Air New Zealand chief executive Greg Foran claims the decision to work a contract for the Saudi Arabian military was nothing but a case of poor judgement, and appears to be rejecting the idea of an independent inquiry into the matter.
Air New Zealand chief executive Greg Foran. Photo: RNZ / Dan Cook
Yesterday it was revealed that through a third party contract, the airline's gas turbines unit worked on two engines and one power turbine module from vessels belonging to the Royal Saudi Navy.
Air New Zealand said in a statement its gas turbines unit specialises in the repair and overhaul of gas turbines, such as power stations, fast ferries and large ships.
Foran said he only found out about the work 10 days ago, then took "immediate action".
He did not find out earlier because it was "part of a business which deals with fixing engines on oil rigs and also does work with navies, navies around the world. This particular piece of work is a $3 million contract so it's actually quite small, and the sign-off process was done at different levels in the business, not at the executive level.
"It was a decision made in 2019. I can't speak for that, it was before my time, but I can assure you that as soon as I did find out about this I did take immediate action."
Earlier, Air NZ said in a statement: "It is through a third party contract that work has recently been carried out on two engines and one power turbine module from vessels belonging to the Royal Saudi Navy.
"The Gas Turbines business has not contracted directly with the Royal Saudi Navy and will not be carrying out any further work of this nature."
Investigation underway
Foran would not say if the airline had a due diligence and human rights process policy.
"That's something I don't want to speculate on."
However, he said he wanted "make sure our processes are watertight" and an investigation was underway.
Asked if an independent inquiry was needed, Foran said: "I'm happy ... that what we're going to be able to do is get into this. As I said, I think this is a case of poor judgement, nothing else. Let us get in, do the work on it and let's make sure we do have the right procedures and processes in place.
"It is not a secret that we had been doing work for navies, such as the US Navy and the Australian Navy in terms of fixing engines."
Asked what other militaries Air New Zealand worked with, Foran said: "That's something we're making sure we get to the bottom of... we're going through the entire list and we're getting into the detail of exactly where the third party work is going".
He said he would be "happy to share" any information about who Air NZ was working with.
The airline would also look at its work for militaries as part of its strategy, but doing so had been part of its business for many years.
Asked if people would be held to account, Foran said the company would have to go through the investigation first.
Asked if it was something he would have expected the previous chief executive - now National Party MP Christopher Luxon - to have known about it at the time, Foran said: "This is a $3m contract. Not large. I can tell you that having had a look over the last few days at the process that was completed, the team did follow the process that was put in place at the time for a contract of that size."
"This is a case where people have picked up some work through a third party and I think in this particular case it is poor judgement on our case that we've taken a decision like this. I don't believe anyone has done anything underhand or have done anything that was trying to keep it secret.
"But let us get in and do the work and put in place the right processes so this stops any event like this happening again."
Shareholders were not told because it was not a significant contract, Foran said.
Asked why it took the airline seven weeks to confirm it had undertaken the work, Foran said: "The situation there is that when raised with us, unfortunately the team who were looking at this, in order to protect some of the, you know, confidentiality around third-party contracts, have held back on moving on this quickly. Now, as soon as that was elevated to myself and other executive, I can assure you, 10 days ago we took immediate action.
"But once again, you know, probably some poor judgement around not elevating that, but driven around protecting confidentiality around third parties."
Luxon said he had no idea Air NZ was doing work for the Saudi military.
"I've no recollection of that no, none whatsoever. I wasn't aware of the issue. I have nothing more to add. It's really a question for Air New Zealand and for the management team there today," Luxon said.
"I appreciate I was former CEO of the business but that's really a question for them to take forward."
Owning up and trying to correct the mistake was the right thing to do, he said.
Prime Minister Jacinda Ardern said the Ministry of Foreign Affairs would look at whether Air New Zealand breached its obligations by doing work for the Saudi military.
The work was completely inappropriate, and officials are looking at whether export control obligations were breached, Ardern said.
Ardern said she was only made aware of the issue yesterday.
Minister of Finance Grant Robertson has said he was surprised and alarmed that a subsidiary of the airline had been doing the work and the situation was simply not acceptable.
Air New Zealand had assured him it would not undertake any more work with the Saudi military, and that Foran had apologised, Robertson said.
Call for independent investigation
Waikato University professor of law Al Gillespie said there needed to be an independent investigation into the level of Air New Zealand's complicity in war.
"Ultimately, you may have some degree of complicity in a much greater war which a number of crimes have occurred in.
"I think it's definitely an error of judgement but we need to get to the facts. One step back though, you need an investigation but it should not be done by the party involved in the alleged incident, it needs to be independent.
"I am flabbergasted this has happened. Air New Zealand has very good corporate responsibility ... the fact that this managed to get through ... I don't think it was intentional but they have to fix their processes so this does not happen again...
"They need to go back and say 'who are we engaged with?' and be transparent, make it clear what they do, who they do it with, and where and when."
"[An] investigation needs to be dependent and it needs to go through the whole process because the damage is not just to the company, it is to the country.
"Because to be complicit in any of this - whether we were or whether we were not, we need to get to the bottom of this."
