BRAZIL: Operational Accident

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Panair do Brasil, No. 1 Brazilian airline and Pan American Airways' biggest subsidiary, last week had its worst operational accident in years. One of its accountants was missing, and so was at least $275,000 of company funds.

The accountant was a company veteran (14 years) named Daniel Cardoso Pimenta. Along with a scion of one of Rio's best families, Chief Cashier Nelson de Almeida Cardoso, he was charged with having embezzled the funds through a tricky system of interoffice bookkeeping entries. Just after auditors spotted the shortage in a routine year-end checkup, Accountant Pimenta disappeared. Cashier Cardoso betook himself to a Rio hospital where he was reported resting under the care of a staff physician, his brother.

For Panair executives, who had built up perhaps the finest operational record of any South American airline, the scandal was tough luck. Last week, Pan American, which owns 48% of Panair's stock, rushed a task force of two vice presidents and two controllers from the U.S. to go over the books behind locked doors. As reports spread that the shortage was much greater than first announced, Panair Manager Frank Sampaio abruptly resigned, without explanation.

The scandal's political effects might also be damaging to Panair. As Brazil's major international airline (it operates four Constellation flights a week to Europe and back), Panair was leading a campaign in Congress for government subsidy of Brazil's overseas air services. With rugged competition from seven subsidized European lines, Panair was losing money on the South Atlantic route and sorely needed government help. After finding out how sadly Panair had been hoodwinked in its account-keeping, Congressmen might possibly bridle at voting the airline $1,000,000 a year in cash subsidies.