Top PIA Officials Found Guilty in Aircraft Sale Inquiry

The PIA, in an internal inquiry, has found the Acting CEO and Director Procurement and Logistics (P&L) guilty of gross violations of rules and regulations, manipulating facts and figures and connivance in appointing a foreigner as technical consultant to achieve their ulterior objectives in the sale of an A-310 aircraft, six engines and four APUs.

The PIA Board of Directors, in December last year, had formed a two-member inquiry committee – comprising Jawed Mansha, acting internal auditor, and Ahmad Rauf, legal consultant – to investigate the sale process of Airbus A-310 AP BEQ and other allied issues. The committee completed its task in February and prepared a 34-page report.

The report found Acting CEO, Bernd Hildenbrand, Director Procurement and Logistics Department, Air Commodore Imran Akhtar Khan, and Technical Consultant, Helmut Bachhofner, guilty of causing a financial loss of over Rs 500 million to the national carrier.

Hildenbrand, currently on Exit Control List (ECL), is on a 15-day leave. Imran has been reverted back to the PAF through repatriation, while Bachhofner has returned to his country after expiry of contract.

Bidding Process Was Tampered With

The report mentions that the entire sale process was based on mala fide intention as the original tendering process was tampered with to ensure a single bidder was chosen.

It says that the price at which the perfectly functioning A-310 aircraft’s fuselage (body), the six engines and the four auxiliary power units were sold, was even less than their scrap price.

Read More: PIA Sells an A-310 Aircraft For A Car’s Price

It observes that M/s Firefly Aircraft Salvaging offered a price of $157, 500 only for the purchase of six engines and four APUs which is significantly lower than its current Written Down Value  of around $4, 726, 792 (latest re-valued on December 31, 2015) and even lower than the scrap value of around $603, 416.

The inquiry committee also came across emails exchanged between M/s Firefly and Director P&L, endorsing the fact that the entire deal was hatched and maneuvered to achieve “the objective”.

“For this reason, the tender of November 18, 2016 was purposely cancelled on December 09, 2016 and having received only one bid for six engines and four APUs under inconspicuous tender/advertisement and that too having no bearing due to the fact that the same was superseded by the tender dated November 18, 2016 which was cancelled on December 09, 2016 with specific phrase “cancelled till further decision,” the findings mentioned.

The report unambiguously fixes responsibility, saying, “A channel was designed by the persons responsible for the actions under inquiry to phase out A-310 aircrafts at present and other assets at a later stage. The entire team involved could not have achieved this objective without connivance of each other and planting of Mr Helmut [Bachhofner].”

Bachhofner was identified by the commission as the key component of this entire connivance. He was hired as a technical consultant and his major responsibilities were pertaining to PIA’s Maintenance Repair and Overhaul (MRO) – PIA Engineering.

The committee deemed the hiring illegal, stating, “No advertisement was published for hiring the services of Technical Consultant in line with PPRA and PIA Rules. As per the Schedule of Powers of the Corporation, appointment of consultant falls under the powers of Chairman of the Board.”

Brokering, validating and playing any part in the Procurement and Logistics department was beyond the scope of Bachhofner’s work. However, from his hiring in October 2016 against Rs 1.5 million per month, he did not serve the Engineering Department in any way in his three month tenure. Instead, the only work he did was facilitating these deals, for which he had a very ‘good reason’.

As it was revealed in the commission’s findings, he incidentally was the shareholder and partner in the only two companies that participated in the bid, out of which one ended up being a beneficiary of this shady deal.

The report noted that “Significant conflict of interest existed due to Mr Helmut being a partner/shareholder in M/S Firefly and M/S Delaney and at the same time being Technical Consultant of PIA having phasing out of A-310 aircrafts as his job obligations under his contract.”

The committee also noted that out of his three months service period, he was out of Pakistan for a long time. Majority of his visits were to Vienna, Austria (his home town) which is hardly 80-km away from Slovakia where M/s Firefly Aircraft Salvaging and M/S Delaney are registered.

