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WHAT HAPPENED | Airline's letter



Published: Tue, August 2, 2005 @ 12:00 a.m.



Pan Am Clipper Connection seeks U.S. Department of Transportation approval to put four more Boeing 727s into flight service, adding to the three it currently has in service.

On July 26, Robert B. Culliford, senior vice president and general counsel of Boston-Maine Airways Corp. (which operates Pan Am Clipper Connection), wrote to William M. Bertram, U.S. Department of Transportation chief, Air Carrier Fitness Division, Office of Aviation Analysis, regarding its certificate amendment application.

There "appeared to be a substantial discrepancy between a copy of the Mellon Bank statement of BMAC's investment account as of April 1, 2005 ... and a contemporaneous Mellon Bank statement in the possession of BMAC's Finance Department." Senior management, including airline President David A. Fink, "immediately began an urgent investigation into those discrepancies," the letter states.

John Nadolny, who had been BMAC's senior vice president and general counsel at the time "to the shock and astonishment of the assembled senior officials ... immediately acknowledged that he had altered the figures shown on the Mellon Bank statement filed with the Department. He offered no explanation for those alterations ..."

Recognizing the possibility that other financial statements filed with the DOT prior to Jan. 7, 2005, might also have been altered, BMAC's senior management determined that a further comprehensive investigation of Nadolny's actions was required.

BMAC will furnish to the DOT "new and verified evidence of its working capital available to support the Boeing 727 aircraft operations for which it seeks authority in this proceeding. That evidence will be submitted as a substitute for the now-discredited working capital evidence previously submitted and verified by Mr. Nadolny on behalf of BMAC, and will further prove the uninterrupted financial fitness of BMAC."

BMAC has investigated and reconfirms that no officer, director or employee of Pan Am or BMAC (or any affiliated, subsidiary or related company), "other than Mr. Nadolny, was involved in, or aware of, or subsequently approved of, the improprieties related to the procurement of the performance bond at issue or the delivery of that document to Air Line Pilots Association in December 2004."

Source: U.S. Department of Transportation docket management system




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