October 25, 2023 • 25 mins
Julie Johnsson and Siddharth Vikram Philip join this episode to discuss Bloomberg’s investigation into sales of airplane components with falsified documentation.
Read more: Ghost in the Machine: How Fake Parts Infiltrated Airline Fleets
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Final approach to the holiday, with thousands of flyers spending
another day stock stranded and frustrated. United Airlines pilots taking
steps to avoid to strike today, and Southwest pilots announcing
the potential of one this summer. Frontier Airlines and a
statement saying a customer had been asked to deplane after
quote two customers got into a verbal altercation.
Speaker 2 (00:23):
In a letter to airlines, the Federal Aviation Administration citing
a severe lack of air traffic controllers could cause serious
delays and cancelations.
Speaker 1 (00:32):
Ah the joys of flying despite the hassles, though commercial
air travel does have one big thing going for it.
It is the safest form of transportation, safer than taking
a train and much safer than going by car, which
is why today's story has raised alarms across the industry.
Bloomberg Sideth Philip and Julie Johnson report that thousands of
(00:56):
jet engine parts with falsified documentation have been sold to
some of the world's biggest airlines.
Speaker 3 (01:03):
It's a whole host of bots, and they were safety
critical bots. All sorts of components really that are critical
to the functioning of the engine.
Speaker 1 (01:10):
And some of these components were installed in the most
popular jet engine in use today.
Speaker 2 (01:16):
It's the most widely used engine ever in the history
of aviation, and it's in most older Boeing seven thirty
sevens and Airbus A three twenties. These are the workhorse
planes that you step on to if you're flying.
Speaker 1 (01:37):
I'm West Casova today on the big take airlines race
to replace bogus plane parts. Julie. Reading the story that
you and Sid reported with our colleagues Ryan Bean and
Sabah Mettings really made me think quite a bit about flying.
(01:59):
How widespread is this problem of falsified plane parts.
Speaker 2 (02:03):
Nobody quite knows right now. And one of the fascinating
things in reporting this story is that I think we
kind of stumbled across an untidy corner of a highly highly,
highly regulated industry with an amazing safety track record. And
the parts distributors, the network of companies that move parts
(02:26):
into maintenance shops, into airlines, back and forth. It's this
back corner of the business that you don't hear that
much about. It's totally unregulated. It's self regulated to the
extent that companies can go out and get certified that
they meet FAA standards, but nobody quite knows how frequently
(02:47):
this happens. We stumbled across one obscure company that has
managed to spread thousands of engine parts throughout the world. China, Australia,
the big three US carriers have all found its parts
in their engines, and even the company that makes the engines,
(03:07):
which is a GE Saffron venture, has found these parts
in their own shops. And the affected engines are the
most widely flown on Earth. So at the scale of this,
really it's a bit of a mystery, but it is
quite stunning.
Speaker 1 (03:25):
And Julie, how did you first discover that there were
these airplane parts working their way into some of the
most popular engines and airlines all over the world.
Speaker 2 (03:33):
This literally fell into my lap. Somebody sent me a
letter that GE had just sent to its customers warning
them about suspect parts from this outfit that we'd never
heard of, and I passed on the news to sit
in some other colleagues, and they very quickly discovered that
(03:54):
regulators in Europe and the UK were looking into this,
and we were sort of off to the races from there.
Speaker 1 (04:02):
And said, your story starts with some airplane mechanics opening
up an engine and seeing something that didn't look quite right.
Speaker 3 (04:10):
This spring engineers at top which is Portugal State around airline,
they huddled around the CFM fifty six engine, which is
the engine at the heart of this scandal. They handle
hundreds of engines every year, and this engine that was
out the paths that they were meant to replace. The
documentation for the part said it was brand new and
fresh on the factory, whereas the part in the hand
(04:33):
looked worn and didn't look brand new. And the engineer
sort of stopped and said, hey, the documentation doesn't quite
match up with the condition of the part. And that's
really what sort of triggered this worldwide probe, which is
the fascinating story that we've been following since early August.
Speaker 1 (04:53):
Exactly what kind of parts in these engines were found
to be misrepresented.
Speaker 3 (04:58):
So it's a whole host of parts, and they were
safety critical parts, and so they are exposed to extreme temperatures.
The parts are spinning at more than ten thousand rpm,
and they range from low pressure turbine blades, seals, nuts
for the ROTA assembly, bushings and all sorts of components
really that are critical to the functioning of the engine.
Speaker 1 (05:20):
And is there any evidence that any of these engines
failed or had any kind of problem as a result
of having these faulty parts.
Speaker 3 (05:29):
We haven't seen any evidence of any flight emergencies being
called due to engine malfunctions, but it does highlight a
risky gap in the system, especially one that's basically very
safety critical industry.
Speaker 1 (05:44):
And was it only engine parts or have they found
these parts in other places on the planes?
Speaker 3 (05:50):
So far, they've only found them on the engines, and
that's because we've seen records from CFM and Saffron and GE,
but we haven't really seen other components being supplied. But
I mean, it's anyone's guess at the moment, and we
already have to look into it and see what other
parts come out from it.
