TDC, Richie and Makeda, NO!

By G.A.Dwyer Astaphan

It is in the business of the selling, leasing, financing and managing aircraft. And as far as I’m aware, it’s a reputable company.

Veling and the St. Christopher Air & Sea Ports Authority (SCASPA) have negotiated an Agreement under which Veling is to construct and operate a Fixed Base Operation (FBO) at the Robert L. Bradshaw International Airport.

An FBO provides goods and services to private aircraft.

According to the Agreement, the FBO is to offer a customer-focused service combined with the exceptional operational expertise to be expected from a market leader in luxury executive flight services.

I understand that in making his pitch for the deal to be approved, a gentleman said that Veling operates a full-service FBO at Mauritius airport, and that the said FBO is “one of the largest facilities in that area of the world”.

Firstly, although he might have been telling the truth, I have found no evidence of a Veling-operated FBO in Mauritius. But I continue to search.

Secondly, apart from the few small islands within a radius of, say, 120-300 miles, and Madagascar about 550 miles to its west, the Seychelles Islands (a 175 square- mile nation of over 100 small islands) about 1,000 miles to its northwest, and the African Continent about 1,400 miles to its west, Mauritius sits pretty much alone out there in the Indian Ocean.
 
So having “one of the largest facilities in that part of the world” is not really saying much.

Please understand. The Mauritius airport handles as many as 2 million passengers annually, and it has a reputation for efficiency. I respect that.

I also respect Veling. I just haven’t seen evidence that it operates the FBO in Mauritius. And even if the evidence does surface, it would have little or no bearing on my argument.

Veling will get a 30-year exclusive concession in the first instance, and a lease on about twenty two (22) acres of land.

By years 7-10, it is to inject up to US$6 million in infrastructure (terminal, parking, etc.) and equipment, and, over time, up to US$17 million, with a modern FBO at RLB Airport.

And in case it does not perform in accordance with a specified timeline, SCASPA can terminate the deal. However, Veling would have to be compensated for its investment up to that point.

Veling will pay the following land rent: for years 1-5, US$0.50 per square meter per annum, which translates to about EC$0.15 per square foot per annum; for years 6-10, US$0.60 (around EC$0.18/sq. ft ) per sq. meter per annum; for years 11-25, US$0.75 per square meter (around EC$0.22/sq. ft.)  per annum; and for years 25-30, US$0.90 per square meter (around EC$0.27/sq. ft.) per annum.

By these figures, it will be paying rent of about EC$135,000.00 per annum in years 1-5 and about EC$245,000.00 per annum in years 25-30.

Veling will form a separate local company to operate the FBO. SCASPA is to get about 3% of its shares and to collect royalties from the operation, starting at about 2% and rising over time possibly to about 10%. Of course, if the operation shows lower-than-anticipated profits, or no profits at all, then SCASPA would get less royalties, or no royalties at all (neither of which would surprise me).

Again, please note: that separate company, and not Veling, will operate the FBO Facility.

After the 30-year term has ended, Veling is to transfer one hundred percent (100%) of  its interest in the assets of the Operating Company, including the FBO Facility, to SCASPA, free of all mortgages, liens and other encumbrances, and whatever costs are associated with the transfer are to be borne by SCASPA.

I hear that some people are interpreting this to mean that after 30 years SCASPA will get Veling’s shares in the Operating Company and the FBO Facility for free!

Oh really?  I wonder if Cabinet has allowed itself to be fooled by that story.

Under the Agreement, Veling will be able to transfer or otherwise dispose of any or all of its interest, and the FBO Facility itself, at any time, provided it has the consent of SCASPA, which consent is not to be unreasonably withheld, delayed or refused, especially with regard to transactions involving companies that are affiliates, subsidiaries or otherwise associated with Veling.

That provision in the Agreement says it all. Veling is going to need cash to do the project. In return for that cash, it will have to give up something. And in any case, it will not hesitate to dispose of its interests for strategic purposes, whether to subsidiaries, affiliates or other companies.

