HOW PIA SCRAPED BOEING 747 CITY OF PESHAWAR BECOME PART OF BALTIA AIRLINES IN USA .

By Author : 

Corruption was amazing under rule of Generals Mushraff the Beloved leader of Pakistan in 2005 as it was never reported then in Paki Media and it never is now. Yet the People who did it like Generals Mushraff  a Qadiani , Ahmad Saed Awan chairman PIA , Finance Ministry Bureaucrat Tariq Aziz a Qadiani the Invisible King of Pakistan .

A Bureaucrat in Finance Ministry of Pakistan and best friend of Mushraff and Shaukat Aziz PM of Pakistan and Brigadier Niaz of Pakistan Army, another Qadiani friends of General Mushraff.

There were others as well like the AVM Niaz Hussein who was made Deputy MD of PIA Drunkard and Womanizer and reportedly his Alcohol bill for a month was in hundreds of thousands.

This story as at time of Mr Chaudhry Ahmad Saed as Chairman PIA and also is related to Another chairman (PIA) Pakistan International Airlines Mr. Tariq Kirmani a Qadiani who was brought from PSO , Pakistan State Oil as Managing Director of PIA just because he was a Qadiani and so was General Pervaiz Mushraff , otherwise  Mr. Tariq Kirmani had no Knowledge of Airlines and no Management experience and was just a Jack Ass the Kind we are exposing in this blog.

Here is an interesting Story of An Aircraft “ Boeing 747 Known as City of Peshawar “was scrapped and sold to a junkyard of Aviation in Arizona to a company known as Green Line International which sold it to USA based Airline called “ Air Baltia “ .

History

Boeing 747-28B, Which had the “City of Peshawar “Painted on it is very Interesting and it was sold to scrap while it was in Perfect condition to fly and was in Perfect condition to Fly . Here are the details of the Aircraft . 

This was the Aircart that also made a belly landing in Islamabad as well , because of Pilot error of PIA Piolet but was repaired and made Serviceable and it gave a lot of service to PIA. here is the Picture of belly landing of AP-AYW. 

On February 4, 1986, AP-AYW made belly landing at Islamabad Airport around 9AM in the morning. The Boeing 747 was arriving as PIA flight PK-300 from Karachi with 264 passengers & crew onboard. Luckily everyone survived this accident caused by pilot error. AP-AYW was repaired with Boeing Company's technical assistance

Construction Number                                (MSN)    21035Line Number                                                256Aircraft
Type                                                     Boeing 747-282BFirst Flight                                                    27. Feb 1975Age                                                                 37.3 Years

Dates From PIA to Scrap to Now as US Airline Plane 

Delivery date-Operator-Registration-Remark 07 dec 2009 ----Baltia Air Lines --- N705BL 23 sep 2005 ----Evergreen Int --- N559EV ---- Stored at Marana 01 apr 1976 ----Pakistan International Airlines --- AP-AYW  Last flight around March 2005, after Hadj 2005. Stored at Lahore Airport Pakistan 17 oct 1975 ----TAP Air Portugal --- CS-TJD 

PIA City of Peshawar in Arizona Junkyard 2005-2010

PICTURES OF AIRCRAFT CLICK HERE 
Baltia Air Lines Boeing 747-200 (N705BL) at LAX aftering being taken out of the airline junkyard in August 2010..

Here is the flat plan of PIA Aircraft AP-AYW know known as NL705 , while being Taken from Junk Yard to Malaysia .

Really the story starts long ago. Back in 1989, Baltia Air Lines was founded in New York City. The idea was to provide service from New York to what used to be the Soviet Union. After lots of planning, it looked like things were going well for the start up. Baltia had plans to fly to multiple cities in the Soviet Union and were looking to purchase a few Boeing 767′s and 737′s. Then the Soviet Union collapsed, which was great for America, but not so great for the new American-based Baltia Air Lines. There was too much instability in the Baltic region and plans to start a new airline were shelved.

It took until 1996 when Baltia was able to get authority to fly from New York (at JFK) to St. Petersberg. At the time Baltia was planning on flying a single Boeing 747 and in 1998 put a $100,000.00 down payment for an ex-Cathay Pacific Boeing 747-200. However, in 1999, the airline did not have enough capital to start flying and the Department of Transportation (DOT) revoked their route authority. In 2007, Baltia received more capital and once again filed to fly from JFK to St. 

