(Trinidad Express) State carrier Caribbean Airlines (CAL) is facing a potential write-off of approximately TT$200 million in losses, including TT$60 million lost from what executives say could amount to credit card fraud related to airline ticket purchases.
More than TT$100 million has already had to be written off from the company’s cargo department.
A report submitted to the CAL board of directors recently stated the losses were incurred because there were no policies in place to ensure the enterprise got its earnings.
Four executives from the company’s management team, who had oversight over those operations but failed to stop the haemorrhage from the company or come up with solutions to recover the money lost, have been identified by other senior staff for the losses.
The Sunday Express obtained a series of e-mails and documents last week which point to questionable actions by management of the company with regard to several multi-million dollar transactions which have handicapped the organisation financially.
The Sunday Express understands the CAL board has already sanctioned an independent company to conduct an audit of the multi-million cargo losses and has instructed the management team to fix the credit card issues related to ticket purchases.
With regard to the credit card problems, the Sunday Express understands basic principles were not followed when tickets were booked.
It has cost the company millions, sources close to the operations explained.
Since the inception of CAL, the Sunday Express learnt that management never adopted the basic controls required for online and call centre credit card transactions and was not concerned about the millions of dollars these lack of controls cost the company.
With regard to the cargo revenues, the Sunday Express understands the losses occurred in 2011 and 2012.
For 2011, the company will write down TT$21.4 million of overstated revenue and will write off TT$40.4 million of uncollected cargo revenue.
CAL, the Sunday Express learnt, could not determine if all manual invoices raised have been settled.
In 2012, the company will write down TT$43 million of overstated revenue, and will write off TT$44.3 million of uncollected cargo revenue.
“It has not been sufficiently determined since the invoices are done manually as such there is no accurate method to track if payment is collected on all invoices,” the note read.
The Sunday Express understands that when CAL began operations in 2007, it simply had an “honour” agreement with its cargo operators who paid the company afterwards and as such, was always in the red with payments as CAL was never up to date on invoicing its customers.
The Sunday Express learnt the independent review of the cargo issues will be presented to the board this week and it is expected a senior executive could be dismissed.
Another executive, speaking to the Sunday Express on condition of anonymity, pointed out that it was “gross negligence” and “incompetence” on the part of CAL’s management over the past three years which led the company to its present state.
While the executive conceded that CAL was to some extent mirco-managed by its board, he pointed out the management was hired to run the organisation for its best interest while the board is supposed to be principally focused on governance issues.
Some executives further allege certain officials at the airline sought to ingratiate themselves to the board but never sought the best interest of the company.
Several attempts to reach CAL’s acting chief executive, Robert Corbie, yesterday to respond to the allegations and finger-pointing at several of his senior staff members were futile.
The Sunday Express understands he is out of the country but is expected back next week.
While the issue of the losses and fraud have been known to the company’s executives within the last month, some executives questioned why this had not been as “leak worthy” to the press as the tickets and upgrade requests of the company’s vice-chairman, Mohan Jaikaran.
“It is a well-known fact that these executives have not and would not make any decision and when engaging the board would take suggestions, provide feedback and carry it out without question. They would then turn it around and communicate to the general staff that the board were giving these guidance or suggestions as directives,” another staff member said.
To illustrate their point, the executives pointed to a Guardian story on Jaikaran’s request for CAL’s sponsorship of a Mother’s Day concert in Toronto, Canada, in the form of tax only tickets.
They observed it was never a board decision but a decision taken by CAL’s marketing department.
In an e-mail dated April 26, acting chief executive Corbie wrote to Alicia Cabrera, CAL’s senior marketing manager, and copied its corporate secretary, Nalini Lalla: “Alicia as per meeting the VC (vice chair) this morning and the coverage (if you are ok with the levels of returns) we will proceed as requested.”
They further observed that Jaikaran’s request to upgrade passengers who included manager of the West Indies cricket team Omar Khan; chairman of the Trinidad and Tobago Electricity Commission (T&TEC), Sushilla Ramkissoon-Mark; chairman of National Petroleum (NP), Neil Gosine, and family; Minister of Legal Affairs, Prakash Ramadhar, and his wife; CrimeWatch host Ian Alleyne, and his spouse and child; chairman of the National Self Help Commission, Surujdeo Mangaroo, and Nadra Mangaroo; attorney Kelvin Ramkissoon; former Miss Universe, Janelle Commissiong; among others, cost the company less than the mismanagement which has taken place over the past three years.
Another executive, when asked for comment, was concerned about “how the public is being distracted with a few thousands of dollars in upgrades when in fact, the (chief financial officer) has now exposed hundreds of millions in write-offs from cargo and credit card, insurance claims never being claimed since the inception of CAL”.
Another was concerned about how the leaks have put the company at risk legally by divulging travel itinerary and personal travel plans of certain individuals which is in contravention of CAL’s policy.
“It is time for CAL’s executives to be executives and act decisively in carrying out the transformation plan, communicating with internal and external customers. The team realises that confidence needs to be built in CAL’s product and our focus should be on that and not on leaking information,” said another executive, who was also reluctant to be named.
The losses are separate from the credit crunch which CAL is seeking to crawl out off.
In 2012, CAL’s unsubsidised cash flow was a deficit of US$234 million for 2012. To this end, the airline embarked on a Stabilisation and Transformation Road Map, to incrementally reduce cost and streamline the airline’s operations once more.
In a statement issued to staff by the company explaining the state of affairs at CAL, which the Sunday Express was privy to, it was explained: “The unsubsidised cash flow deficit of US$234 million for 2012 arose primarily as a result of reckless management decision to purchase nine ATR aircraft at a total cost of US$174 million out of operational cash flows.
“This cash purchase was chosen over an alternative leasing arrangement which is the norm in the airline industry. This decision put extreme pressure on the airline’s cash flow.” (See table)
The statement explained to staff that the operational deficit of US$120 million was financed by short-terms loans which totalled US$114.2 million.
