How BWIA's flight plan went off course An investigation by CAMINI MARAJH BWIA is hurtling off the runway, buffeted, in part, by the turbulence of the Gulf War, the lingering effects of 9/11, high fuel prices and a global economic slowdown. But in the soft underbelly of the airline, there are allegations of greed, personal vendettas, smear tactics, secret companies in offshore tax havens, suspicious profit aircraft acquisitions in subsidiary Cayman companies, income from the sale and lease-back of assets booked into the accounts as profit and a compensation package for the airline's top brass to which only the Prime Minister and a few members of the board are privy. Conrad Aleong, the man in the eye of the storm, has also been taking some hard knocks over his management style, fights with BWIA's four unions, his private consultancy business, CA International and accounting questions about the airline's three consecutive years of historic profits. Aleong's response was furious to questions about his private company, CA International and specific BWIA transactions, accusing the unions of spite and muck-raking. He also dismissed as "ridiculous" and "total rubbish" suggestions that he bolstered BWIA's bottom line by booking income from frequent sale and lease-back of assets. CA International was hired by the Lawrence Duprey BWIA board of directors in January 1998 through a second Aleong company, Air West Indies Ltd. The performance-based management supply contract was not then, nor is it now disclosed to the full board of directors. Aleong, who was in the CEO's chair at BWIA prior to the 1995 Acker privatisation has scoffed at reports suggesting that his private company, of which he is a director has benefited from any finders fees in respect of any transaction involving BWIA. His company initially provided management supply contracts for BWIA's top five people, himself included. He said he is not paid anything for providing top management services to BWIA. The CA contract, managed through an executive payroll paid out by the company's auditors, PriceWaterhouseCoopers (PWC), is said to be worth well over US$40,000 a month. Aleong, who said CA was a Port of Spain registered name, had no explanation for why it did not turn up in a search at the Registry of Companies. Making clear that it was a "consulting division" of his other company, AWIL, he said he registered it as a brand name. The records of the 1996 incorporated-AWIL, however, reflect no association to a CA International. The name, CA International turned up, however, on the Cayman registry as having been recently voluntarily struck off the register. It was exempt from all filing requirments, including the names of shareholders and or directors. Aleong said the Cayman CA International was not his. He also expressed surprise that a No. 2 company, bearing the identical name to the wholly owned BWIA subsidiary, West Indies Aircraft Ltd, turned up with the same registered address as the BWIA WIAAL, at PO Box 265 GT, Georgetown, Grand Cayman. "I have no idea who No.2 is," he said when asked if it was a BWIA entity. He said he would have to check with the airline's corporate secretary. "I really don't know those things. They (company lawyers) arranged the corporate matters. They can answer that." He said it could well be another BWIA company which owns one of the BWIA-purchased Dash-8s. "I think we may have put one aircraft in one company and another aircraft in another," he said, explaining that it was much easier to dispose of an asset through the sale of a special purpose company. Told that WIAAL was listed as the financier of all three BWIA Dash-8s: 9y-WIN, WIL and WIP, Aleong said: "I don't know if WIAAL has three planes." He said he would have to check with the company's lawyer. But airline sources said if the planes were BWIA-owned and held in a secret offshore company, they would have to be properly disclosed in the accounts. BWIA bought its first two Dash-8s in February 1999 at US$10.9 million apiece. It's wholly-owned Cayman subsidiary, WIAAL financed 85 per cent of the sticker price, putting up US$9.2 million for each airplane through a 12-year loan at an annual interest rate of 8.3175 per cent repayable in fixed monthly installments of just under US$90,000 The third aircraft, another Dash-8, was bought 10 months later at US$11.2 million. Of this, 90 per cent, or US$10.1 million was financed via a similar 12-year structure with an interest tag of 9.482 per cent and with monthly payments of US$105,612.76. Again, the loan on the third aircraft was secured by a mortgage on the aircraft and a pledge of WIAAL shares. What those shares are is a secret since all the companies are exempt from providing any information on the public record. Two years later, in December 2001, Caribbean Aircraft Acquisition Ltd, another special purpose company carrying the same Cayman address as the two WIAALs purchased an identical Dash-8 bought for the 49 per cent BWIA-owned, Tobago Express at a substantially cheaper price of US$9.6 million. Aleong said he got deep discounts on all of the planes carrying sticker prices ranging from US$12 to US$13 million. In the case of the Tobago Express plane, Aleong said the airline benefited from a delivery order that went sour. A Chinese buyer, who had placed a US$1 million deposit on the plane was unable to take delivery. Tobago Express got the discount. Coincidentally, WIAAL No. 2 is a stakeholder of Katerserv, a company incorporated in 1998 by a piano technician and the company holding a lucrative contract from a majority owned BWIA subsidiary, Allied Caterers Ltd. ACL has subcontracted its entire catering facility to Katerserv of which BWIA now has a small stake. Several BWIA officials, inlcuding Aleong are listed as directors. In the 2001 BWIA accounts, the catering operation was said to be worth US$360 million. Aleong, however, said it was cheaper to subcontract ACL's facilities to Katerserv. Also under scrutiny is a put option placed on a block of Equant or Sita shares sold to an unidentified buyer for US$5 million in 2000. BWIA recorded a US$2.4 million profit on the transaction in its December 2000 accounts. The transaction which gave the buyer a put option exercisable by July 2001 reappeared in the following year's accounts, with BWIA repurchasing at US$5 and taking a loss or what the accounts termed a "fair value adjustment" of US$3.5 million. Financial analyst and former Citi-banker Ved Seereeram claimed the transaction was improperly recorded. "It should have been recorded as a loan and not as a sale of asset for the purpose of inflating profit and understating the liability," he said, declaring that "the whole transaction was a clear sign that the books were manipulated to report a much better picture than the actual state of affairs." But Aleong questioned: "Why would a chartered accountant firm like PWC sign an audit statement if it was not acceptable accounting practice?" he asked rhetorically. Declaring that he did not deal with the matter, he said: "Why don't you ask William Lucie Smith. He and our financial controller deal with those questions and when they finish deal with those questions it is brought to the audit committee of the board. So I don't understand these questions." Lucie Smith, the Managing Partner of PWC said the question should be directed to BWIA. "I don't know," he said, "you will have to ask them direct". On the sale and leaseback of L1011-airplanes, Aleong said: "You always do that when you are trying to raise some money." Two of the sales, however, were done in 2000, year three of BWIA profits. It is alleged BWIA broke several agreements with different aircraft financiers prematurely to repurchase and resell L1011s. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.carstt.com TnT Webdirectory: http://search.co.tt *********************************************************