Petersburg. 

The DOT approves the plan and allowed them to fly in 2008. When Luly with The Airline Blog first contacted Baltia back in August 2009, they assured him they were planning on purchasing one Boeing 747 from an airline that was based in the US. Many were skeptical that the airline would actually purchase an aircraft and questioned if the airline would ever take off (pun intended).
It was quite shocking when they announced that they purchased a Boeing 747-200. They didn’t end up getting a 747 from an American carrier, but they still found one. 

Baltia ended up purchasing one which was first delivered to TAP Air Portugal in 1975. Then in 1976 it was sold to Pakistan International Airlines (PIA), where it flew until it was stored in 2005. Then in July 2009, Baltia Air Lines purchased the jumbo jet and registered it as N705BL. They paid a little less than a half-million for the plane, which did not come with engines.

Baltia Air Lines Boeing 747-200 (N705BL) arriving to Malaysian Airline System Berhad ("MAS") facility in Malaysia for scheduled maintenance

Even though they had a plane, it became questionable if it would ever fly. Doubters were amazed, when on August 4th 2010, she arrived at the Malaysian Airlines Maintenance Center where it will be updated and painted.
The choice of an older, less fuel efficient aircraft is a bit puzzling. Of course there is a lower up front cost, but it will cost a lot in the long run. Will passengers be willing to fly in such an old aircraft? Will most even realize how old she really is?
This airline surely is interesting. Not only a US airline flying passengers in a Boeing 747-200, but flying non-stop to major Russian cities is too good to ignore. These people sure seem to have the drive and ambition to make an airline happen, no matter what the time line.

The keen eye of a ramp worker caught N705BL at LAX on its way to Malaysia (photo) and was allowed to go in to take a look. The interior is still looks like PIA (photo), but they plan to install a VIP interior. I kind of hope they can keep the classic spiral stair case going up to the upper deck (photo).
More recently, Baltia Air Lines has announced the purchase of a second Boeing 747 and that they plan to start flying during the second quarter of 2011. 

According to Airliners Gallery News, Baltia Air Lines President, Igor Dmitrowsky stated, “Significant progress has been made in the FAA Air Carrier Certification document process and that Baltia is anticipating a second quarter launch.” He continued with, “There are still other pre-launch certification tasks to be accomplished such as the completion of the Safety Attribute Inspection audit process of the manuals, the completion of maintenance on our newly acquired Boeing 747 aircraft, the training of our crewmembers, and the mini evacuation test and proving flights, which should all be completed prior to our inaugural flight.”

MORE BALTIA AIR LINES GOODIES:* Video of N705BL arriving  in Malaysian Airlines Maintenance Center
* 20 photos of the aircraft’s life* Simpliflying looks at Baltia Air Lines use of social media

END OF PIA BOEING 747 IN MALAYSIA :

According to reliable sources the Boeing 747 known as city of Peshawar  was sold in Malaysia as it is standing in Kaula Lumpur Airport in Malaysia Pictured here , Either the Plane was registered in same other name or it was used for spare parts or its Equipment was sold to other Airline it is a Mystery that has to be explored further:

At Malaysia in 2012 at Kaula Lumpur  Airport 

Here is the Agreement of sale of This Beautiful Aircraft known as City of Peshawar or AP-AYW.

AIRCRAFT BILL OF SALE

FOR AND IN CONSIDERATION OF ONE HUNDRED FORTY FOUR THOUSAND ONE HUNDRED SIXTY FOUR DOLLAR AND SIX CENTS ($144,164.06), THE UNDERSIGNED OWNER OF THE LEGAL AND BENEFICIAL TITLE OF THE AIRCRAFT DESCRIBED AS FOLLOW:

UNITED STATES REGISTRATION NUMBER:	N705BL
AIRCRAFT MANUFACTURER & MODEL:	BOEING 747-200
AIRCRAFT SERIALNO:	21035

DOES THIS 11th DAY OF JANUARY, 2012 HEREBY SELL, GRANT, TRANSFER AND DELIVER ALL RIGHTS, TITLE, AND INTERESTS 1N AND TO SUCH AIRCRAFT "AS IS WHERE IS" UNTO:

PURCHASER:

YUSOF, MOHD YAZMEEN MD NO.8, JALAN DINAR A U3/A SECTION U3 TAMAN SUBANG PERDANA 40150SHAH ALAM SELANGOR MALAYSIA

IN TESTIMONY THEREOF I HAVE PLACED MY SIGNATURE BELOW ON THIS 14th DAY OF MAY, 2012.
SELLER:BALTIA AIR LINES, INC
BY /signature/RUSSELL THAL

EXECUTIVE V .P.

