Tony Fernandes and AirAsia: too much controversy?
 I really like Tony's entrepreneurial spirit, my company invests in start-up companies in Malaysia and Singapore, and his hands-on approach and flair is exactly one of the key features we are looking for in founders. However, when a company grows, these might not always be the best traits.
In The Edge Singapore of December 5, 2011 is an interview with Nitin Pangarkar, associate professor at the National University of Singapore and writer of "High Performance Companies: Successful Strategies from the World's Top Achievers". From this interview: "For companies and organisations to perform, very often, leadership plays the most critical and visible role. Big-name CEO's who have turned around their companies or played a big part in their performance attract lots of attention and fawning and, in some instances, are treated as demigods. Some of these notable names include GE's Jack Welch, Virgin Group's Sir Richard Branson and, closer to home, Tony Fernandes of AirAsia. Many want to know what their secret is. Pangarkar, however, has his reservations. "I honestly don't like celebrity CEO's; I like CEO's who share the credit," he says."
 Regarding Tony Fernandes being the CEO of AirAsia and also being a director of MAS (from a Corporate Governance point of view an unsatisfactory situation), I found the following that is of interest.
"A Guide to Corporate Governance in Malaysia", a publication from CCH, pages 219 and 220:
"Normally, a director is not in breach of duty merely by holding directorships in other companies. However, such a director may be liable for breach of duty if the companies are competing companies and he places himself in a position where the duties owed to each of the companies conflict.
Nevertheless, s 131(5) of CA (Companies Act) 1965 requires a director to disclose at a director's meeting any office or any property held that may directly or indirectly create a conflict of his duties or interests as a director in the first company. Further, s 132(2) requires of a company to obtain the consent or ratification at a general meeting in order to engage in business which is in competition with the company.
Note that the principle that a person can be director of two competing companies does not apply to executive directors. They cannot be on the boards of competing companies."
To me this is pretty clear language.
 Air Asia announced its 3rd quarter results two weeks ago and they were quite disappointing compared to the year before. But for me rather shocking was the following list of material related party transactions:
AirAsia X is paying less than RM 5 million to AirAsia for all its services, only 21% of the amount of last year, while AirAsia X surely has been growing in size? I find this very strange. I have written about the unsatisfactory company structure of AirAsia and its associated companies which results in huge Related Party Transactions. Something that is simply bad from a Corporate Governance point of view.
 But may be the most worrying about AirAsia is the enormous amount of Capital Commitments, more than RM 57,000,000,000.00.
This relates to about RM 10,000 for every single Malaysian family of five persons. What will happen if things don't go well, if a major event happened, if competition increased, if a very severe recession would hit, etc, etc, etc. Are in that case the Malaysian taxpayers on the hook, as so often has been the case? AirAsia will most likely be deemed to be too big to fail.
Ze Moola wrote about this issue on his blog: