The national flag carrier Biman Bangladesh Airlines has resorted to various strategies to make itself look profitable on paper. Despite incurring losses, Biman added the profits of its subsidiary companies to its own account.
On the other hand, information about liability has been concealed. The amount shown in the company’s financial statements has also been understated. A huge amount of money due on different accounts, including VAT and taxes, was not shown as income-expenditure.
The discrepancies have been revealed in a report by the Commercial Audit Directorate on the five-year status of Biman’s income-expenditure and profit-loss accounts.
Similar audit objections from previous years were discussed at a meeting of the Parliamentary Standing Committee on Public Accounts on Sunday.
According to the audit report, of 112 audit objections filed by Biman, the Standing Committee of the eighth, ninth, and tenth parliaments recommended disciplinary settlement with regard to several audit objections.
A progress report on those recommendations was given at Sunday's meeting. It showed that all of the recommendations had yet to make progress. In all cases, the audit department said in its reports that no progressive action or response was received. According to the report, the amount of money involved in these audits is more than Tk358.8 crore.
Meanwhile, the Commercial Audit Directorate stated that the flag carrier has shown the net profits of its subsidiary companies, Biman Poultry Complex (BPC) and Flight Catering Center (BFCC), as its own net profits. By resorting to this action, Biman has concealed its real financial statement. In reality, Biman had a net loss of Tk102.99 crore in 2020 and Tk25.91 crore in 2023.
The report also said Biman has not added information on its liabilities for valuation from 2017 to 2023. The Civil Aviation Authority of Bangladesh (CAAB) owes a huge amount of money on accounts of landing-boarding charges, leases, surcharges, VAT and taxes. But it has not been shown as a liability in the financial statements of the last five years by Biman.
At the same time, the due amount to be paid to Padma Oil Company as interest on delayed payment was not added to the liability column. Regular payment of interest on late payments of fuel oil and various charges would have increased the operating cost of the organization and would have changed the amount of net profit.
An organization's equity and interest ratio should be less than 2.5, but the current ratio of Biman is 7.13. Due to this, the company's liability and interest are increasing. The report states that this is a threat to Biman’s business policy.
According to a calculation dating back to 2017, the actual liability of Biman is Tk1,075.4 crore. But in 2021, the liability was shown to be Tk622.2 crore less than the actual amount. This under-showing of liabilities has continued in the current financial year as well. As a result, the amount shown in the financial statement of the organization is incorrect.
The audit report shows that if the provision against pension and gratuity is kept properly every year, the net profit would be less or the company would incur a net loss.
Biman’s ground handling service is considered to be non-airline business, but the income from this sector has been included as Biman’s income.
According to the report, the net profit of Biman Bangladesh Airlines for the year ending June 2023 was Tk28.65 crore. This includes BPC’s profit of Tk2.20 crore and BFCC’s net profit of Tk46.23 crore.
In the last fiscal year, Biman had a net loss of Tk25.91 crore. In other words, profits from BPC and BFCC contributed to the airline's net profit.
In the last financial year, Biman has shown an income of Tk9,521.24 crore and an expenditure of Tk7,800.13 crore. Biman’s income includes Tk1,207.77 crore from ground handling services, which is a non-airline business. Bangladesh Civil Aviation Authority's surcharge, VAT and taxes worth Tk3,865.61 crore have not been considered liabilities in the financial statement.
Biman has also not shown Tk970.33 crore due payment to Padma Oil Company in its statement either.
In 2021, Biman received Tk683.77 crore as equity from the government. According to the conditions, the money received in the share capital sector must be legally converted into share capital within six months. But Biman did not convert the amount into share capital.
Muhammad Khademul Bashar, Director of Commercial Audit Directorate, told Bangla Tribune that Biman has shown the company’s profitability by including the income of their subsidiary companies.
"In order to show the profit and loss of an organization, its accounts must be shown. But besides, all liabilities and debts should be included along with profit and loss sections. But some accounts were not included in Biman’s financial statements. As a result, the true picture of the organization’s financial status did not emerge through the statements,” he said.
