Financial losses: PIA delays hiring of firm for forensic audit

Court’s order remains unimplemented even after one and a half years

Shahbaz Rana August 08, 2014


The officials responsible for bringing the national flag carrier to its knees may go scot-free as the Supreme Court’s order to carry out a forensic audit of Pakistan International Airlines (PIA) to determine the causes of financial losses remains unimplemented even after one and a half years.

PIA management is using delaying tactics in hiring an independent chartered accountant firm to conduct the audit despite initiating the process in January last year, say sources in the Ministry of Aviation.

Even the board of directors of PIA has asked the management to implement the court’s order, they say.

In late 2012, the Supreme Court had ordered the PIA management to conduct the forensic audit to unearth the underlying reasons behind the dismal state of affairs. It called for carrying out the audit of the past seven years, starting 2005 – the year when PIA struck a deal to purchase Boeing aircraft. However, the court did not cite the Boeing deal in its order.

The court passed the order while hearing a case filed by Pakistan Muslim League-Nawaz leaders Iqbal Zafar Jhagra and Marvi Memon. They had sought directives for initiating an investigation into PIA affairs to identify corruption, mismanagement, inefficiency and the lack of competent staff.

A forensic audit is likely to expose all the ghost employees, which are one of the main reasons behind the heavy losses suffered by PIA. The carrier has one of the highest per-seat employees, more than double the world standards.

Until the end of March, PIA’s accumulative losses had increased to over Rs191 billion. Debt servicing was one of the main factors behind the dismal financial affairs.

According to sources, PIA did initiate the process of hiring a chartered accountant firm and issued a tender. Proposals were invited from the companies having requisite experience and resources to conduct the forensic audit.

In response, three firms came forward. However, one failed to meet the criterion, leaving the competition between the remaining two.

Sources said both the firms were technically qualified. Subsequently, they were invited for a presentation primarily focused on their experience to carry out the forensic audit.

Later, a partner of one of the companies was arrested by the Federal Investigation Agency for fraud in the Trade Development Authority of Pakistan because of the company’s role as auditors, which left only one firm in the race.

Instead of awarding the contract to the remaining company, PIA wanted to restart the tender process, sources said. The purpose, they added, was to buy time until the government started restructuring of the air carrier, leading to its eventual privatisation.

The government has already hired a consortium of financial advisers to offload a minimum of 26% shares by June next year.

Talking to The Express Tribune, PIA spokesman Mashhood Tajwar said the case of awarding the contract to the remaining company had been sent to the board of directors, which decided that the tender should be re-invited.

He said the chartered accountant firm lacked requisite experience in forensic audit. “PIA wanted to implement the court judgment in its true spirit,” Tajwar said.

However, according to sources, the board had directed the PIA management to re-advertise the job over six months ago, but it was delaying the process.

Admitting the delay in issuing the fresh tender, Tajwar stressed that the advertisement would be given very soon.

Sources pointed out that the shortlisted company may approach the Supreme Court against the new tender, as its bid was already known to everybody. The PIA management had not yet given any response to the firm, keeping all options open, they added.

Published in The Express Tribune, August 9th, 2014.

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Moiz Omar | 9 years ago | Reply

@P Kahn: Do you have any reference for this?

P Kahn | 9 years ago | Reply

Asked by reporter Sir Richard of Virgin Atlantic CEO today if you had chance to buy a international Airline which Airline you would BUY. Do you know he said PIA. this Airline does not do any advertisements for there international markets and there UK and USA every flights is FULL my Airline VA has only 75% full in average from USA will big budget of advertising and inside the plane everything is clean and every thing works if one seat Video just in case very rarely if it does not work we will issue $100.or $150.00 gift certificate We all know have you ever heard selling 26% take over management and profit but the Liabilities is for Pakistani Citizen what a DEAL Pakistan educated people must have fake DEGREE'S to let go PRIVITIZATION MEANS DAY LITE ROBBERY But unfortunately I blame Pakistani citizen (Albert Einstein say education is not the learning of fact. But the training of the mind to think )

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