Kick Back in A310 Deals from Jamica Air Under Generals Musharaff and Ahmad Saed Chairman PIA

PIA's New Multi-Million Dollar Air Jamaica Deal Has Huge Kickback Potential 

By Khalid S. Butt


KARACHI: The recent Pakistan International Airlines (PIA) multi-million dollar deal with Air Jamaica, for leasing six old A-310 jet craft, is being increasingly questioned by aviation industry experts.

PIA has signed the dry lease deal for 10 years at the rate of $200,000 per aircraft, but these planes cannot fly on long routes without refueling.

A PIA official said two aircraft would join the fleet in November, two in December and two in June 2004 under the dry lease agreement. Dry lease gives the leasing airline an option to purchase the aircraft at the end of the lease period.

The A-310s would replace some aging Airbus A-300 planes. The agreement comes ahead of the introduction of new Boeing (BA) 777 aircraft next year into PIA’s fleet. The first three planes will be inducted by March 2004.

Experts say the Air Jamaica deal is more about leakages of funds and kickbacks than hiring of aircraft as leased aircraft are of an older vintage of A-310. This twin-engine aircraft has no ‘Trim Tank’ that was installed in the later versions. Thus, PIA will be forced to ply these aircraft on domestic and regional routes only.

The second problem is in the Pratt and Whitney engines. PIA engineering does not have the facility to maintain and overhaul these engines. Thus PIA has to spend more money in more contracts for maintenance of these engines.

According to a former director marketing of the PIA, the management is already negotiating with Pratt and Whitney for the maintenance of the engines at the rate of $400 per flying hour. If these planes will fly 12 hours daily at an average, PIA will pay Pratt and Whitney around $201,600 per week for maintenance.

Experts say the present deal is an action replay of the PIA deal for six Jumbo jets with Cathay Pacific.

Cathay Pacific (also a Sabre client) suffered a loss in 1998 for the first time in its 35-year history. On March 10, 1999, Cathay’s Chairman Mr. Peter Sutch while announcing the 1998 financial results put the loss at HK$ 542 million (1US$= HK$7.7) incorporating HK$ 607 million as the prevalent market value of his fleet of 13 B747-200/300 aircraft. 

Cathay decided to get rid of its fleet of 7 Jumbo jets (B747-200) and six B747-300 aircraft. So the 13 aircraft were for sale for US$ 78 million or US$6.6 million per aircraft. 

PIA could buy 6 aircraft for US$40 million! Behold the all-fixing lease PIA worked out. It is a marvel of taking a company for a ride. Instead of buying six aircraft, PIA decided to spend almost $200 million on leasing and maintenance etc of these six jets for just 24 months.

The details of these costs to PIA, in addition to any financial charges, include: 

1. $275,000 per aircraft per month x 6 aircraft x 24 months is $39.6 million. 

2. Heavy maintenance @<hidden> $1510 per flight hour for a guaranteed minimum of 3666 to 3999 flight hours per aircraft per year is US$70 million for 24 months. 

3. Insurance for hull value of $35 million each hull, third party liability value of $1.1 billion and foreign object damage (FOD). 

4. Spare parts support & consignment package @<hidden> 1% of value per month. 

5. All maintenance & spares expenditure for up to but not including ‘C’ check. 

6. Maintenance & support arrangements with Rolls Royce for the RB211 engines and with other equipment vendors like Matsushita for in-flight entertainment equipment etc. 

7. Tooling and training etc. 

8. Line Replaceable Units (LRUs) required by PIA in greater quantities than per agreement e.g. two additional RB211 engines. 

9. Auxiliary Power Unit (APU) – Line maintenance and LRU replacement. 

10. Airworthiness directives and service bulletins. 

11. Cost of using common parts from PIA inventory. 

12. Aircraft on Ground (AOG) coverage etc. 

The additional cost to keep three of its B747-200 in operation to support the Cathay aircraft should also not be ignored. The leased aircraft cannot be used for Haji flights. And some of the costs will never be known. 

