Pakistan International Airlines (PIA) fraud and corruption scandal
Pakistan International Airlines (PIA) fraud and corruption scandal is not a coincidence but an organised failure of institutional management, state, and internal controls. PIA is a national flag carrier found in very miserable circumstances nowadays, from fake degrees and professional licenses of the pilots to horrifying crashes with loss of precious lives.
The incidence of fraud and corruption in State-owned enterprises, particularly in Pakistan, has been rising at an alarming rate in fairly recent times (Simpson, 2002, p. 21). While the perpetuation of financial crime and fraud in Pakistan is a globally renowned fact, and while privatised institutions play a particularly substantial role in such statistics (Loughman and Sibery, 2011, p. 254), fraud in the governmental institutions is also a key element in the fabric of financial crime in Pakistan (Daudpota, 2013). In that regard, Pakistan International Airlines (PIA hereafter) plays a significant role in being a State-owned enterprise.
Being the national flag carrier of Pakistan, PIA has a predominantly State-based shareholding structure (International Monetary Fund and the Middle East and Central Asia Dept, 2014). Indeed, the State owns approximately 87% of the shares in the Airlines, with the remainder 13% being held by private investors (United Nations ESCAP, 2009, p. 183). Yet, despite the active involvement of the government, or rather owing to the active engagement of the administration, PIA has been fraught with corruption and financial fraud for some time now (John, 2009, p. 61). Even recently, three PIA officials have been fired due to corruption and human trafficking charges, reflecting the inherent culture of corporate management within PIA (Pakistan Today, 2015).
When one considers such colossal failures to manage financial crime within such public bodies, several critical risk factors such as collusion with tenderers and financial bungling play a prominent role. Of these, this paper seeks to essentially focus on the two main critical risk factors of kickbacks and mismanagement to analyse how these risk factors have played a role in the perpetuation of financial fraud in PIA. Further to this study, the paper shall propose a potential solution in controlling the advent and extent of financial crime in the PIA, as per the established standards of crime control (Croall, 2003). Read the answers to the following questions:
- Critical Risk factors of mismanagement;
- Critical risk factors and the kickbacks;
- Risk identification and framework analysis;
- … and more!
Download the case study now to learn the major critical risk elements.
Pakistan International Airlines (PIA) fraud and corruption scandal.
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