ISLAMABAD, March 19: The government has referred to the Public Accounts Committee (PAC) a report by the auditor general of Pakistan (AGP) which identified financial irregularities worth Rs5.09 billion and accumulated losses amounting to Rs10.26 billion in the Pakistan International Airlines (PIA). The magnitude of financial irregularities and losses in the national flag carrier could have been more as the management did not provide the details of some of the accounts to the state auditors, sources said.

Pointing out the lack of transparency in the PIA affairs, the auditor general said the management did not submit audited accounts of PIA Hotel Ltd, Midway House, PIA Shaver Poultry Breeding Farms and Skyrooms for the year 2002-03. The government referred the report to the PAC after the AGP had already brought the serious financial irregularities to the notice of President Gen Pervez Musharraf.

The PAC would determine a suitable time to call the PIA chairman, Ahmed Saeed, to answer questions about financial health of the national flag carrier as well as the losses incurred by it.

Official record shows that Rs10 billion losses incurred by the PIA were in addition to the Rs23 billion injected by the government to keep the organization in good health during the tenure of chairman and managing director Ahmed Saeed.

According to the AGP report, titled “Audit Report on the Accounts of the Public Sector Enterprises 2002-03,” the PIA had accumulated losses worth Rs10.26 billion on December 31, 2002, despite the fact that the corporation showed it earned a pre-tax profit of Rs1.8 billion during 2002 as against a pre-tax loss of Rs2.2 billion.

The report observed that the PIA did not charge depreciation on aircraft and spares according to revised useful life which would have reduced the fixed assets by Rs800 million and spares and inventory by Rs878 million “with corresponding effects on profits”.

“The correct position is needed to be incorporated in the book of accounts,” it said. The report observed that trade debts of the PIA increased to Rs3.36 billion by the end of 2002, registering an increase of 10.28 per cent.

PIA Managing Director Ahmed Saeed paid Rs22.606 million to daily wagers on account of bonus and production incentive without approval of the finance division, the report observed.

“The matter was reported to the management on June 26, 2003 and in August 2003, but without any response,” it added.

The auditor general report noted that the PIA management did not take effective steps for recovery of Rs7.10 million from Duty Free Shop despite the fact that the corporation had been asked to do so on June 9, 2003.

The report said the matter was also brought to the notice of the management in August 2003 and discussed in Departmental Account Committee’s meetings held on February 25, 2004. The committee recommended that the matter should be examined in light of the sales agreement. However, the report observed that no progress in this regard had been reported by the PIA.

The report said the Public Accounts Committee might be asked to give appropriate directives in the case of Euro Travel, Lahore, which was declared defaulter by the PIA “with an amount of Rs27.033 million outstanding against a bank guarantee of Rs9.3 million which was not encashed due to court orders”.