By Nathen‘ Jolly‘ Green. July 09, 2020
LIAT has been traded for many years while making massive losses, and those losses were compounded by the gigantic taxes lodged against local air travel by the shareholder governments, despite many warnings about the excessiveness of those taxes. But each time LIAT got into financial difficulties, the shareholder governments put money in to make up the shortfalls. Which meant staff wages got paid, along with creditors. So, people stayed with LIAT, because they knew, or thought they knew that the shareholders would always bail out LIAT. Everyone thought their job was safe, and the creditors thought their money was safe. But LIAT was bought by the shareholders as an insolvent company and was knowingly traded by them ever since as an insolvent company. Now when it suits them, the want to walk away leaving a trail of debts.
The employees and creditors of LIAT were lulled into a false sense of security for many years past. I remember in 2013 a Bajan lady journalist called Beverly Sinclair,interviewed prime minister of Saint Vincent and the Grenadines Dr Ralph E Gonsalves. She did so on a range of issues, including LIAT, in which St. Vincent and the Grenadines, Barbados, Antigua and Barbuda, and, to a lesser extent Dominica, are the major shareholders.
Gonsalves who was then and is now the Chairman of LIAT‘s shareholder governments he was or is also CARICOM‘s lead spokesperson on air transport.Therefore, people would expect to be able to believe any statements a man described as the Honourable Prime Minister of SVG made as head of authority in both those positions. He was the man who everyone regarded as the spokesman, the leading authority even, for both CARICOM and LIAT on matters of local and regional air travel.
Gonsalves always had plenty to say about everything, and he certainly had plenty to say about LIAT. He must have had the full backing of the shareholders and CARICOM because none of them objected or protested at the statements he made or the actions he took, he was acting on their behalf as their official spokesman, administering their policies.
LIAT had made more massive losses, and the shareholders were putting in more money to keep it running. In the interview, Ms Sinclair opened with “It is generally good business sense to only invest in viable enterprises.” Gonsalves seemed to be unsettled by the question. But he argued that more countries needed to invest in LIAT.
To which she replied, “But, Dr Gonsalves, if you have a business and you are asking investors to come and put money in it, it should be a business that‘s viable.”
Gonsalves reply may surprise many people now because it did then. “With respect, you completely misunderstand air transport.” “Ma‘am, ma‘am, ma‘am, you completely misunderstand regional air transport.” She then accused the Prime Minister of assuming what she knows.
In his usual belligerent way, he went on to say “From that comment. Let me tell you why you don‘t know. You don‘t know because air transportation inside of the eastern Caribbean is not anything of the luxury type of investment. It is an absolute necessity — an absolute necessity for islands“. He further stated that when his Unity Labour Party government decided to invest in LIAT shortly after coming to office in 2001, he told Parliament that he was investing in an insolvent company.
There, right there, is the killer for Gonsalves ‘he told Parliament that he was investing in an insolvent company‘. Because now he has told everyone he invested in a company knowing it was insolvent.
Gonsalves told Ms Sinclair that he told lawmakers then that if LIAT didn‘t exist, it ought to have been invented “and that the important thing is for us to get involved in that company, put money in it to try to make it better“.He said that “until this recent problem, we have made LIAT better than what it was in 2001.
Gonsalves continued “This is why I make the point with crystal clarity. A regional airline of this kind, this is not anything which is going to make money. This is a service that must be provided, and we seek, if we can break even with this service, fine. But you cannot make money out it.“
So, there was an admission that they continued trading LIAT, knowing it was losing money, hoping it would break even, but not expecting to, reflected in his nonchalant style of reply. Gonsalves said that the same investment criteria as for a hotel or a beer factory could not be used in relation to regional transport.
All this supportive rhetoric by Gonsalves built false confidence in all the creditors and employees, much as I suspect it was designed to do.
