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Wednesday, September 1, 2004

Bogus Parts Broker Gets Jail

Tempio Pausania, Italy--Enzo Fregonese, 75 year old owner of Panavia-tion, an aircraft spare parts broker company located in Rome, Italy on February 26th was sentenced by the District Court of Tempio Pausania in Sardegna to serve a 15-month jail sentence for distributing unapproved aircraft parts throughout the aviation industry. The final ruling followed a three-year criminal investigation, codename "Operation Latin Phoenix," which was conducted by the Italian state prosecutor and a special unit of Italian financial police (Guardia di Finanzia). The investigation did reveal that via Panaviation and several other aircraft parts brokers, highly questionable spare parts have been distributed around the world. This is the first criminal sentence ever in an unapproved parts case in European aviation.

Two years ago an unapproved parts notification (UPN), issued by the Italian civil aviation authority ENAC alarmed the industry. During preceding raids in hangars and storage facilities the authorities seized numerous aircraft parts in questionable condition, though they were ready to be shipped to customers around the world. The investigators further found evidence of falsification of required accompanying paperwork, namely for life-limited parts as well as obviously forged JAA Form Ones and FAA 8130s.

Already back in November 2003 Enzo Fregonese pleaded guilty, but the judge rejected this plea. With this legal step Fregonese was able to save his inventory, approximately 80,000 parts and other private assets, which could have otherwise remained confiscated by the Italian government.

Soon these parts now may reappear on the market, but according to ENAC, "under strict new rules and guidelines." In the wake of the investigation, Italy has considerably enforced its regulations in regards to unapproved parts and parts cannibalized from old aircraft.

During the judicial session on February 26th, 2004 Fregonese voluntarily agreed to four counts of indictment.

Consequently he was sentenced for the attempt to jeopardize the safety of air transport, which is related to the Italian Penal Court Article 432. Fregonese, for example, acknowledged and pleaded guilty to having sold a fuel quantity indicator for an MD80 that was never overhauled by an authorized repair facility, as indicated by accompanying paperwork. Thereby the instrument ended up in an airplane operated by Italian regional carrier Meridiana. He further pleaded guilty to forging official airworthiness certificates (JAA Form One) for material to be installed into Fokker airplanes. The Form One originally indicated that the part belonged to Italian flag carrier Alitalia, but the Italian airline did not recognize the form, once it was made available to it by the U. S. buyer.

In January 2002 the Italian civil aviation authority ENAC alarmed the worldwide aviation industry about initial findings into the investigation. ENAC expressively declared all parts distributed by Panaviation as "suspected unapproved parts," which makes them illegal to be installed on aircraft or be kept in stock, but only few parts were traceable and resurfaced. Investigators believe that affected parts have probably been distributed via consignment sales operation in the U. S. to operators on all continents and urged maintenance and repair facilities to cross check their inventories. Although ENAC has requested feedback upon finding any Panaviation parts, only a few nations complied with this request. The equivalent unapproved parts notification released by the U.S. Federal Aviation Administration only five days after the Italian warning did not include the request for feedback to the Italian aviation authority.

Many operators were affected by the scheme. While producing a 52 minute TV documentary (Title: Operation Latin Phoenix, which aired first in February 2003 by German PBS station WDR and later an updated version on January 5, 2004 by SAT1) on the Italian investigation and its consequences, the producers learned that airlines such as Lufthansa, former Swissair, Crossair, AUA, SAS, Singapore, Air France, Alitalia, Air One, Finnair, and Northwest Airlines (to name just a few) were among the customers of Panaviation, and they had to check their inventories and fleets.

Nevertheless the consequences for the industry are alarming and costly: German flag carrier Lufthansa, for example, was forced to change a hydraulic connector, belonging to the thrust reverser for CF6 engines. Unfortunately for Lufthansa it could not recall where its technicians may have installed the total of five connectors it had received and that later were earmarked as suspected unapproved parts. The German civil aviation authority LBA's reaction was sharp: the suspicious part was ordered to be removed from "all engines in operation in Germany." So Lufthansa was forced to exchange it on the 150 engines belonging to its fleet of Boeing 747 and Airbus A300/310 aircraft. Deadline was November 2003.

Italian flag carrier Alitalia was forced to remove more than 640 bearings within the landing gear assemblies of its MD-fleet because of similar tracing problem,s and the local carrier Air One had numerous aircraft grounded by ENAC in order to remove parts purchased from Panaviation. Among the customers listed on Panaviation's customer list are as well very renowned manufacturers, such as Airbus Industrie and repair facilities around the world. Aviation experts estimate the damage inflicted to airlines and maintenance facilities just by accomplishing inspections and specific removals may already exceed several million Euros.

But still thousands of these "suspicious parts" have not been traced yet despite great efforts by law enforcement and civil aviation authorities. The former investigators of the Italian case believe they may be still installed in numerous aircraft, flying somewhere this very moment.

Because of the high risk of sudden failure of such components the investigators refer to them as "ticking time bombs on board of planes." Panaviation has conducted its questionable business since the early 19902, but operators and repair facilities are only required to keep their records for a period of seven years (fewer in the U.S.), thereby making it impossible to trace transactions prior to 1996, though the parts may be still in circulation or on shelves.

In the wake of the investigation it became obvious that the major obstacle for operators, maintenance facilities, and the authorities is the fact that brokers of aircraft parts do not have to be regulated or otherwise certificated or authorized. Further, the required documentation, associated with a spare part is far from being safe against manipulation and forgeries. In fact each and every five-Euro bank note has more safety features incorporated than a JAA Form One or its equivalent, the FAA Form 8130, which makes it easy to falsify such documents with the help of scanners or simple copier machines. And finally, Europe has no specific laws governing the distribution of unapproved parts, while the U.S. introduced a specific new law in the wake of numerous unapproved parts cases throughout the late 1990s. The new regulations provide clear definitions of crimes and penalties up to a lifetime in jail for such offenses.

Some of the affected maintenance facilities such as SR Technics and Austrian AUA would strongly support the idea of regulating brokers and parts dealers with new European regulations. But such steps would require an agreement by all European member states and would only make sense if the FAA would impose similar restrictions upon the trade and distribution of aircraft components.

Last but not least, it has always been the argument of opponents to such stricter regulation that, so far, no fatal accidents associated with the use of unapproved or bogus parts have been reported. This is not true, however.

In 1993 the National Transportation Safety Board (NTSB) database contained hundreds of accidents, many of them with commercial aircraft, that would pop up if the database was searched by the category "bogus part." In 1995 the FAA asked the NTSB to delete that category. Now those accidents can be found buried within the category "maintenance-related." Such "cleaning" of databases does not address the safety issues. "Especially not," said Bernd Kopf, a Boeing 747 pilot of the German Cockpit Association VC.

"if meanwhile criminal activities have become involved in this business and where unscrupulous minds dare to risk the lives of hundreds of innocent people boarding a plane. The traffic in unapproved parts has reached a criminal stage, because of the high profits one can make in dealing such items. As a matter of fact, it is well known by court records that meanwhile even former drug trafficers deal in aeronautical parts because they do not have to deal with junkies, but with well suited business men and make the same profits with a lower risk, in case they're caught."

In the wake of such statements and even the discovery of bogus parts within the fire-extinguishing system of Air Force One, the U.S. Congress in 2000 released a new law that redefines prison terms and penalties of up to "life in jail" for trafficking unapproved aeronautical and space vehicle parts. As of today no such or similar laws exists in any of the European states.

-- by Tim van Beveren

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