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Badilisha Lugha KISWAHILI

A320 lease was ministry project, says ATCL insider

4th March 2012

Top officials of the Ministry of Communications and Transport were in control of the lease project for an A 320 Airbus while the ATCL management as well as the board were bystanders and passive executors of the project, a veteran ATCL insider has declared in a personal newspaper column.

Byase Luteke, the pen name of a veteran member of the ATCL management who is privy to what goes on in the Board of Directors, made this observation in an article meant to give “a dialogue perspective on ATCL's A 320 saga” in his weekly column specialising in aviation matters, in the Business Times.

Essentially criticising the reporting on the lease by this newspaper, the columnist and ATCL insider made two critical observations, first that the lease process was tied to “government business” as it had a greater stake in the issue than the ATCL management, which was caught in the middle by a rapidly changing scenario of a far-flung business engagement.

The second key observation was that the lease was only a side-show to a more important concern at least on the part of the Chinese firm Sonangol, which entered into the disturbing lease contract with ATCL via its subsidiary, Wallis Trading also based in the Far East.

Luteke particularly objected to fingering David Mattaka, then ATCL chief executive officer saying that intimating he was responsible for the event “is tantamount to scapegoating,” elaborating that “had the CSHL (China Sonangol Holding Corporation) deal been successful, credit would have gone to the government, not the CEO. Finally, ATCL isn't creditworthy to buy aircraft on its own.”

What this means to observers is that the A 320 lease affair entirely started and ended with the principal shareholder, that is, the government, and this insinuation is brought out when Luteke explains the reaching of the lease contract and who made the decision, or was reticent to reverse some previous decision.

It means that while the shareholder's business, ATCL isn'\t creditworthy enough to purchase even one aircraft, the principal shareholder has adequate funds to commit to a lease contract whose total implication is the purchase of two new aircraft of the sort that was being leased.

It is thus not a question of the govrnment not having the capital to inject into ATCL to purchase new aircraft and engage in aviation business with candor and dignity, but a deliberate maintaining of a hobbling ATCL so that, on the pretext that it has no aircraft, lucrative lease contracts where half of the money goes into foreign bank accounts of state officials can be arranged.

That this is the case is noticed in the writer's explanation of how two aspects of the lease played out to the finale, first the fact that the signing of a loose contract for a plane that was soon to be grounded was shareholder interest rather than the management, and second, the state reneged on promises to CSHL.

From the overall account that Luteke makes of what CSHL has committed to ATCL, this activity wasn't an expansionary activity of own airline business or anything of the sort, but rather as a 'sweetener' to other projects it was pursuing, chiefly obtaining rights or concessions for exploring some rare minerals.

While the writer doesn't quite clarify on what this entailed, speculation shall unavoidably focus on the continuing tussling among two or three major powers to obtain exclusive rights on the uranium extraction zone.

Among the bidders is a Russian firm which has some discreet government support, and one or two US multinationals whose government support hasn't quite come out yet, but if Secretary of State Hillary Clinton came out in fulsome praise for a 100 MW jet engine thermal power facility, what of State Department concern as to who obtains rights to a uranium concession?

The question that comes up is who engineered the faulty contract, as three parties are involved, or say four of them, two on one side and two on the other, namely China Sonangol and Wallis Trading on one hand, and then the Ministry of Transport and then ATCL on the other hand, which the writer gives clues while not raising the matter substantially.

On the face of it, one would form an impression that Wallis Trading was a secondary entity that China

Sonangol uses for its marginal trade activities, for instance in this case, where controversy is likely to arise on the good faith underlining the contract, so it is advisable that the brand name be spared the blame throwing.

In like manner on the other side, officialdom in the ministry would have found it difficult to engage the government outright in such a scheme, so it it helpful if there is a state airline badly in need of lease aircraft, and through such need, a whopping 300bn/- and counting could be arranged as liabilities for plane leasing.

The point is that bureaucracy needs to find a way of siphoning such amounts of money from the govenrment, so it should be large enough so that it is adequate for all parties involved, here meaning the various layers of bureaucracy (in the sense of sector ministries, financial institutions and proper state authorities) as well as the foreign companies enabling the siphoning of money to take place.

In other words the plane lease in its loose manner was something that the ministry wanted, in precisely the manner indicated by Luteke, which is sensible because ATCL, even if it had a penchant for rather bad contracts, would at least make sure that the plane is working even if the payments are large.

ATCL as an aviation firm would be hard put to arrange an aircraft effigy with which to siphon away cash, but the ministry is a different matter as their professional status or dignity isn't affected by the state of ATCL aircraft – outsourcing trouble the way CSHL asks Wallis Trading to do its dirty work.

Evidently CSHL could not have been the source of the problem because its interests were in strategic minerals, not defrauding petty cash from rock bottom ailing Third World aviation firms, while Wallis Trading could not have engineered such contract as it would have to be presumptous so as to believe aforehand that ATCL would accept it. Only the ministry would be undisturbed and capable of pulling it.

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