You do not have to be a rocket scientist to envisage, even now, the transactions that will take place between Veling and all of these other corporate relatives and friends, such as, perhaps, two UK companies named V-2 Ventures plc and Fred Wilson Entertainment Ltd., and others, all of whom will want their own generous packages of concessions, and that way the cycle will keep repeating itself well beyond the next 30 years. 
  
In the case of the ownership of the FBO Facility itself, SCASPA  gets the right of first refusal to buy at fair market value, and if it can’t come up with the money, then Veling will be free to sell it to any other person, local or foreign.

Do you think that in its present financial and fiscal state, and for years to come, SCASPA will be able to seriously consider buying the FBO Facility?

So, in time, expect Veling itself to own little or nothing. And, likewise, expect SCASPA to own nothing.

This arrangement will shut out locals, except those who might be fortunate and favoured enough to find themselves being friends of foreign interests which are involved.

It seems that we are not learning from past mistakes. Or maybe we are so busy doing things the way we want them done rather than the way they should be done, that avoiding or repeating mistakes is not a high priority for us.

Might there not have been a better way of approaching this? I think so.

But the first question to be asked is whether we need a proper FBO at the airport, and the answer is yes.

You may wish to know that there are three locals who presently provide FBO services at RLB and who collectively represent around 100 years of experience in that business.
They are TDC, St. Kitts International Ground Services (Uklin ‘Richie’ Richardson and his late partner, Al Williams), and FBO St. Kitts & Nevis (Makeda Michel).

Under the Agreement, they will be allowed to continue plying their trade, but all under the control of Veling (or whoever it is that Veling will allow to operate the FBO facility). In practical terms, therefore, they will be reduced to being bit players, and face the risk of being choked out of the FBO business altogether.

One hundred (100) years of expertise, goodwill and human effort potentially wiped out just like that! And in their own country!

Can the three local FBO operators find the money to build a world-class facility?

Probably not on their own (just as Veling, on its own, probably can’t), but if a local company was formed including them as well as other local large, medium and small local businesses, individuals, institutions such as SCASPA itself, Social Security, the local Credit Union, the Police Credit Union, the Teachers’ Union, the Nurses Association, the local taxi and bus associations, and so on, I believe that an exciting alliance could have been struck to take on this venture.

And just as Veling has no intention, or maybe no resources, to build the Facility to completion in a hurry, similarly our own local people could have been given a reasonable timeline to get it done, and everything would have been in local hands.

That is empowerment!

And if we needed to seek more capital, then we could go to the OECS and CARICOM.

But will this idea be pursued? Not if we are to go by the trend which has been established in our country.

If local refrigeration and air-condition technicians are being squeezed out of work by people from Mainland China, even in providing services to Government (so these Chinese chaps are  getting paid with the money of the very people who are being squeezed out), and if locals are losing out on the chance to open little grocery stores and snackettes, then it would be naïve of us to expect locals to get a fair chance at empowerment so that they might own and operate an FBO Facility at their airport.

If so many locals are out of work in this ‘guava season’, while foreigners are in jobs which can and should be held by locals, and some of these foreigners are working illegally at that, then what chance does a local consortium have of building out and operating the FBO at RLB?

And if the Prime Minister can ‘ten-man-in-one-fully’ say that the people of this country are not capable of doing these jobs that so many foreigners are holding down (which he is, in effect, saying), then he is admitting to having robbed Kittitians and Nevisians of  their right to be fully empowered in their own country.
 
At this rate, Kittitians and Nevisians might be lucky if any of them get a job at the FBO.
 
And just as locals will be left out of the FBO loop, they are also to be left out when it comes to knowing what is in the Agreement, because of a provision in it which says that it is confidential.

Confidential on what grounds, may I ask? National Security? The Public Interest?  No way.

It is confidential  because governance has deteriorated so much that if the people were to know the facts about a number of matters, they would demand the Prime Minister’s resignation.

And it maybe that is where we are heading.

Because each and every day, more and more people are coming to realize that for the most part, they are regarded as good enough only to take dew, jump and wave and cuss when they are told, and vote to maintain the status quo; but that when it comes time for the real goodies, and for real empowerment, they are realizing that they have to make way for those foreigners who are “friends of the Government”.