Speaker 1 (06:08):
Tell us about the company that makes this engine.
Speaker 3 (06:11):
The company that makes the engine is a joint venture
called CFM that's owned by General Electric and Saffron, which
is a French company, and they've been working on CFM
engines for decades. And since it's such a widely used engine,
there's thousands of suppliers making parts, supplying parts, and essentially
(06:31):
the whole aviation industry revolves around this and so there's
workshops repairing the engine, there's brokers selling parts for the engine.
There's also a sort of separate issue of manufacturers actually
making those parts for the engine, separate from CFM and
Saffron and Julie.
Speaker 1 (06:49):
Once these mechanics that TAP discovered a problem with this
engine part, what happened from there?
Speaker 2 (06:57):
So THP alerted Safra, which is one of the two
partners in this engine venture, and they had it back
and forth. Saffran verified, yes, this is forge, and urge
TAP to go through its records and start to dig
up every part that they had along with a certification
from this little company. So sure enough, more suspect documents
(07:22):
popped up, and that's when Saffran turned to CFM. The
engine maker put out a letter and alerted all its customers, like, hey,
take a look at any parts that you have, go
through your records. And something that's really important to point
out is that we're talking actual paper records for documentation
(07:44):
for these engine parts. Every part has a story that
is carefully documented that goes onto an aircraft, and it's
the repair history, whether it's airworthy, how long it can
remain in use, depending on the type of this is
all documented.
Speaker 3 (08:03):
So documentation is at the heart of aviation safety, and
unlike other industries, paper documents in the aviation industry are
sort of what rule the roost, and so documentation that
accompanies aircraft parts are typically paper records, so they're actually
typewritten with a typewriter or handwritten by pen and essentially
(08:26):
they're meant to signify that documentation is intact, the part
is what it says it is, because a lot of
the record keeping is basically down to just those papers,
and so when you buy an aircraft part, you also
inherit a sheaf of papers that adds to the value.
And without those papers, the part is worthless because you
(08:46):
can't really identify the part. You don't know how many
hours it's done, you don't know where it's been, what
the origin is, and so it's just treated as bogus.
So unless you have the right documentation, the part is
absolutely useless. For the aviation industry.
Speaker 2 (09:01):
There's a safety aspect to this because without the records,
you don't know if the part was scrapped at one
point were determined that it was not safe to fly.
So that's a really important part of the safety net.
Speaker 1 (09:16):
And yet as you say, the documentation that this entire
industry relies on turns out to be pretty easy to fake.
Speaker 3 (09:24):
It's a really surprisingly simple scam. I mean, you can
literally tick an existing certificate and just slap on new
details onto it, and unless someone actually goes back and
checks with those people who had the original certificate or
the manufacturers, essentially it's as good as saying that the
spot is good to go.
Speaker 1 (09:45):
And really, were the parts that they found that weren't
right in these engines? Were they just use parts marked
as new? Were they fake parts marked as genuine? What
were they.
Speaker 2 (09:56):
That's something we'd love to know as well. We know
for sure that there were parts pawned off as new
that we're used with forged documents, but there's a lot
we still don't know, including where these parts came from,
what their history.
Speaker 1 (10:13):
Was said has really said? These letters went out to
airlines warning them that this was a problem that they
had found. Do we know how many planes around the
world have been found to have these parts in their engines?
Speaker 3 (10:27):
Saffran has said that bogus spots have been found on
about one hundred and twenty six engines. Most CFM fifty
six equipped planes have two engines on them, so we
don't really know how many aircraft are affected with because
some may have won on both engines affected. But it
is one hundred and twenty six engines so far and
they're still looking into it, so we could see more
(10:48):
come to light as this sort of drags.
Speaker 2 (10:50):
On, and from industry insiders, it's certainly the largest investigation
to come along in many years, dating back to the
nineteen ninety.
Speaker 1 (11:01):
After the break the company behind these falsified parts, Julie
As Airlines and Mechanics, began looking at their engines to
spot fake parts. You write that what they found is
all of them seemed to originate from a single company.
(11:25):
What is that company?
Speaker 2 (11:26):
Well, the company at the center of this investigation is
a little known London based parts distributor called AOG Technics
Limited and founded in twenty fifteen. AOG is aviation shorthand
for aircraft on the ground. And there's some irony because
(11:47):
this company unintentionally has caused some grounded aircraft as engines
have been replaced to weed out parts that came from AOG.
Speaker 3 (11:56):
So AOG Techniques is a little known company that nobody
already knew about until we wrote about it and we
set up about eight years ago by a entrepreneur part
time DJ from Venezuela called Jose Alejandro Zamora Iala. So,
before Zamora got into the industry, he dabbled in professions
from music to real estate and he spun tunes under
(12:18):
the stage name Santa Militia in Venezuela, Italy and Spain.
Zamora said that techno is his passion on his SoundCloud account.
