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At the recently concluded 2019 Annual General Meeting (AGM) held on August 26, 2020, with shareholders and board members of Ogle Airport Inc. (OAI), the Airport Operator for the Eugene F. Correia International Airport, several issues were raised which were outlined in a letter I wrote in the Chronicle on August 23, 2020 prior to the AGM. However, it becomes necessary that I raise public awareness of these issues because they provide clarity on why minority shareholders of OAI feel there is existing oppression at the Airport, a Public Utility, Private – Public Partnership Enterprise.
While there were forms of acknowledgements from OAI on the governance problems in need of redressing, there seems to be an absolute lack of effort, on the part of OAI, to move the process forward. The chairman, in an act of dereliction of his fiduciary duty, has permitted the Recording Secretary, a full-time employee of his company, to omit concerns of substantial and minority shareholders in the minutes, the legal record of the meeting. This indefensible act is used incessantly over the last two decades to silent dissenting voices; and it is used to window dress the affairs of the Airport in the eyes of the Government.
Now, for there to be financial sustainability that would pave the way for equitable development of the Airport and better returns on investment, there needs to be the mandatory establishment of the Capital Replacement Reserved Fund. This requirement, enshrined legally as an obligation in OAI’s Master Lease with the Government of Guyana, is to prevent the erosion of sizable portions from the annual income which goes towards certain capital expenditures for example, the $70M taxiway which was built last year could have been built from such a fund had it been in place. However, in lieu of this fund, and as a way to get around it, OAI’s board crafted and implemented a burdensome initial fee structure onto new leases so as to raise separate funds to build certain types of infrastructures at the Airport. In other words, some capital work projects on the Airport are financed from the Airport’s revenue earnings while others are financed directly by the Air Operators / Lease Holders – a clear breach of the financial framework of the Airport.
OAI, though approved to sub-lease Airport lands, has an opaque land sub-leasing system in force. The giant oil company had taken advantage of it.
The system uses criteria that are infringements on the Competition and Fair-Trading Act in that it applies dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage. A good case in point is the Small Air Operators, who have been marginalized at the expense of companies in the Oil and Gas sector; although a Light Aircraft Park was built in 2016, the promised hangar facility for their operations were never delivered.
The majority group of shareholders, who belong precisely to the same group of companies, have exerted a death grip control over OAI’s board and the entire Airport operations, with the sole purpose of ensuring policy decisions benefit their business interests exclusively. This level of conflict of interest, group-think and cabalism skews development in favour of those shareholders who are members of a board that lacks gender balance, independence, adequate sub-committees and an alternating chairmanship – a flagrant violation in contradiction with the objectives of the Airport. However, many appeals to OAI to have a shareholders’ agreement which would regulate the relationship between OAI’s management, its ownership, and the protection of the shareholders were dismissed.
Even though calls were made to change OAI’s External Auditors as it is not unusual to do so every five years, according to international accounting standards and financial experts, the board members with the majority control were stern in retaining the same External Auditors who have been there for nearly two decades. The internal financial controls and accounting are under the oversight of the dominant shareholders who also retain the same External Auditors for their own businesses. This obviously casts more than just doubt over the independence of the External Auditors in that the possibility of them being consumed by self-interest and familiarity are not only high, but suspicious as they turn a blind eye on exposing strong allegations of insider trading.
Nevertheless, in light of the transformative economic policies our new Government has implemented to benefit the Air Transport Sector, it is obligatory that the Airport Review Panel, a statutory body, be instituted since this will bring about balance, transparency and the necessary scrutiny through Government’s representation at OAI’s board level. Further, this will engender the much-needed change that will restore confidence in the Airport by all stakeholders, especially the substantial and minority shareholders.
Ultimately, what is at stake here is of national importance, and I assure the public that there will be a weekly expose in the media.
Capt. A. Mazahar Ally
of OAI for ASL, AMSL & GRSI