Please read the whole article; it was a sterling piece by IWitness News SVG and will be a significant contribution to the historical records of SVG and the region. Be sure to read the comments they are all exposing and genuinely relevant.
https://www.iwnsvg.com/2013/09/10/liat-is-not-a-business-like-other-businesses-gonsalves-says/
Under the direction of Dr Ralph E Gonsalves, PM of SVG, who is also Chairman of the Shareholders, spokesperson and for CARICOM on air transport. LIATS shareholder governments have been directing LIATS board of directors for years, the directors with the full knowledge of the company being insolvent, they have been trading the company while insolvent.
Therefore, the directors and certain politicians from shareholder government who have proven to be, and acted as de–facto directors, may perhaps be held in lawresponsible for the debts, due to knowingly trading the company and in doing so incurring further obligations, liabilities and debts. Misleading the public, the staff and workers of LIAT and all the creditors, including the bankers and aircraft lessors into believing the shareholder governments would keep funding LIAT whenever they got into financial difficulties. So, unless the shareholder governments announce they are paying all debts in full the shareholders, directors, including de–facto directors, should perhaps be held liable and responsible for paying all debts in full and sued for the same by everyone who lost money in LIAT.
Talking of de-facto directors, perhaps we should also remember the hiring of Jean Holder, who did that? The buying of new aircraft which at the time everyone said were an unsuitable choice, who approved that? Was it the board of directors or the Chairman of the shareholders?
There is so much written about who said what out there that it would take a hundred pages to list it all, I could do that, and perhaps I will, at some other juncture.
What I am saying is that the shareholder governments cannot hide behind liquidation, where everyone loses money except them. They are the culprits in trading while insolvent and as such are responsible for the losses. They acted as de-fact directors. They provided the mouthpiece that fooled creditors and employees, so they should pay up.
As the director of an insolvent company, you have specific duties and responsibilities you must meet. If you fail to uphold those responsibilities, then you could be accused of wrongful trading and held personally liable for company debts. Engaging in any of the following practices while you are in control of the affairs of an insolvent company will significantly increase the risks:
Carrying on trading with no intention of repaying
You must not continue to enter new contracts and trade when you know you have no reasonable prospect of repaying your creditors.
Attempting to repay debts through fraudulent means
If you try to repay debts through dishonest transactions,you cannot fulfil or using misleading information to obtain loans; then you could be convicted of fraudulent trading. Unlike wrongful trading, fraudulent trading is a criminal offence that could lead to a custodial sentence as well as personal liability for company debts.
Selling assets for less than market value
You might think that selling assets at a reduced price to raise funds quickly and repay your debts would be an accepted practice. However, it could lead to your creditors receiving less of the money they are owed on liquidation. The court can reverse such transactions and order you to refund the proceeds of the sale.
Repaying some creditors and not others
Company directors are obliged to act in the best interests of the creditors. Making payments to some creditors, and not others are called showing ‘preference‘. As an example, you may choose to repay a personally guaranteed loan or pay a supplier you know personally. The court can reverse such payments and order the creditor to refund the money.
A Danger for LIAT creditors
A possible danger for the creditors of LIAT, one and all, is that some of the shareholder governments leaders control the insolvency laws in their own countries. Some [at least one] have even been known to make or alter laws [not insolvency laws] overnight which could protectthemselves, colleagues, and wrongdoers. Taking the bill to Parliament in the morning, giving it three readings, and then walking away, and allowing others to do the same, scot–free of any liability, or prosecution under the law. That was when the honourable went in a different direction.
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“So, people stayed with LIAT, because they knew, or thought they knew that the shareholders would always bail out LIAT. Everyone thought their job was safe, and the creditors thought their money was safe”
Who ever thought that needs to spend time at Clare View.
Notes From A Native Son Of The Rock! “What is left out is as important as what is there.” – Toni Morrison, “Rootedness: The Ancestor as Foundation!”
Clare View! It depends on your vantage point! From Clareview Plantation, one’s vista may take in the broad expanse of the Atlantic Ocean fingering Willoughby Bay, the confluence of the Caribbean Sea and the Atlantic Ocean entwining and lapping at the Intersection of North Sound or the calming waves of the Caribbean Sea caressing and massaging, where the beach is just the beginning, from Runaway Bay to Hawks Bill!
All of the English speaking SIDS along the Caribbean Archipelago are “Small Places!”