And what we do know is that he had previously
worked in the aviation industry. Zamora began his career around
twenty ten as an account manager at AJW known as Walters,
(12:40):
which is one of the biggest maintenance players in the
aviation industry. Thereafter he worked for a company called Getalysis,
which is again one of the biggest maintenance shops in
the world. And soon after Gatalysis, he went and set
up AOG Techniques on his own and it sort of
had this viny respectability. It had a very professional and
(13:03):
slick looking website which is now deleted, which sort of
boasted an office in London near Buckingham Palace. It boasted
of warehouses in Miami and Frankfort and London and Singapore,
and at the sort of heart of it all is
really a tiny company with a single entrepreneur who claimed
(13:24):
to have multiple employees, who had these offices everywhere, but
actually just the guy sitting at his laptop working on
a website called ils, which is where the aviation industry
buys and sells aviation parts.
Speaker 1 (13:41):
Julie, how was this one person able to get all
these parts to sell to major airlines around the world.
Speaker 2 (13:48):
Yeah, we don't know. That's a really good question. And
for the first three or four years of its existence,
AOG was just a bit player. Were just you know,
a few thousand pounds up to about twenty thousand pounds
at the start of twenty nineteen, and then over the
next year the sales just exploded into the millions of pounds.
(14:12):
So that's one of the questions is where did the
parts come from? You need funding to buy use parts,
where did that come from?
Speaker 3 (14:22):
When we started looking into the company, we sort of
looked for the people playing on who worked at the company,
and we sort of throw LinkedIn and we found a
number of employees who claimed to be working there, and
just on a hunch, we did a reverse image search
on one of the people, a guy called Michael Smith,
and he's now deleted his LinkedIn profile, but at the
(14:43):
time he said he was a quality assurance manager at
AOG And we did a reverse image search on his
profile picture on LinkedIn and we found that it was
on a stock image site where they described him as
a confidence senior and a white T shirt. And for
some reason, that same force potograph is also really popular
among medical professionals. It also features on the websites of
(15:05):
a Wisconsin cardiologist, an Oregon dentist, and a Barcelona ecal surgeon.
So we don't really know if Michael Smith exists or not,
but definitely his profile picture isn't who he claims to be.
And he's one of the signatories listed on some of
the fake documents, and we don't really know who he is.
And there was another couple of documents that were signed
(15:26):
by someone called Jeffrey Shardak, who shares a last name
with the French president, and we don't really know who
he is, or we haven't been able to identify him.
Speaker 1 (15:37):
Julie. At the height of this company's business, how many
airlines was he supply.
Speaker 2 (15:44):
We don't know. That's one of the items that ge
and CFM have been trying to get from AOG in
the lawsuit that they filed in late August, right as
we were working on our first story, and so they've
requested and they've foreseend sales records from this company and
so hopefully should help track down the parts that have
(16:06):
spread around the world. What we do know just from
calling airlines is that United, Delta, Southwest American, the biggest
US airlines, have uncovered these parts. AOG certainly looked the part.
They were certified by one of the parts industry accreditation
(16:28):
agencies as following the FAA's guidelines around quality, and this
might have helped them infiltrate an industry where people tend
to do business with people that they know, so I
think that's an important thing to mention. The other is
that post COVID, the engine world has just been in
(16:50):
an extreme crunch for maintenance for spare parts, and I
think that might have caused people to lean more heavily
on online tools like clearing houses to find companies, even
obscure companies in London that provide the spare parts that
they need to do these engine repairs.
Speaker 1 (17:12):
Sid Once these airlines and the engine maker discovered that
there were these parts being sold by AOG. What did
they do?
Speaker 3 (17:23):
So they went to CFM and they told him about
these parts, and CFM then wrote to AOG technique saying
that hey, we've got these documents that aren't quite real.
Can you please get in touch with us and tell
us how they came about. And according to the legal documents,
Zamora told Doug Hensley, who's the regulatory counselor GE Aerospace,
(17:45):
on August second that he was out of the country
on vacation. However, he would stop selling the parts as
a courtesy, and that triggered this whole back and forth
where Saffraan and GE went to a London court and
asked for documents basically giving them every single sale that
they've made. And they've actually got them on the fourth
(18:05):
of October, and that might actually give us more insight
into what AOG did where they got the parts, from
what they did to sort of sell them on. But really,
I mean the heart of it is that the fact
that these documents they have to be manually checked and
looked at, and it's going to be a time consuming process.
Speaker 2 (18:24):
And in this lawsuit by the engine makers, one of
their attorneys described this deception as being on quote an
industrial scale with thousands of suspect parts.
Speaker 1 (18:37):
And what does Zamora, what does AOG Techniques have to
say about this?
Speaker 3 (18:42):
So we briefly reached Zamora on the phone. We've been
trying to contact him over multiple days and multiple attempts
in all sorts of ways, and we briefly reached him
on the phone, but then as soon as I said
I was a journalist with Bloomberg, he hung up on me.
And we also reached out to Zamora's wife, who said
that Bloomberg had been trying to paint him to be
a bad person or something and he didn't want to
(19:04):
speak to anyone because the information was fabricated.
Speaker 1 (19:08):
And you also reached his lawyer. Is that right?
Speaker 3 (19:12):
Yeah, we reached out to his lawyers, but they haven't
really responded to attempts to seek a comment from them
about what this sold's all about.
