KINGSTON, Jamaica - Prominent Jamaican economist, Joseph Cox, is questioning why does Kingston continues to retain an 11.9 per cent shareholding in the Trinidad-based Caribbean Airlines (CAL) which last month said it had completed its audited financial statements for a three-year period beginning in 2017.
In a statement the state-owned CAL said that the audited financial statements marked “a significant step in strengthening transparency, financial accountability and governance across the organisation”.
Jamaica had initially held a 16 per cent shareholding in CAL, but that was reduced to 11.9 per cent, following the Air Jamaica acquisition agreements.
Joseph, the former assistant secretary-general for Economic Integration, Innovation and Development at the Guyana-based CARICOM Secretariat, said recent reports in recent weeks had “brought renewed attention to serious financial reporting and governance concerns at Caribbean Airlines.
Joseph, who hosts the weekly Jamaica-based Caribbean Business Review (CBW) programme, said that PwC (PricewaterhouseCoopers) the London-based multinational professional services network and one of the world’s “Big Four” accounting firms, had “issued disclaimers of audit opinions on the airline’s financial statements for 2017, 2018 and 2019, citing inadequate supporting documentation, unresolved financial balances and tax liabilities.
“Particularly troubling are discrepancies in reported share capital and the auditor’s (0:54) inability to obtain necessary management representations. A disclaimer, however, s not a finding of fraud, but it means the auditors could not obtain sufficient evidence to validate the reported financial performance,” said Cox, who is also a management consultant and governance adviser.
Cox said that for an airline substantially dependent on Trinidad and Tobago’s taxpayers, “these findings raise fundamental questions about financial stewardship, corporate governance and shareholder accountability.
“But another question deserves an answer. Why does Jamaica continue to retain an 11.9 per cent shareholding in Caribbean Airlines? The airline operates principally as Trinidad and Tobago’s national carrier.
“Jamaica has limited apparent influence over its strategic direction and the benefits of continued ownership remain difficult to quantify and identify,” Cox told listeners and viewers to the programme, adding that “the withdrawal of services from important Jamaican routes further weakens the strategic rationale.
“With historical accounts subject to profound audit limitations, even the realisable value of Jamaica’s equity remains uncertain. Divestment should not mean surrendering a public asset at an arbitrary price. “
Cox said that it should begin with an independent valuation and a transparent assessment of Jamaica’s shareholder rights and interests.
“The question is no longer simply what Jamaica owns in Caribbean Airlines, but what purpose continued ownership serves and why the government has not initiated an orderly exit,” Cox added.
Last month, CAL’s chairma, Reyna Kowlessar, told the airline’s ninth annual general meeting, that bringing the airline’s audited financial statements up to date, following an inherited nine-year backlog, “is an essential part of our focus on rebuilding, growing and positioning Caribbean Airlines for lasting success
“Our focus remains on creating a stronger organisation that can grow responsibly, deliver reliable service and achieve long-term operational and financial success,” Kowlessar added.
The airline said it is also progressing the completion of its remaining outstanding audits. The audited financial statements for 2020 are targeted for completion by the end of October 2026, while those for the financial years 2021 to 2025 are on schedule to be completed.
Caribbean Airlines said it continues to exercise greater financial and operational discipline to manage these external pressures while maintaining essential connectivity.
CAL said it is also advancing its fleet optimisation strategy, including the sale of two ATR aircraft. One of these aircraft has already been delivered to its new owner.