“For the people in a small place, every event is a domestic event; the people in a small place cannot see themselves in a larger picture, they cannot see that they may be part of a larger picture, they cannot see that they might be part of a chain of something, anything. The people in a small place see the event in the distance heading directly towards them and they say, “I see this thing and it is heading towards me.” The people in a small place then experience the event as if it were sitting on top of their heads, their shoulders, and it weighs them down, this enormous burden that is the event, so that they cannot breathe properly and they cannot think properly and they say, “This thing that was only coming towards me is now on top of me,” and they live like that, until eventually they absorb the event and it becomes a part of them, a part of who and what they really are, and they are complete in the way until another event comes along and the process begins again.” – Jamaica Kincaid, A Small Place!
Our Vision of the Caribbean Archipelago continues to be shaped by the economic development patterns of North Atlantic buccaneers, privateers and planters warring and plundering the islands from invasions, to English, French, Dutch and Spanish governance, to mining, to genocide of the Amerindian people, to human trafficking of Africans and agriculture in the triangular trade from Africa to Europe! We inhabit these Islands surrounded and shaped by the Atlantic and Caribbean! We are connected yet separated by the Sea and Ocean with minds clouded by the Sahara Dust! “Could a Man’s existence be like a bridge, poised between the water that birthed him, and the earth that would bury him.” – Edgar O Lake, The Devil’s Bridge!
Along the Caribbean and the Lucayan Archipelagos a new vision and post “Covid and Rona” reality beckons to engage the Caribbean Sea and the waters around the Lucayan archipelago as highways with these SIDS as off ramps just as the indigenous people did! It may be too late for many of us old “stagers” but the youth steeped in “Minecraft” Technology surely can!
“Come, then, comrades; it would be as well to decide at once to change our ways. We must shake off the heavy darkness in which we were plunged, and leave it behind. The new day which is already at hand must find us firm, prudent, and resolute. We must leave our dreams and abandon our old beliefs and friendships from the time before life began. Let us waste no time in sterile litanies and nauseating mimicry. Leave this Europe where they are never done talking of Man, yet murder men everywhere they find them, at the corner of every one of their own streets, in all the corners of the globe.” – Frantz Fanon, The Wretched of The Earth!
KILLING OF LIAT: INSOLVENCY? – SERVICE-ORIENTED
The author has made some ‘…salient and valid points’ on a ‘…debt-ridden entity and people concerned in its direction and operations,’ thereby bringing it on the brink of collapse.’
Don’t think that only ‘PM Gonsalves’ knew that ‘LIAT’ as an air transport entity was operating in a mode of ‘Insolvency.’
Do believe that those that committed ‘…Government Revenues or Public monies,’ in its operation knew several things;
(i) …They would be Cash flow difficulties;
(ii) …Balance sheet difficulties; and
(iii) …Heavy subsidies.’
By these, they shall have known or reckless not to know that ‘Air Transport was primarily ‘…Service-oriented,’ and not necessarily ‘profit-making.’
Even so, the airline shall have been so operated to cover associated costs.’
Seems now that only ‘God’ can save ‘LIAT.’
Some skeptics still believe that ‘God’ may not be willing to put any money in it.
Likened to the Sinner, required to be born again,’ this entity may have to be ‘…re-capitalized and restructured.’
They shall have also known that in order to lessen ‘Subsidies,’ there had to be;
(a) ‘…Operational efficiency;
(b) …Travel-affordability; and
(c) …Low operational taxes.’
Lest its wings be clipped, there shall be new innovations for; (i) ‘ efficient operations; (ii) …effective management; and (iii) …be financially-positioned to protect its survivability.’
Notes From A Native Son Of The Rock! “I’ve never invested in any airline. I’m an airline manager. I don’t invest in airlines. And I always said to the employees of American, ‘This is not an appropriate investment. It’s a great place to work and it’s a great company that does important work. But airlines are not an investment.” – Robert Crandall, Former American Airlines CEO!
The venerable RP, sleuth extraordinaire, political commentator, economic savant, socio-cultural visionary, technology observer and legal luminary has pronounced and shouted a Hanging, Murder, Lynching or Mercy Extermination in the “KILLING OF LIAT: INSOLVENCY? – SERVICE-ORIENTED!”