Speaker 1 (19:19):
And said, what I have Saffron and ge said about this.
Speaker 3 (19:22):
So the Saffron CEO said that it's a bit strange
that a phantom company could be allowed to supply spare
parts with false documents, and they said that they don't
know who they sold the paths to, and whether all
the airlines have done their checks. They have no responsibility
and no rail connection to AOG techniques, but they are
trying to find out information about him.
Speaker 1 (19:43):
And Julie. You said earlier that one of the problems
here is that this distribution side of the business isn't
as highly regulated as much of the rest of the industry.
What do the regulators have to say about this.
Speaker 2 (19:56):
Well, you know, the regulators has been quick to point
out that this part of the industry is not regulated
to the extent that there is any oversight. It's with
companies choosing to get accredited by you know, agency that
follows guidelines set by the FAA, the US aviation regulator.
(20:18):
But in reaching out to folks in Europe, US and
the UK, it's not clear who is taking the lead
and tracking this down. I mean, they've all issued warnings
to operators, but it's a little bit of a quagmire.
Speaker 1 (20:38):
When we come back. What can be done to stop
this from happening again. Surely you write in the story
that this sort of thing has happened before.
Speaker 2 (20:54):
Yes, it has. And Mary Chiavo, who are colleague ran
Bean interviewed for the story was an inspector general with
the Transportation Department in the nineteen nineties and really went
after these fogus parts that had infiltrated the supply chain
and I think put more than one hundred people into
jail through her investigations. Her actions spurred hearings by Congress
(21:20):
and caused the FAA to really zero in on these cases.
So the sad news is that it's a little bit
of deja vous all over again for some of the
people who've been around and ga Tellusus also said that
the spotlight from this will probably spur more hearings and
(21:43):
maybe this time regulators will take another look at what
they can do to shore up the safety net.
Speaker 1 (21:49):
Since this has happened in the past, why is it
that regulators didn't become aware that this was a problem
and do something to prevent it from happening again.
Speaker 3 (22:00):
Had a voluntary program back in nineteen ninety six for
part sellers to agree to audits and checks, and the
idea was that it would address the lack of documentation
and traceability without the FAA having to actually deploy its
own resources into it. But as we found in the
story that despite AOG being certified by a company called
(22:23):
Transtonic Aviation Consultants, which is one of the handful of
organizations that FA has allowed to confer this certification. It
was still able to get away with the action that
it did.
Speaker 1 (22:35):
And what did Transonic say about this?
Speaker 3 (22:38):
Transonic said that they had hired a subcontractor to audit
aog's operation, and the subcontractor said that everything was in order.
And Transtonic stripped AOG of its accreditation in early September
after it said it learnt about the alleged forgeries, and
they said that they were already bamboozled by the allegations
(22:58):
against Zamora, and they said, there's no type of inspection
to find out if people are bad.
Speaker 1 (23:05):
So now all these airlines have discovered these parts in
their engines, what's going to take to fix all of them?
Speaker 2 (23:12):
Well, if they have to take the engine off the
wing and start to pull out parts, at a minimum,
that's three hundred thousand dollars. So the repairs will be
interesting to watch. We don't know if it's just going
to be you know, one hundred plus engines that are
involved or substantially more. So that's definitely part of the fallout.
Speaker 3 (23:33):
You also have the airlines that are stuck with their
planes on the ground, unable to tap the demand. Aircraft
manufacturers are struggling to produce new airplanes. That means there's
a huge surge of demand for older aircraft with sort
of chick circles. Back to this thing where older aircraft
are kept in the air with bots which they buy
from a variety of sellers, and AOGU is one of them.
Speaker 1 (23:57):
How do these airlines know that the new parts they're
buying are themselves legitimate? Since this documentation can be.
Speaker 2 (24:03):
Forged, we might see a return to more focus on
visual inspections of parts as they come in and less
faith than just the paperwork that accompanies them.
Speaker 3 (24:15):
Yeah, we may also see regulators sort of cracking down
on it and demanding better certification and auditing.
Speaker 1 (24:22):
And is there any concern that aog is just the
company that you happen to find out about that there
could be others also doing the same thing.
Speaker 2 (24:33):
Oh? Absolutely, And as one of the people we interviewed
in the story points out, right now, there's huge money
in engine repairs and engine parts, and where there's money,
there's fraud.
Speaker 1 (24:46):
Sid Julie, thanks so much. For sharing your reporting.
Speaker 3 (24:50):
Thank you, Thanks so much for having us on.
Speaker 1 (24:53):
Thanks for listening to us here at The Big Take.
It's a daily podcast from Bloomberg and iHeartRadio. For more
shows from iHeartRadio, visit the Heeartradio app, Apple Podcasts, or
wherever you listen. And we'd love to hear from you.
Email us questions or comments to Big Take at Bloomberg
dot net. The supervising producer of The Big Take is
Vicky Bergolina. Our senior producer is Catherine Fink. This episode
(25:15):
was produced by Sam Gobauer and Christine Driscoll. Kilde Garcia
is our engineer. Our original music was composed by Leo Sidrin.
