ISLAMABAD: The highly politicised top management of the fast drowning PIA has sacked the airline’s chief financial officer (CFO), the man who had dared to oppose and block some major deals allegedly aimed at making quick billions for the mighty and powerful in the present dispensation.
After his strong opposition to the highly controversial deals, including the PIA-Turkish airlines arrangement, chartered accountant Faisal Malik was initially removed from the all-important position of the CFO and made director training and development but has now been finally sacked within weeks of the move.
Faisal Malik, when contacted, confirmed that he has received a termination letter, which announces that his services are no more required. Malik said that he has not been conveyed any reason for his abrupt removal, which comes within months after he was assessed by the outgoing MD as “Outstanding” - the top most rating given to an employee during the appraisal process.
When asked if there was any pending inquiry against him, he said that there has never been any inquiry ordered against him and instead explained that his permanent employment has been terminated without assigning any reason or giving him the opportunity to defend his position. He confirmed that this is not only unprecedented but also illegal.
It is interesting to note that another key official of the PIA, with alleged fraud of hundreds of millions, has been getting paid for the last three years without doing anything and being placed in the surplus pool but has yet not been sacked despite clear-cut inquiry reports against him. However, in a sharp contrast, in case of Mr Malik, the airline has sacked him without any such allegation or citing any reason.
The PIA spokesman Mr Tajvar, when approached, said that Faisal Malik has not been removed by any individual but following the decision of the PIA’s board of directors. He, however, did not know the reason for Malik’s removal but ruled out the possibility that the officer’s contract was terminated for his opposition to certain controversial deals that were otherwise being aggressively pursued by the airlines management.
The Pakistan International Airlines, which is facing the worst financial crises in its 55 year history and whose financial woes have been compounded by a leadership crisis in the national flag carrier, resulting into unending tales of corruption, nepotism and cronyism, has now removed of an officer who have been opposing controversial deals one after the other. The latest victim of the PIA management is a UK qualified chartered accountant, who has previously been associated with Arthur Andersen, Engro, Abbott, Pricewaterhouse Coopers and Ernst & Young, UK, before joining the PIA as CFO. Within a few months of earning an ‘outstanding’ performance appraisal from the outdoing MD, PIA, he was recently sidelined and given portfolio of Director Training and Development just because he declined to ‘deliver’ unwarranted demands.
When asked Faisal Malik confirmed that he has been in direct conflict with the powerful people/groups in the organization who were determined to sidetrack any obstruction in their plans to bulldoze organizational rules, regulations and corporate best practices.
He confirmed that he had objected to the deal in writing by raising logical concerns, and on the basis of obvious factual disadvantages that would have accrued to the PIAC had the arrangement been implemented. He disclosed that following his opposition to the PK-TK arrangement, the statutory position of the CFO was made reportable to the DMD (a non-statutory position) instead of the MD. “This move was not only against the principles of corporate governance but also against the spirit of the PIAC Act 1956 and the Cabinet’s Committee on Corporate Restructuring of State Owned Enterprises,” he explained.
The PIA spokesman, however, insist that the PK-TK arrangement was merely a proposal, which had died down after it was not found viable.
When enquired, Faisal Malik confirmed that some higher ups in the PIAC and some sitting in the corridors of power wanted the PIA to consider proposals from dubious and totally unknown so called “financiers” (people without corporate addresses) willing to extend up to $400 million assistance to PIA at unbelievably low interest rates (which were even below market interest rates available to the most profitable global corporates) to take the airline out of its current liquidity crises.
The “front-men”, he said, were disguised as PIA well-wishers, tried their best to use their political clout and statutory position to force the management in to accepting such offer, which was aimed at turning ill-gotten black money in to white by investing it into PIA. The proposal was stalled after the CFO challenged the credentials of the so-called financiers by putting together some basic research on them and advised that PIA may take out this loan from the government if the government deemed it appropriate to consider the offer.
