PIA audit report exposes ruthless financial mismanagement, fraudulent practices

Audit covering the period from 2007 to 2017, uncovered irregularities, inflated lease agreements, dummy bookings

Pakistan International Airlines (PIA), has reportedly suffered substantial financial losses, attributed to organised mismanagement and fraudulent practices over a decade, according to a recent report from the Auditor General of Pakistan.

The audit, covering the period from 2007 to 2017, uncovered alleged irregularities, including inflated lease agreements, dummy bookings, and the procurement of spare parts through intermediaries rather than directly from open markets. Losses from these activities are estimated in the billions of rupees.

The findings, reported by Express News, indicate that the national carrier sustained damages from fraudulent practices in leasing and purchasing aircraft, booking seats, and managing ticket refunds.

In a prominent example, 8,800 tickets were reportedly refunded approximately 45,000 times between 2011 and 2017, with many tickets being refunded multiple times. “The internal audit firm, despite its strong reputation, failed to identify these frauds,” noted the report.

The audit holds PIA’s engineering department particularly responsible, highlighting instances where planes were leased at inflated rates or purchased despite being grounded in other countries for being unfit to fly.

The report also highlighted the suspicious practices of travel agencies allegedly booking dummy seats, blocking them from sale and leaving flights partially empty. This practice reportedly allowed some travel agents to falsely mark flights as full, only for the seats to remain unsold up to an hour before departure.

Former PIA Auditor General Ishtiaq Rizvi commented to Express News, saying that attempts to address fraud were met with his reassignment. “PIA officers either own companies or act as covert agents for firms benefitting from these practices, earning significant kickbacks,” Rizvi alleged.

“Aircraft parts were needlessly replaced multiple times, often sourced exclusively from specific companies rather than the open market.”

He added that measures like “golden handshakes” to reduce staffing by over 3,500 employees have not curbed PIA’s losses, suggesting instead that if recovery efforts targeted those responsible and skilled officers were appointed, the airline could regain stability within two years.

PIA’s woes have been further compounded by the premature retirement of aircraft like the Boeing 777s, which, despite a typical lifespan of over 30 years, were reportedly grounded after only 10-14 years of use without accountability.

The findings add to calls for stringent reforms within PIA to recover losses and restore profitability amid the airline’s prolonged financial crisis.