WASHINGTON DC, Oct 8, 2005 | ISSN: 1684-2057 | www.satribune.com

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Editor’s Note: After our successful series of investigative articles on PIA under the ousted Chairman Choudhry Ahmed Saeed, a new Chairman, Tariq Kirmani of PSO, was appointed. We gave six months to Mr. Kirmani to undo what Saeed had done and to put the airline back on the right track. Now that period is almost over. With this first story we begin our new series of investigations about PIA under Mr Kirmani.

From Shoe Maker to a Gas Guzzler, PIA Remains a Raped Orphan

By M A Siddiqui

KARACHI, October 8: Despite the change at the top, from a shoe maker to a gas dealer, the cancer that hit Pakistan’s national airline, PIA, has not been diagnosed. While General Musharraf’s nominee robbed the airlines left right and center, PM Shaukat Aziz’s man is not just stealing the coffin, he is raping the dead body as well, as a popular proverb goes in Pakistan.

In the six months that Tariq Kirmani, head of the country’s largest oil company, the Pakistan State Oil (PSO), has run PIA, not only the mistakes made by ousted Chairman, Choudhry Ahmed Saeed, have been repeated, ratified and authenticated, Kirmani has made blunders of his own.

Many insiders and experts agree that the way PIA is now being run appears to be a pre-meditated plan to bring it down to the status of a financial train wreck when it could be sold for ‘One Dollar’ to an international client of Citibank, the employers of Pakistan’s borrowed Prime Minister, waiting for his ‘elevation’ to join the World Bank.

And guess who is having the biggest laugh these days? Musharraf’s crony Choudhry Ahmed Saeed. He goes about every evening reminding Musharraf and his inner circle high spirited comrades of another much used and abused proverb: ‘As you sow, so shall you reap.’ Saeed’s desperate cries were answered by Musharraf not by stopping Kirmani from raping the PIA, but by awarding Saeed a national medal for his ‘meritorious services’ to PIA.

Kirmani joined the PIA in April this year and came from PSO, a petroleum products wholesale and retail company, with absolutely no experience whatsoever of aviation or airline business. His sole claim to the PIA throne was his friendship with PM Shaukat Aziz who had acquired the leverage to name the new PIA boss because Ahmed Saeed and Musharraf had been so discredited it had become an embarrassment for Musharraf to either continue with Saeed or name a replacement.

“Instead of learning the aviation ropes, Kirmani did what he knew best: Corporatize the set up. This meant that against all rules and regulations all Directors of PIA were re-named Senior Vice Presidents, as if renaming them would turn them into real experts,” a former PIA executive told the South Asia Tribune.

Kirmani was known as the King of PSO because he would rule like a king. No one was allowed on the 9th Floor of the PSO building. Not even his senior most executives unless they had an appointment or a meeting. But the King had a lot of baggage, dirty baggage, which was either ignored by Shaukat Aziz and Musharraf or they did not bother to do a security and background check with relevant agencies and authorities.

This dirty baggage included a long list of official investigations being conducted against Kirmani and PSO on charges of corruption, misuse and misappropriation of millions of dollars by none other than the National Accountability Bureau (NAB) of General Musharraf in all the provinces.

A list of these official probes, obtained by the South Asia Tribune makes a sad reading. It reveals that PSO and Kirmani were in deep trouble and Shaukat Aziz had tried to bail him out by giving him the high profile job of PIA Chairman. Even now if those official investigations are taken to their logical end, Kirmani would stand convicted of many crimes, big and small. South Asia Tribune will deal in full detail with these issues in the upcoming stories in this series. Click to view the list

As late as January 2005, the NAB was seriously pursuing Kirmani. Many of the previous investigations were either put on hold or were pending clearance from the top to proceed. Most of them under PM Shaukat Aziz and General Musharraf may not see their logical end and may have to wait for the NAB under a new dispensation. Click to View latest NAB letter

With this background Kirmani started “revamping” the PIA on Corporate lines. The first orders he issued were to carpet the road which led to his office worth Rs 5.6 million. Although Civil Aviation Authority (CAA) and not PIA is responsible for road maintenance, Kirmani had no problem issuing the orders.

Then came another proclamation from the new Emperor. All employees of PIA, big or small, high or low, will have to use the back door to enter the head office. Only the Chairman will use the front door. Even that was not enough. Kirmani ordered that a new elevator to his first floor office be installed and his car should be able to drive right at the elevator door. That is right now being done to make the entry of the king more royal. Millions are being spent on the project.

To keep the distance from his subordinates obvious, Kirmani ordered the removal of all chairs from briefing rooms and now all the executives have to stand in the morning meetings for hours. The corporate face of the airline has quickly changed to the headquarter of an intelligence agency.

Having "corrected" his image and established himself as the corporate boss, since all the Directors of PIA were now called Vice Presidents, Kirmani went about the next hatchet job, of cutting jobs in the name of saving expenses. Hundreds of old and new employees have been ordered to be retired but only at the lower level because these poor guys do not have connections in the top echelons of power.

