Former director of local carrier Jetstar Pacific Luong Hoai Nam was arrested Thursday in Hanoi on accusations that his mismanagement had caused major losses at the partially-state-owned carrier.

Nam has been prohibited from leaving Vietnam since December 16, after audits at the State Capital Investment Corporation (SCIC), which holds 70 percent stake in the airline, found financial management irregularities during his time as director.

State auditors said managers at the firm had been overpaid. They also asked SCIC to find out how Jetstar managers were responsible for the loss of more than US$30 million related to its fuel hedging activities from July 2008 to May 2009.

In an interview with Tuoi Tre last month, Nam said the airline assigned two Australian senior executives to take charge of fuel hedging in 2008, a tool applied to stabilize jet fuel costs. It was hard to hold anyone accountable for the loss, he said, noting that hedging was a risky instrument.

The two Australian executives have also been prohibited from leaving Vietnam.

According to a report by Australia’s ABC News, Jetstar Pacific’s chief operating officer, Daniela Marsilli, and its chief financial officer, Tristan Freeman, are assisting Vietnamese authorities in the investigation.

Nam submitted his resignation in September and was relieved of his post on November 10. He joined the low-cost carrier in 2004 after 11 years at state-owned Vietnam Airlines.

Local carrier Pacific Airlines was renamed Jetstar Pacific Airlines in May 2008 under a branding agreement with Jetstar Airways, which is a subsidiary of Australia-based Qantas Airlines.

Jetstar Pacific posted cumulative losses of VND1.1 trillion ($59.6 million) at the end of last year, according to state auditors.

Reported by Ngoc Duc-Thai Son