I'm west Kasova. We'll be back tomorrow with another Big Take.
Final approach to the holiday, with thousands of flyers spending
another day stock stranded and frustrated. United Airlines pilots taking
steps to avoid to strike today, and Southwest pilots announcing
the potential of one this summer. Frontier Airlines and a
statement saying a customer had been asked to deplane after
quote two customers got into a verbal altercation.
Speaker 2 (00:23):
In a letter to airlines, the Federal Aviation Administration citing
a severe lack of air traffic controllers could cause serious
delays and cancelations.
Speaker 1 (00:32):
Ah the joys of flying despite the hassles, though commercial
air travel does have one big thing going for it.
It is the safest form of transportation, safer than taking
a train and much safer than going by car, which
is why today's story has raised alarms across the industry.
Bloomberg Sideth Philip and Julie Johnson report that thousands of
(00:56):
jet engine parts with falsified documentation have been sold to
some of the world's biggest airlines.
Speaker 3 (01:03):
It's a whole host of bots, and they were safety
critical bots. All sorts of components really that are critical
to the functioning of the engine.
Speaker 1 (01:10):
And some of these components were installed in the most
popular jet engine in use today.
Speaker 2 (01:16):
It's the most widely used engine ever in the history
of aviation, and it's in most older Boeing seven thirty
sevens and Airbus A three twenties. These are the workhorse
planes that you step on to if you're flying.
Speaker 1 (01:37):
I'm West Casova today on the big take airlines race
to replace bogus plane parts. Julie. Reading the story that
you and Sid reported with our colleagues Ryan Bean and
Sabah Mettings really made me think quite a bit about flying.
(01:59):
How widespread is this problem of falsified plane parts.
Speaker 2 (02:03):
Nobody quite knows right now. And one of the fascinating
things in reporting this story is that I think we
kind of stumbled across an untidy corner of a highly highly,
highly regulated industry with an amazing safety track record. And
the parts distributors, the network of companies that move parts
(02:26):
into maintenance shops, into airlines, back and forth. It's this
back corner of the business that you don't hear that
much about. It's totally unregulated. It's self regulated to the
extent that companies can go out and get certified that
they meet FAA standards, but nobody quite knows how frequently
(02:47):
this happens. We stumbled across one obscure company that has
managed to spread thousands of engine parts throughout the world. China, Australia,
the big three US carriers have all found its parts
in their engines, and even the company that makes the engines,
(03:07):
which is a GE Saffron venture, has found these parts
in their own shops. And the affected engines are the
most widely flown on Earth. So at the scale of this,
really it's a bit of a mystery, but it is
quite stunning.
Speaker 1 (03:25):
And Julie, how did you first discover that there were
these airplane parts working their way into some of the
most popular engines and airlines all over the world.
Speaker 2 (03:33):
This literally fell into my lap. Somebody sent me a
letter that GE had just sent to its customers warning
them about suspect parts from this outfit that we'd never
heard of, and I passed on the news to sit
in some other colleagues, and they very quickly discovered that
(03:54):
regulators in Europe and the UK were looking into this,
and we were sort of off to the races from there.
Speaker 1 (04:02):
And said, your story starts with some airplane mechanics opening
up an engine and seeing something that didn't look quite right.
Speaker 3 (04:10):
This spring engineers at top which is Portugal State around airline,
they huddled around the CFM fifty six engine, which is
the engine at the heart of this scandal. They handle
hundreds of engines every year, and this engine that was
out the paths that they were meant to replace. The
documentation for the part said it was brand new and
fresh on the factory, whereas the part in the hand
(04:33):
looked worn and didn't look brand new. And the engineer
sort of stopped and said, hey, the documentation doesn't quite
match up with the condition of the part. And that's
really what sort of triggered this worldwide probe, which is
the fascinating story that we've been following since early August.
Speaker 1 (04:53):
Exactly what kind of parts in these engines were found
to be misrepresented.
Speaker 3 (04:58):
So it's a whole host of parts, and they were
safety critical parts, and so they are exposed to extreme temperatures.
The parts are spinning at more than ten thousand rpm,
and they range from low pressure turbine blades, seals, nuts
for the ROTA assembly, bushings and all sorts of components
really that are critical to the functioning of the engine.
Speaker 1 (05:20):
And is there any evidence that any of these engines
failed or had any kind of problem as a result
of having these faulty parts.
Speaker 3 (05:29):
We haven't seen any evidence of any flight emergencies being
called due to engine malfunctions, but it does highlight a
risky gap in the system, especially one that's basically very
safety critical industry.
Speaker 1 (05:44):
And was it only engine parts or have they found
these parts in other places on the planes?
Speaker 3 (05:50):
So far, they've only found them on the engines, and
that's because we've seen records from CFM and Saffron and GE,
but we haven't really seen other components being supplied. But
I mean, it's anyone's guess at the moment, and we
already have to look into it and see what other
parts come out from it.
Speaker 1 (06:08):
Tell us about the company that makes this engine.
