Tweet
Former Finance Minister Dr Omar Davies and former chairman of the national airline Air Jamaica, O. K Melhado, have been accused of “tainting” the process leading to the sale of Air Jamaica’s Heathrow slots to Virgin Atlantic Airways (VS) in May 2007. Contractor General, Greg Christie, named both men as chief architects in his findings, following investigations into the controversial sale of the slots.
The incumbent Jamaica Labour Party government was highly critical of roles played by Davies and Melhado, resulting in the slots being sold to Virgin over British Airways (BA), which was the other bidder.
In his 196-page report, Christie concluded, “Davies had unlawfully and improperly intervened in the process and had already accepted in principle VS offer by way of a letter dated April 23, 2007.”
This was done while the Air Jamaica board was still going through the bids submitted by both airlines. The report, which is expected to create a political firestorm, has not yet been made public and is to be debated by Cabinet tomorrow before being tabled in Parliament.
According to the Contractor General, Davies’ intrusion into the evaluation process took place following an improved offer by Virgin and while a final position paper, dated April 19, 2007 to justify the recommendation for BA’s proposal was being prepared by Air Jamaica’s then President and CEO, Michael Conway.
Conway had requested the airline’s senior vice president for sales and marketing, Paul Pennicooke, to prepare a justification report, which was done on April 24, 2007 in support of BA’s recommendation.
According to the findings, Dr. Davies, by way of a letter directed to VS on April 23, 2007, stated that he has approved its offer “in principle.”
The Contractor General added, “to further compound his unauthorized and unlawful usurpation of the negotiations, evaluation, due-diligence and approval process of the BA and VS proposal, the then Minister, Dr. Omar Davies, on the said day April 23, 2007, wrote to BA informing it of his approval of the VS offer”.
Dr. Davies, again on the said day directed a letter to Melhado, in his capacity as Air Jamaica chairman, stating that he has assessed the issues and closely examined the comparative matrix prepared by the airline’s senior management, concluding that in the final analysis it is a “judgment call”.
Notwithstanding the use of the term in principle to describe the approval of the VS offer, the Contractor General found a April 25, 2007 letter, written by Conway to VS confirming, “Davies had in point of fact fully committed Air Jamaica and the Government of Jamaica to the VS proposal.”
Conway’s letter expressed Air Jamaica’s welcome to BA to Jamaica next week to document the agreement including those matters set fourth in Dr. Davies’ letter to VS boss, Sir Richard Branson.
In addition, the Air Jamaica president and CEO expressed the hope that VS will be able to fast track the process so that the appropriate announcement can be made to both airlines customers to accomplish an effective transition.
The Contractor General’s probe concluded, “the implications of Dr. Davies’ letter of April 23, 2007 to VS and Conway’s subsequent letter of April 25, 2007 and the presumed intent that was conveyed therein to create a legally binding agreement.”
This legally binding agreement is further evidenced by the fact that a Memorandum of Understanding regarding Air Jamaica’s acceptance of the VS proposal was entered into by both parties, effective May 10, 2007.
Very significantly, the investigation showed that on May 2, 2007, eight days after Dr. Davies informed VS of the acceptance of its offer in principle, Melhado wrote to the former Finance Minister informing him that in order to facilitate a final decision, the board has summarized an updated comparison between the VS and BA proposals.
“The integrity, propriety and credibility of the updated document is called into question because it was prepared on May 2, 2007, after Minister Davies has approved the VS offer on April 23,” the 196-page report noted.
The investigative team stated, “by all indications, the prior April 19, 2007 evaluation, which has conclusively favoured the acceptance of the BA proposal, may have been deliberately altered to reflect and justify an improper, unauthorized and unlawful ministerial decision, which has already been communicated to all the parties and which had given the nod to VS.”
Turning to the role played by Melhado, the Contractor General concluded that he was “unquestionably disingenuous in his report to the board of Air Jamaica”.
This is based on the finding that on May 2, 2007, the entire board was led to believe that Dr. Davies evaluated both BA and VS proposals and indicated that he proposed, subject to having the support of the board and management to seek Cabinet’s approval for VS offer.
Believing that this was deliberately done, the Contractor General surmised that the Melhado’s motive was to lend credence to an unauthorized decision, which had already been made by Dr. Davies.
The Contractor General reported that based on the contents of the May 2, 2007 board meeting minutes, the entire board was not then informed of the fact that Dr. Davies had already accepted the VS offer more than a week before April 23, 2007 and had on that same date advised Melhado in writing.
Davies, Melhado and former Air Jamaica board member, Senator Noel Sloley, were cited for not being fulsome or forthright in the responses they provided to office of the Contractor General’s respective requisition to them.
The Contractor General is of the opinion that there is prima facie evidence on record, which would suggest that all three have acted in contravention of the Contractor General Act, adding that Davies, in particular, ought to provide detailed response to the considerations, which informed his decision to accept the VS proposal.
