The Federal Investigation Agency (FIA) on Monday registered a case against two former chairmen of Pakistan International Airlines (PIA), a former acting CEO, and arrested a former director of the national airline on charges of causing losses of over Rs1 billion to the exchequer.

FIA Sindh Director Amir Farooqi told Dawn the investigative body had registered a case against PIA ex-chairmen Nasser Jaffer and Irfan Elahi and former acting CEO Bernd Hildenbrand and also detained former director engineering Maqsood Ahmed.

“They caused loss of Rs1.25bn and made advance payments for upgradation of business class seats and entertainment system in years 2014-16,” the official said. “The seats were never replaced and the system never installed.”

The case has been registered under sections 409 (criminal breach of trust by public servant), 420 (cheating and dishonestly inducing delivery of property), 109 (punishment for abetment) and 34 (common intention) of the Pakistan Penal Code (PPC) and section 5 (2) of the Prevention of Corruption Act, 1947.

According to official documents seen by Dawn, the FIA initiated an inquiry into PIA's state of affairs under the directions of the Supreme Court, which had ordered a special audit of the airline in 2018.

The documents pointed out that the PIA Board of Directors in its 351st meeting in 2013 had approved upgrading business class seats and inflight entertainment system, changing cabin ambiance including carpets, seats, covers, curtains, side trim, toilets, gallery, business class utility pack/gift items, etc.

According to the documents, the then PIA chairman, Nasser Jaffer, approved a firm – Sogema – for changing seats of the entire fleet of Boeing 777 “dishonestly and illegally with ill motives by abusing his official position”.

The national carrier's Board of Customer Services Committee did not recommend the firm, Sogema, and it was also not the lowest bidder, the documents revealed. The FIA said Irfan Elahi, who was secretary Civil Aviation and became PIA chairman after Jaffer, and acting CEO, Hildenbrand, also "dishonestly" approved advance payments to Sogema and another firm, Panasonic, without bank guarantees and in violation of Public Procurement Regulatory Authority (PPRA) rules, the documents stated.

They further said that till November 2016, without executing any formal agreement, the PIA made advance payments of €5,331,600 and $756,449 to Sogema and Panasonic, respectively, in violation of PIA rules. “All advance payments without bank guarantee are violation of section 39 of PPRA,” the documents said.

Furthermore, “the material/items and services against which advance payments/agreements were made were never received by PIA.”

Thus, the accused persons by abusing their official position caused huge wrongful pecuniary losses to the public exchequer without the supply of any contracted goods or services from any company with their ulterior motives for their wrongful gain, the documents stated.