Speaker 3 (06:11):
The company that makes the engine is a joint venture
called CFM that's owned by General Electric and Saffron, which
is a French company, and they've been working on CFM
engines for decades. And since it's such a widely used engine,
there's thousands of suppliers making parts, supplying parts, and essentially
(06:31):
the whole aviation industry revolves around this and so there's
workshops repairing the engine, there's brokers selling parts for the engine.
There's also a sort of separate issue of manufacturers actually
making those parts for the engine, separate from CFM and
Saffron and Julie.
Speaker 1 (06:49):
Once these mechanics that TAP discovered a problem with this
engine part, what happened from there?
Speaker 2 (06:57):
So THP alerted Safra, which is one of the two
partners in this engine venture, and they had it back
and forth. Saffran verified, yes, this is forge, and urge
TAP to go through its records and start to dig
up every part that they had along with a certification
from this little company. So sure enough, more suspect documents
(07:22):
popped up, and that's when Saffran turned to CFM. The
engine maker put out a letter and alerted all its customers, like, hey,
take a look at any parts that you have, go
through your records. And something that's really important to point
out is that we're talking actual paper records for documentation
(07:44):
for these engine parts. Every part has a story that
is carefully documented that goes onto an aircraft, and it's
the repair history, whether it's airworthy, how long it can
remain in use, depending on the type of this is
all documented.
Speaker 3 (08:03):
So documentation is at the heart of aviation safety, and
unlike other industries, paper documents in the aviation industry are
sort of what rule the roost, and so documentation that
accompanies aircraft parts are typically paper records, so they're actually
typewritten with a typewriter or handwritten by pen and essentially
(08:26):
they're meant to signify that documentation is intact, the part
is what it says it is, because a lot of
the record keeping is basically down to just those papers,
and so when you buy an aircraft part, you also
inherit a sheaf of papers that adds to the value.
And without those papers, the part is worthless because you
(08:46):
can't really identify the part. You don't know how many
hours it's done, you don't know where it's been, what
the origin is, and so it's just treated as bogus.
So unless you have the right documentation, the part is
absolutely useless. For the aviation industry.
Speaker 2 (09:01):
There's a safety aspect to this because without the records,
you don't know if the part was scrapped at one
point were determined that it was not safe to fly.
So that's a really important part of the safety net.
Speaker 1 (09:16):
And yet as you say, the documentation that this entire
industry relies on turns out to be pretty easy to fake.
Speaker 3 (09:24):
It's a really surprisingly simple scam. I mean, you can
literally tick an existing certificate and just slap on new
details onto it, and unless someone actually goes back and
checks with those people who had the original certificate or
the manufacturers, essentially it's as good as saying that the
spot is good to go.
Speaker 1 (09:45):
And really, were the parts that they found that weren't
right in these engines? Were they just use parts marked
as new? Were they fake parts marked as genuine? What
were they.
Speaker 2 (09:56):
That's something we'd love to know as well. We know
for sure that there were parts pawned off as new
that we're used with forged documents, but there's a lot
we still don't know, including where these parts came from,
what their history.
Speaker 1 (10:13):
Was said has really said? These letters went out to
airlines warning them that this was a problem that they
had found. Do we know how many planes around the
world have been found to have these parts in their engines?
Speaker 3 (10:27):
Saffran has said that bogus spots have been found on
about one hundred and twenty six engines. Most CFM fifty
six equipped planes have two engines on them, so we
don't really know how many aircraft are affected with because
some may have won on both engines affected. But it
is one hundred and twenty six engines so far and
they're still looking into it, so we could see more
(10:48):
come to light as this sort of drags.
Speaker 2 (10:50):
On, and from industry insiders, it's certainly the largest investigation
to come along in many years, dating back to the
nineteen ninety.
Speaker 1 (11:01):
After the break the company behind these falsified parts, Julie
As Airlines and Mechanics, began looking at their engines to
spot fake parts. You write that what they found is
all of them seemed to originate from a single company.
(11:25):
What is that company?
Speaker 2 (11:26):
Well, the company at the center of this investigation is
a little known London based parts distributor called AOG Technics
Limited and founded in twenty fifteen. AOG is aviation shorthand
for aircraft on the ground. And there's some irony because
(11:47):
this company unintentionally has caused some grounded aircraft as engines
have been replaced to weed out parts that came from AOG.
Speaker 3 (11:56):
So AOG Techniques is a little known company that nobody
already knew about until we wrote about it and we
set up about eight years ago by a entrepreneur part
time DJ from Venezuela called Jose Alejandro Zamora Iala. So,
before Zamora got into the industry, he dabbled in professions
from music to real estate and he spun tunes under
(12:18):
the stage name Santa Militia in Venezuela, Italy and Spain.
Zamora said that techno is his passion on his SoundCloud account.
