Dodgy contract cost CAA Rs60m

Defence Ministry finds irregularities in Mehran Lounge contract.

KARACHI:

The Civil Aviation Authority (CAA) lost potential income of Rs60 million by contracting a private aviation company to manage the VIP lounge at Karachi airport and broke several rules for the awarding of contracts in the process, according to a probe conducted by a Ministry of Defence Board of Inquiry.

The inquiry team held three CAA officials responsible for the irregularities and loss of potential income and recommended action against them. However, it was not clear if the CAA would do so, as a spokesman insisted that the findings were suspect. The Public Accounts Committee had ordered the probe after looking through the CAA audit report.

According to the inquiry report, the CAA officials helped private company Princely Jets win the contract to manage Mehran Lounge by unfairly restricting competition and by giving the company privileged information.

The CAA received just one bid when the Mehran Lounge contract was tendered: from Princely Jets, for Rs35,000 per month. “Due to the receipt of a single bid, CAA negotiated with Princely Jets for enhancement of the price to Rs50,000,” says the report. “It appears that the negotiations were made only as an eyewash since the company had already offered Rs50,000 per month before the tendering process.”

The report says the authority should not have entertained the single bid and should have re-tendered the project after doing some work to get wider participation.

Instead, Alqera Atiq, the acting chief commercial and marketing officer of the CAA, Moinuddin Zain, the general manager (commercial), and former CAA director general Air Commodore (retired) M Junaid Ameen helped Princely Jets win the contract, says the report.

“Mr Atiq in his conduct and approach exceeded his mandate, responsibility and authority in favour of Princely Jets. He entered into negotiations with Princely Jets and discussed the idea in its complete dimensions, thereby giving complete details of the concession to the detriment of the interest of the CAA,” says the report

Zaidi, says the report, recommended that only companies holding air operator certificates be allowed to bid for the lounge, thus restricting participation in the tender. He ignored the advice of the CAA’s legal and financial directorate and issued a letter of intent without the approval of CAA DG Farooq Rehmatullah, says the report.

The inquiry found that former DG Ameen had issued approval for the tender terms favouring Princely Jets, even though Rehmatullah had not given his consent. “It was also in his knowledge that the concession could be awarded through tender only, yet he allowed negotiations and also provided complete details of the facility before initiating the tendering process,” says the report.

“There was clear nepotism and favouritism in award of contract of Mehran Lounge,” says the report. “The Public Procurement Rules have been violated in the said process. The CAA has suffered a loss of Rs60,019,161 during the currency of the contract.”

The BoI recommended that the contract be cancelled and that the three officers be punished.

However, a CAA spokesman said the authority did not trust the findings as the members of the probe committee had not heard from the accused officials during their inquiry.

“The report was sent back, with our reservations, to the PAC and they referred it to the defence secretary. We believe that the officials named in the report should get the chance to be heard,” he said.

However, a source familiar with such inquiries said the findings had been reached through established procedure. “The inquiries ordered by the PAC are held on the basis of documentary evidence. That’s what happened here so the CAA does not have much of a leg to stand on in this particular case,” said the source.

Published in The Express Tribune, July 4^th, 2011.