While Sayed-Khaiyum is busy trying to dress up his takeover of the Qantas influence over Air Pacific decision-making, the Business Times, a Malaysian business paper with no interest in our politics, has a headline which says it all: “Fiji seizes control of Air Pacific”. No-one is fooled. It’s yet another attack on the investment of a long time investor. This sends a signal to the world that no investment is safe in Fiji. Khaiyum is the biggest single obstacle to economic growth in our country. Either Bainimarama is too stupid to understand this or he has no say, because Khaiyum has some kind of hold on him through evidence of corruption. NAVOSAVAKADUA
I do wish anti-bloggers would provide hyperlinks to their sources, It only takes a couple of seconds and it would allow readers to check their claims. The unnecessary absence of sources is a form of deceit.
The Business Times heading was correct but it was not the Business Times, as Navosavakadua claims, that said Fiji seizes control — it was Fiji's military regime!
Here is the article:
SUVA: Fiji’s military regime said it had seized control of national carrier Air Pacific from Australia’s Qantas yesterday because it did not want foreigners to own or control Fijian airlines.
The South Pacific nation’s government, which took power in a 2006 coup, denied the move amounted to nationalisation, saying it fixed an anomaly that gave Qantas control of the carrier while having only a 46.3 per cent stake.
“(The) government has now corrected the activities of prior Fijian governments, which allowed foreign citizens to control Fiji’s national airlines,” it said in a statement. AFP
In fact, the Fiji Government did not say it had seized control. Fiji's "Biggest Single Obstacle"explains, in response to a Qantas denial, why they took this action:
The Business Times heading was correct but it was not the Business Times, as Navosavakadua claims, that said Fiji seizes control — it was Fiji's military regime!
Here is the article:
SUVA: Fiji’s military regime said it had seized control of national carrier Air Pacific from Australia’s Qantas yesterday because it did not want foreigners to own or control Fijian airlines.
The South Pacific nation’s government, which took power in a 2006 coup, denied the move amounted to nationalisation, saying it fixed an anomaly that gave Qantas control of the carrier while having only a 46.3 per cent stake.
“(The) government has now corrected the activities of prior Fijian governments, which allowed foreign citizens to control Fiji’s national airlines,” it said in a statement. AFP
In fact, the Fiji Government did not say it had seized control. Fiji's "Biggest Single Obstacle"explains, in response to a Qantas denial, why they took this action:
MEDIA RELEASE: QANTAS MISLEADS ON VETO CLAIM Fijian Attorney-General and Minister for Civil Aviation Aiyaz Sayed-Khaiyum released the following statement today in response to Qantas:
Qantas’ assertion that it does not have veto or supermajority power over key business decisions at Air Pacific is patently false and misleading.
For actions pertaining to 19 areas of operations, including the following, by Air Pacific or any of its subsidiaries there requires the approval of two thirds of the directors (six of the nine directors).
- Adoption of the company’s budget
- Entry into any major commercial or joint venture agreement
- Any major variations to air service schedules
- Commencement of any new air routes
- Appointment of the chairman and any deputy chairman
- Appointment of the managing director
- Granting of any mortgages
- Employee incentive schemes
Furthermore, so long as Qantas holds more than 40% of all the voting shares in Air Pacific, Qantas directors must constitute more than one third of the directors present at the meeting for there to be quorum in respect to any of the aforementioned actions (at least two of six directors).
These stipulations are in place notwithstanding the fact that the Fijian Government owns 51% of shares and appoints five of the nine directors.
Attached for reference are the related articles of association.
-ENDS-
Air Pacific is the major airline used by tourists, and tourism is now Fiji's most important source of income. The Bainimarama Government has always acted to prevent any possible threat to the economy and its power base. Hence the Media Decree that ousted Murdoch interests in the Fiji Times; the Essential Industries Decree that restricted union access to airline workers; and recent talk about Government possibly buying the Fiji Sugar Corporation.
WEEKEND READING • Allen Lockington column • 2010 Was Not a Good Year for the Workers by Fr Kevin Barr • The Great Council of Chiefs, a Colonial Invention by Victor Lal • Known Unknowns and ANZ Sanctions on Fiji by Scott MacWilliam
ED. NOTE. The A-G may be correct in saying Qantas's 4 Board seats gave it opportunities to render ineffective Fiji Government's 5 seats but he provides no examples of when Qantas actually used its powers in this way. The A-G's move may have been motivated for the reasons he has given, it could be a smart business move, or it could merely be an extension of previous practices.