“To the people in a small place, the division of Time into the Past, Present and the Future does not exist. An event that occurred one hundred years ago might be as vivid to them as if it were happening ths very moment. And then an event that is occurring at this very moment might pass before them with such dimness that it is as if it had happened one hundred years ago. No action in the present is an action planned with a view of its effect on the future. When the future, bearing its own events, arrives, its ancestry is then traced in a trance-like retrospect, at the end of which, their mouths and eyes wide open with their astonishment, the people in a small place reveal themselves to be like children being shown the secrets of a magic trick.” – Jamaica Kincaid, A Small Place!
Flying short haul inter-island routes with passengers and airfreight would of necessity require ‘Heavy subsidies.’ and ‘Low operational taxes.’ which the Comrade has immediately decreed to get “SERVICE-ORIENTED” OCL Barbados based at Argyle into the friendly Caribbean skies on the 12th day of Christmas in July 2020!
“Knowledge is like a garden: if it is not cultivated, it cannot be harvested.” – African Proverb!
The Big Three: Jamaica has absolutely no interest and cast its gaze ever northward; TnT with CAL will only entertain routes that are profitable given the financial drag; and, Barbados under an IMF regime of Fiscal Reform and Structural Adjustment has no fiscal space! The little Eight: Sadly have just reverted to the Dreadful Past! It should be the Little Six: Grenada will cling to CAL and be hard-bound to the South as its PM demonstrated in his hostility to the CWI AXIS of Cameron and Browne – Keep your eyes on the Sticky Wicket Prize; The Comrade in St. Vincent and The Grenadines is rightfully proud of Argyle and has made it abundantly clear that with his local short haul inter-island air carriers, his people’s requirements for southern movements are satisfied; St Lucia with service from Air Caraibes, CAL, Inter-Caribbean and the Vincentian “puddle jumpers” has always made it known that as long as LIAT was based in Antigua and Barbuda they had no interest in contributing to workers’ welfare on, and, enhancing the Rock’s coffers! The Former Head of SLASPA, just as the Ancient Mariner, would tout that line to all and sundry! He resurfaced from Florida with GPH and installed one of his disciples to head up the Operation on Antigua! No one paid a peep to this mere voice in the wilderness when the info was posted! Dominica is caught in the Deep Blue! St. Kitts & Nevis has turned their eyes to the North Star since they do not see any possibilities of being an airport Hub!
All Airlines worldwide are reducing their fleets by a minimum of 20% and staff from 30 to 50%! LIAT could not have escaped unscathed! Ethiopian Airlines is one of the few 100% Government Owned Airlines that run a profitable and comprehensive fully integrated Airline System! Mr Prime Minister, visit their Strategic Plan and engage! They have Dash 8’s in their fleet with the capacity for quick internal training in all operations! If you could not get the OECS to act on maintaining FAA Class 1 requirements why would you think they have LIAT as a Caribbean Institution in their Strategic Imperatives! You are on your own and with Urgency and Nimbleness can clear the Sunny Caribbean Skies from the drifting Sahara Dust clouding Caribbean Shareholder minds!
With its wings clipped, the KILLING OF LIAT: INSOLVENCY from no new innovations delivering; (i) ‘ efficient operations; (ii) …effective management; and (iii) …be financially-positioned to protect its survivability.’ will be the outcome and verdict!
Times of great uncertainty have a way of demonstrating what people and institutions are made of, and many have been impressed with the innovation, resilience and motivations of the Antigua and Barbuda LIAT workforce! It is a resource and technological capacity that few SIDS possess and should not be permitted to wither on the vine or discarded to the vagaries of the shiftless Caribbean waves and sinking sands! “What is any better than operating and acting out of our own collective interest? What is any greater than seeing the world through our eyes? What resonates more with people than understanding that we are central to our history, not someone else’s? If we can, in the process of materializing our consciousness, claim space as agents of progressive change, then we can change our condition and change the world.” – Dr. Molefe Kete Asante, The Afrocentric Eye!
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