SOLOMONS’ NEW AIRCRAFT NOT OKED BY GOVERNMENT

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SOLOMONS’ NEW AIRCRAFT NOT OKED BY GOVERNMENT $85 million Airbus leased by Solomon Airlines without oversight

By Douglas Marau HONIARA, Solomon Islands (Solomon Star, Sept. 22, 2011) – The government in the Solomon Islands never approved the [recent lease of a ] new Airbus by Solomon Airlines, Finance Minister Gordon Darcy Lilo revealed.

Lilo told a press conference yesterday that, although Solomon Airlines was a state-owned enterprise (SOE), the people had been fooled into believing that the new aircraft was guaranteed by the government.

Lilo said although SOE regulations stated that the minister responsible (Finance Minister) should have been consulted; it was never done, with the airlines board [crossing] the line in approving the aircraft themselves.

Asked whether there were legal implications attached, Lilo could only say that the airlines ‘had breached government regulations.’

[PIR editor’s note: As of 2011, the Airbus A320 model costs around US$85 million per unit. The newest addition to the Solomon Airlines fleet was flown on a proving mission to Nadi International Airport in Fiji; at the time, officials held prospects that the airline could link the four Melanesian Spearhead Group countries with the Airbus in question, between the Solomon Islands, Fiji, Papua New Guinea and Vanuatu.]

Finance Minister Lilo explained that the reasons the government had declined to approve the new airbus were past incidents where the airlines had failed to pay off its debts which nearly forced the National Provident Fund (NPF) to collapse and because of a 2010 Audit Report submitted to the Finance Minister from the Auditor General which indicated that Solomon Airlines was incapable of standing on its own.

That also adds to situations in the 1990’s during the Mamaloni government when the airlines board made a dry lease to obtain a Boeing 737 owned by International Lease Finance Corporation. Lilo said when he was Permanent Secretary of finance in 1996; they were forced to cancel payments for the aircraft because it was very expensive.

At that time, the Mamaloni government was also buying arms from the United States, thus they had to cancel payments for the aircraft which was only deemed as a waste of money.

[PIR editor's note: Lilo was accused this week by Public Accounts Committee Chairman Matthew Wale for delaying the appointment of the Solomon Airlines executive board, which he claimed was motivated by personal interest. "One of the travel agencies has huge debts so the Minister pressured Solomon Airlines to allow it to sell tickets," Wale said. Other chairpersons questioned the need for a new board, acknowledging the success of the current board in turning a profit for Solomon Airlines.]

In 2009, Solomon Airlines leased a De Havilland Canada Dash 8, seating 40, from Vincent Aviation of Wellington, New Zealand. Then they leased another Dash 8 from Airlines PNG. In August 2009, Solomon Airlines also obtained an Airbus A320-200 aircraft including pilots, leased by Strategic Airlines.

He said the airlines were also left handicapped in handling the lease agreement with Strategic which forced them to pull out; then it was the recent airbus. Lilo said all the reasons outlined above were the reasons why the government had disagreed in purchasing the new aircraft. "The government never approved the new airbus because we are concerned we might fall into the same situation again and it would be a problem," he said. "Solomon Airlines is government-owned, but it has and is a failed project."

The Finance Minister said history would repeat itself if Solomon Airlines is not careful. Meanwhile, Lilo said the process in appointing a new airlines board was on track. "As a minister responsible, I want to make sure that the new board can bring the good out of Solomon Airlines and salvage them from their problems," the minister said. Solomon Airlines chief executive officer Ron Sumsum is expected to respond to the minister’s statement today.

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