Air Pacific is the major airline used by tourists, and tourism is now Fiji's most important source of income. The Bainimarama Government has always acted to prevent any possible threat to the economy and its power base. Hence the Media Decree that ousted Murdoch interests in the Fiji Times; the Essential Industries Decree that restricted union access to airline workers; and recent talk about Government possibly buying the Fiji Sugar Corporation.
Whatever the reasons, there will almost certainly be two consequences, one possibly beneficial, the other definitely not. The action will probably lower Air Pacific's share price, make it less attractive to other investors, and less costly for Air Pacific to buy out Qantas. Both companies would be pleased to see a buy out but Qantas's current asking price (F$70 million) is too high for Air Pacific.
More generally, the move against Qantas will do nothing to restore investor confidence.
WEEKEND READING • Allen Lockington column • 2010 Was Not a Good Year for the Workers by Fr Kevin Barr • The Great Council of Chiefs, a Colonial Invention by Victor Lal • Known Unknowns and ANZ Sanctions on Fiji by Scott MacWilliam
14 comments:
I can now see why the recent decree to protect Ministers and Media from public releases.
We haven't seen the end of this
saga. Khaiyum hasn't mentioned specifics.
If pushed he certainly may release information.
There is no point griping about Navosavakadua’s post. The essence of the story is there and whether he said Fiji or Fiji’s Military regime makes not the slightest difference. In fact in my view the former is less damaging than the second.
The key point here is that Khaiyum has a record of interfering with foreign businesses in Fiji. He does it unilaterally, often without consultation and as we all know there is no redress in the courts. Even if we take his arguments at face value, which I do not, the overall effect is contributing to the dire straits of the economy and the lowest levels of investment on record.
To move Fiji forward we need a growing economy and I am afraid we will never have that with Khaiyum and Bainimarama controlling things. Even after an election, if one happens.
They are incapable of seeing the bigger picture and the consequences of their unending line of ill thought out decrees.
So why can't the regime get a soft loan from china to purchase the shares from Qantas? It is not as if they are afraid of asking for more money,and given they are just swell managers, and can publish dcrees for anything that suits them, I think they should have all the control and responsability of Air Pacific. As indicated Qantas is very reluctant partner in this and presumably the regime would rather just get the shares for free, why not go the whole way and nationalise it. It wouldn't surprise me at all.
In most countries crashing the share price to your own advantage is illegal. It is the government who is looking to purchase Air Pacific shares from Qantas and the government who has taken action that will reduce the price of the shares.
You are incorrect to say Air Pacific is looking to buy the shares from Qantas.
It is normal in large companies for specific critical actions or decisions to require more than a 50% of the board to vote in favor.
For Air Pacific this was in place before the Fijian Government bought majority shares in the company.Qantas, Air New Zealand, British Airways and several Pacific Island states held shares initially. The other Government’s sold their shares and Fiji became the majority shareholders in the airline.
To say this is a veto situation implies that a them or us mentality has developed inside the company and the sooner Qantas sells its shares the better for Qantas. The current Qantas appointed Air Pacific board members have a total of 62 years experience in the industry and would be a serious loss of expertise to Air Pacific.
To change the rules while you are negotiating to purchase shares is an abhorant action by any Government and in most countries results in court action.
BASA
Move over Qantas/Air Pacific....
Much more of interest and going back decades is this: the Kwok Brothers are reportedly under arrest over corruption charges in Hong Kong. Qantas and Air Pacific wrangles pale into insignificance now (CNN Business Review - 30 March 2012)
Shivers down a few spines we might think? All too close to home.
Qantas shares for Emirates? Etihad or Qatar Airways?
That would make some sense. About time too!
Public flotation? Might buy some ourselves. We deserve it!
Couldn’t resist commenting.
QFs involvement with Fijis tourism and aviation goes back a long long time.
For the present government to deal with them this way is an insult to QF and the people of Fiji.
QF became actively involve with FJ in 1984 at the invitation of the then Fiji govt.
They have invested their money to help Fiji and FJ, they could have continued operating their own aircraft
and Fiji would not have had FJ. So No jobs for people of Fiji.
Jetstar came in to Fiji to compete with Virgin/Pacific Blue as Fj could not directly compete so why blame them.
Fj only has 6 airplanes their competitors have a lot more.
