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08.10.2004 Business & Finance

Ghanair/GIA Deal: Something Is Rotten

By Ghana Palaver

(Ghana Palaver) -- We smell something rotten in the decision of the NPP Government to sell off Ghana Airways, the national airline, to a supposed Ghana International Airline whose two principal partners are based in the Land of the Mormons, Utah, USA.

We have a nagging feeling that the country is not being told the whole truth.

First of all, Ghana International Airlines (GIA) did not exist until the NPP Government put Ghana Airways on the market. It is a ³Special Purpose Vehicle² (SPV) formed purposely to partner the NPP Government to buy out Ghana Airways. If the NPP Government had so much problem with the NDC Government having a ³Sole Purpose Company² (SPC) set up for the purpose of purchasing the Presidential Jet Gulfstream II, to the extent that for that reason President Kufuor refuses to use the aircraft, thereby causing great financial loss to the state, then they should have the same problem with an SPV being set up for the Ghana Airways deal, for the purposes of an SPV and an SPC are the same - companies set up solely for a once only transaction.

Secondly, GIA is an artificial consortium of Sky West Airlines, a successful Utah-based regional carrier, Sentry Financial Corporation also of Utah, and some Ghanaian investors. So far, the Ghanaian investors have remained faceless. For the sake of accountability and transparency, is it too much to ask that Ghanaian investors involved in the deal be unmasked?

Third, after all, with its strong Mormon connections, and with the sudden strong re-emergence of the Mormon Church on the Ghanaian scene, and with the recollection of the following recent dealings between the NPP¹s Jake Obetsebi-Lamptey and the Mormons:

(i) The leasing of prime land on Ghana¹s ceremonial road to the Mormons for the construction of their West African regional Temple;

(ii) The paid visit to Utah by Jake Obetsebi-Lamptey;

The admission of Jake¹s daughter to the Mormon University at Salt Lake City;

(iv) The grant of scholarships to NPP journalists to be selected by Jake to the Mormons;

(v) The visit of President Kufuor himself to Salt Lake City at the invitation of the Mormons for what nobody knows;

there is bound to be suspicion and speculation, as indeed there is, that Jake Obetsebi-Lamptey and John Agyekum Kufuor are involved in the GIA deal, or that whichever Ghanaian investors are involved are only fronting for Jake and Kufuor.

Fourth, the processes leading to the selection of GIA as the buyout partner for Ghanair havethemselves been called into question. The previous efforts to deal with the problem of Ghanair were seen as botched attempts by the NPP Government to ditch the airline as the Government, the sole owner, looked on virtually unconcerned and uninterested in going to the aid of the airline, except to speed up its demise. The Government¹s refusal to support the airline financially until July 24, 2004 has been cited in this regard.

Five, and also cited in this regard, was the nearly accepted proposal by ŒNationwide Airlines of South Africa, a family airline with two small aircraft and a turnover of $5 million per annum to take over Ghanair. We recollect in this connection that it took the fiery vigilance of the Ghanaian media and a now alert Ghanaian public to abort the deal, with all the rumours of a kickback having been paid and having had to be refunded by a Minister involved in the deal.

Six, the sudden decision of the NPP Government on 24th July 2004, once the GIA entered on the scene, to take over the entire US$160 million debt of Ghanair, is viewed with extreme suspicion. Why not? If this debt could so easily be taken over, why did the NPP Government have to wait till Ghanair ³crashed² and the GIA emerged on the scene before announcing the absorption of the debt which after all was the albatross that was hanging around the neck of the airline and which was choking the airline to death?

Why were the numerous proposals for early governmental intervention to avoid disgrace all met with extreme lethargy, obviously deliberately until July 24, 2004?

Seven, we are informed that GIA was ranked third among the bidders for the airline when proposals were called for in October 2003 from four interested parties. Specifically, we are informed that the rankings of the bidders, according to the Price Waterhouse and Coopers¹ evaluation of the proposals, were as follows (scored out of 100):

1st - Fidelity Group (KLM/Kenya Airways) - 67;

2nd - Ghana Air Partners - 51;

3rd - Ghana International Airlines (GIA) - 41;

4th - Corporate Trade Solutions - 31.

So what is the untold story of GIA being catapulted from the 3rd position to become the preferred proposer?

Eight, we are again informed that the GIA bid was the most favourable because they were ready to assume risk. But what risk exists as at today when the Government has absorbed the US$160 million debt? And were the other bidders given the chance to review their proposals once the Government decided to absorb the debt?

Ninth, we learn that Sky West is only a successful regional airline in the USA. Is the business environment in West Africa the same, such that we can use their track record in the USA to measure their likely performance in Ghana and West Africa?

Ten, we are told that GIA will enjoy a tax holiday for five years. Why is this still necessary if the debt has been absorbed by the Government?

Finally, let us remember that the NDC Government handed over the following very viable air routes to the NPP Government:

(i) Accra-Heathrow (UK);

(ii) Accra-Düsseldorf (Germany;

(iii) Accra-Rome (Italy);

(iv) Accra-Harare (Zimbabwe);

(v) Accra-Johannesburg (South Africa);

(vi) Accra-Dubai (UAE);

(vii) Accra-JFK/New York (USA);

(viii) Accra-Baltimore (USA).

The NDC Government also handed over to the NPP Government the following assets:

(i) Three DC 10 Aircraft for long haul flights;

(ii) Two DC 9 Aircraft for West Coast flights.

At the time the NDC was leaving office, we are informed that Ghanair also had a debt liability of US$100. In the three and a half years that the NPP Government has been in office, the following has been their record of Ghanair:

(i) Ghanair has lost all the eight very lucrative routes listed above;

(ii) All five aircraft have also been lost to the state;

(iii) The airline¹s debt has risen from US$100 to US$160 million.

Can GIA, a company of dubious background, with dubious credentials, obviously tacking on to the political tail-coats of the ruling NPP Government, salvage the ailing national airlines, or is there a grand design for them and their faceless and invisible Ghanaian collaborators to move in there, strip the airline of its last remaining assets, make a quick buck, and leave the Ghanaian taxpayer home and dry.

Something indeed is rotten in the company called Ghana Airways, and something is rotten in the state of Ghana!!!

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