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Monday , September 28 2020

KAC board admits violations, submission of incorrect info

Board to refer panel’s report to Public Investment Authority

KUWAIT CITY, Aug 12: The Board of Directors of Kuwait Airways Corporation (KAC) acknowledged the existence of violations related to the expenses for the celebration of the 65th anniversary of the founding of the company, as well as the errors and incorrect information in the responses to the questions of lawmakers in this regard.

The board of directors decided to refer all the violations and observations highlighted in the Audit and Risks Committee’s report received from the board chairman to the Public Investment Authority, in its capacity as the General Assembly, and to assign the executive management to investigate the matter and to summon whoever necessary from both inside and outside the company, reports Al-Qabas daily. It requested correction of the information that is inaccurate or unavailable in the responses to the parliamentary questions from MPs Thamer Al-Dhafiri and Saleh Ashour, including the mention of an amount of $800,000 collected as sponsorship fee from Airbus, as there is no evidence of this in the company’s records or financial data.

Also, there is a mistake in calculating the cost of the ceremony, which amounted to KD 433,000 but was mentioned in the report as KD 380,000. It has been proven that the sponsorships did not cover the value of the ceremony, and it is not as stated that there were surplus cash sums.

Violations
The report highlighted nine violations, including the letter directed by the board chairman to Airbus Company, which was not applied on the ground due to its explicit contradiction with the terms of the contract signed between the two sides. If applied, it would have constituted a waiver of the company’s assets.

The report indicated that the supreme committee had gone beyond the preparation of the ceremony that included the approval of the budget and disbursement of bonuses without referring to the Nomination and Remuneration Committee.

The board chairman violated the applicable regulations and decisions by not submitting letters received from the CEO to the board of directors regarding the supreme committee’s move to override the preparations and organize the approved budget for the celebration. The board decided to assign the CEO with the task of preparing the response to parliamentary questions.

The Public Relations Department was transferred to him instead of the board chairman, and the executive management was tasked with creating a bylaw that organizes sponsorship procedures in the company. The board asked the executive management to study a financial provision of $200,000 in the event of receiving from Airbus, which is related to the commercial exchange of the ceremony conditional on receiving all aircraft from the Airbus Company, and determine whether there is a need to make a provision or not in accordance with the terms of the contract.

Meanwhile, the executive management was assigned to follow up with the Boeing Company regarding the possibility of KAC claiming the amount of $265,000, which was presented as a sponsorship amount for the AACO ceremony. It was also assigned to demand the recovery of KD 35,000 that was unlawfully disbursed to a company, as well as KD 9,000 spent on a contract with an advertising agent.

The board confirmed the review of all signed and unsigned contracts for trade exchange granted by KAC, the slogan of a sponsor on a plane, and the advertisements on the aircraft screens for a period of not less than a minute, as well as in the company’s Al-Buraq magazine, in addition to an advertisement in the airport and the waiting hall for a period of 12 months and others at a fee that the board considers as minimal.

Report
The report submitted to the Public Investment Authority had highlighted nine violations, including the letter directed by the board chairman to Airbus Company, which was not implemented on the ground because of its clear contradiction with the terms of the contract signed between the two sides, which, if applied, would have constituted a waiver of the company’s assets.

These violations include bypassing the supreme committee formed to prepare the approved budget for the celebration, and paying remuneration without referring to the Nominations and Remuneration Committee, which is considered a violation of the decisions and regulations of the board of directors. It also recorded the existence of unusual procedures that marred the awarding procedures for the documentary tender, for example, awarding the bid at the highest prices.

This is in addition to the fact that the Tenders and Auctions Committee summoned the members at a short notice, due to which the vice chairman and members of the Financial and Legal departments or their representatives did not attend. The report stated that the board chairman violated the regulations and decisions in force not to display letters received from the CEO to the board of directors regarding violation of the supreme committee in terms of preparation and organization of the approved budget for the celebration.

An informed source said, “The report of the board of directors affirms solidarity of KAC board members, with the exception of one member. The evidence of this is that the board was the one that addressed the violations and referred them to the Ministry of Finance, Public Investment Authority, Nazaha and the State Audit Bureau. By this, the board will have cleared its liability for all these violations, and the concerned authorities have to assume their responsibilities towards the company and the public money.”

Irregularities
The report revealed a set of financial irregularities such as:

1- The company bore additional financial burdens for the implementation contract of “Operetta” on the occasion of the passing of 65 years.

2- It unlawfully disbursed sums to one of the suppliers for assigning a direct order to print and install stickers for 15 aircraft.

3- It paid an amount to a company in exchange for producing a song on an official occasion without providing supporting documents for the disbursement.

4- It bought gifts by direct order from a company in violation of the financial decisions regulating the purchase.

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