Remember at board level, board members reject proposals to demand better
Performance from management which is one avenue for them
Air services agreements are between governments, nothing to do with airlines,
Airlines are only affected by what equipment and capacity they can operate, but it is a govt to govt
agreement
Well, we cannot resist commenting further:
Effectively, over almost thirty years Air Pacific (former Fiji Airways)appears to have been run to the benefit of a small coterie of people. From 1987 onwards, it appeared to be run to employ and to lubricate the vested personal interests of a very defined group of people. Certainly not the Fiji taxpayers who were financing it. Certainly not the FNPF stakeholders who are financing it now. It should be prepared for public flotation and offered to airlines which have a track record of conspicuous success. It should also be groomed for some discerning new shareholders to come in. How about ensuring that all the pilots who were so ignominiously forced (at very short notice) to settle elsewhere (thereby adding value to UAE airlines) should now be afforded the opportunity to become shareholders in the airline they helped to foster? At the time of their departure, they were being treated as nothing much more than mere 'bus drivers' in the land of their birth. Yet their training had cost them and Air Pacific's taxpaying owners, millions of Fiji dollars.
How short-sighted and moronic was that? It has now back-fired and most who left Fiji have done exceptionally well for themselves and their families. Good luck to all of them!
If we were truly SMART, we would study carefully how it is that the 50-odd former Air Pacific pilots have bettered their lot so ostensibly in the UAE. They are finding no difficulty in achieving command: a substantive proof of their training in Fiji (but much w also through their own application, expense, paternal expense and investment by Air Pacific). What does this show? It shows that given a proper recognition, locally born and trained Air Pacific pilots are second to none in the world. They are perfectly capable of command in the most competitive market going. Yet, in Fiji where most were born, they were subjected to vile and often discriminatory processes. This is precisely why this airline ought now to be privatised and run professionally and commercially with due recognition of merit "no matter who you are or where you hail from". Politics has no place in a commercial airline.
Some of us are unlikely to forget this behaviour which was, in our estimation, disgraceful and it did not end in the cockpit but rebounded upon close relatives and associates. Now, let us be quite clear: the airlines of the UAE subscribe to international norms and they are above average in the standards and best practices they require of everyone employed by them.
Who were these sub-standard executives and board members who permitted this shoddy climate to prevail? Some of them are still around. Time to examine your collective navels!
We are now waiting to see which Media organ will take on an examination and analysis of the past fifteen years of Air Pacific and its operations. If they are not up to it, then the Economist Intelligence Unit should be incentivised on the grounds that the shares are urgently for sale. Are they worth buying? An independent Due Diligence should be done.
Thank you Croz for printing my offering, even though you went on to attempt a refutation.
I trust that, with the same spirit of debate, you’ll allow my rebuttal.
The essential point I was making was that the Bainimarama Government’s decision to use legislation to reduce the rights of a company with major investments in Fiji sent a very bad signal to the international investing community.
A Blogger using the name Once-an-investor-but-no-more managed to grasp this, but the real point is what do people outside our political disputes make of this.
Let me show you.
Bangkok based TTR weekly, had the following take on the seizure: “the government’s decree, which cannot be appealed, may create jitters in the business community after previous disputes between the regime and international corporations.”
This is pretty clear. Khaiyum costs investment because of his determination to use the law to confiscate the legal rights of existing investors. Decrees which retrospectively remove rights and then deny any legal appeal rights are very costly to investment, economic growth and jobs. The only person who can’t see this is their author, ASK, and his boss, who seems only to get the information that ASK allows him to receive.
Please feel free to check the story via the following link.
http://www.ttrweekly.com/site/2012/03/fiji-sends-qantas-packing/
Navosavakadua
@ Navosavakadua
Your comments appear entirely justified and sensible to anyone who has invested in Fiji over decades. Now, there is absolutely no incentive to continue expanding investment and certainly not in employment. Arbitrary and regulatory decisions with almost no lead time are destroying jobs. We have downsized by two thirds in the past three years. Jobs cost money to create; they cost money to maintain and they go "out the window" when confidence is trashed. No Good Faith - No Good Jobs and No Integrity. Simple equation.
Of course, there is a line of thought which suggests that job creation should be some kind of charitable exercise.
Now what a fanciful idea! No one in their right mind would opt for this. It is a recipe for national decline and disaster. It is a recipe in fact for where we find ourselves now: in a Declared State of Disaster. Did we think our decision-making skills would lead us anywhere else? Because if we did, we were completely befuddled. Do tell us, do, how many new jobs were created this Q1 2012? Surely we must know?
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