PIA doles out billions in ‘out of court’ settlements


—Cases in courts weakened due to non-cooperation, destruction of important record by PIAC officials, audit notes

ISLAMABAD: Pakistan International Airline Corporation (PIAC) has sustained a loss of around £10.153 million (Rs1.472 billion approximately) due to its multiple out of courts settlements due to the negligence of the national carrier, mishandling and hiring incompetent counsels to pursue its cases, according to documents available with Pakistan Today.

According to details, M/s Global Sendee Travel and M/s Raison Travel sued PIA in English High Court at London on June 23, 2011, over a claim of 9 per cent commission on fuel surcharge from June 2006 to October 15, 2010, in addition to 2 per cent overriding commission from June 2006 to June 2008.

The PIAC management made an out of court settlement with the aforementioned agents and paid an amount of £349,293.09 and offered to all APTA-UK agents to .settle commission claims in early 2013. The offer was accepted by the 11 agents out of 33 agents. An amount off 2.677 million was paid to them.

PIAC also made a payment of £6.4 million to 22 APTA-UK headed by M/s Mehboob Travels in March, 2015, on the proposal of chief legal officer. Taking advantage of the APTA case, M/s Times Travel and M/s Nottingham Travels (Non-APTA members) also approached the court in UK for benefits as provided to APTA members and claimed £3.558 million. An interim payment off £727,500 was made to agents on the orders of the court and remaining to be paid.

The audit is of the view that the case was not properly pursued and the demands of agents were accepted without countering, as is evident from the memorandum dated April 4, 2014, of M/s Clyde and Co, legal counsel of PIAC, indicating the weaknesses of the case due to non-cooperation and destruction of important record by PIAC officials.

The chairman also expressed his concern in referred BoD meeting that PIA could have settled the matter several years ago at a cost of approximately £1 million.

However, the board of directors directed to conduct a thorough investigation and pinpoint the personnel found responsible for such misconduct, but no action was taken against the persons at fault, causing a loss of £10.153 million to PIAC.

The audit recommends fixing of responsibility on the person(s) at fault.

Moreover, loss due to payment to the lawyers at London station was reported to the tune of £1.843 million (Rs267.235 million approximately).

PIAC also hired the lawyers M/s Clyde & Co in 2012 and M/s Farani & Taylor in 2015 and paid an amount of £1.685 million and £160,000 respectively to counter the case lodged by the agents at London for 2 per cent, 9 per cent and 7 per cent commission on gross sale with fuel surcharge in non-transparent manner and without consideration of experience in Aviation field.

Both the lawyers had no experience of aviation field due to which PIAC could not get fruitful results in such legal cases. In legal case of M/s Clyde & Co, PIAC settled out of court with the agents and in case of M/s Farani & Taylor, the court ordered for interim payment to the agents as they could not convince the court.

No prior ground work was done at the time of hiring of solicitors/legal counsels.

The management was required to prepare the case properly and to obtain legal advice based on aviation record, however, the same was not done and huge payment was made to solicitors for the said cases.