BASSETERRE, St. Kitts – OPERATION RESCUE’S member Richard Caines said that he supports Prime Minister Dr. the Hon. Timothy Harris’ decision of St. Kitts and Nevis refusal to invest in LIAT, and that the Federation was one of the original shareholders of the regional airline.
Caines, a Junior Minister of Finance during the People’s Action Movement’s tenure in office, made the pronouncement last evening (Sept. 29) on WINN FM during Operation Future’s weekly talk show programme ‘The Operating Room’.
Following a call for other regional government to invest in LIAT, Prime Minister Harris insinuated that St. Kitts and Nevis was not eager to invest in the cash-strapped airline.
He also insinuated that LIAT’s financial troubles did not make it an attractive investment option.
“At this moment in time the Cabinet has not made a commitment to invest in LIAT. In fact, it is not on the table before us and with regard to the challenges facing inter-island travel, we certainly would have to be convinced that an investment in LIAT at this time makes sense.”
Caines commended the Prime Minister on the position he took.
“I do not think that the statement made by Dr. Harris is out of place. I think that I want to give him credit because he must have thought about it before he made that statement.”
Revisiting the past, Caines declared that the Federation was once a financial supporter of the region’s air carrier.
“St. Kitts and Nevis was one of the original shareholders of LIAT...it was administered by the Ministry of Communication and Works and our representative on the Board of Directors was Mr. Bertrand Haynes, the Permanent Secretary to the Ministry of Communication and Works. Mr. Haynes would travel to Antigua, monthly, sometimes they would have an emergency meeting and when we want to know anything we would turn to Mr. Haynes.”
He however pointed out that in terms of LIAT’s operation, little could have been achieved by the Board of Directors. “Decisions the Board took, they were never undertaken; they would just be shelved. And there were so many other problems!”
The former Junior Finance Minister stated that the Federation’s shareholding as a part owner of LIAT gave the government an obligation that any losses by the company had to be undertaken by the shareholders...a subvention.
He pointed out that because of the subvention a financial stranglehold was placed on taxpayers.
“It so happened that each time when you get the LIAT accounts you can never see a situation where you are not going to get a feeling that, ‘Well boy, they did badly this time but next year they are going to do better or next quarter, or next half year it’s going to be better.’ And LIAT became a burden, a millstone around the necks of the people of St. Kitts and Nevis.”
He explained that although it ws not a viable venture, the government continued to support LIAT.
Caines also explained what it costs a government to maintain an airport and noted that LIAT was exempted from paying all fees, including landing.
“In St. Kitts and Nevis, LIAT had been exempted from all of those (fees), and those were running into hundreds of thousands of dollars a year. We never got those, they were exempted so as to give the company a chance to make profit.
“But instead of making profit, we were faced with the problem of having to pay subvention, which sometimes amounts to a ton load of money. I would say over the period we had paid millions of dollars to the company called LIAT.”
He lamented that if one were to look back at the benefits that the people of St. Kitts and Nevis had gotten from LIAT, “I think that the amount we paid long outweighed the benefits, because the commercial world is a little different and wherever there is a gap somebody is going to fill it. In other words, if not LIAT, then somebody else.”
The Operation Rescue’s member compared the airfare he had recently paid on his travel to neighbouring St. Maarten to that of the not too distant past.
“I was travelling to St. Maarten in order to support my business and I paid $120, and a little later on $300. Earlier in this year, February, I went to St. Maarten, and when they told me $980 to go to St. Maarten and come back here. I started to tremble because I hadn’t been to St. Marten for about two or three years. Think about it, 20 minutes flight, $980, and you take a three-hour flight to Miami...$1600. Well, something got to be wrong.”
He claimed that people in the Federation could be no worse off if they do not have LIAT, noting that somebody would come along with something that would serve them.
“Earlier when I was a minister of government, we had the same problem with ALM. When I found and reported to Cabinet that ALM was ripping us off, in short order we told them where to get off and ALM was not coming and nobody died as a result,” he explained.
Caines said while he was a Junior Minister of Finance, LIAT would sometimes twice a year take an Appropriation Warrant to his ministry. “And that Appropriation Warrant is styled subvention for LIAT. In other words, you did not provide in your budget estimates for LIAT to make a loss, so it was not anywhere in there.”
That information, he said, was passed from the Ministry of Communication and Works to his ministry, and after a number of years he became concerned and held discussions with other officials.
“And when everybody saw it as a normal thing, I didn’t think so. I took a submission on the Ministry of Finance to the Cabinet. It had to do with the accounts of LIAT for many years. I projected the losses over the said period and showed what subvention was paid to LIAT, which ran into millions of dollars by St. Kitts-Nevis.”
After examining the figures put before the Cabinet, Caines said recommended that the shares should be surrendered to LIAT “for not one penny”.
“And so after many months of discussions, Cabinet took my words, the only sensible decision, the only correct decision, and gave LIAT the shares and withdrew from that burden to St. Kitts and Nevis,” he added.
