Air Mauritius: The chronicle of a programmed debacle

Political Caricatures

By L.E. Pep

More than one week after the announcement of huge loss of nearly Rs 1 billion, the tremors are still being felt with the Chairman abandoning Air Mauritius (MK) for less troublesome settings and some have been fired to tame down the dissenting voices, especially the more recalcitrant ones. One of the daring ones, Raj Ramlugun, has paid the high price of being unceremoniously sacked, after having sent an open letter to the Prime Minister denouncing mismanagement and governance issues which he considers as the very causes of Air Mauritius’ debacles.

Raj Ramlugun warns us not be fooled by the demand for a new “business model” for MK that is projected every time a new CEO is appointed or whenever the company registers a poor performance. He lists an alphabet soup of experts that have been recruited under different CEOs to supposedly restructure the company yet the national airline keeps landing up in such dire straits. As an insider, he attributes that to lack of accountability, competence and professionalism at the senior management level of MK.

Moreover, constant political interference has given rise to powerful clans and some venal trade-unionists who run the organisation on the basis of their own preferences and advantages rather than the organisation’s needs such that none of initiatives and projects for improvement and change get implemented in their totality. If one really wants to save MK, Raj Ramlugun believes, that should start by an urgent re-evaluation how the organization is managed at different levels including the functioning and responsibilities of the Board — in a sense, a total re-engineering of MK. An MK equipped with more qualified staff who are well trained to manage the new aircrafts, the hedging, the profitability of the routes, etc., and led by a board of directors equipped with management know-how and conversant with the technicalities of the airline industry.

Many netizens on various social networks have rallied to his cause in the form of “#weareraj! Let’s all stand up together and fight for #justiceforraj!” He is being seen as a victim who has dared to expose the wrongdoings at a public company that is well known for its nepotism and lack of accountability. This support is growing day by day and many consider his fight as their fight and are asking for his reinstatement. The Listed Companies Minority Shareholders Association is also joining the fight. They convened a press conference yesterday on the situation at Air Mauritius and the way forward.

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Relocation of street vendors in Port Louis: A mess

Some of the present members of government are now realising how facile it is to criticize and how much more difficult it is to find solutions.

It appears that some members of the Mauritius Tamil Temples Federation (MTTF) are against the relocation of hawkers near their temple in Port Louis. Minister Yogida Sawmynaden was invited to attend a meeting with members of the MTTF so that he could find a solution to the apprehensions of the Federation. However, according to a source present during the meeting, a certain discomfort was felt in the face of the inflexible attitude of the Minister, the latter defending tooth and nail the government project. It was then that a member of the MTTF raised his voice to express his disapproval, which would have irked the minister.

Some present at the meeting allege that the Minster was inflicted a loud slap in the face by one influential member of the Tamil community. “The minister was obviously running out of arguments. Hence his personal and unjustified attacks against this member,” says a witness who seems to be enjoying the minister’s misfortune. It is reported that the person who allegedly slapped the minister would have said that that was the doing of Goddess Ammen, not him. After the MedPoint favourable verdict, as insinuated by the government’s cheerleader Soodhun, we have now another manifestation of the Divine.

The meeting ended in complete cacophony. As the country prepares for elections to be held most probably by the end of this year, such incidents may become more frequent but we will have to ensure that we can offset such outbursts of aggressiveness, whether justified or not, by a more serene climate of discussions and consultations.

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Lokal is not always beautiful

You recall that the presentation by the MCB Group at a conference at the Caudan Arts Center of the results of a study “Lokal is beautiful” carried out by the French firm Utopies. That report was presented to an extended audience coming from the public and private sectors, NGOs, SMEs, the press, etc. Arnaud Florentin, Associate Director at Utopies and author of the report, observed: “The notion of local multiplier effect, developed by the Utopies agency, corresponds to the ability of an income that enters a territory to circulate sustainably and to irrigate its economy. The image of a pinball machine, where the ball must stay in play and bounce as much as possible between the components of the game to score points and get “extra-balls”, summarizes this concept well.” He also added: “Il ne s’agit pas tant de se défendre par des pratiques tarifaires que de chercher à stimuler une nouvelle forme d’entrepreneuriat local et de faire émerger de nouvelles filières locales.”

Our problem is that we are not able to get the pinball going in the first place, so forget about “bouncing as much as possible”. Take the recent decision of the Competition Commission which has recommended that the Ministry of Agro Industry and Food Security lifts the restriction on the importation of frozen/chilled meat. That is food processors using pork as an input had to import pork from abroad subject to their purchasing 50% of their meat requirement on the local market. Local pork is reported to be of inferior quality and more expensive for producers of derived products. Food processors must therefore deal with importers and distributors of these same products. Thus the lifting of the restriction will mean the death of the pig breeders.