PIA thus leased 6 planes for upwards of US$200 million, or over Rs. 11.5 Billion when PIA could have bought these aircraft for just $40 million or Rs 2.3 billion. What a deal for Cathay!

Now, the same game plan is ready for the implementation with Air Jamaica by people appointed by General Pervez Musharraf.

source : http://www.satribune.com/archives/sep21_27_03/P1_pia.htm

PIA Planes Boeing 777 and A310 are not Owned by PIA but Taxila Limited and Caymen Islands Shady company

Boeing 777 and Airbus A310 Airplanes Bought by PIA are not Owned by PIA but some company in Cayman Island known as Taxila Incorporated and Fly PIA limited under Generals Musharaff , Tariq Aziz , and Ahmad saed of Servis shoes Industries who was chairman PIA. 

Special SAT Report

ISLAMABAD, July 11: The Musharraf Government has flatly refused to provide the relevant documents about grossly inflated B-777 aircraft lease deals by PIA to the Defense Committee of the Pakistan Senate.

After a series of investigative reports in the South Asia Tribune, the Senate Committee had taken up the issue and held a series of hearings in which the PIA Chairman and other executives were summoned to testify.

These top management officials gave conflicting and evasive statements before the Senate Committee which ultimately demanded that copies of all the agreements signed by PIA with fake off shore companies be made available.

Initially the officials promised to provide these documents but after intervention of the Presidency, the PIA has refused to hand over the key agreements.

In a letter to the Chairman of the Committee, one of the Opposition Senators, Engineer Rukhsana Zuberi said the information as required in the requisitioned Meeting on June 9, 2004 has not yet been provided to the Committee.

A list of required documents was provided and additional information required after PIA presentation. Despite a lapse of 20 days I have received no input, she wrote.

“I am again submitting a list of documents required for Taxila Ltd and Fly PIA Ltd Inc in Cayman Island,” she added.

The documents demanded from PIA include the Memorandum of Association, Incorporation Certificate, Increditor Agreement, Master Lease Agreement, Resolution of Board of Directors, 

Exim Bank Letter, PIA Guarantee, Guarantee issued by Export Import Bank of USA Participation Agreements, Citibank & Exim Bank Arrangement, Agreements for finances arranged through Banks in Pakistan for the down payment, State Bank of Pakistan 3 page letter written by Boeing to PIA on February 13th 2004, Quotations & Facilities given by Air Bus 340 & Boeing 777,
Decision Criterion.

The letter also demands the total price of each plane that has already arrived giving prices of the components bought from third parties or the original manufacturers of each component.

It may be added that except the Master Lease Agreement between PIA and Taxila Ltd, all the other documents were obtained by the South Asia Tribune and most of the important pages were released on the web site.

The Opposition senators got the copies of these documents from the web site and now want officially certified copies from the PIA so that they could proceed with the accountability of PIA bosses in the Parliament.

source: http://antisystemic.org/satribune/www.satribune.com/archives/july04/P1_pia.htm

How PIA Cargo was Made a Loss making Entity by General Musharraf Dictator

Why has PIA Leased Cargo Freighters to Dubious Backgrounds Punjabi's Qadianis related to Generals Musharaff from Cricket Back Ground like Ijaz Butt , Waseem Barri and Sajjad Pervaiz Ex-Employees of PIA. 

A PIA Aircraft Cargo Bay

By M T Butt

ISLAMABAD, October 11: When South Asia Tribune reported two weeks ago that the PIA Chairman had awarded the entire cargo contract for Europe and UK, worth almost Rs 2.5 billion, to a crony, a former cricketer, we had just touched the tip of the proverbial iceberg. Now the real dirt has hit the roof and the scandal would match any of the big time block busters of the Musharraf era.

Pakistan’s leading newspaper ‘Dawn’ after some initial digging has done a report, as a follow up of our Sept 27 tip. Dawn comes out with many details of the scam which involves Chairman Ahmed Saeed and his ex-cricketer brother in law, Ejaz Butt, as well as many former Pakistani Test players including Pervez Sajjad and Wasim Bari, now enjoying top positions in PIA.

