- ‘National exchequer is facing losses worth billions due to offshore registration of PIA subsidiaries in the British Virgin Islands’
ISLAMABAD: The Auditor General of Pakistan (AGP) has recommended a special audit of Pakistan International Airlines’ subsidiaries, as they were causing colossal losses to the national exchequer, it was learnt on Monday.
Documents available with Pakistan Today disclosed that the national exchequer was facing losses worth billions of rupees due to offshore registration of PIA subsidiaries in the British Virgin Islands (BVI).
During the earlier audit of the PIA, the relevant record pertaining to the subsidiaries was not provided to the AGP, who has now recommended a comprehensive audit of the PIA management based on the last 10 years.
Documents revealed that PIA Investment Limited (PIAIL) Managing Director Najeeb Samie has so far obtained an exorbitant salary worth $5.8 million. At the same time, he is also working as the MD of five other PIA subsidiaries that are registered abroad.
According to details, Najeeb Samie was appointed as PIAIL MD on April 3, 2006, and despite his retirement in July 2016, he is still working on a two-year contract which on expiry was renewed for another two years.
“Appointment of retired employees against the government instructions needs justification,” the AGP said. “Terms and conditions of MD and other employees working in the PIAIL were not provided during the audit. The matter should be investigated regarding the non-production of record.”
As on December 31, 2017, PIACL had three subsidiaries, namely PIAIL, Sky Rooms Pvt Ltd and Midway House. All the subsidiaries were incorporated in Pakistan except PIAIL, which was incorporated in Sharjah, UAE. Later, the same was registered in British Virgin Islands (BVI).
The external auditors had qualified their report for the year 2008-2017 regarding non-revaluation of assets of the subsidiary companies. Despite repeated identification by the external auditors, the management did not try to remove the qualifications pertaining to their subsidiary company.
PIAIL was incorporated on 10th September 1977 in Sharjah as a limited liability company under a decree issued by the ruler of Sharjah. In 1986, PIAIL was registered in British Vrigin Islands under the International Business Companies Ordinance, 1984 (now BVI Business Companies (Amendment) Act, 2012) as a company limited by shares. The registered office of PIAIL is situated in Citco Building, Wickham Cay, Road Town, Totola, British Virgin Islands. The PIAIL management formed/created a company namely RHC (Delaware), USA, which operates Roosevelt Hotel, New York.
The management failed to produce any record except the limited financial statements in respect of companies working under their control on the pretext that all the relevant record pertaining to RHC was available in New York (USA) and Hotel Scribe, Paris.
The management did not even provide the record of their liaison office at Karachi for the years under review. It was however intimated by the management that the audit team may visit the respective organizations in USA and France for a detailed audit.
The subsidiaries of PIACL included RHC Operating LLC-Roosevelt Hotel, Hotel Scribe, Paris, France (MFSA), PIA Hotels Limited, PIA Aviation Limited and Avant Hotels (Pvt) Limited.
The RHC Operating LLC-Roosevelt Hotel NY (USA) hotel earned a profit during the period 2008 to 2014, however, sustained losses during the period 2015 to 2017. The overall profit earned during the last 10 years remained $49.862 million. the audit had demanded complete minutes of the board of directors during the years 2008 to 2017 along with agenda items for review and scrutiny. The management could not provide the relevant record.
PIA spokesman Mashhood Tajwar remained unavailable for comment despite repeated attempts.