Indonesia flag carrier Garuda’s shares tanked after the financial services regulator ordered the company to restate its 2018 financial results.
The national carrier breached accounting rules, the Financial Services Authority said, as it fined each PT Garuda Indonesia director IDR100 million (about $7,000).
It ordered the airline to update its earnings within 14 days after investors made complaints of accounting irregularities.
The Stock Exchange also fined Garuda IDR250 million and issued an official written warning.
While the fines are minor, the cost to its market valuation is significant, dropping nearly 8%.
The irregularities stemmed from a contract with startup PT Mahata Aero Teknologi for in-flight entertainment.
Garuda accounts stated it booked revenue of $211.9m from PT Mahata, which put Garuda back in the black, with a profit of more than $800,000, compared to a 2017 loss.
The airline ‘respects the opinion of the regulator’ but denied any wrongdoing, said Garuda spokesman Ikhsan Rosan.
The regulator froze the license of Garuda’s auditor Kasner Sirumapea for a year for wrongly stating the income from Mahata by claiming upfront receivables on a 15-year contract.
Garuda said the regulator had a ‘different interpretation of the financial statements.’
The regulator took the action to ‘maintain public trust in the Indonesian capital market.’
