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