Gulf Air abandons $1.3m civil claim against former manager

29 August 2008
Airline says no further action will be taken following its fraud investigation.

Gulf Air has reached a settlement with a former senior manager who had been banned from leaving Bahrain for a year during an investigation into financial irregularities at the airline.

Documents seen by MEED show that the Bahraini national carrier has abandoned a BD500,000 ($1.3m) civil claim against its former head of in-flight services, Michael Kent.

In exchange, Kent has dropped two claims against the airline for BD40,000 compensation for lost earnings over the past year while he was prevented from leaving the kingdom.

Documents dated 10 June 2008 outline the terms of a final settlement between the two parties, showing the two sides have agreed to drop their respective claims. The only money to change hands, according to the documents, is BD10,000 paid by Kent to Gulf Air to repay a court fee incurred by the airline.

The civil case by the airline against Kent followed an investigation by the Bahraini public prosecutor into financial dealings at Gulf Air, which began in July 2007.

Kent was arrested on 12 July that year and released 24 hours later, after questioning. He was subsequently banned from leaving Bahrain while the investigation proceeded.

In a statement on 28 November 2007, the public prosecutor said Kent had been accused of bribery and a breach of confidence, but the case against him had been dropped because of a lack of evidence.

A further document from the public prosecutor, dated the following day, removed Kent from a list of people banned from leaving Bahrain. Subsequent to that, however, Gulf Air launched a civil case against Kent, while he also sought to recoup compensation from the airline.

“The criminal investigation for fraud found no evidence that Mr Kent was involved,” says Mohammed al-Mtwa, Kent’s attorney. “The case has been cancelled.”

Kent is now understood to have flown home to Australia. “He just wanted the whole process to be finished,” says Al-Mtwa. “He has been stuck in the country for a year. His wife became seriously ill during that time. He just wanted to get out of Bahrain.”

Gulf Air declined to comment on the arrangement with Kent.

“The fraud investigation has now concluded and no further action will be taken,” says an official at the airline, declining to offer further details of any deal.

The public prosecutor was unavailable for comment.

Separately, Gulf Air has responded to recent calls from members of parliament in Manama for the airline to open up its books for scrutiny.

Some MPs have called for a committee to be set up to investigate the company’s financial health, and have criticised its financial opacity.

“Gulf Air recognises its commitment to the parliament and people of Bahrain,” says the company official. “We will look to engage with the parliament after the summer recess.”

In April 2007, Gulf Air revealed daily losses of $1m a day and launched a substantial restruc-turing of the business. Its efforts since then to reduce its losses have been hampered by high fuel costs as a result of record oil prices (MEED 22:8:08).

Despite ongoing losses, the airline has placed several large orders for new aircraft this year, including 24 Boeing 787 Dreamliners and a $5bn order with Airbus.

It has also been expanding its route network and making deals linking it to other airlines’ networks. The most recent of these ‘code-share’ deals was signed in early August with Malaysia Airlines, covering routes to tourist destinations in Malaysia and Jakarta in Indonesia.

Gulf Air: Key numbers

Size of the civil claim against Kent abandoned by Gulf AirBD500,000
Size of Kent’s dropped earnings claimBD40,000
Amount paid to Gulf Air by Kent to cover the airline’s court costsBD10,000
Source: MEED

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