And what we do know is that he had previously
worked in the aviation industry. Zamora began his career around
twenty ten as an account manager at AJW known as Walters,
(12:40):
which is one of the biggest maintenance players in the
aviation industry. Thereafter he worked for a company called Getalysis,
which is again one of the biggest maintenance shops in
the world. And soon after Gatalysis, he went and set
up AOG Techniques on his own and it sort of
had this viny respectability. It had a very professional and
(13:03):
slick looking website which is now deleted, which sort of
boasted an office in London near Buckingham Palace. It boasted
of warehouses in Miami and Frankfort and London and Singapore,
and at the sort of heart of it all is
really a tiny company with a single entrepreneur who claimed
(13:24):
to have multiple employees, who had these offices everywhere, but
actually just the guy sitting at his laptop working on
a website called ils, which is where the aviation industry
buys and sells aviation parts.
Speaker 1 (13:41):
Julie, how was this one person able to get all
these parts to sell to major airlines around the world.
Speaker 2 (13:48):
Yeah, we don't know. That's a really good question. And
for the first three or four years of its existence,
AOG was just a bit player. Were just you know,
a few thousand pounds up to about twenty thousand pounds
at the start of twenty nineteen, and then over the
next year the sales just exploded into the millions of pounds.
(14:12):
So that's one of the questions is where did the
parts come from? You need funding to buy use parts,
where did that come from?
Speaker 3 (14:22):
When we started looking into the company, we sort of
looked for the people playing on who worked at the company,
and we sort of throw LinkedIn and we found a
number of employees who claimed to be working there, and
just on a hunch, we did a reverse image search
on one of the people, a guy called Michael Smith,
and he's now deleted his LinkedIn profile, but at the
(14:43):
time he said he was a quality assurance manager at
AOG And we did a reverse image search on his
profile picture on LinkedIn and we found that it was
on a stock image site where they described him as
a confidence senior and a white T shirt. And for
some reason, that same force potograph is also really popular
among medical professionals. It also features on the websites of
(15:05):
a Wisconsin cardiologist, an Oregon dentist, and a Barcelona ecal surgeon.
So we don't really know if Michael Smith exists or not,
but definitely his profile picture isn't who he claims to be.
And he's one of the signatories listed on some of
the fake documents, and we don't really know who he is.
And there was another couple of documents that were signed
(15:26):
by someone called Jeffrey Shardak, who shares a last name
with the French president, and we don't really know who
he is, or we haven't been able to identify him.
Speaker 1 (15:37):
Julie. At the height of this company's business, how many
airlines was he supply.
Speaker 2 (15:44):
We don't know. That's one of the items that ge
and CFM have been trying to get from AOG in
the lawsuit that they filed in late August, right as
we were working on our first story, and so they've
requested and they've foreseend sales records from this company and
so hopefully should help track down the parts that have
(16:06):
spread around the world. What we do know just from
calling airlines is that United, Delta, Southwest American, the biggest
US airlines, have uncovered these parts. AOG certainly looked the part.
They were certified by one of the parts industry accreditation
(16:28):
agencies as following the FAA's guidelines around quality, and this
might have helped them infiltrate an industry where people tend
to do business with people that they know, so I
think that's an important thing to mention. The other is
that post COVID, the engine world has just been in
(16:50):
an extreme crunch for maintenance for spare parts, and I
think that might have caused people to lean more heavily
on online tools like clearing houses to find companies, even
obscure companies in London that provide the spare parts that
they need to do these engine repairs.
Speaker 1 (17:12):
Sid Once these airlines and the engine maker discovered that
there were these parts being sold by AOG. What did
they do?
Speaker 3 (17:23):
So they went to CFM and they told him about
these parts, and CFM then wrote to AOG technique saying
that hey, we've got these documents that aren't quite real.
Can you please get in touch with us and tell
us how they came about. And according to the legal documents,
Zamora told Doug Hensley, who's the regulatory counselor GE Aerospace,
(17:45):
on August second that he was out of the country
on vacation. However, he would stop selling the parts as
a courtesy, and that triggered this whole back and forth
where Saffraan and GE went to a London court and
asked for documents basically giving them every single sale that
they've made. And they've actually got them on the fourth
(18:05):
of October, and that might actually give us more insight
into what AOG did where they got the parts, from
what they did to sort of sell them on. But really,
I mean the heart of it is that the fact
that these documents they have to be manually checked and
looked at, and it's going to be a time consuming process.
Speaker 2 (18:24):
And in this lawsuit by the engine makers, one of
their attorneys described this deception as being on quote an
industrial scale with thousands of suspect parts.
Speaker 1 (18:37):
And what does Zamora, what does AOG Techniques have to
say about this?
Speaker 3 (18:42):
So we briefly reached Zamora on the phone. We've been
trying to contact him over multiple days and multiple attempts
in all sorts of ways, and we briefly reached him
on the phone, but then as soon as I said
I was a journalist with Bloomberg, he hung up on me.
And we also reached out to Zamora's wife, who said
that Bloomberg had been trying to paint him to be
a bad person or something and he didn't want to
(19:04):
speak to anyone because the information was fabricated.
Speaker 1 (19:08):
And you also reached his lawyer. Is that right?
Speaker 3 (19:12):
Yeah, we reached out to his lawyers, but they haven't
really responded to attempts to seek a comment from them
about what this sold's all about.
Speaker 1 (19:19):
And said, what I have Saffron and ge said about this.
