The International Air Transport Association (IATA) is carrying out an internal investigation of its billing and remittance system for airlines, after 550 million Thai baht ($17 million) was reported missing from the system in Thailand.
The financial irregularities, which took place between January 2006 and August 2009, were covered up through counterfeiting bank statements, falsifying bank account reconciliation and destroying transaction records, says IATA.
"We are very concerned of this breach of our systems by a suspected fraudster. A full internal investigation is forming the basis for better controls and processes," it adds.
The system, known as the billing and settlement plan (BSP), helps to facilitate airlines' collection of payments for ticket sales from agents.
Agents remit the funds to a central point, and these are collated into one settlement for each airline.
However, the BSP in Thailand did not receive "the full remittance of amounts due from certain agents" between January 2006 and August 2009, says IATA.
An IATA employee, who was responsible for managing pre-payments under the BSP and reconciling bank accounts, was found dead last August days before the IATA detected the financial irregularities.
The employee's death is still being investigated by Thai police, says the IATA.
At least one carrier among those affected by the fraud has threatened legal action to recover their losses.
Bangkok Airways said last week it planned to commence legal action against the IATA to reclaim the funds, but has since written to the association to withdraw the threat, says an IATA spokesman.
A Bangkok Airways spokeswoman says the carrier is now in talks with the association to "clarify the matter at hand".
However, the IATA says airlines taking part in the scheme have "a contractual obligation to make up any shortfall in the system".
"Airlines have understood this contractual obligation which recognises the fact that the system operates on a cost recovery basis," says the association.
The IATA transferred the operation of the scheme to its regional office in Singapore from Thailand after it discovered the financial irregularities.
"A number of measures are underway globally in consultation with the airline experts and IATA governance groups," it adds.
Source: Air Transport Intelligence news