It is a sad commentary on how Pakistan’s leading lights of cricket have become cronies and instruments of making money under the table, serving masters without scruples. Click to readDawn Story dated October 10

The Dawn story begins with a devastating para: “Pakistan International Airlines could be losing millions in foreign exchange annually in cargo transportation revenues following the handing over of its entire cargo transportation in Europe to a firm at a higher commission, allegedly in violation of rules and despite serious objections by the internal auditors, documents available with Dawn reveal.”

It shies away from naming names, but says: “In March 2003, PIA renewed its agreement with Golden Star Aviation, a one-man firm owned by one of PIA ex-employees, as its cargo sales agent (CSA) for booking the entire cargo transportation in eight European countries - France, Italy, Netherlands, Belgium, Denmark, Norway, Sweden and Finland. Previously, the company was handling only France."

This ex-employee of PIA is former Test cricketer Pervez Sajjad, as South Asia Tribune reported on Sept 27 Click here for SAT Report He was posted to Paris as a PIA employee in 1994 and was given a golden handshake in 1998 when he opened a Cargo Agency in France by the name of Golden Star Aviation. It was a routine business venture but Sajjad knew he could make it a success, should his luck favor him in future. He hit the jackpot in 2001 when General Musharraf appointed Choudhry Ahmed Saeed as Managing Director of PIA, later making him Chairman of the Corporation.

Why Sajjad became lucky was because of his silent partner, another former Test player Ejaz Butt, brother-in-law of Chairman Ahmed Saeed. The Saeed-Butt-Sajjad trio could find no better partners to launch the biggest ever milking scam in PIA, focusing on its cargo operations as there were millions of dollars to be made quietly, away from the glare of the media and the Islamabad Generals, besides nosy bureaucrats.

In 1998, Sajjad’s Golden Star was an ordinary cargo booking agency in Paris. When Ejaz Butt moved his strings with brother in law Ahmed Saeed, Golden Star was made the General Sales Agent (GSA) the sole cargo agency for the whole of France. Now any one else who booked a cargo on PIA will have to pay a cut to Sajjad.

How this was achieved is another story. Cricketer Wasim Bari was the General Manager of Cargo in 2001 and his collusion was necessary to achieve this. Bari was bribed in a subtle way. The Cargo Division was turned into a Directorate and Bari was promoted from a GM to a Director.

Another hurdle, the concerned executive, the Director of Marketing, Farooq Shah, was also to be crossed. At that time he was only an "Acting" and not a confirmed Director. So he was told to help Sajjad and he would be confirmed as Director. That was easy.

But when Sajjad and his Golden Star were in place and settled as GSA, the newly created Directorate of Cargo at the Head Office was no longer needed. So it was conveniently abolished and Wasim Bari, now a Director, was posted as Director Administration, a much more powerful position.

Director Farooq Shah, who had complied with the scheme, was given another promotion and made a Deputy Managing Director for his quiet services.

The dividends started coming in and a couple of years passed. The Sajjad-Butt-Saeed trio decided that more should be done to get more dollars. In February/March 2003 a much bigger target was set --- to make Sajjad’s Golden Star the CSA for entire Europe, a monopoly.

This time the Director of Marketing was Kamran Hasan and he had to be made part of the deal. His brother, Sohail Hasan, was found to be the bridge to achieve this target. Sohail’s agency, Cargo Aids, was given 95 per cent of shipping rights for export of Mangoes and fresh fruits/vegetables to Europe and Middle East via PIA.

It meant that out of an average cargo bill of between Rs 700 and Rs 800 million, Sohail’s agency would pocket a cool 10 per cent, whether it exported the goods or any body else did. The 2-3 month Mango season turned out to be much more fruitful than mere mangoes for the Hasans. They had almost a monopoly over fresh produce exports and they could use their clout by preferring some exporters over others.

Kamran Hasan never raised an objection to Sajjad’s Golden Star becoming the sole agent for Europe without any bidding, without competition and even without having proper financial and corporate credentials. The Sajjad deal was made even sweeter by allowing him more commission than the normal rules would allow.

The Dawn report confirmed this and disclosed much more. "The airline reportedly allows the firm 10 per cent commission as against five per cent which it gives to its various cargo agents in these countries. Even the General Sales Agent (CSA), which is the sole agent, appointed by the international airlines in any particular area, is given 7.5 per cent commission,” it said.

