Gross irregularities, misappropriation of funds and fraud worth Rs 28.722 billion have been detected in the accounts of the Civil Aviation Authority (CAA), said the audit report for the year 2011-12 compiled by auditor-general of Pakistan.
These irregularities reflect misconduct on the part of the senior officials of the regulator and indicate that there is a dire need for the CAA bosses to keep their house in order. The report, a copy of which is available with Pakistan Today, reflects non-recovery of rent and space charges from licencees worth Rs 3,497.586 million. The audit noted an amount of Rs 3,497.586 million outstanding against various licencees and lessees of the CAA working at various locations. Those included outstanding dues on account of licence fee Rs 2,996.282 million, non-recovery of financial charges of Rs 263.176 million, non-utilisation charges on account 8.18 acres of land at Jinnah International Airport, Karachi of Rs 238.128 million. The audit observed that the dues were accumulated due to negligence of airport managers in performing obligatory responsibilities to implement agreement clauses and realisation of the authority’s revenue. The audit noted that the CAA made payment to a contractor for construction of terminal building and allied electrical and mechanical works at Multan International Airport. Audit observed that payments were made to the contractor without recording detailed measurements of work done in the measurement book.
The audit noted that tenders were invited for commercial utilisation of MT Building on April 21, 2009 with reserved price of Rs 0.760 million per month (based on specified charges for airports in Category-A). The licence was awarded to a licencee against the bid of Rs 0.775 million per month, under agreement dated July 1, 2009. The audit observed during the review that the CAA also licenced an additional area of 99,869 sq ft to the licencee. The additional area comprised 78,200 sq ft covered space and 21,069 sq ft open space. Audit observed that the CAA approved and paid bonus to employees during 2010-11 without prior approval of the administrative ministry and concurrence of the Ministry of Finance. Audit holds that non-adherence to government policy resulted in irregular payment of Rs 316.401 million. Audit maintained that this violation occurred due to an inadequate oversight mechanism for effective implementation of internal controls.
Audit noted that the CAA awarded two contracts valuing $3.168 million to foreign firms for procurement of Instrument Landing System (ILS)/Distance Measuring Equipments (DMEs) and Doppler VHF Ominy Directional Radio Range (DVOR) JDMEs. It observed the contracts were awarded without preparation of PC-II and PC-I and processing the self-financed project through DWP for approval. Audit noted that the authority hired services of M/s IBM as consultants on June 15, 2007 through a request for proposal (RFP) for implementation of enterprise resource planning (ERP) system for a period of two years at a cost of Rs 12.900 million. The consultants through due process selected M/s Jaffer Brothers Limited (JBL) as vendor for implementation of the ERP system on June 11, 2008 at a cost of Rs 101 million having completion period of 15 months. Audit noted that the CAA pre-qualified and awarded the contract for construction of passenger terminal building superstructure including all associated utilities and E/M works (Package-Hi) at new Benazir Bhutto International Airport Islamabad to a joint venture (JV) contractor on April 20, 2011 at a cost of Rs 20,286.000 million.
Audit observed that one of the constituting firms of the JV was blacklisted by the World Bank on the charges of fraud and corruption. Therefore, the company was disqualified to work all over the world on World Bank funded projects. Hence the award of subject work was against foe mandatory criteria as spelled out by the PPRA. Audit noted that the CAA, invited bids from five pre-qualified firms for upgrading Multan International Airport (Phase-II) Packaged Construction of Terminal Building & Allied Electrical & Mechanical Works on May 27, 2010. The bid of one joint venture (JV) was disqualified during preliminary evaluation due to submission of a photocopy of bid security document instead of original and non submission of evidence of registration with Pakistan Engineering Council for the specific project.
Universal Safety Oversight Audit Program (USOAP) by International Civil Aviation Organisation (ICAO) recommends deployment of Pakistan International Airline Corporation’s employees in CAA will create a perception of conflict of interest. Audit noted that the CAA had borrowed services of aircraft pilots on deputation basis as flight inspectors from M/s Pakistan International Airline Corporation. Audit observed that the deployment of PIAC employees in regulatory authority was against the cited recommendation of ICAO. Audit further observed that ICAO had also expressed its concern on the inclusion of managing director PIAC, an operator, as a member of the CAA board, as this involved conflict of interest. As member of the board, the operator was in a position to influence the decisions of the regulatory board. The audit holds that CAA’s ability to collect its receivables involving Rs. 8877 million from PIAC might have been compromised due to the presence of MD PIAC as member of CAA board.
