The government-owned Pakistan International Airlines claimed in a lawsuit filed here yesterday that it was the victim of a fraud by the McDonnell Douglas Corp. in an unusual twist on an overseas bribery payoff.
According to the complaint filed in U.S. District Court, PIA said it was overcharged by $1.6 million for four DC-10 airlines after being assured by McDonnell Douglas that no Pakistanis were being paid off for arranging the sales.
The suit alleges that the Pakistani government was concerned in 1973 that no kickbacks or payoffs be made in connection with a purchase of widebodied jets for its airline, and called in various airplane manufacturers to discuss the arrangements they had within Pakistan.
McDonnell Douglas reportedly disclosed to the country's minister of finance that it had an arrangement to pay $100,000 in a "bonus award" to a Pakistani firm for each DC-10 plane bought by the country's airline.
The government asked McDonnell Douglas to halt that arrangement and instead reduce the price of its planes by the same $100,000, the suit claims. McDonnell Douglas agreed, the suit continued.
After purchasing four planes from McDonnell Douglas, the suit continued, Pakistan's Federal Investigative Agency learned that the airplane firm's actual "bonus" arrangement with the Pakistani firm was for $500,000 per plane.
McDonnell Douglas was, in fact, paying the additional amount to the Pakistani firm all along, the suit claimed.
Attorneys for PIA are asking that the airplane manufacturing company reimburse the country for an additional $400,000 per airplane, saying the firm agreed to give price concessions to the government rather than pay any bribes or kickbacks.
The country is also asking $3.2 million in punitive damages because of the alleged fraud that was perpetrated against it.
A McDonald Douglas spokesman said last night that "we believe we do not owe the airline any money and we intend to defend that position vigorously."