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August 11, 2018

NAB probing irregularities in PIA CEO’s appointment


August 11, 2018

ISLAMABAD: While the National Accountability Bureau (NAB) is probing the appointment of Pakistan International Airline (PIA) Chief Executive Officer (CEO) Musharraf Rasool Cyan, the Aviation Division has informed the cabinet that the appointment was made as per all applicable laws.

In a summary sent to the Cabinet Division, “a copy of which is available with The News”, the department defended Dr Cyan’s appointment claiming that the US educated economist possessed the requisite qualifications and experience as per the terms of the advertisement, at the time of his appointment.

“Aviation Division is of the view that Musharraf Rasool Cyan was appointed as CEO, PIA after observing the applicable laws, including the Companies Act, 2017, Public Sector Companies (Corporate Governance) Rules 2013 (as amended in 2017),” says the summary.

A spokesman for the NAB Nawazish Ali Khan Asim said the Bureau is probing the case as per the direction of the Supreme Court of Pakistan. He said the case is at the initial stages and details would be submitted in the court once the complaint verification process is complete.

Supreme Court of Pakistan has taken suo motu notice of various issues pertaining to selling of national assets, including Pakistan International Airlines (PIA) in Human Rights Case No11827-S/2018.

After the formation of PTI government, the new cabinet will take up the issue of PIA including the appointment of its CEO as per the orders of the Supreme Court. Despite the PML-N government’s intention to privatise the loss making national flag-career, the current CEO Musharraf Rasool has been openly opposing the privatisation of the airline. He has said that PIA could be made a unique success-story of Pakistan if proper reforms are initiated under his vision.

In its summary sent to the Cabinet, the Aviation Department maintained that PIA had been subject to frequent change of senior management. “This makes things difficult for an organisation facing myriad of challenges on various accounts. During the past ten years, PIA has seen large number of Managing Directors/Chief Executive Officers,” it reads.

Between May 9, 2016 and the appointment of Musharraf Rasool Cyan as CEO PIACL on September 5, 2017, the Company was run by acting CEOs. Describing the appointment process, the summary says that the job of PIA CEO was advertised on May 20, 2017 after which 8 candidates had been shortlisted out of 11 applicants. Preliminary interviews were conducted in Chairman PIACL’s office on June 16, 2017. Subsequently, 3 candidates were further shortlisted and called for second round of interviews on July 3, 2017. However, no minutes of the proceedings of this shortlisting process are available.

A panel comprising Muhammad Irfan Elahi, Secretary Aviation Division/Chairman PIA and Tariq Mahmood Pasha, Secretary Economic Affairs Division/Member PIA Board interviewed the shortlisted candidates.

“Sardar Mehtab Ahmed Khan, Adviser to Prime Minister on Aviation was present during the interviews as observer. Although minutes of the proceedings of the second round of interviews were also not recorded but evaluation sheets signed by both the members are available,” says the summary.

Accordingly, a summary was initiated for approval of theFederal Cabinet for appointment of Musharraf Rasool Cyan as CEO of the PIACL after due authorisation by the Prime Minister.

The appointment was approved by the Cabinet in its meeting on August 22, 2017, on contract basis for a period of two years. Cyan assumed the charge of Chief Executive Officer PIACL on Sept 5, 2017. The advertisement required possession of a “graduate degree from a well reputed institute or such other professional qualification relating to the principal line of aviation business; or be a recognised businessman or professional with a postgraduate degree in business administration or public administration or finance or commerce or marketing or equivalent from any recognised institute”. In addition, the requisite experience was “minimum 25 years of working preferably in international airlines of repute with minimum of 10 years’ experience in a senior professional position in relevant professional areas including inter alia science, technology, finance, law, business, social sciences, etc.

“Musharraf Rasool Cyan possesses PhD in Economics from Georgia State University, USA. In addition he also has Masters Degree in Development Planning and Administration from University College, London, UK,” it reads.

The CEO has the experience of working as the Assistant Commissioner, Deputy Secretary and Chief Economist in Government of Pakistan. He also worked as Financial Management Expert in the Asian Development Bank. He also worked as Research Associate, Project Director and Assistant Professor at International Centre for Public Policy, Georgia State University, USA.

According to Aviation Department Cyan did not possess previous experience of the airlines industry, which was indicated as a preference, and not as a mandatory requirement, for applicants with airlines industry background.

When contacted by The News, Musharraf Rasool Cyan said he had not been contacted by NAB so far in connection with probe into his appointment. He claimed that after his appointment, significant improvements have been observed in PIA’s performance and safety ratings as acknowledged by the Safety Assessment of Foreign Aircraft (SAFA) index.

He claimed that PIA could be restored to its past glory if his vision is implemented and there would not be any need for privatisation of the airlines. Cyan had submitted a strategy paper titled “Reaching Higher Echelons – Revamp Strategy for PIA” outlining his vision for PIA’s turnaround before his appointment.

After taking over PIA, the CEO said he had cancelled expensive wet-leases of planes from other airlines and decreased the number of grounded company aircrafts through better maintenance. The PIA has also increased flight punctuality up to 90.5 percent in 2018 vs. 85 percent in 2017 and its excess baggage revenue went up by 20 percent. In October 2017 PIA was closed to be banned from flying over Europe for poor safety rating of 2.29 under the SAFA index. Had PIA crossed the threshold of 2.50 it would have been banned but now the safety index has improved to 1.33, which is PIA’s lowest SAFA rating since 2012. Also no serious violations have been reported on any PIA aircraft since April 2018.

He said the PIA kitchen has once again been improved and food quality/choice is being enhanced. The financial performance of the incumbent management, despite grave challenges and frequent disruptions from malicious quarters of the company, shows significant improvement in period under review i.e., September 2017 to May 2018 compared with same period last year.

The revenues, despite decrease in capacity available for selling; has increased by 4.5 percent. However, due to massive increase in fuel costs and exchange rate loss (deflation of rupee), the operating cost increased by nearly 20 percent resulting in increase in operating loss by 1.9 percent.

However, for apple-to-apple comparison, if conditions had remained unchanged, consequent to the reforms undertaken by the management, the operating losses would have decreased by approx Rs6 billion and total loss by Rs12 billion. Basic cabin amenities such as pillows, blankets etc., were never to be found on PIA aircraft. Now 100 percent coverage is being ensured.

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