Air Mauritius

Editorial

Dead Ends 

The Air Mauritius saga risks being put to silence now. Several years ago, it was found that over a long lapse of time when the company was under the stewardship of Sir Harry Tirvengadum (SHT), funds belonging to the company had been misappropriated under a visionary scheme of diversion of sales proceeds of air tickets. It involved a total misappropriation of about Rs 100 million rupees, which was ‘big money’ at the time. The device employed was to pay up fictitious commissions to the Rogers Aviation Company on supposed sales of tickets. The “commissions” were ultimately reverted back from Rogers to a black box held in Air Mauritius under the control of a few key individuals running the affairs of the airline. Air Mauritius used the diverted money to ingratiate all sorts of people, especially for financing the major political parties, but also by offering free tickets to holders of positions in “respected” institutions. The “transactions” were done in cash, courtesy of an important banking institution of the country.

When the matter came to the Supreme Court in 2003, Gerard Tyack, Financial Director of Air Mauritius, was found to have been one of the Air Mauritius select few who were involved in the misappropriation of funds. The latter had diarised the names of those to whom money had been handed under the table. His plea that he would have been simply executing orders did not prevail in court. Last year, the then Chairman and CEO of Air Mauritius, SHT, represented that he was incapacitated on grounds of health to withstand trial and was discharged by the court on this count. The matter appeared to have been silenced after this episode. But that was without reckoning with the previous CEO of Air Mauritius, Mr Bungsraj, who informed others about his recent meeting with and advice received from SHT on the proper running of Air Mauritius. In the circumstances, the DPP renewed the case for SHT to stand trial.

It now turns out that Air Mauritius would have suddenly decided to discontinue its case against all the protagonists concerned in this matter before the Supreme Court and take it up instead in front of the Mediation Court. Accordingly, a deal may be struck between it and those against whom it had filed the case in the Supreme Court in favour of a mutual settlement between the parties. Being of a bilateral nature, this settlement will most likely not be on for public disclosure. In other words, all the questions on good governance regarding a company in which the public sector has a controlling interest and which is listed on the Stock Exchange, will be removed from public scrutiny.

This decision to resolve the matter through mediation will negate years of a semblance of justice being sought by Air Mauritius to repair the damage done to its finances; in any event, the nature of the bilateral arrangements may be such as not to require making public the extent of repairs, whatsoever, obtained by Air Mauritius. Shareholders will most probably be told that it was not worth the while to pursue the matter anymore in the Supreme Court. No one will know who actually was giving orders for financing the various political parties which will have a quieter time as from now than the one they had while the extensive trial was going on. Public expectations about the firmness with which misgovernance is sanctioned in our country will remain unappeased. We will not have the chance to see the real faces of many who claim or have claimed being paragons of virtue.

The most recent decision of Air Mauritius concerning this case will put a lid of silence on the matter. It should be clear that silence is not golden under all circumstances and is not an option where public interest is superior to private pursuits. The question is whether the various back-patting we have been receiving on good governance from diverse international observers are more important than the clumsy way the Air Mauritius scandal dating back to so many years has been determined by administrative fiat. Sometimes, a single fly in the ointment is enough to rubbish all the good grades you may obtain. After years of suspense, thus, the compromise has brought the whole country to a dead end.

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Infinity BPO

We have, in an earlier editorial, drawn attention on the substantial amount of public funds that have been spent by the Additional Stimulus Package/ERCP of the government salvaging jobs in Infinity BPO, a call services company. Actually, no jobs have finally been salvaged despite all the public money injected in the company. At the last count, some of the laid-off workers were still staging a hunger strike to get paid back their dues.

A dramatic recent decision by the court has now placed the company under a regime of provisional liquidation. This situation happens when a company is unable to meet its obligations to one or several creditors who petition the court, in consequence, to get their dues repaid. On being satisfied, the court appoints a liquidator to employ his best endeavours to sell off the assets of the company and settle unsatisfied bills owed to third parties. The Commercial Court gave this decision yesterday on a case brought before it by the Municipal Council of Quatre Bornes for the company’s failure to settle outstanding municipal dues amounting to some Rs 5 million. To the extent there are sufficient assets left in the company, the liquidator will employ the proceeds of sale thereof to meet claims according to a laid-down sequence of ranking of creditors. No distribution takes place once proceeds from sales of assets have been exhausted after meeting claims according to the laid-down scheme of priorities. The liquidator has to sort out the matter and decide the extent to which laid-off workers will be compensated out of the available funds.

Unless the company can be salvaged by using hidden reserves, if any, this episode brings to a fatal end the efforts deployed by the Additional Stimulus Package/ERCP to save the company. The question that one may ask in this context is whether the public funds injected into the failed company have served any useful purpose barely a few months after they started being injected. On the face of it, none. No jobs were saved in the process which means that the Stimulus Package/ERCP have drawn a blank sheet on this count. This prompts the further question as to what depth of analysis was employed, if any, before deciding to inject the public funds, being given the short lapse of time thereafter when the company floundered. Another question is in order: given the general scarcity of public funds, some amount of prioritisation of use of such funds must perforce be made among competing demands. This being the case, how finely did the Stimulus Package/ERCP balance the efficiency of use of the public money among alternative competing demands when opening up the tap to pour the substantial public funds in Infinity BPO?

It may well be that the public sector enterprise which has ended up with the BPO Infinity building on its hands in this process can still recuperate some of the money spent. So, all is not lost to the government. However, the government intervention to acquire Infinity’s building has had the effect of carving the property out of the hands of the liquidator who has just been appointed by the court. That was surely not the main objective of public intervention in the company, of course. But the main objective of saving jobs was missed out without even as much as guaranteeing the business continuity of the enterprise. We reach thus another dead end and make way for liquidators to sort out the mess.

* Published in print edition on 1 April 2011