between June 2018 and September 2021. 

The company paid the fine in mid-November last year, around the same time that Mr Goh and his business partners were finalising their application for an air service license from MAVCOM.

Also, during that time, Mr Goh was fighting a court case against investors in i-Serve Online Mall who were demanding the return of their monies that were deposited in the company under schemes that promised monthly returns of up to two per cent each month.

Mr Goh is challenging the legal action by investors and his striking out application on the suit will be heard at the Malaysian High Court on Nov 22.

Finance ministry officials familiar with the ongoing probe told CNA that PM Anwar has received several appeals from groups of investors, who lost their deposits in i-Serve Online Mall.

Malaysian police said this week that investigators are poring through financial documents for ties and the possible flow of funds between i-Serve Online Mall and MYAirline. The authorities have also frozen 15 bank accounts this week following the latest arrest.

LATEST AVIATION BUNGLE

The controversy swirling around MYAirline, which the company said was due to “deep financial constraints”, is the latest bungle in Malaysia’s troubled aviation sector that is struggling with five operators in a relatively small domestic market. 

There are also other legacy financial problems that date back to the troubling period during the pandemic. 

National carrier Malaysia Airlines, or MAS, remains in serious financial trouble and operates with continuous capital injections from the government. 

In recent weeks, financially troubled AirAsia X Bhd (AAX), Malaysia’s medium-haul low-cost carrier which is struggling to maintain its listing status on the Malaysian stock exchange, suffered a setback when the authorities extended its classification as a financially distressed entity, or PN17 as it is commonly referred to. 

AAX and its associated airline Capital A, formerly AirAsa Group Bhd, slipped into PN17 status in October 2021 and January 2022 respectively, due to losses suffered during the Covid-19 pandemic that severely impaired the shareholders equity at both entities.

The stock exchange authorities did not provide reasons for the extension of the PN17 status for both the airlines but industry analysts noted that the troubles faced by MYAirline has raised scrutiny over the airline companies.