Lokal Is Beautiful recommends that we focus on the importance of incentivising local production of complex goods in order to encourage local solutions to local needs. But the reality of local production is quite different. Local producers incur enormous costs in order to meet the required norms and standards imposed by the authorities while importers can flood the markets with low-end products without being worried about standards. Some imported products constitute unfair competition because they are not subject to the same quality controls. For all these reasons, SMEs in Mauritius suffer from unfair competition and it is difficult for them to overcome these obstacles. Thus, whether we like it or not, we will have to look re-examine our “pratiques tarifaires” if we want our local industry to flourish.

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MMM’s Commission of Education

The MMM’s Commission of Education, meeting the press last Friday, called for the “humanization of the Mauritian education system”. It is not the child who is the cause of his failure but the system. “All the studies carried out over the last fifteen years show that it is children of poor families and those who attend underprivileged schools who fail the exams!” The President of the commission also pointed out that failure at the primary level gets reproduced by the end of the secondary cycle. Each year, there are some 2000 to 2500 children who fail the exams at the end of primary school. But the hardest part to digest is that of the 100 children who are admitted in Grade 1, only 35% succeed in accessing HSC classes. Our education system is of the “factory school” type. Even among those that succeed at Grade 6 level, we have many who are functionally illiterate.

The Commission has quite some interesting and valid proposals which include, among others, measures that would strengthen reading and writing skills, languages, computer science and mathematics; the inclusion of the human sciences at secondary school, as well as the practice of sports to combat violence in schools; lifelong learning education (more adapted to the modern context) and the professionalization of teachers supported by a Teachers council. These proposals are good for setting up the foundations of a solid reform of the education sector but we will need such creative ones and much more for a total overhaul of the present outdated and unfair system.

What confounds us however is that such a high level of contributory dialogue with the press ended on a bland populist note about the student of limited means who could not find a sponsor to finance his tertiary studies. Why this uproar? There are so many students from poor families who are laureates but are obtaining only a pittance from the State and these families are having to undergo all kinds of hardships to send their children abroad for further studies. Where they cannot afford the huge costs of foreign studies, these laureates opt for local universities for their first degree. Moreover, there are today different loan schemes (where reimbursements start only upon joining the world of work) and bursaries for students in need. If that student does not fall in this category, I do not see the need of encouraging such an attitude which is neither based on merit or any social criteria and which will be setting a bad precedent for the future.

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Chagos: What next?

The International Court of Justice has given a judgement in favour of Mauritius in the case brought before it regarding the Chagos issue. We owe this favourable judgement to, among others, the former Labour government that took the case to the International Tribunal for the Law of the Sea and won it in 2015, the MSM government (under the leadership of Minister Mentor SAJ) which went to the UN General Assembly and the ICJ, the 40 years of struggle by Lalit and other opposition parties, our investigative journalists, the Philip Sands Chambers and the Chagossians. Despite the threats of dire consequences from the UK and the USA, Mauritius pressed on and obtained a momentous victory at the ICJ, thereby earning for itself the respect of many nations worldwide.

What next? Government is proposing to tread carefully ahead with no intention of demanding the dismantling of the American base in Diego Garcia. But after getting vindicated for its 40 years of struggle, Lalit makes it bold to put pressure on government to a) charter a ship for an official visit to the Chagos Archipelagos with onboard government officials, representatives of opposition parties, the local and international press and the Chaogossian community, (b) purchase a fishing vessel that will carry out fishing activities and prospection of petroleum and other mineral resources in the Mauritian waters near Chagos (this is already enforceable after the United Nations Convention on the Law of the Sea (UNCLOS) judgment of 2015, which is binding), and c) declare Chagos as the 22nd constituency of Mauritius with a representative in the National Assembly. Lalit believes it is the right moment to start pressing our case given also progressive currents are growing stronger here and abroad.

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The National Insurance Company: Colourable Accounting

Since its incorporation in 2015, the National Insurance Company (NIC) falling under the aegis of the Ministry of Financial services and Corporate Governance, has never submitted any audited accounts. The chief executive officer of every statutory body is supposed to, not later than two months after the end of every financial year, submit to the Board for approval the annual report, including the financial statements. And the Board not later than one month from the date of receipt, has to furnish to the Minister such reports and financial statements. The legislation on statutory bodies even provides for the Financial Services Commission, the Minister and Board, to take appropriate disciplinary actions in case of non-compliance. One wonders whether this case should not call for the sacking of the FSC officials, the whole board of NIC or both?

