Audit gets lost in translation

An aviation safety auditor was hired by a Russian specialist air charter operator to perform a comprehensive safety audit of its flight operations activities. Their fleet consisted of heavy lift helicopters and jet aircraft. The auditor was advised that the findings of his audit could be used to support the operator’s bid for a lucrative contract.

The auditor completed the audit over a period of 5 days on site, which included an observation ride on a short training flight in one of the helicopters. During the training flight a heavy under-slung load was transported for a short distance. The load developed a dangerous swing and the training pilot became agitated and vociferous with the trainee. He took control and stabilised the load beneath the aircraft.

In his subsequent report the auditor gave a clean bill of safety ‘health’ to the fixed-wing jet operation, but raised a significant concern with regard to the safety of the helicopter operations due to the swinging load event. The operator was unhappy with the audit report, but as there was insufficient time to commission another audit, the report was submitted to support the bid. The bid was unsuccessful.

In line with his standard invoicing procedures, the auditor had insisted on payment of 50% of the audit fee in advance. However, the operator refused to pay the outstanding 50% of the audit fee on completion. The auditor referred the matter to ITIC. ITIC’s advice was that it would be prudent to write the outstanding 50% off, as pursuing this fee could give way to larger a counter-claim.

However, despite the auditor’s agreement to write-off the outstanding fees, the operator still initiated legal proceedings. They alleged that the auditor’s lack of rotary-wing heavy lift experience, as well as his inability to understand the language of the pilots, led to undue concern and an inaccurate audit report. They further alleged that it would have been reasonable to expect him to attempt to resolve his concerns directly with the training pilot at the time instead of committing them directly to the report without prior discussion. Undocumented damages were said to be in the region of US$2.5M.

Although the auditor did not feel that the operator’s allegations had any merit, it was recognised that a successful defence in litigation could not be guaranteed. ITIC advised that an offer of a small ex-gratia payment could be sufficient to resolve the operator’s complaint and bring the matter to a close. Accordingly, it was proposed that the operator be reimbursed for the proportion of the audit fee already paid, plus legal costs incurred, in full and final settlement of their claim. Settlement was offered without an admission of liability. The offer was accepted by the operator and the matter was successfully closed before it had the opportunity to escalate.