Pakistan’s Federal Investigation Agency has filed charges against three former executives of PIA - Pakistan International Airlines (PK, Islamabad International) and has arrested a former director in connection with losses of over PKR1.25 billion rupees (USD8.1 million) to national coffers.
According to Karachi news reports, the FIA Corporate Crime unit has arrested the airline’s former director of engineering, Maqsood Ahmed. It has also filed charges against former chairmen Nasser Jaffer and Irfan Elahi and former acting chief executive officer Bernd Hildenbrand.
FIA Director Amir Farooqi told Dawn newspaper that Ahmed was apprehended “on the basis of solid evidence” while efforts were being made to arrest the remaining accused. The charges relate to advance payments made to upgrade business class seats, entertainment systems, and a cabin refurbishment between 2014 and 2016, which were never installed.
The case is being prosecuted under various sections of the Pakistan penal code relating to misconduct by government employees, incitement to fraudulent and dishonest property transfer, aiding and abetting, and common intent, as well as under the Prevention of Corruption Act.
According to official documents seen by Dawn, the FIA initiated an inquiry into PIA's state of affairs under the directions of the Supreme Court, which had ordered a special audit of the airline in 2018.
According to the documents, then PIA chairman Jaffer had approved a contract to the company Sogema to change the business class seats in the airline's entire fleet of B777s, “dishonestly and illegally with ill motives by abusing his official position”. The national carrier's board of customer services committee had not recommended Sogema, nor was it the lowest bidder, the documents revealed.
Elahi, who was Secretary of Civil Aviation and became PIA chairman after Jaffer, and acting chief executive Hildenbrand, also "dishonestly" approved advance payments to Sogema and another firm, Panasonic, without bank guarantees and in violation of Public Procurement Regulatory Authority (PPRA) rules, the documents stated.
Until November 2016, without executing any formal agreement, the PIA had made advance payments of EUR5.3 million euros (USD6.4 million) and USD756,449 to Sogema and Panasonic, respectively, in violation of PIA rules, the documents read. However, "the material/items and services against which advance payments/agreements were made were never received by PIA,” the investigation found.
