By
Nathen' Jolly' Green. July 09, 2020

LIAT has
been traded for many years while making massive losses, and those
losses were compounded by the gigantic taxes lodged against local air
travel by the shareholder governments, despite many warnings about
the excessiveness of those taxes. But each time LIAT got into
financial difficulties, the shareholder governments put money in to
make up the shortfalls. Which meant staff wages got paid, along with
creditors. So, people stayed with LIAT, because they knew, or thought
they knew that the shareholders would always bail out LIAT. Everyone
thought their job was safe, and the creditors thought their money was
safe. But LIAT was bought by the shareholders as an insolvent company
and was knowingly traded by them ever since as an insolvent company.
Now when it suits them, they want to walk away leaving a trail of
debts.

The
employees and creditors of LIAT were lulled into a false sense of
security for many years past. I remember in 2013 a Bajan lady
journalist called Beverly Sinclair, interviewed prime minister of
Saint Vincent and the Grenadines Dr Ralph E Gonsalves. She did so on
a range of issues, including LIAT, in which St. Vincent and the
Grenadines, Barbados, Antigua and Barbuda, and, to a lesser extent
Dominica, are the major shareholders.

Gonsalves
who was then and is now the Chairman of LIAT's shareholder
governments he was or is also CARICOM's lead spokesperson on air
transport. Therefore, people would expect to be able to believe any
statements a man described as the Honourable Prime Minister of SVG
made as head of authority in both those positions. He was the man who
everyone regarded as the spokesman, the leading authority even, for
both CARICOM and LIAT on matters of local and regional air travel.

Gonsalves
always had plenty to say about everything, and he certainly had
plenty to say about LIAT. He must have had the full backing of the
shareholders and CARICOM because none of them objected or protested
at the statements he made or the actions he took, he was acting on
their behalf as their official spokesman, administering their
policies.

LIAT had
made more massive losses, and the shareholders were putting in more
money to keep it running. In the interview, Ms Sinclair opened with
"It is generally good business sense to only invest in viable
enterprises." Gonsalves seemed to be unsettled by the question.
But he argued that more countries needed to invest in LIAT.

To which
she replied, "But, Dr Gonsalves, if you have a business and you
are asking investors to come and put money in it, it should be a
business that's viable."

Gonsalves
reply may surprise many people now because it did then. "With
respect, you completely misunderstand air transport." "Ma'am,
ma'am, ma'am, you completely misunderstand regional air transport."
She then accused the Prime Minister of assuming what she knows.

In his
usual belligerent way, he went on to say "From that comment. Let
me tell you why you don't know. You don't know because air
transportation inside of the eastern Caribbean is not anything of the
luxury type of investment. It is an absolute necessity — an
absolute necessity for islands". He further stated that when his
Unity Labour Party government decided to invest in LIAT shortly after
coming to office in 2001, he told Parliament that he was investing in
an insolvent company.

There,
right there, is the killer for Gonsalves 'he told Parliament that he
was investing in an insolvent company'. Because now he has told
everyone he invested in a company knowing it was insolvent.

Gonsalves
told Ms Sinclair that he told lawmakers then that if LIAT didn't
exist, it ought to have been invented "and that the important
thing is for us to get involved in that company, put money in it to
try to make it better". He said that "until this recent
problem, we have made LIAT better than what it was in 2001.

Gonsalves
continued "This is why I make the point with crystal clarity. A
regional airline of this kind, this is not anything which is going to
make money. This is a service that must be provided, and we seek, if
we can break even with this service, fine. But you cannot make money
out it."

So,
there was an admission that they continued trading LIAT, knowing it
was losing money, hoping it would break even, but not expecting to,
reflected in his nonchalant style of reply. Gonsalves said that the
same investment criteria as for a hotel or a beer factory could not
be used in relation to regional transport.

All this
supportive rhetoric by Gonsalves built false confidence in all the
creditors and employees, much as I suspect it was designed to do.

Please
read the whole article; it was a sterling piece by IWitness News SVG
and will be a significant contribution to the historical records of
SVG and the region. Be sure to read the comments they are all
exposing and genuinely relevant.

https://www.iwnsvg.com/2013/09/10/liat-is-not-a-business-like-other-businesses-gonsalves-says/

Under
the direction of Dr Ralph E Gonsalves, PM of SVG, who is also
Chairman of the Shareholders, spokesperson and for CARICOM on air
transport. LIATS shareholder governments have been directing LIATS
board of directors for years, the company with the full knowledge of
the directors being insolvent, they have been trading the company
while insolvent.

Therefore,
the directors and certain politicians from shareholder government who
have proven to be, and acted as de-facto directors, may perhaps be
held in law responsible for the debts, due to knowingly trading the
company and in doing so incurring further obligations, liabilities
and debts. Misleading the public, the staff and workers of LIAT and
all the creditors, including the bankers and aircraft lessors into
believing the shareholder governments would keep funding LIAT
whenever they got into financial difficulties. So, unless the
shareholder governments announce they are paying all debts in full
the shareholders, directors, including de-facto directors, should
perhaps be held liable and responsible for paying all debts in full
and sued for the same by everyone who lost money in LIAT.

Talking
of de-facto directors, perhaps we should also remember the hiring of
Jean Holder, who did that? The buying of new aircraft which at the
time everyone said were an unsuitable choice, who approved that? Was
it the board of directors or the Chairman of the shareholders?

There is
so much written about who said what out there that it would take a
hundred pages to list it all, I could do that, and perhaps I will, at
some other juncture.

What I
am saying is that the shareholder governments cannot hide behind
liquidation, where everyone loses money except them. They are the
culprits in trading while insolvent and as such are responsible for
the losses. They acted as de-fact directors. They provided the
mouthpiece that fooled creditors and employees, so they should pay
up.

As the
director of an insolvent company, you have specific duties and
responsibilities you must meet. If you fail to uphold those
responsibilities, then you could be accused of wrongful trading and
held personally liable for company debts. Engaging in any of the
following practices while you are in control of the affairs of an
insolvent company will significantly increase the risks:

Carrying
on trading with no intention of repaying

You must
not continue to enter new contracts and trade when you know you have
no reasonable prospect of repaying your creditors.

Attempting
to repay debts through fraudulent means

If you
try to repay debts through dishonest transactions, you cannot fulfil
or using misleading information to obtain loans; then you could be
convicted of fraudulent trading. Unlike wrongful trading, fraudulent
trading is a criminal offence that could lead to a custodial sentence
as well as personal liability for company debts.

Selling
assets for less than market value

You
might think that selling assets at a reduced price to raise funds
quickly and repay your debts would be an accepted practice. However,
it could lead to your creditors receiving less of the money they are
owed on liquidation. The court can reverse such transactions and
order you to refund the proceeds of the sale.

Repaying
some creditors and not others

Company
directors are obliged to act in the best interests of the creditors.
Making payments to some creditors, and not others are called showing
'preference'. As an example, you may choose to repay a personally
guaranteed loan or pay a supplier you know personally. The court can
reverse such payments and order the creditor to refund the money.

A
Danger for LIAT creditors

A possible danger for the creditors of LIAT, one and all, is that some of the shareholder governments leaders control the insolvency laws in their own countries. Some [at least one] have even been known to make or alter laws [not insolvency laws] overnight which could protect themselves, colleagues, and wrongdoers. Taking the bill to Parliament in the morning, giving it three readings, and then walking away, and allowing others to do the same, scot-free of any liability, or prosecution under the law. That was when the honourable went in a different direction.

END

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