Dr Wafi’s advice to all employees of MAS

Dr Wafi Nazrin Tan Sri Abdul Hamid, the Head of Legal and Risk Department of MAS and an expert in competition law, has given a very good advice to the members staff of MAS on the MAS – AirAsia’s “Collaborative Frameworks”. Please read his e-mail and the reply from one of the MAS unions below. Read Here for related article.

If we were to read in the newspapers, it would appear from Tan Sri Azman Mokhtar, the MD of Khazanah, statement that Khazanah is still considering its option to purchase the 10 % share of AirAsia X Sdn Bhd. However, on 16-8-2011 Tan Sri Azman Mokhtar has openly told a group of bloggers that the AirAsia X Sdn Bhd was a “DODGY DEAL”.  Despite the “DODGY DEAL”,  Khazanah went ahead to instruct investment banker Stanley Morgan to do a valuation of AirAsia X Sdn Bhd. It is mind boggling! Read HERE. 

Just to remind Dr Wafi of the background of AirAsia X Sdn Bhd. AirAsia X Sdn Bhd formerly known as Fly Asian Express Sdn Bhd aka FAX. In 2006 FAX fought and took over Rural Air Services (RAS) in Sarawak and Sabah from MAS. When FAX took over RAS, it was also awarded with about RM200 million (not RM65 million as previously stated) as subsidy by the Abdullah’s Administration and it was also issued with Air Operation Certificate (AOC) to operate airline.

Despite FAX’s failure in the RAS, the Abdullah’s Administration did not ask FAX, now known as AirAsia X Sdn Bhd, to refund the RM200 million subsidy or part thereof when its RAS contract was prematurely terminated and allowed to keep the AOC, to operate under the same AOC. And yet, on 2-10-2011 Tan Sri Tony Fernandes has been quoted in AgendaDaily to have said that “Orang kata itulah linknya macam-macam. Sebenarnya kami tidak dapat apa-apa, apa yang kami perolehi kebanyakkannya di zaman Dr Mahathir dan Datuk Seri Najib, di zaman Pak Lah hanya sedikit.”. Why was he so ungrateful? Read HERE for the full report in Agenda Daily.

When MAS took over the RAS due to FAX failure, MAS paid RM35 million to refurbish the seven aircraft before it could resume operation of RAS in Sabah and Sarawak. Dr Wafi, what actions did MAS take against FAX? For more details read HERE & HERE.

Most surprisingly, Dr Wafi was extremely concerned about outflow of confidential information of MAS to AirAsia Bhd and AirAsia X Sdn Bhd for fear of contravening the Competition Act but he chose to ignore the fact that Tan Sri Tony Fernaandes and Datuk Kamarudin Meranun of AirAsia Bhd and AirAsia X Sdn Bhd are sitting on the board of MAS. Even the MAS union official was questioning the rationale of Dr Wafi’s email. See below for the e-mail of Dr Wafi and another e-mail reply from the officer of one of the MAS unions (MESA). 

Please read both the e-mails, which was sent to yours truly by someone in the know, below and make your own judgement.   

From: YOUR VOICE ONLINE

Sent: Monday, October 10, 2011 5:05 PM

Subject: MAS-AK-Air Asia X Joint Collaboration – Flow of Information

Bahasa Malaysia versions included – please scroll down / Versi Bahasa Malaysia disertakan – sila skrol ke bawah

(STRICTLY FOR INTERNAL CIRCULATION ONLY)

CIRCULAR FROM GROUP LEGAL PRACTICE

To        :  All Staff System-wide Ref      

              :  CSD 005 1.2/11 Date    

              :  10 October 2011

MAS-AK-Air Asia X Joint Collaboration – Flow of Information

With the recent joint entry into the Comprehensive Collaboration Framework (CCF), which includes the execution of the Collaboration Agreement between Malaysia Airlines (MAS), Air Asia (AK) and Air Asia X, there have been numerous queries from the staff in relation to sharing information for the purposes of the joint collaboration. Various parties—both within and outside of MAS—have asked our staff for information that is commercially confidential and sensitive to MAS. The uncertainty among our staff is natural and understandable as they have been educated not to share such information with competitors. The requests—both from the superiors and external consultants—are, however, part of the MAS-AK joint collaboration framework.

