A jubilant PIA Chairman Ahmed Saeed: Failure is no worry
By M T Butt
ISLAMABAD, Sept 27: Pakistan has finally decided to try and sell its most lucrative and profitable asset in the heart of downtown Manhattan, the precious Roosevelt Hotel, just because PIA has failed to perform, despite a hefty Rs 32 billion grant pumped in by the government.
The decision was taken at a meeting presided over by Prime Minister Shaukat Aziz on Sept 21 in which a Committee was set up to negotiate with the Saudi partners of the Roosevelt Hotel to persuade them to agree on its sale.
The meeting was attended by Defence Minister Sikandar Iqbal, Minister of State for Defence Zahid Hamid, Adviser to Prime Minister on Finance Salman Shah, Minister of State for Finance Umar Ayub, PIAC Chairman Ahmed Saeed, Secretary, Defence, Hamid Nawaz and senior officials of Defence Ministry. The Committee includes representatives of PIA, Ministries of Defence and Finance.
The sale of Roosevelt has been the foremost wish of present PIA Chairman Choudhry Ahmed Saeed as it would enable his administration to oblige many of his friends and favorites as well as provide PIA with some cash to keep the airline going for a few more months.
But senior PIA executives have been resisting the same as Roosevelt is a goose that lays the golden egg every year, providing PIA with at least 3 to 5 million dollars in net profits.
Many Pakistani governments have come and gone but no one could finally sell the Roosevelt. At one stage, last year even General Musharraf himself, who stays in Roosevelt, rejected the idea of its sale because it was such a prime property in New York, providing an identity and presence to Pakistan in the world’s largest economic powerhouse.
But on Sept 21, PM Aziz was almost forced to agree to the sale as PIA Chairman Ahmed Saeed informed the meeting that unless government continued to pump in between four to five billion rupees every year into PIA, the airline was going to sink under its own weight.
The first bad news about the sinking fate of the airline was given by the Chairman a few weeks back at the District Managers conference in Lahore when he admitted that there was no turn around in the airline’s finances and all the money pumped in by the government had been spent without any sign of a recovery.
But in all its accounts and statistics, PIA Chairman has been showing profits for the corporation, thanks to some fancy work of accountants forced to fudge figures, suppress payables and show loans as income and profit.
The worst form of manipulation was witnessed in May this year when PIA shares were sold on the Stock Exchange and a media campaign was built up to show that PIA shares would be a good buy at Rs 20 a share and would keep on rising. Rs 20 was kept as the minimum offering price.
Instead of going up in four months the PIA share had come down almost by 41 per cent as the market has realized that the promise of milk and honey was nothing but empty talk and PIA was actually sinking.
Prime Minister Aziz knows the real situation but his hands are tied as Chairman of PIA Ahmed Saeed is very tightly linked to General Musharraf through his bridge buddies and horse racing partners, the duo of his aide Tariq Aziz and retired Brig Niaz, a man who has his hands deep into the PIA pie.
Ahmed Saeed has led PIA to a situation where the airline has purchased more aircraft than it needs and can fly, the entire fleet is pledged to foreign loan companies, extravagant expenditures have been incurred on senseless projects like changing Business Class seats costing US$ 34,000 each and costly repairs in foreign workshops have drained millions away.
Right now PIA has purchased B-777s from US, it already has Boeings from Cathay Pacific and has also bought 6 Airbus 310’s. A plan to buy smaller aircraft is also on the anvil. This has landed the airline in heavy debt with the overall industry facing a slump because of worldwide terrorism fears and downturn in tourism industry, besides the rising oil prices.
PIA management claims that it could not meet its profit estimates in the last two quarters because of the rising oil prices but at the Sept 21 meeting in Islamabad, PM Aziz argued that the oil price increase was nothing exclusive for the PIA but every airline in the world had to meet that challenge.
But PIA’s fortunes have not been dwindling just because of oil price increases. The management of Ahmed Saeed is largely responsible for many wrong and disastrous decisions, including throwing out all the honest professionals from top management and filling the posts by cronies who are either incompetent or corrupt or both.
In one case a favorite of Ahmed Saeed, General Manager of Flight Services, Ehsan Siddiq, was accused by an air stewardess of sexual assault and the matter went to the highest court in the country. The Ministry of Defence asked Ahmed Saeed in writing to sack the official because he was bringing a bad name for the entire airline and the Ministry. Instead, the PIA Chairman promoted him from a GM to a Director.
There are many such examples. Professionals who could be an asset for any airline in the world, including Khurshid Anwar, Shahid Islam, Sikandar Elahi, Mustafa Ansari, Imran Khan and many others were retired on one pretext or another while cronies were awarded handsomely including award of the entire cargo contract for Europe to a former cricketer Pervez Sajjad. National heroes like Squash legend Jehangir Khan were insulted and humiliated on the other hand.
But the biggest fraud was committed when General Musharraf and his military commanders were told that PIA would make a huge turn around if Government injected Rs 25 billion, which they did, not knowing that they were being taken for a ride by the craft manipulators.
After 2 years, and after Rs 32 billion gone down the drain, PIA Chairman Ahmed Saeed has admitted that there was no turn around imminent, that yearly an injection of Rs 5 billion was needed to keep the airline afloat. He has left General Musharraf and PM Aziz with no choice but to keep throwing good money after bad.
Thus the decision to sell off Roosevelt Hotel has been taken as a last resort to provide PIA with some cash. But this will be the end of PIA’s most consistent and profitable foreign investment, PIA insiders say.
Roosevelt could at best get US$ 250 to $260 million, if sold at the current market price in Manhattan. Of this amount almost $150 million will go for repayment of existing loans leaving some 100 million dollars for the owners. Another big chunk, almost $40 to $45 million will go in taxes to the US Government thus leaving a paltry 50 million or so dollars for the two partners --- the Saudis and PIA --- to share.
With just about $25 million, how long would PIA be able to survive but the worst part if that it will lose an investment which is providing at least $3 to $5 million every year in net profits. That means Roosevelt would, even at the current rate, pay its price in 5 to 7 years and PIA would still own it.
The good part of the deal is that the Saudis understand the situation better than the manipulating managers of PIA and they are in no mood to liquidate an investment which is providing them a financial base in Manhattan as well as giving them a regular profit, be it small.
Compared to the fortunes of PIA, insiders say Choudhry Ahmed Saeed has benefited tremendously from his position to provide undue advantage to his own personal business, of making shoes. His transition from a shoemaker to an aircraft flier has helped boots and boot lickers alike.
His Servis Industry is thriving, it now has more assets than liabilities, most of its loans are paid off and it has landed lucrative contracts like that of Nike, because of the clout Ahmed Saeed enjoys as PIA Chairman. When Saeed joined PIA, Servis was struggling.
The family of Chairman Saeed is also not far behind with some nephews setting up their own computers companies and working in close coordination with PIA for their benefit.
PM Aziz knows what is going on and he is basically averse to appointment of private businessmen as heads of public corporations. But since Ahmed Saeed has been there because of Musharraf, Aziz is helpless. Yet as a financial manager he knows how to catch the thieves, on their own turf.
As per this strategy the Government has refused to pump in more money into PIA but has asked the Roosevelt Committee to negotiate the sale of the Hotel. PM Aziz knows it would not be an easy task and in the meantime, PIA may hit the bottom, making it easy for him to shunt Ahmed Saeed out.
At the Sept 21 meeting Aziz gave him a broad hint. An official announcement conceded that Aziz had “directed PIA officials to further professionalise its working.”
source: http://antisystemic.org/satribune/www.satribune.com/archives/sept04/P1_butt3.htm
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