There is more: it seems that the NIC’s earlier auditor Ernst and Young (E&Y) submitted a disclaimer report. Now that’s quite disquieting for the many small savers and holders of insurance policies of NIC. The public will want to know why the auditor E&Y, following the submission of its disclaimer report, has been replaced by Moore Stephens. But what is more serious is whether the NIC is actually solvent? One would recall the auditors PWC’s earlier warning with respect to the BAI about the financial implications of overgenerous investment instruments and insurance policies that are likely to mature in the near future.

These are dynamite stuff in the hands of the NIC. It means that the NIC will have to make provisions in terms of precautionary actuarial reserves to match these consequential future liabilities. In case the NIC cannot do so, Government will have to capitalise the insolvent insurance company. Good to remember: at the time of the acquisition of BAIs in 2015, no actuarial study was done – some VIPs will have to account for that in case of any enquiry on the takeover of the BAI.

Given that the debts of the NIC are included in the public debt figure, the public is likely to be concerned not only about its overvalued assets, especially the building housing the Wellkin Hospital but also about the toxic investment items and insurance policies it holds.

A lower figure for the overvalued assets and injection of capital by government in the NIC will further aggravate the present public debt figure peaking at nearly 65% of GDP as at December 2018, exclusive of the debts of Air Mauritius, the proposed Combined Cycle Gas Turbines, housing projects and other contingent liabilities.

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The MedPoint verdict: the turning point?

Double jubuliation for Pravind Jugnauth this week: the favourable decisions on the MedPoint case and the case before the International Court of Justice in relation to the Chagos, but he still has to win the general election war. After almost nine years of an ordeal on the personal and family levels, he is now more serene to decide on the necessary future steps that will secure him power for another five years. There is a confident feeling now both in his party and within the Muvman Liberater (ML). We can expect the MSM to surf on a new wave of voters’ approval and consent following these two victories… as long as it lasts. But it may not last long, if more untoward incidents like #Karocannegate come to the surface. The public is in between two minds: they are happy for the PM but they are somewhat baffled by the judgement caught that they are in the legal tangles of the case and still not totally convinced about the conflict of interests issue and whether what is legal is necessarily moral.But for the opposition, it is only a temporary reprieve for the regime. For them, the resolution of the MedPoint case is just a tree that is hiding the forest. They are waiting for the euphoria of the Privy Council judgment to settle down, and once in election mode they’ll move on to hit back, more aggressively and across the country, on the MedPoint deal focussing on taxpayers concerns: “Who benefitted from the MedPoint deal? Did the shareholders pocket Rs 144 million, the double of the price at which it was evaluated initially? Moreover the opposition is convinced that the MedPoint effect will very quickly melt away in the present above-average temperatures and reminders of past series of scandals will come afloat again reminding potential voters that they have had quite a raw deal with the Choomkas, Soodhuns, Dayals, Tarolahs… you name it!

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MBC to be joined by Star FM et Pima FM

The MBC is touching a new low with each passing day. However, this week, buoyed by the two favourable verdicts – the MedPoint case and the ICJ’s Advisory Opinion on the Chagos – the MBC-TV has touched bottom; it has been reduced into an arm of the government’s propaganda machine.

As the election looms, politics will infiltrate everywhere and the old certainties will give way to changing moods of hope, indifference or pessimism caught between extremes of vociferous criticism and slavish loyalty. We are a bit worried, may be a bit paranoid, about the more nefarious agenda of this regime of encouraging a North Korea-esque TV network and radio stations that blast citizens with daily concoctions and constantly strokes the dear leader’s ego. MBC-TV will be joined by two openly pro-government radio stations – Star FM and Pima FM.

We are now convinced that it was a calculated move by the regime to use this network of broadcasters to drum up support for the forthcoming elections. It will be the perfect time to use the MBC-TV network to roll out the propaganda which will slowly filter onto social media and the fawning radio stations will help to spread it rapidly.

It is undoubtedly true that the MBC has always been simply a propaganda tool of the Establishment. But the MSM-ML alliance had nourished the hope that we could have an MBC with less political bias! MBC’s purpose is to inform, educate and entertain the Mauritian public as democratic citizens and to do so without pressure while keeping the government at arm’s length. What we are seeing now is disgraceful. Recent events have revealed MBC-TV’s hideous underbelly and a lot of people don’t like what they see.

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* Published in print edition on 8 March 2019

Tags:Air Mauritius, Chagos Archipelagos, Diego Garcia, Financial Services Commission, ICJ’s Advisory Opinion, L.E. Pep, Lokal, Mauritian Education System, Mauritius Tamil Temples Federation, Medpoint Case, Ministry of Financial Services and Corporate Governance, National Insurance Company, Political Caricatures, Privy Council judgment, Raj Ramlugun, Street Vendors, United Nations Convention on the Law of the Sea, Utopies, Yogida Sawmynaden