As if this wasn’t enough, he added, the same well-wishers asked the management to enter into an agreement with an unknown financial advisory consulting firm for the restructuring of PIA’s debt with a view to ‘reduce cost on the best effort basis’, but with no commitment on the part of the consultant. Had this agreement been executed, PIA would have had to pay a hefty amount of almost Rs12-13 billion in the form of various transaction fees, which would have been non-refundable irrespective of whether or not the restructuring exercise was successful.
The proposal, he disclosed, had come from a gentleman closely associated as one of the lobbyists with the Pakistan Embassy in Washington, a US national. The proposers, he added, also demanded ‘sovereign immunity’ whereas the offer of restructuring was sent with total disregard to PIA’s Board of Directors, Ministry of Defence, Ministry of Finance and Public Procurement Rules for short-listing contractors.
He said that he was put under tremendous pressure to sign-off on the Engagement Letter, which meant that PIA had to commence making payments to the consultants as soon as the letter was signed, but he resisted the pressure, much to the dislike of the powerful authorities.
In yet another instance, he recalled, a bank did not meet the minimum credit rating criteria, but on the insistence of powerful individuals, funds were asked to be invested with the bank against the approved policy. He said he was threatened with dire consequences if the placement was not made. He defied the pressure on which he was told that someone else might be brought in his place, who will do the needful, but still he did not budge. Before his removal, he was threatened at least thrice by the most powerful people that he will lose the job if he won’t oblige them.
The incompetence and lack of professionalism and foresight, he said, also caused the airline a loss by not claiming an extension option available in the lease contract for 6 Airbus A310 aircraft from Airbus Leasing Inc. Had this extension option been exercised, the Corporation would have saved millions of dollars.
Another glaring example of the incompetence of the corporate planning function was their total inability to comprehend the terms of the lease agreement with International Leasing Finance Corporation (ILFC) by claiming amount actually spend on repairs and maintenance of Boeing 777 and Airbus A310 aircraft from ILFC, which the airline was entitled to claim as per the terms of the agreement.
The airline failed to claim an amount of approximately Rs4.4 billion, which was highlighted by the finance officers with the help of the auditors of the Corporation. No head rolled on the documented case of gross incompetence.
According to sources within the airline, one of CFO’s “crimes” was his refusal to make payments for the allotted government land for Shaheed Bhutto Township Scheme because of doubtful nature of the land. The Sind chief minister was approached by the then managing director for allotment of 10 acres for the construction of a housing society for low paid employees by the name of Shaheed Benazir Bhutto Township at Scheme No 36, Gulistan-e-Jauhar, Karachi.
The challan for the property clearly stated that if the said property was under litigation then the entire purchase consideration would be forfeited, whereupon an enquiry was raised into the matter, and it transpired that the said piece of land was in fact under litigation. The entire process for land acquisition was being expedited at an unbelievably fast pace, to coincide with the president’s visit to PIA during which visit the president announced the launching of the housing scheme.
The News has learnt that the CFO didn’t make the payment owing to the fact that the Board was the only competent body to accord such an approval, which in the said case wasn’t obtained. He also highlighted the litigation clause of the challan and opined that pending clear title, the payment shouldn’t be made. This landed him in trouble with the powerful people who were hell bent upon getting the scheme going and releasing the payment. He, however, didn’t make the payment as long as the objections remained (to-date) thus giving another cause to infuriate the powerful groups.
According to the PIA spokesman, the PIA had nothing to do with the finances of this housing scheme as it was to be funded by the contribution of the airlines employees. Contrary to what the spokesman stated, the fact is that the purchase price of land was to be paid by the airline. He doubted that the CFO had opposed to make the payments.
In yet another case of inviting trouble, Faisal Malik voiced his opposition to the idea of closing down PIA’s own marketing network in the UK by appointing General Sales Agents for all UK territories until the economics of the proposition justified so. The PIA sources said that some interested parties were behind this move to award the GBP 100 million market to some favourites as has already been done in the case of Norway, Denmark, Amsterdam and Barcelona. In this issue, the PIA spokesman said that the management did not decide the GSA issue.