While MAS staff should be commended for their awareness of antitrust law (or competition law) and the implications thereof, the staff should be reminded that MAS, AK and Air Asia X technically remain separate companies and remain competitors. As such, what the staff have learnt in relation to antitrust and exchange of information between competitors remains valid and applicable. Thus, exchange of commercially sensitive information between competitors (even in the context of the joint collaboration) remains anti-competitive and illegal.

As a measure to deal with this antitrust issue, the parties to the joint collaboration have jointly appointed an international law firm (I.e. Allen & Overy, Sydney) to advise the parties on the need to comply with antitrust laws of various countries to which the parties fly and to set down the proper protocols and guidelines for the management.

Further, Bain & Co has been jointly appointed by the parties as the independent, third-party consultants to initially assess the efficiencies to be achieved by any particular collaboration and to ensure that sensitive data are not shared between the airlines and that any arrangements are not implemented unless all appropriate and desirable regulatory clearances are obtained.

In light of the above, all MAS staff are requested to adhere to the following procedure and guidelines strictly:

1.     For the purposes of the Joint Collaboration, all proposals, information and communication must be channelled to Bain & Co only to ensure antitrust compliance. For this purpose, the three airlines would enter into a non-disclosure agreement with Bain & Co.

2.     For the purposes of the CCF, staff cannot communicate directly with the staff of AK or Air Asia X or any third party acting on behalf of Air Asia or Air Asia X (except Bain & Co).

3.     Only Divisional Heads and Heads of subsidiaries may communicate with Bain & Co.  Divisional Heads and Heads of subsidiaries shall keep a record of the details of such communication.

4.     If there is any request for information from or any giving of unsolicited information by AK or Air Asia X staff, kindly inform Group Legal Practice (GLP) immediately.

If you have any other queries, please do not hesitate to contact GLP:

          Dr Wafi Nazrin        E-mail: wafi@malaysiaairlines.com            

          Dr Vince See             E-mail: vince.see@malaysiaairlines.com; nttrust@malaysiaairlines.com

You are expected to act accordingly and you are encouraged to visit the antitrust website of Corporate Services’ intranet at http://csd.mas.net/antitrust.htm to know more about antitrust law.  

Thank you.  

Dr. Wafi Nazrin Abdul Hamid

(UNTUK EDARAN DALAMAN SAHAJA)

SURAT PEKELILING DARIPADA KUMPULAN AMALAN PERUNDANGAN

Kepada             : Semua Kakitangan

Tarikh                : 10 Oktober 2011

Rujukan             : CSD 005 1.2/11

Kerjasama MAS-AK-Air Asia X– Aliran Maklumat

Dengan terbentuknya Rangka Kerja Kerjasama Komprehensif (Comprehensive Collaboration Framework, CCF) baru-baru ini, termasuk perlaksanaan Perjanjian Kerjasama di antara Malaysia Airlines (MAS), Air Asia (AK) Dan Air Asia X, terdapat beberapa persoalan yang ditimbulkan oleh kakitangan-kakitangan berkenaan dengan perkongsian maklumat tentang tujuan kerjasama tersebut. Pelbagai pihak – sama Ada dari dalam maupun luar MAS – telah bertanya kepada kakitangan tentang maklumat yang dianggap sulit Dan sensitif kepada MAS. Ketidakpastian dikalangan kakitangan MAS terhadap perkongsian maklumat tersebut adalah sesuatu yang biasa Dan difahami kerana kakitangan telah dilatih untuk tidak berkongsi maklumat yang sedemikian dengan pesaing. Permintaan tersebut – sama ada daripada pihak atasan dan perunding luar – adalah dianggap sebagai sebahagian daripada rangka kerja kerjasama MAS-AK.