Even in this operation no management or administrative skills were displayed. While jobs were cut to save money, millions were being thrown away either because Kirmani did not know what he was doing or he did not care.

One such example is of a Director who is actually not a Director but who was pushed up by the previous Chairman as a favor because he was a blue eyed boy.

Documents obtained by the South Asia Tribune reveal the case of Salman Javed, the General Manager promoted as Director General Services on virtually the last official day in office by Choudhry Ahmed Saeed. He was to stay on probation for six months before he was to be confirmed in his new post as Director. The confirmation would be due on October 14, 2005. View appointment letter

Come Kirmani. Somehow he did not like Salman’s promotion and wanted to get rid of him. The most economical way would be not to confirm him on the new job if he was not fit. But using his ‘excellent’ administrative skills, Kirmani ordered on August 8, 2005 that Salman should be retired. Presumably the retirement before confirmation meant that Salman was going out as GM, his original designation. But no, he retires as Director with full pay and benefits up to age of 60 which would cost PIA close to Rs 13 million. Click to view retirement order

“What a great show of magnanimity. The amount which is being paid to Salman could have kept at least 72 lower rank PIA employees, now being sent home, on their jobs for a year,” a PIA financial analyst said. “The case shows Kirmani has either no idea of how to save money or the job cuts are meant to serve some other agenda,” the analyst added.

In another show of skill, or lack of it, Kirmani has not touched the expensive flight engineers who have nothing to do after PIA sold all its wide body planes. These 42 redundant engineers have to be paid flying hours even if they don’t fly and the amount comes to millions upon millions. If PIA were to fire these 42 engineers, almost 400 low level jobs could be saved. But Mr Kirmani has not yet thought about it.

These were administrative matters in which Kirmani was supposed and required to be an expert. How about the real job of running the airline, aviation and aircraft?

Kirmani’s decisions in the first six months are pathetic to the point of being naive and stupid, says a former PIA MD.

“PIA is throwing away all the planes gradually at token prices and replacing these with the planes on wet lease. The terms on which these planes have been leased are worse even compared to the terms on which PIA sold its planes.”

Kirmani has sold six A-300B4 planes while the 7th was scrapped. But before the sale PIA spent so much money on these aircraft under the head of maintenance, that the price obtained looked like peanuts. This fact was revealed during the physical inspection of the aircraft by the Senate Standing Committee on Defence and Defence Production.

According to an estimate of the PIA engineering, total cost of maintenance for A300B4 fleet was estimated to be $17.263 million. Therefore the PIA management decided to sell the entire fleet of six aircraft for $10.1 million but after it had done all the checks including C-checks and base checks. PIA also replaced and installed new equipment on the sold aircraft worth millions of dollars. Why it was never understood.

The matter did not end there. PIA has been providing the facility to part out the parts without any cost to the buyers. In the open market, charges for parting the aircraft are very high and in millions of dollars.

So there was something very fishy about the sale from the very beginning. Why were so many favors being dumped on the buyers. The buyer, MNG Airlines, attached many conditions with its offer to buy the aircraft and all were accepted by PIA.

The most intriguing was for PIA to take the same aircraft on lease from the buyer. So PIA first sold them its duly refurbished planes at throw away price and then leased the same on questionable and highly profitable rates. Can any sane financial expert explain these decisions taken by Kirmani?

For the last Hajj season, PIA hired three aircraft at $3 million each. However, a PIA official revealed that PIA has paid almost $15 million instead of $9 million. Why, it is not yet clear, but something was again very fishy.

The point to note is that PIA had hired the three aircraft in the presence of the A300B4 fleet. Now that these six aircraft have been sold, it will have to hire as many more to meet the Hajj season needs. That’s why, the PIA management has already invited bids for three aircraft immediately till November period before the commencement of the Hajj season. The airline will also be looking for three more aircraft.

Why such a great interest in leasing to the extent that fully airworthy aircraft are sold to a company and then leased back from it, is the million dollar question. Perhaps for Kirmani this is a good business practice but for PIA and the country it may mean losses of millions and billions instead of the promises made by Saeed that his decisions would bring profits of billions.

When the South Asia Tribune broke the story of Kirmani’s appointment on April 1, 2005, we wrote: “Yet the new Chairman will have a daunting task at hand to deal with all the Saeed’s men sprawling all over the airline. He will have to clean up the management, bring back all the qualified and experienced professionals who have been shunted out on personal reasons and start picking up the pieces faced with a task of managing an airline burdened with huge debts and unable to generate revenues to meet its costs.”

“The new Chairman will have to run the airline like an airline not like an oil company, where he comes from, or like a shoe factory where the outgoing chairman will go.”

And when he was appointed, we wrote on April 17, 2005: “It would be unfortunate if Kirmani covers up Saeed’s misdeeds or protects the corruption of his cronies, just because exposing all this may embarrass General Musharraf or his close friends. Even if some people have to be protected, the rape which took place with PIA has to be exposed and corrected. Otherwise replacing one yes-man with another would not mean a turn around for the airline.”

It turns out that a shoe maker has been replaced by an oil dealer and the airline has become the orphan, who is raped by the new father every time he is adopted.

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