So Chairman Ahmed Saeed allowed his brother in law and Sajjad a 10 per cent commission on all cargo booked on PIA from Europe. It was a windfall or in simple words a jackpot hit without even buying a lottery ticket.

Yet the trio did not stop there. No rules were followed and no competitive bidding was done to make other cargo companies make better offers. When they first gave Golden Star the sole right to control all cargo from Europe, Sajjad and his firm were not even prepared for such a big deal as they had never handled cargo on such a large scale. “The firm did not have any office or establishment anywhere in Europe except in France,” Dawn reported.

But with the European contract under the belt, it was not difficult to find an experienced firm with a broader base. Sajjad quickly found one. Said Dawn: “A source at the PIA Headquarters told Dawn on the telephone that the Golden Star Aviation has entered into a so-called partnership with a firm, Kales Group of Netherlands, and was using the latter's facilities or outlets throughout Europe.”

When Dawn contacted the PIA management for answers to these troubling questions, they got a two-para corporate statement but even that was enough to confirm all the doubts.

This is how Dawn reported it: “On Oct 1, 2004, a detailed official comment was sought from PIA on these points. It sent a written reply, saying: "Golden Star Aviation was appointed in 1998 which resulted in yielding positive results. The sphere of operation of the CSA was increased in different phases to other countries of Europe. The accuracy of this section is corroborated by the substantial growth in loads and revenue from our European Stations."

It further said: "Golden Star (CSA) has affiliations with M/s Kales Group which is one of the largest freight forwarders in Europe working on modern lines and exercising effective control and coverage on the European market. M/s Kalas (Kales) Group due to their business agreement with Golden Star has submitted bank guarantees to PIA for M/s Golden Star which was accordingly accepted."

But this official confession contained many half-truths and misleading facts which were obviously hidden from ordinary Dawn readers. PIA’s statement that Golden Star was appointed in 1998 was basically wrong as in 1998 Sajjad had just set up his cargo agency after getting a golden handshake from PIA. He was one of the many such agencies, may be one of a few in Paris. His agency was appointed the sole agent in Paris in 2001, but this fact was glossed over in the PIA statement.

The official statement about Golden Star having affiliation with Kales Group was also misleading. It never had that affiliation when Sajjad got the big jackpot contract. It was done as a pure favor. But after he became the CSA, Sajjad then entered into an agreement with Kales.

This was also confirmed by the Dawn report which quoted an internal PIA audit memo, in its possession: “The audit memo also raised the objection that Golden Star in fact entered into a joint venture with Kales Group B.V. Netherlands in April 17, 2003 - a month after it was appointed the CSA by PIA.”

The most intriguing and incriminatory part of the official PIA statement to Dawn was about the bank guarantee. As CSA, Golden Star of Sajjad should have provided the guarantee before it was awarded the sole contract for Europe. This was ignored by Chairman Ahmed Saeed because of his brother in law Ejaz Butt. But somebody had to provide the guarantee as the documentation had to be completed.

That job was negotiated with Kales Group and PIA officially admitted that “M/s Kalas (Kales) Group due to their business agreement with Golden Star has submitted bank guarantees to PIA for M/s Golden Star which was accordingly accepted." The Sajjad-Kales agreement was signed in April but PIA had already appointed Sajjad as CSA in March 2003, without a bank guarantee. Why was this concession allowed to Sajjad was not explained in the PIA statement.

Dawn also quoted from many PIA documents. It said “a recent internal audit report of the PIA was said to have raised serious objections to the fact that neither a bank guarantee was provided by Golden Star Aviation nor was it a global bank guarantee as required under the agreement.”

"In our view, the bank guarantee should have been issued by a bank in France and should have been a global bank guarantee as set out in the agreement," according to an internal audit memo dated April 13, 2004. "Further it can also be argued that the CSA has not furnished its own bank guarantee issued by the bankers of the CSA based in France."

Besides, it said, the guarantee, "even if considered to be valid", was applicable to France only and does not cover its cargo sales relating to other countries like Netherlands, Belgium, Italy, Norway, Sweden, Finland and Denmark.

