Vietnam arrests former Jetstar chief executive

Jan 8, 2010, 6:16 GMT

Hanoi - Vietnam authorities arrested the former chief executive of the low-cost carrier Jetstar Pacific Airlines on charges of 'neglect,' a senior security official said Friday.

Luong Hai Nam, 47, is accused of costing the majority state-owned budget carrier millions of dollars by purchasing fuel while prices were high in 2008.

Nam was arrested Thursday in Hanoi, said Major General Hoang Cong Tu, the head of Vietnam's Security Investigation Agency.

The state-run newspaper Thanh Nien reported Nam would be charged with 'neglecting his responsibilities so as to cause serious damage to state property.'

In 2008, Nam approved a fuel-purchasing contract lasting through May 2009 at a time when oil prices had hit 145 dollars per barrel. The price of oil subsequently fell as low as 30 dollars per barrel.

Vietnamese media have also charged that Jetstar officials received high salaries despite the firm's poor earnings record.

In previous statements to the media, Nam said the fuel losses were the result of market fluctuations and his salary was determined by Jetstar's board of directors, not himself.

According to government auditors, Jetstar has not earned a profit since its establishment in 1991. In 2008, it booked record losses of 34 million dollars, including 31 million dollars relating to the fuel purchases.

Vietnamese police have also barred two other Jetstar Pacific executives, Daniela Masilli and Tristan Freeman, from leaving Vietnam pending the completion of their investigation.

Jetstar Pacific has undergone a number of corporate restructurings in recent years.

The government's State Capital Investment Corp of Vietnam now holds 70 per cent of the company. The remainder is held by Australia's Qantas Airlines (27 per cent) and the state-owned Saigon Tourist Holding Co (3 per cent).