Speaker 3 (19:22):
So the Saffron CEO said that it's a bit strange
that a phantom company could be allowed to supply spare
parts with false documents, and they said that they don't
know who they sold the paths to, and whether all
the airlines have done their checks. They have no responsibility
and no rail connection to AOG techniques, but they are
trying to find out information about him.
Speaker 1 (19:43):
And Julie. You said earlier that one of the problems
here is that this distribution side of the business isn't
as highly regulated as much of the rest of the industry.
What do the regulators have to say about this.
Speaker 2 (19:56):
Well, you know, the regulators has been quick to point
out that this part of the industry is not regulated
to the extent that there is any oversight. It's with
companies choosing to get accredited by you know, agency that
follows guidelines set by the FAA, the US aviation regulator.
(20:18):
But in reaching out to folks in Europe, US and
the UK, it's not clear who is taking the lead
and tracking this down. I mean, they've all issued warnings
to operators, but it's a little bit of a quagmire.
Speaker 1 (20:38):
When we come back. What can be done to stop
this from happening again. Surely you write in the story
that this sort of thing has happened before.
Speaker 2 (20:54):
Yes, it has. And Mary Chiavo, who are colleague ran
Bean interviewed for the story was an inspector general with
the Transportation Department in the nineteen nineties and really went
after these fogus parts that had infiltrated the supply chain
and I think put more than one hundred people into
jail through her investigations. Her actions spurred hearings by Congress
(21:20):
and caused the FAA to really zero in on these cases.
So the sad news is that it's a little bit
of deja vous all over again for some of the
people who've been around and ga Tellusus also said that
the spotlight from this will probably spur more hearings and
(21:43):
maybe this time regulators will take another look at what
they can do to shore up the safety net.
Speaker 1 (21:49):
Since this has happened in the past, why is it
that regulators didn't become aware that this was a problem
and do something to prevent it from happening again.
Speaker 3 (22:00):
Had a voluntary program back in nineteen ninety six for
part sellers to agree to audits and checks, and the
idea was that it would address the lack of documentation
and traceability without the FAA having to actually deploy its
own resources into it. But as we found in the
story that despite AOG being certified by a company called
(22:23):
Transtonic Aviation Consultants, which is one of the handful of
organizations that FA has allowed to confer this certification. It
was still able to get away with the action that
it did.
Speaker 1 (22:35):
And what did Transonic say about this?
Speaker 3 (22:38):
Transonic said that they had hired a subcontractor to audit
aog's operation, and the subcontractor said that everything was in order.
And Transtonic stripped AOG of its accreditation in early September
after it said it learnt about the alleged forgeries, and
they said that they were already bamboozled by the allegations
(22:58):
against Zamora, and they said, there's no type of inspection
to find out if people are bad.
Speaker 1 (23:05):
So now all these airlines have discovered these parts in
their engines, what's going to take to fix all of them?
Speaker 2 (23:12):
Well, if they have to take the engine off the
wing and start to pull out parts, at a minimum,
that's three hundred thousand dollars. So the repairs will be
interesting to watch. We don't know if it's just going
to be you know, one hundred plus engines that are
involved or substantially more. So that's definitely part of the fallout.
Speaker 3 (23:33):
You also have the airlines that are stuck with their
planes on the ground, unable to tap the demand. Aircraft
manufacturers are struggling to produce new airplanes. That means there's
a huge surge of demand for older aircraft with sort
of chick circles. Back to this thing where older aircraft
are kept in the air with bots which they buy
from a variety of sellers, and AOGU is one of them.
Speaker 1 (23:57):
How do these airlines know that the new parts they're
buying are themselves legitimate? Since this documentation can be.
Speaker 2 (24:03):
Forged, we might see a return to more focus on
visual inspections of parts as they come in and less
faith than just the paperwork that accompanies them.
Speaker 3 (24:15):
Yeah, we may also see regulators sort of cracking down
on it and demanding better certification and auditing.
Speaker 1 (24:22):
And is there any concern that aog is just the
company that you happen to find out about that there
could be others also doing the same thing.
Speaker 2 (24:33):
Oh? Absolutely, And as one of the people we interviewed
in the story points out, right now, there's huge money
in engine repairs and engine parts, and where there's money,
there's fraud.
Speaker 1 (24:46):
Sid Julie, thanks so much. For sharing your reporting.
Speaker 3 (24:50):
Thank you, Thanks so much for having us on.
Speaker 1 (24:53):
Thanks for listening to us here at The Big Take.
It's a daily podcast from Bloomberg and iHeartRadio. For more
shows from iHeartRadio, visit the Heeartradio app, Apple Podcasts, or
wherever you listen. And we'd love to hear from you.
Email us questions or comments to Big Take at Bloomberg
dot net. The supervising producer of The Big Take is
Vicky Bergolina. Our senior producer is Catherine Fink. This episode
(25:15):
was produced by Sam Gobauer and Christine Driscoll. Kilde Garcia
is our engineer. Our original music was composed by Leo Sidrin.
I'm west Kasova. We'll be back tomorrow with another Big Take.
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