Another big favor given to Golden Star under the agreement, Dawn reported, is that the firm is allowed commission on 'Charges Collect' shipments also known as CC shipments. These shipments are mostly made by the government, including the defence ministry. Since the government or the defence ministry has to bring in goods through PIA and no other airline, no marketing effort is required by the CSA as this is mostly done by PIA itself.

”Golden Star was also allowed to claim commission on CC shipments at the time of delivery in Pakistan, although, previously, it was a well-established practice that the commission, if ever given to a cargo agent, was given only when government dues were received by the national airline.”

This concession, according to experts consulted by the South Asia Tribune, meant that on all government-to-government cargo, including the all-important Defence equipment, spares etc, shipped to Pakistan from Europe by PIA, Sajjad and his firm would get a commission as CSA. This was a simple bonus, in addition to the jackpot.

Yet these concessions were not considered adequate enough and the Sajjad-Butt-Saeed trio went for an over kill in the scam. The agreement with Golden Star provided that the CSA was to be given a 7.5 per cent commission “plus 2.5 per cent on achieving the target.”

This target mentioned in the agreement was never fixed or explained and according to PIA officials what is stands for is even lower than the average cargo carried by PIA from Europe in the last 5 years. So to justify an additional 2.5 per cent commission, a very soft target which includes government cargo, was set. In effect, the whole target business was included to make the agreement look like a rational deal whereas it was a direct bonus to Sajjad and his firm.

Dawn report mentioned that the Audit Department of PIA had objected to this rate of commission, asking the airline for a 'downward revision' of the percentage allowed to the CSA. "It is felt that 7.5 per cent commission is even too high."

”The audit report also found that the firm failed to report airway bills amounting to Rs 16.2 million. "During audit, we have noted instances of lift of unreported airway bills pertaining for the period January 2002 to January 2003 amounting to Rs16,193,850. The sale of above-mentioned airway bills not yet received from the CSA," the April 2004 audit memo said, suggesting that the money be recovered from the CSA.

Dawn continued: “It is alleged that when the irregularities were pointed out by the audit reports, a meeting was called of all country/cargo managers from European stations in the first week of May 2004 at Cargo Division, Karachi, and they were asked to "regularize the irregulars". Despite audit objection on the higher rate of commission allowed to Golden Star for Europe, a PIA minute, also called M-1, issued after the meeting said that "the CSA will be paid commission of 7.5 per cent either on net rates or on published rates", whichever is applied.

"Another 2.5 per cent over and above will be paid if the CSA meets the assigned target for the territory," the M-1 said. The Chairman had stood firmly by his crony.

The report said: “Under the rules, the CSA or any cargo agent of the airline can seek special freight rates by applying to the country/cargo managers, who in return send their request with their recommendations to the head office for approval. But these special freight rates are allowed in rare cases and only on the recommendation of the country/cargo managers, who are well aware of the prevailing market conditions. But, the source said, Golden Star used to sending its requests for special concessional freight rates to the country/cargo managers in the respective European countries, and also send a copy of the same to the head office.

"The special rates were approved by the head office without consulting the country manager concerned," it concluded.

The last two paragraphs of the reports hide a much bigger scandal. What these concessional rates mean, according to a PIA expert, is that while Golden Star would be charging the customers the normal PIA freight, it quietly asks and gets a rebate from the Head office on the same cargoes.

This in other words means cheating the customers as they do not get the benefit of the discount allowed by the Head Office and the CSA keeps the entire amount.

Calculated in rough terms, if an additional 5 per cent discount is allowed by the Head Office on an average, the Sajjad-Butt-Saeed trio would be taking home not just 10 per cent as their legitimate Commission but another 5 per cent as discount as well.

These disclosures and details, as revealed by Dawn and sources of the South Asia Tribune raise many questions which Prime Minister Shaukat Aziz and General Pervez Musharraf have to answer.

Why has PIA been allowed to appoint a middle man when it has basically to get the services of a European firm. Why not have a direct contract with the European company and save millions in commissions?

Why all these special favors have been ignored and how long will PIA be allowed to serve as the milking cow for the current top managers?

No wonder after all this mismanagement, the Chairman publicly says PIA needs up to Rs 5 billion in subsidy every year to stay in the air. What will Aziz and Musharraf do now that billions have already been pumped into and have disappeared into thin air?

sources: http://antisystemic.org/satribune/www.satribune.com/archives/oct04/P1_butt.htm