Friday, September 18, 2020

Inside the Air Botswana privatisation conspiracy theories

Air Botswana needed someone to turn it around.
Lance Brogden needed a challenge.
On paper, it was a match made in heaven. The young attorney came highly recommended and made all the right noises: ?There is nothing that cannot be fixed. The situation is not hands up,? a starry eyed Brogden said about Air Botswana in his maiden interview. The media lapped it all up and branded him the ?turnaround strategist.?

By September last year, the Air Botswana General Manager seemed uncharacteristically weary of phone calls, especially when they came from journalists. Three phone calls later, The Sunday Standard still did not have a comment from the media?s blue-eyed boy who, until then, was fervently riding the crest of press rave reviews.
With Air Botswana down P7,9 million in the first quarter of 2006- the worst loss recorded in a long time ? and the crew jumping ship in droves, the media attention and the idea of turning Air Botswana around just did not do it for Brogden anymore.

Four Air Botswana pilots had just handed in their resignation letters, and the airline had grounded some of its BAe 146 jets and changed the flight timetable because of shortage of spares. The airline?s financial results for the first quarter of 2006 showed a loss of P7, 9 million – 25 percent lower than the ambitious target Brogden had set himself.

While Air Botswana packed more airline seats last year compared to the previous year, Brogden failed to cash in on the passenger traffic windfall because he could not reign in costs which ballooned to 19 percent more than the corresponding time the previous year.

For sometime, the airline continued to operate loss making routes like the Gaborone/Lanseria route and the Cape Town/Maun route.

Even after flights were suspended, Air Botswana continued paying money to advertise the Gaborone/Lanseria route on billboards.

Figures show that the Airline spent P4, 2 million on wet lease costs for the first quarter of 2006; overshooting its P1 million budget by more than 300 percent.

With Air Botswana sinking deeper in the red, its senior executive managers were shopping up a storm using the airline?s credit card.

Their shopping spree paper trail shows that one of the cards turned up a grocery bill of P1200 from the high end Pick and Pay Supermarket.

The same card also turned in an unauthorized payment in excess of P374 000; far beyond the authorized credit limit.

The money was, however, later returned following queries from middle and junior staff members.
Those close to the feted ?turnaround artist? said that his heart was no longer in it.

The man who only a few months earlier had told the media that ?there is nothing that can not be fixed, the situation is not hands up,? was now allegedly saying things like ?no one would be stupid enough to buy this airline.?

The situation was further complicated by allegations of a proposal presented to Cabinet by the head of the presidential Business and Economic Advisory Council (BEAC), Nico Czypionka, a few weeks before government announced the fast tracked privatization of Air Botswana.

A source close to Cabinet told The Sunday Standard that Czypionka, an astute, fast talking, hands on, ultra hard right wing economist who commands a lot of respect among his peers, advised cabinet to sell Air Botswana to South African Airlink, a closely held Johannesburg airline.

Under the proposed deal, Air Botswana would sell all its aircrafts then use the money to buy into a partnership with SA Airlink who would provide the aircraft.

A few weeks later, the Ministry of Works and Transport announced the accelerated privatization of Air Botswana and a number of buyers showed interest. However, when the time to submit bids came only SA Airlink, Lobair (a division of Lobtrans Ltd, a Botswana fuel transporter) and African World Airways Ltd stepped up to the plate.

Other suitors which had shown interest: Ethiopian Airlines, Comair Ltd, a South African carrier, Tourism Empowerment Group, a South African Tourism Company, ExecuJet Aviation Group, A Zurich-based air charter company and Interair South Africa – another closely held carrier pulled out of the deal.

It is not clear if their decision to pull out had anything to do with Czypionka?s proposal to Cabinet.

It was about the same time that Botswana Guardian quoted a source from PEEPA saying Air Botswana was expected to continue making losses.

With the scare story that Air Botswana was on the brink of collapsing wantonly fed the media, newspapers went on a feeding frenzy, zeroing in on the airlines red balance sheet.

