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PAN AM CLIPPER CONNECTION Federal finance probe requested



Published: Thu, August 4, 2005 @ 12:00 a.m.



VIENNA -- U.S. Rep. Tim Ryan says he doesn't want a repeat of the Pan Am mess at the local airport and, in a letter to the Western Reserve Port Authority, delivers a healthy dose of I-told-you-so.

What the port authority had feared would happen with Pan Am Clipper Connection has now occurred: A high-level U.S. Department of Transportation official requested a federal investigation into the carrier's finances.

At the same time, Ryan of Niles, D-17th, in a letter to the port authority board of directors this week, reminded the officials that he'd warned them June 15 about Pan Am fraud allegations and that he believed the port authority should have slowed things down.

Ryan's letter

Instead, the announcement of Pan Am's coming was formally made at a June 27 news conference. "Unfortunately, they did not share my view," Ryan wrote; copies also went to Mahoning and Trumbull counties' commissioners; Steve Bowser, director of aviation; and Daniel Keating, the port authority's lawyer.

Ryan said he doesn't want the problems to be repeated and urges dialogue about how the process was handled.

"Given the fact that the Pan Am negotiations were not handled in an open manner and that serious problems were not fully disclosed, we as a community must take steps to ensure that all stakeholders receive complete and accurate information about airport initiatives so that this kind of situation does not occur in the future," his letter states.

It wasn't until Monday that the port authority's concern grew to the point where it withheld $250,000 in Department of Transportation Small Community Air Services funding from Pan Am. The grant was awarded to the port authority to attract and promote a carrier.

Without that marketing help, Pan Am President David A. Fink said he'd take his planes elsewhere. Service was to start Nov. 10 at Youngstown-Warren Regional Airport.

Bhatia's letter

Tuesday, Karan K. Bhatia, assistant secretary for Aviation and International Affairs, wrote a letter to Kenneth M. Mead, DOT inspector general in Washington.

"I am requesting that the Office of the Inspector General initiate an investigation into the circumstances involving certain information filed by Boston-Maine Airways Corp. in proceedings before the department," Bhatia wrote.

Pan Am Clipper Connection is run by Boston-Maine Airways.

Bhatia supervises the Office of Aviation and International Affairs, with responsibility for licensing of U.S. and foreign airlines, formulating U.S. international aviation policy, and the administration of the DOT's economic policies and programs.

Vic Rubenstein of Rubenstein Associates, Liberty, who is running the airport's marketing campaign with the port authority, said Bhatia's action shows the local officials did the right thing in holding back the grant.

"With the right information in front of us, we made the right decision and reacted quickly," Rubenstein said. "We are totally vindicated."

Ryan's letter, however, said the news of Pan Am "is not unexpected." He said his office in June contacted port authority chairman William Reali, Rubenstein and Bowser about his concerns.

No investigation

Rubenstein said Ryan's intentions are honorable, and that the news conference indeed had been pushed back a week. The port authority, he said, had assurances from the DOT that there was no investigation at that time -- only charges filed by the pilot's union -- and more assurance that service to Youngstown/Warren by Pan Am's three existing planes wouldn't be affected.

The Air Line Pilots Association has told the DOT that John Nadolny, former general counsel for Boston-Maine Airways Corp., falsified investment account and cash balance amounts in documents submitted to the DOT as evidence of the company's fiscal viability.

"In particular, I ask that your investigation consider whether Mr. Nadolny's actions were limited to only those instances that were previously disclosed and whether other individuals employed by Boston-Maine were involved in, or knew of, Mr. Nadolny's actions," Bhatia's letter states. "My office intends to defer action on all open dockets regarding Boston-Maine's authority until such time as I receive your investigative report and my staff has fully reviewed its conclusions."

That stance would affect the three Boeing 727s Pan Am now flies, as well as four more it seeks DOT blessing to fly.

The carrier has informed DOT that Nadolny had resigned, that Nadolny has stated that he acted alone and that he neither acted at the direction of his superiors, nor with the knowledge or approval of his superiors.




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