Discrepancies: Audit reveals widespread mismanagement in CAA

The regulatory body suffered losses worth millions of rupees when it failed to sign a revised agreement for over 10 years with Skyrooms (Pvt) Limited. CREATIVE COMMONS

ISLAMABAD: 

The Civil Aviation Authority (CAA) had to suffer huge financial losses due to a lack of administrative accountability in the department, an official source said.

The Auditor General of Pakistan, in his latest report for 2011-12, has revealed that due to routine lethargy by senior officials, the CAA could not secure its financial interests for the last several years.

The regulatory body suffered losses worth millions of rupees when it failed to sign a revised agreement for over 10 years with Skyrooms (Pvt) Limited. The agreement expired in June, 2001.

Skyrooms is a subsidiary of Pakistan International Airlines (PIA) that owns and manages Airport Hotel at Karachi. The lease agreement between CAA and Skyrooms for the land and hotel building expired on June 2 , 2001 but a revised agreement had not been executed even till 2012 because disagreements occurred over the completion of certain legal formalities, the audit said, adding that this required justification.

Abid Ali Khan Qaimkhani , a public relation officer for the CAA, said he was not aware of the reasons that resulted in the violation of rules . “Perhaps Skyrooms could not clear its outstanding dues with the CAA. This situation might have been the cause of the constant delay in the signing of the revised agreement,” he said.

The audit in its earlier reports for 2009-10 had also pointed out various issues that reflected the mismanagement and acute financial indiscipline in the CAA. Violation of rules in signing land lease agreements had already cost the authority millions of rupees in 2007-08.

The Executive Board of the CAA in its 92nd meeting on June 2, 2001, while approving the Land Lease Policy (2001), decided that rent should be increased by 50% at the end of each five-year tenure.

However, the chief commercial and marketing officer of the CAA executed five lease agreements with private parties for 30 years during 2007-08 with enhancement in rent at 100% on expiry of each ten-year tenure. The officer signed the agreement in accordance with paragraph 9 of the Land Lease Policy of 17 July 2002, instead of the enhancement of rent at 50% at the expiry of each five-year tenure as approved by the board.

The action was in contravention of the CAA Board’s decision of June 2, 2001. Due to non-implementation of the board’s decision, the authority was deprived of its revenue of Rs1,089 million.

The audit pointed out the loss in March 2009 but the authority replied that ground rent was charged in accordance with approved criteria of CAA Land Lease Policy, 2001.

The reply was not tenable because the CAA Board had approved the revision in rent after expiry of five years with 50% enhancement.

The CAA, during a Departmental Accounts Committee (DAC) meeting on November 7 and 8, 2007, while discussing a similar issue for the 2006-07, contended that as per the board’s decision, the rent should remain 1/30 of the land value for the first 10 years and be enhanced by 100% on expiry of each ten-year tenure.

The committee directed the CAA to prove the contention from the original minutes but it could not do so and it also failed to report the progress to the committee even after one year.

The DAC, in its next meeting on December 2, 2008 declared that the contention of CAA in respect of the implementation of the board’s decision was not correct.

The issue again came under discussion at a DAC meeting on December 7 and 9, 2009 and it was decided that the decision of the board taken in June, 2001 should be recognised as final policy on the Land Lease issues. The CAA, however, again failed to report the compliance of the policy to the audit till 2012