The media was sold on to the notion that the ailing airline needed recapitalization of at least P300 million. The Botswana Guardian even went as far as to conclude that ?Government which recently ordered a multi-million pula presidential jet is in no mood to bail out and is in a rush to sell. AB?s poor balance sheet makes it easy pickings for competition, some of whom may wish to buy and close it down. If things were to go according to plan, AB will be sold within the next two months.?

The argument by the anonymous PEEPA official fitted in with the argument by Brogden who said the airline could not achieve operational reliability without a new aircraft.

The privatize-Air Botswana-now group brandished the airline?s red balance sheet arguing that Air Botswana could not afford to buy a new aircraft without government?s subvention.

With government in no mood to commit its money, it was necessary to privatize the airline now rather than later to, among other things, secure the new air aircraft. Investigations by The Sunday Standard, however, revealed that when the decision to accelerate Air Botswana?s privatization was made, there was nothing to suggest that a new aircraft could only be bought through government subvention. In fact, several finance houses made proposals to finance the purchase of three ATR 42-500s without seeking any guarantee other than a Deed of Hypothecation over the airline purchased.
The Sunday Standard, in its feature article, ?Botswana?s privatization on a tail spin?, dated September 24, 2006 carried a warning by Air Botswana staff members who were opposed to speedy privatization.

They argued that Brogden, PEEPA officials and Czypionka, who were pushing for speedy privatization, had created a burning platform from which they were building a case for their campaign.
Some influential politicians had bought line, hook and sinker into their storyline.

With the airline collapsing under its weight of accumulated losses ? there was a sense that the camp was whipping up panic to justify speedy privatization ?before the airlines loses its value.?

Members of Parliament debating a motion this week to suspend the privatization of Air Botswana simply joined the dots, and a sinister outline emerged: That an aide at the Office of the President, some politicians, some PEEPA officials and Air Botswana officials had conspired with SA Airlink to plunder and strip off Air Botswana.

Reports that Air Botswana officials who opposed the speedy privatization were systematically purged provided further fodder for MPs conspiracy theories. For example, Air Botswana board chairman and Permanent Secretary in the Ministry of Works and Transport, George Thipe who was opposed to speedy privatization was dropped from the board under mysterious circumstances.

The Airline Board Secretary and General Counsel, Mr. Moipolai, who had also raised concern about the goings on at the airline was also closed out of board meetings.

Moipolai was further accused of sabotaging the privatization process.

Privatisation agents? case was however dealt a blow by the Ernst and Young report which called for caution under existing circumstances.

Ernst and Young said although the airline could not sustain the purchase of a new aircraft it would not be wise for government to privatize Air Botswana in its current operational and financial difficulties.

Members of Parliament on Friday halted the airline?s privatization, arguing that it violated the Privatization Policy that was passed by Parliament in 2000.

Member of Parliament for Francistown South, Khumo Ngwana Maoto, took parliament by hand to show how the transaction has, from beginning to the end, violated the Privatisation Policy.

Specially Elected Member, Botsalo Ntuane, talked of ?indecent haste? to privatize the airline.

He reminded his colleagues that the Zambians did the same in the 1990s and are now not only regretting it but struggling to get back the privatized assets.

He also talked of the sham that became the privatisation process of the former Soviet Union.
He said he doubted cabinet ministers believed it was prudent to continue with the airline.
The obviously frustrated Minister of Finance, Baledzi Gaolathe, wailed that MPs were ambushing cabinet with their motions.

But the back benches would not listen to his please.
The responsible minister, Lesego Motsumi, was given a chance to defend the ongoing negotiations with SA Airlink.

MPs were not convinced saying there has to be more consultation on the matter.

It is widely believed that Botswana?s privatization process will be lost and won with the privatization of Air Botswana, but so far things are not looking up, especially the latest aborted privatization attempt. It is the fourth to fall through the cracks.


Read this week's paper

ACHAP denies donor taps have run dry

The African Comprehensive HIV/AIDS Partnerships (ACHAP) has denied it faces an uncertain future amid allegations that donor taps have run dry.