Madagascar Airlines is facing allegations of favouritism and conflicts of interest in the awarding of a renovation contract to a supplier.
The country's Independent Anti-Corruption Bureau (BIANCO) said the flag carrier's ex-chair of the board, Hajanirina Rinah Rakotomanga, is suspected to have “intervened” in the procurement process, favouring Jerry Victor Razafindramanga.
“[Razafindramanga] is none other than her companion, thus influencing the procedure,” BIANCO said.
The investigation found that the contract violated procurement rules, with the “creation of fictitious bids from allegedly competing companies intended to simulate a competitive tender".
Some Madagascar Airlines managers allegedly “facilitated” these violations.
“The BIANCO took precautionary measures, including the freezing of bank accounts and the seizure of a vehicle supposedly acquired with funds from the disputed contract,” the agency said. “The people involved have been referred to the Anti-Corruption Unit (PAC) for legal action.”
Madagascar Airlines confirmed today (November 19) that a “judicial procedure led by the competent authorities is underway”.
The airline did not detail the allegations, but said: “The company, as a legal entity, is not a party to this process and reaffirms its full respect for the independence of institutions as well as the principle of presumption of innocence.”
To continue operations and stability, the board of directors has appointed an accountable manager and is reinforcing its collegiate management structure.
The airline also confirmed that its operations are “proceeding normally" and that flight schedules are unchanged.
Last week, Madagascar airlines confirmed that it has secured $40 million in financing from the World Bank to support its turnaround plan.
“The World Bank, satisfied with the progress of the recovery project, has agreed to provide financial support of $40 million, in addition to the $25 million already mobilised through the integrated growth project,” the airline said.
“The Government of Madagascar has reaffirmed its full support for Madagascar Airlines and is working to finalise the remaining 20% of conditions, which should be met by the end of the month."
The airline said it faced debt of around $80 million when under Air Austral's management, which ended in 2020. The company's debt would then increase to over $100 million during the pandemic.
In October 2021, Air Madagascar was placed under a collective debt settlement procedure, which was a government measure to ensure it continued operations and protected it from creditors, and thus formed Madagascar Airlines.
Under its partnership with the World Bank, the airline is currently looking to strengthen its governance to better comply with OECD international standards. This will include establishing audit, remuneration, and strategy committees.