Walaupun kakitangan MAS seharusnya diberi pujian di atas kesedaran mereka tentang undang-undang “Antitrust” (Competition Law) dan implikasinya, kakitangan adalah diingatkan bahawa MAS, AK dan Air Asia X, secara teknikalnya, masih lagi tiga buah syarikat yang berasingan dan mereka kekal sebagai pesaing di antara satu sama lain. Oleh yang demikian, segala apa yang telah dipelajari oleh kakitangan berkenaan tentang “Antitrust” dan pertukaran maklumat diantara pesaing, masih kekal digunapakai. Pertukaran maklumat komersial yang sensitif di antara pesaing (walaupun di dalam konteks kerjasama ini) tetap kekal sebagai “anti-competitive” dan salah disisi undang-undang.

Sebagai langkah untuk menangani isu “Antitrust”, ketiga-tiga pihak yang terlibat di dalam  kerjasama tersebut telah bersetuju untuk melantik sebuah firma guaman antarabangsa (iaitu Allen & Overy, Sydney) yang berfungsi sebagai penasihat kepada ketiga-tiga pihak tentang perlunya mematuhi undang-undang “Antitrust” di negara-negara yang mereka beroperasi dan untuk menetapkan protokol serta garis panduan untuk pihak pengurusan masing-masing.

Seterusnya, Bain & Co telah dilantik secara bersama sebagai perunding bebas dan selaku pihak ketiga untuk menilai kecekapan yang ingin dicapai di dalam mana-mana kerjasama khusus, memastikan data yang sensitif tidak dikongsi di antara syarikat-syarikat penerbangan tersebut dan apa jua susunan/aturan tidak boleh dilaksanakan kecuali dengan kelulusan daripada pihak-pihak berkuasa.

Berhubung dengan perkara tersebut di atas, semua kakitangan MAS adalah dikehendaki mengikuti prosedur dan garis panduan seperti dibawah:

1.     Untuk perkara berkaitan dengan Kerjasama ini, segala kertas-kertas cadangan, maklumat dan komunikasi harus diserahkan kepada Bain & Co sahaja bagi memastikan undang-undang ‘Antitrust’ dipatuhi. Bagi tujuan ini, ketiga-tiga syarikat penerbangan tersebut akan menandatangani satu perjanjian “non-disclosure” dengan Bain & Co.

2.     Untuk perkara berkaitan CCF, kakitangan dilarang untuk berkomunikasi secara langsung dengan kakitangan AK atau Air Asia X ataupun mana-mana pihak ketiga yang mewakili pihak Air Asia atau Air Asia X (kecuali Bain & Co).

3.     Hanya ketua-ketua jabatan dan ketua-ketua anak syarikat sahaja dibenarkan untuk berkomunikasi dengan Bain & Co. Mereka hendaklah menyimpan rekod komunikasi tersebut.

4.     Jika terdapat sebarang permintaan untuk maklumat daripada ataupun pemberian maklumat yang tidak berasas daripada kakitangan AK dan Air Asia X, sila maklumkan terus kepada Group Legal Practice (GLP) dengan segera. Jika terdapat sebarang pertanyaan, sila hubungi terus GLP:  

Dr Wafi Nazrin             E-mail: wafi@malaysiaairlines.com            

Dr Vince See             E-mail: vince.see@malaysiaairlines.com; nttrust@malaysiaairlines.com

Anda hendaklah bertindak sepertimana di atas dan sila lawati laman “Antitrust” Corporate Services di http://csd.mas.net/antitrust.htm bagi mengetahui maklumat lanjut berkenaan dengan undang-undang ‘Antitrust’ tersebut.  

Terima kasih.  

Dr. Wafi Nazrin Abdul Hamid

Please see the e-mail reply from one of the MAS Unions (MESA) below:

Dear Dr Wafi cpy rest,

I am confused. On one hand, due to anti-trust law, staff are cautioned to channel any such required information only through the “independent ” Bain & Co. However, at the same time, we have the other party key personalities right here in our house as board members! Are they not privy to trade secrets and information that is not so privy with us staff? Hope you can educate all of us.

Matdiah Bin Mohammad

Secretary, MESA