“THE AIR SEYCHELLES INVESTIGATION”

“THE AIR SEYCHELLES INVESTIGATION”

Air Seychelles is considered as the bloodline of our tourism industry. There is a line of thought which contributes to the notion that the local tourism industry cannot survive without the national carrier. In the interest of the Seychellois Nation and the Tourism Industry in particular, Le Nouveau Seychelles Weekly have decided to open its own investigation to determine the true state of affairs of the company. We shall call it the “Air Seychelles Investigation”.

We will start by identifying all the major players behind the company and their responsibilities in making Air Seychelles the company that it is today.

Who are the Board Members and what are their responsibilities:

As a public entity, the Board Members of Air Seychelles are necessarily deemed to be conversant with their fiduciary duties in relation to the company. We are requesting the Air Seychelles CEO to set out for the real owners of the company, the taxpayers, the fiduciary duties required of the Board of Directors. The Corporate Data of the company as published in the Annual Report 2005-2006 reads as follows: Directors: David Ralph Savy (CEO) – Eddie Belle – Francis Chang Leng – Francis Chang Sam – Mohammed Afif – Maurice Lousteau-Lalanne – and Sylvestre Radegonde. Mr. Wilfred Jackson is the company secretary. The Creole Spirit building, Quincy Street in Victoria is listed as the registered office and the principal place of business for Air Seychelles. A.J. Shah & Associates is listed as the Auditors. Barclays Bank Plc, Nouvobanq, Standard Chartered Bank, Habib Bank Limited and Nedbank are listed as the bankers for the company.

We noted for future reference that MCB is not listed as one of Air Seychelles’ Bankers.

The role of the Auditor General

As the constitutional appointed incumbent for undertaking the audit of monies disbursed by the Government of Seychelles, we request from the Auditor General an explanation of the fiduciary duties of the CEO and Board Members of Air Seychelles. The Attorney General should have recourse to open an enquiry upon finding lapses in the exercise of fiduciary duties by CEO/Board Members.

What are the Generally Accepted Accounting Principles/Standards in the Seychelles, as far as the presentation of Financial and Statutory Reports? Have these been approved by the Auditor General? Who is responsible to police the application of these standards? Are any reports available to support these?

A.J. Shah and Associates.

What is the duty of ‘due care and diligence’ with respect to the audit of the Accounts of Air Seychelles?

Summary: The above set-up presents a major problem. That of conflict of interest, as A.J.Shah & Associates are the Auditors as well as the owners of The Creole Spirit building. The Landlord/Tenant relationship might be an impediment to the diligence that is expected in the auditing process. In the event that any of our findings are found to be detrimental to the National interest – before publishing, we will convey our concerns to the authorities giving them the opportunity to express an opinion.

The following is an excerpt from the British Bankers Association (BBA) release. We print the findings to compare with the “Air Seychelles Annual Report 2005 – 2006” which states

Long-term BBA LIBOR

BBA LIBOR is a short-term interest rate deposit rate and is only calculated up to a maturity of 12 months. We have never calculated BBA LIBOR rates beyond this nor do we have any intention of doing so as the liquidity in the London interbank cash market dries up after a one year maturity. Some people use interest rates swap rates as approximation for longer periods but please be aware that the methodology is likely to be quite different for BBA LIBOR.

What do the abbreviations s/n, o/n and 1 w, 1 month mean?

These abbreviations stand for the maturities for which BBA LIBOR is fixed. There are 15 different maturities for each currency and day of fixing. The shortest maturity is overnight (O/N) for Euro, US Dollar, Pound Sterling, and Canadian Dollar and spot/next (s/n) for all other currencies. 1 w stands for 1 week and 1m stands for 1 month. The longest maturity for which BBA LIBOR is fixed is 12 months.

An “overnight” rate that you see quoted tomorrow will value today and mature tomorrow.

A “spot / next” rate that you see quoted today will value in 2 days (i.e. the day after tomorrow) and mature the day after that.

BBA LIBOR calculation basis

BBA LIBOR is not a compounded rate but is calculated on the basis of actual days in funding period/360. Therefore the formula is as follows: interest due = principal x (libor rate/100) x (actual no of days in interest period/360). Please note that for GBP the calculation basis is 365 days.

It is also important to work out the exact/actual number of days in the funding period which is not always 90 days for a 3 month deposit but could, for example, be 89 or 91 days.

If you have a funding period of, for example, 45 days you could extrapolate between the 1 and the 2 month rate to arrive at the correct BBA LIBOR rate.

Conclusion:

If the use of LIBOR by Air Seychelles is not standard practice per BBA, why are the exigent facts for the treatment of the MCB Loan not disclosed as per Section 153 (2) of the Companies Act, 1972?