MAS Case Study: Incentives And Pressures

1004 Words5 Pages
3.1 INCENTIVE/PRESSURE Incentives/Pressures are incentives of management or other employees to commit fraud. For example, The company is under pressure to meet debt covenants or obtain additional financing. In the case of MAS, the company has cash reserves of RM600 million when Tajuddin took over responsibility as CEO. He was leaved with an overlarge fleet and diminishing profits. Although the sales rose to RM4.1 Billion in the year ending March 3, 1994, profits fell from RM145.4 Million to RM7.7 Million. But at that time, the flight was still receiving large shipments of new aircraft and sales of its used aircraft were slow. Some of MAS’s new aircraft were delivered late, resulting in penalty payments from Airbus. Due to the pressure, Tajuddin immediately set out to solve the problem. He introduced a more businesslike attitude and to get better reporting from the company’s managers. Aircraft utilization was increase. The carrier company signed code-share agreements on transpacific routes and promoted its Kuala-Lumpur-Los Angeles route to attract more business passengers. Planes stayed just as full after the number of flights was increased from eight to 14 a week. MAS recorded its highest ever pre-tax profit in 1996 to 1997 of RM349.4 million. And he is then claimed by MAS’s management group for misusing of MAS assets (cash) and took the money for his ppersonal used (on 2009). The company continued to buy new planes and relocation to Kuala Lumpur’s new Sepang
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