Special

Royal Nepal Airlines Corporation (RNAC) is leasing a Boeing 767. There is nothing unusual about it. Especially for an airlines that has "squandered" above 50 million US Dollars leasing one after another aircraft in the last half a decade.

Rather, its latest aircraft-leasing move has something usual — like most of its leases in the past this one too is a shady deal. And there are simply too many loopholes pointing at the dubious dealing.

Consider the first and foremost "clue": As of writing this (on October 25), the national flag carrier was all set to send an advance amount of one million US Dollars to the supplier of the aircraft, Lauda Air — a subsidiary of Austrian Air.

Sounds business-like, all right. But, when would the aircraft be arriving in Kathmandu? By December 1 this year, the airlines’ Executive Chairman Hari Bhakta Shrestha confirmed. Now, the question that crops up is: Why is the money being sent more than one month ahead in advance?

More so, at a time when the top boss of the state-run airline has publicly asserted that "the money would be paid to Lauda Air with one hand and that he would take hold of the aircraft with the other hand."

If that is the case, here is the question even a layman would very naturally raise: Then why the haste to make the advance payment?

And in haste, chances are that the national airline may be making waste — of the national coffer. Here is how: In the agreement with Lauda Air, RNAC did not bother to make a provision of counter bank guarantee to be provided by the Austria-based airline.

This was the reason why the Foreign Exchange Department at Nepal Rastra Bank made an inquiry on the "missing counter bank guarantee in the agreement" while permitting RNAC to pay the foreign exchange to Lauda Air.

Aviation experts assert aircraft-leasing deals without bank guarantee are risky business. "Almost every international aviation business includes the counter bank guarantee in the agreement," says Prabhakar Adhikari, a senior aviation Lawyer. "When you have the provision of playing safe with the counter bank guarantee, why do otherwise?"

RNAC officials, however, do not subscribe to that theory. "Even if there is no counter bank guarantee in the agreement, the money will be paid safely and RNAC will not have to lose a single cent."

It was the same missing counter bank guarantee provision that led to the Chase Air Scam — the worst scandal in RNAC’s history — in 1998. Since there was no such guarantee on the part of Chase Air, the fly-by-night company swindled the national flag carrier by pocketing around the national airlines’ 800,000 US Dollars and not supplying the agreed aircraft.

Agreed that Lauda Air has far better reputation than that of Chase Air. But, that alone does not, and cannot, justify RNAC’s "easy-going" act. More so, when the corporation itself was preparing to send a bank guarantee of one million US Dollars — apart from an equal amount for the advance payment — to Lauda Air.

A highly placed source at RNAC said that two drafts — of one million US Dollars each — was being prepared to send to Lauda Air. "One of the drafts is for the advance payment and the other is for bank guarantee."

In that case, the unanswered question is: Why did RNAC have to provide the bank guarantee when the supplier of the aircraft (Lauda Air) was not made to do so?

With the fact that RNAC is leasing Lauda Air’s aircraft at the rate of 3,300 US Dollars per flight hour — and not getting it free of cost — why did it not have an equal footing in the agreement with Lauda Air? This is something that sends ominous signals.

As if that were not enough, yet another mystery in the deal is the commission amount ICTC group would be getting in the deal. After "failing" to lease an aircraft through inviting global tenders for four times, RNAC resorted to sealed tender for the leasing of a Boeing 767 last month.

Enter ICTC Group on the scene. Interestingly nowhere in the agreement paper signed between RNAC and Lauda Air, the commission amount of ICTC group has been mentioned. All that the 14-paged agreement has about the "local agent" is its circular seal bearing its name, address in Kathmandu and its telephone and fax numbers.

Aviation experts question the need of such a local agent for the deal with an international airline like Lauda Air. "Why did RNAC have to have a local agent like ICTC to negotiate with Lauda Air? And even if it does, should it not disclose the commission it should pay to the local agent in the deal?"

Forget about the deal with the local agent, the agreement with the main supplier itself is unclear and has many questions than answers. Why, for instance, RNAC chose to sign the agreement with Lauda Air in Italy and not at Lauda Air’s Headquarters in Austria?

The agreement paper once again. It is this document that makes it clear that the agreement paper was signed in Malpansa of Italy. The outer cover of the agreement document also points out the specific place — Aeropoto, Milano — where the agreement was signed.

The agreement was signed by a "Chief Executive Officer (CEO) of Lauda Air Sp.A." Which means, doubts remain if the CEO is from the Lauda Air headquarters or someone from the branch offices.

Even if the bank – that would be receiving the money on behalf of Lauda Air — has been mentioned as Bank Austria, what catches one’s attention is the place where the money would ultimately reach — Belize.

The name appears to be written in code BLZ 11000. The account number mentioned is 105-105-523. Knowledgeable sources claim the place where the money would ultimately reach is a troubled-spot. "This is where accounts are mysteriously transferred and money laundering takes place."

The story does not end only on the unclear financial part. Equally dubious is the technical aspect. The last page of the agreement document spells the technical details of the aircraft. And this is where one gets to smell rat. The page has a noteworthy information — Date of delivery of the aircraft: 1988.

Even those handling the documents at RNAC do not know what does the date mean. "We ourselves are not clear if the date indicates the manufacturing time of the aircraft or was it then (1988) when the supplier received the aircraft from elsewhere."

If the latter is the case, the real age of the aircraft is still a conundrum. Initially, RNAC officials had agreed when the media reported that the aircraft was 12 years old — which is already a violation of the RNAC Act.

But if the delivery date 1988 — as mentioned in the agreement — indicates that Lauda Air received the aircraft in that year from another supplier, then the aircraft is surely much more older.

Under all these shady circumstances, what made RNAC go for the deal can perhaps be anybody’s guess.

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RNAC-Lauda Air Deal Dubious Dealing

By Navin Singh Khadka