Air NZ apologises to MPs over Saudi engine scandal, explains 'failings' which saw airline ignore 1 NEWS' questions

Anna Whyte
Source: 1News

Senior Air New Zealand leadership today apologised to MPs over the controversial third-party contract with the Saudi Navy during an appearance at Parliament. 

Chief executive Greg Foran told the Parliamentary committee it was signed under former CEO Christopher Luxon, but due to the small size of the deal it would not have ended up on his desk.

Foran and Board Chair Dame Therese Walsh faced a committee of MPs today during the annual review of Air New Zealand. 

Earlier this week it was revealed by 1 NEWS that Air New Zealand's business unit, Gas Turbines, which specialises in servicing military marine engines and turbines, had been carrying out work for the Saudi Navy on two engines and one power turbine through a third party contract. 

The Saudi Navy has been blockading Yemen - stopping food and medicine getting through to the country, contributing to a humanitarian crisis. 

"We have fallen short... undertaking work like this is certainly not acceptable to me or Greg," Dame Therese said. 

"I apologise on behalf of Air NZ this has occurred."

National MP Mark Mitchell asked the pair why it had taken so long - nearly eight weeks - to respond to media about its activities.

Foran said the original question had been "tackled by someone reasonably junior in the communication team". 

He said the staffer spoke to the Gas Turbine team and "got themselves caught up that this was done in a third party", with commercial issues leading to the view it was not appropriate to discuss with media. 

"I think that's a failing," Foran said. 

Green MP Golriz Ghahraman spoke about the situation in Yemen, saying she wanted to "bring those victims and the heartbreak into the room", before asking for the dates the contract was signed and who was CEO at the time. 

"That contract was signed in May 2019, the first of the engines arrived in September 2019," Foran said. 

"Two of the engines have already gone back and the other component, the power plant, is still in pieces on the floor and that is in the midst of getting packaged up and at the right point of time that will be sent back. 

"I think Christopher Luxon was CEO at that time, but I would point out, had I been CEO at that time I would not have seen that contract on my desk because the process we had in place did not elevate it up."

Mr Luxon is now a National MP. 

Foran said that if the contract was over $3 million it "would be on one of my direct report’s desk".

He added that procedure needed to be tightened up. 

Ghahraman also asked if Air NZ had notified the Ministry of Foreign Affairs and Trade (MFAT) about its activities with Saudi Arabia. 

Under New Zealand's export controls regime, a permit to import controlled chemicals and export strategic goods both military and dual use is required. 

Foran said he believed Air NZ had not and they were "deep in discussions" with MFAT.

"To the best of my knowledge at this stage, that was not a part of the process and we are now investigating, should that have been?"

Dame Therese said there was an internal review, an external review by PWC and was engaging a QC to review technical and licensing procedures underway. 

"There has been no other work done or contracted to be done with Saudi Navy," she said.

She expected the results of the reviews would be back in a matter of weeks. 

Earlier this week, Air New Zealand attributed the work for the Saudi Navy to a lack of "oversight".

Foran said the $3 million contract was first arranged through a third party in 2019, before he stepped into the CEO role, and because of the value of it, it was signed off at a level in the business which never reached executive level.

The New Zealand Government owns 52 per cent of Air New Zealand ordinary shares.

In recent years the Government has also contributed millions of dollars in humanitarian aid to Yemen.