PIA Airplane Sent to Israel

Among the questionable actions of the individuals implicated, the commission questioned their decision of lending the Pakistan’s flag carrier to feature in a movie glorifying Israel – a country Pakistan has no diplomatic ties with and does not even recognize.

Despite the fact that Pakistan has no diplomatic ties with Israel, consideration was not given to get the approval of relevant official authorities of Govt of Pakistan before allowing the use of national flag carrier’s aircraft for a pro-Israeli movie.

Imran Akhtar, Director P&L, bypassed the relevant procedures and booked the Charter Flight. The Group Tours & Charter Section was neither engaged nor were the above requirements complied. The Director P&L not authorized to involve himself in the negotiations, finalization and finally signing of the Charter Agreement, therefore, above are gross violations of rules and regulations.

“It is bewildering that a senior member of Pakistan armed forces ignored the national diplomatic policy regarding Israel and allowed the questionable arrangement,” added the report.

The Whole Transaction

The committee found it odd that although the A-310 aircraft had been handed over to the German company, there was no payment against it. After probe, they found out that the price, instead of being received as cash, was to be settled through marketing and support expense. This expense would be accounted for years down the line, whenever PIA designs a route to Leipzig – where the aircraft is currently present.

PIA does not operate any routes to Leipzig currently.

The report pointed out, “The offered purchase price by M/s Mitteldeutsche Flughafen AG was not to be received in cash term instead it was to be settled on account of marketing & support expense for a newly-planned flight route passing through Leipzig/Halle Airport to New York. The Board hasn’t approved the route of Karachi-Leipzig-New York.”

While selling airframe to M/s Mitteldeutsche Flughafen Leipzig/Halle Airport, the sale/utilization of the aircraft engines and parts other than Airframe – engines, APU, landing gear and seats – was not considered from such a remote location. Engines have a huge cost as per the latest financial information.

It was clearly laid out in the preprint that neither Director P&L nor Acting CEO had any authority to negotiate, finalise and move the aircraft for sale at Leipzig through Malta. It is a blanket violation of deregistration/retirement rules and regulations to be followed before selling an aircraft.

It is believed that if normal course of business would have been adopted for the sale of AP-BEQ and its engines/other parts, at least 70 parties would have participated. The sale/utilization of the aircraft engines and parts other than airframe wasn’t considered.

Final Report Pending

While talking to the press on Thursday, Federal Secretary Aviation Division and PIA Chairman, Irfan Elahi, confirmed that a report had been prepared by the inquiry committee formed by PIA Board. He said a questionnaire was also given to the officials concerned against whom observations were made in report’s findings and they had responded back to the committee. Final report would be submitted to PIA Board during the next week, he held.

To a question, the chairman made it clear that the PIA management could only take departmental actions against the accused officials, if any, whereas the Federal Investigation Agency (FIA), which is also investigating the matter, will take criminal actions against the accused persons if proved so.

“It is up to the [PIA] Board what departmental actions it takes against officials found involved in sale of the aircraft,” he said.

To another question, Irfan stated that he had approved 15-day leave of the Acting CEO with a condition that he would not leave the country until the probes against him were completed.
When contacted, the PIA spokesman said the PIA Board had ordered a preliminary inquiry into the matter.

As part of the inquiry, he said, response was sought from the Acting CEO, Director P&L and Bachhofner. “The replies they submitted will now be presented before the Board during the next meeting,” he added.

“We will only be able to comment once it will be discussed in the board meeting and findings are shared with us,” he maintained.

A senior PIA official, speaking on the condition of anonymity, told journalists that Imran didn’t commit any illegal thing during his stay with the PIA.

He added that repatriation of Imran along with his 13-member team wasn’t against the backdrop of any investigations by FIA or the PIA as during his around two-year stint as Director P&L PIA he tried his best to put airline’s matters on the right track.

It was a coincidence that the FIA, probing aircraft sale, issued Imran with a show cause notice on the same day he left PIA, the official remarked.

“The plane hasn’t been sold yet. It is parked there at Leipzig in Germany,” the official claimed, adding it would be sold after PIA Board approved the deal. To a question, the PIA official further told that Imran would respond to queries of FIA if he was asked by his parent department of doing so.

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