According to the Contractor General, the investigations reveal evidence of breaches of the Financial Administration and Audit Act and the Public Bodies Management and Accountability Act in the negotiation, evaluation, due diligence and approval processes of the commercial agreement with VS.
The incumbent Jamaica Labour Party government was highly critical of roles played by Davies and Melhado, resulting in the slots being sold to Virgin over British Airways (BA), which was the other bidder.
In his 196-page report, Christie concluded, “Davies had unlawfully and improperly intervened in the process and had already accepted in principle VS offer by way of a letter dated April 23, 2007.”
This was done while the Air Jamaica board was still going through the bids submitted by both airlines. The report, which is expected to create a political firestorm, has not yet been made public and is to be debated by Cabinet tomorrow before being tabled in Parliament.
According to the Contractor General, Davies’ intrusion into the evaluation process took place following an improved offer by Virgin and while a final position paper, dated April 19, 2007 to justify the recommendation for BA’s proposal was being prepared by Air Jamaica’s then President and CEO, Michael Conway.
Conway had requested the airline’s senior vice president for sales and marketing, Paul Pennicooke, to prepare a justification report, which was done on April 24, 2007 in support of BA’s recommendation.
According to the findings, Dr. Davies, by way of a letter directed to VS on April 23, 2007, stated that he has approved its offer “in principle.”
The Contractor General added, “to further compound his unauthorized and unlawful usurpation of the negotiations, evaluation, due-diligence and approval process of the BA and VS proposal, the then Minister, Dr. Omar Davies, on the said day April 23, 2007, wrote to BA informing it of his approval of the VS offer”.
Dr. Davies, again on the said day directed a letter to Melhado, in his capacity as Air Jamaica chairman, stating that he has assessed the issues and closely examined the comparative matrix prepared by the airline’s senior management, concluding that in the final analysis it is a “judgment call”.
Notwithstanding the use of the term in principle to describe the approval of the VS offer, the Contractor General found a April 25, 2007 letter, written by Conway to VS confirming, “Davies had in point of fact fully committed Air Jamaica and the Government of Jamaica to the VS proposal.”
Conway’s letter expressed Air Jamaica’s welcome to BA to Jamaica next week to document the agreement including those matters set fourth in Dr. Davies’ letter to VS boss, Sir Richard Branson.
In addition, the Air Jamaica president and CEO expressed the hope that VS will be able to fast track the process so that the appropriate announcement can be made to both airlines customers to accomplish an effective transition.
The Contractor General’s probe concluded, “the implications of Dr. Davies’ letter of April 23, 2007 to VS and Conway’s subsequent letter of April 25, 2007 and the presumed intent that was conveyed therein to create a legally binding agreement.”
This legally binding agreement is further evidenced by the fact that a Memorandum of Understanding regarding Air Jamaica’s acceptance of the VS proposal was entered into by both parties, effective May 10, 2007.
Very significantly, the investigation showed that on May 2, 2007, eight days after Dr. Davies informed VS of the acceptance of its offer in principle, Melhado wrote to the former Finance Minister informing him that in order to facilitate a final decision, the board has summarized an updated comparison between the VS and BA proposals.
“The integrity, propriety and credibility of the updated document is called into question because it was prepared on May 2, 2007, after Minister Davies has approved the VS offer on April 23,” the 196-page report noted.
The investigative team stated, “by all indications, the prior April 19, 2007 evaluation, which has conclusively favoured the acceptance of the BA proposal, may have been deliberately altered to reflect and justify an improper, unauthorized and unlawful ministerial decision, which has already been communicated to all the parties and which had given the nod to VS.”
Turning to the role played by Melhado, the Contractor General concluded that he was “unquestionably disingenuous in his report to the board of Air Jamaica”.
This is based on the finding that on May 2, 2007, the entire board was led to believe that Dr. Davies evaluated both BA and VS proposals and indicated that he proposed, subject to having the support of the board and management to seek Cabinet’s approval for VS offer.
Believing that this was deliberately done, the Contractor General surmised that the Melhado’s motive was to lend credence to an unauthorized decision, which had already been made by Dr. Davies.
The Contractor General reported that based on the contents of the May 2, 2007 board meeting minutes, the entire board was not then informed of the fact that Dr. Davies had already accepted the VS offer more than a week before April 23, 2007 and had on that same date advised Melhado in writing.
Davies, Melhado and former Air Jamaica board member, Senator Noel Sloley, were cited for not being fulsome or forthright in the responses they provided to office of the Contractor General’s respective requisition to them.
The Contractor General is of the opinion that there is prima facie evidence on record, which would suggest that all three have acted in contravention of the Contractor General Act, adding that Davies, in particular, ought to provide detailed response to the considerations, which informed his decision to accept the VS proposal.
According to the Contractor General, the investigations reveal evidence of breaches of the Financial Administration and Audit Act and the Public Bodies Management and Accountability Act in the negotiation, evaluation, due diligence and approval processes of the commercial agreement with VS.
Comment