While the Honduran Congress is hurrying to modify the concession contract and to forgive millions of lempiras in fines to InterAirports, this supposed operator of airports is the focus of investigation in San Francisco.

This strange story began more than three years ago when the National Congress, presided over by Rafael Pineda Ponce, and Tomás Lozano Reyes, then the Secretary of State for Public Works, Transportation and Housing (SOPTRAVI), approved legislation establishing the airport concession June 2000. The contract was signed between Raúl Torres Lazo, a representative of InterAirports, and SOPTRAVI. The President, Carlos Roberto Flores, the President of Congress, José Alfonso Hernández Córdova, and Rolando Cárdenas Paz and Lozano Reyes also signed the agreement.

The government decision was made in response to privatization requirements from the International Monetary Fund and by the need to improve the quality of service to tourists using the country's airports.

But it seems that Honduras was no different than other Latin American countries who have had bad experiences with privatization, where the States ceded all in exchange for very little. It is almost like the Spanish Conquest all over again, where the Spaniards offered trinkets and mirrors in exchange for gold. The difference in this case is that it was our own countrymen who set up the harmful conditions, and this time it was even without the threat of the sword.

Bidding

The granting of the concession was preceded by a bidding process, during which many conditions were agreed upon which now seem very disadvantageous to the country. Several companies participated, but not all were informed of changes and modifications made to the concession agreement.

Many would find it incredible that the government actually restricted its own rights to construct new airports or to submit any problems regarding the concession to the national courts. But that is exactly what was done in the concession document. The government officials were either taken advantage of as innocents, or were intentionally negligent.

As guarantee that the details of the negotiations would be kept quiet, the regulations of the bidding process prohibited the concession conditions from being made public. This shows how far this country is from being transparent and free of corruption.

Critics of the contract call it unfair and very disadvantageous for Honduras. But InterAirport executives counter that "everything that is being blamed on us-that we worked against the State, against safety, against dignity, against the people-is not true, because everything was decided by the government. We did not change a comma. The tariffs we have been criticized for were put in place by the government in 1996. All this about how we won't build in Copán or in other places-we didn't decide that, sirs, you did. You made the rules, so why are you coming to complain to us?"

Operator

One of the most questioned aspects of this concession has been about the Operator, the company managing the airports. At first it was believed that the operator would be the San Francisco International Airport. "But then we finally found out that we did not have an international operator, as we discussed in the National Industry Association (ANDI)," said Adolfo Facussé.

The City of San Francisco, California, created a company with $10,000 USD named SFO Enterprises (SFOE) to seek contracts for consulting in the privatization of foreign airports. SFOE employed high ranking directors of San Francisco International Airport, but it is not part of the Airport. SFOE created a subsidiary named SFO Honduras, which is a partner in the company InterAirports that won the concession. San Francisco is now involved in a great discussion upon finding themselves saddled with the management of Honduran airports.

The city is facing stiff criticism in the San Francisco Weekly. On July 16 the Budgetary Committee of the Board of Supervisors of the San Francisco International Airport ordered an audit of the publicly funded "private" company, but it is yet to be seen if the Board of Supervisors will enforce that.

Raúl Torres Lazo, a partner in InterAirports, has declared that "InterAirports agreed to pay SFO Honduras $750,000 a year to manage the airports, but at the beginning the agreement was with the San Francisco International Airport."

InterAirports is now facing pressure to change operators and break ties with SFO Enterprises. The last news released was that the new operator would be a transnational Vancouver company which is a subsidiary of the Vancouver Airport. (The Vancouver International Airport is managed by the Vancouver Airport Authority (YVRAA), which is the sole owner of a subsidiary company called Vancouver Airport Enterprises Ltd. (VAEL). VAEL is committed to representing YVRAA's interests in YVR Airport Service Ltd. (YVRAS), in which it is a partner with CDC Capital Partners of England.)

Unfinished Business

The contract with InterAirports includes a long list of projects that should be finished within set timetables in the country's airports. And this is precisely one of the most hotly debated issues within the government and the company. In general, these requirements have not been fulfilled.

The General Operator of InterAirports recognizes that "it is proven that we are out of compliance with the March 31 deadline, for the reasons explained earlier. If we went to arbitration in London (where the contract says any dispute must be decided), it would become very clear there why we are out of compliance. But one party out of compliance [the government] cannot accuse another party of noncompliance. It would be better to make an agreement between us."

Torres Lazo stated in an interview with the daily newspaper Tiempo that one of the biggest mistakes made by InterAirports, an intentional error, was to subcontract out the most important services to partners. Al subconcesionar los servicios a la mayoría de los socios no les interesa que la empresa tenga utilidades porque se conforman con las que obtengan en forma individual.

The company most mentioned is SERLIPSA (Pacific Coastal Services), a member company of InterAirports delegated (subcontracted) to manage customs services for merchandise destined for Tegucigalpa entering the country through the airports or the port of Puerto Cortés.

According to Torres Lazo, the lack of transparency was not only obvious in the subcontracting, but in that SERLIPSA was only required to pay InterAirports 13 percent of its total profits.
An analysis by ANDI found that, in summary, in the case of SERLIPSA the Honduran government only received 5 lempiras for every 100 lempiras charged by the company, when it should have received 40 lempiras. "To me, that is fiscal fraud," said Facussé. "The Director of Income, Mario Duarte, told me that the government lost 100 million lempiras with SERLIPSA," he added.

Negotiations

Government functionaries have met with representative of InterAirports to sep a solution to the series of noncompliance issues, but these efforts have been in vain because of the company's financial problems.

The Superintendant of Concessions has been unable up to now to maintain an efficient supervision of the company, supposedly because it does not have the resources necessary to do the job.
The problem has degenerated into demands and counter-demands. The State fined InterAirports 40 million lempiras for the uncompleted projects; at the same time the company is demanding that the fines be nullified. "If they back off, we will too," say the employees in their demands.
This war has finally made its way to the National Congress. There they are talking about forgiving the fine, of changing the contract and accepting a change of operator. They want to start over with a clean slate. "But what kind of slate?" asked the ANDI president.

Defenders of InterAirports, including politicians, have argued that cancelling the contract would discourage future foreign investment in Honduras. But one has to ask, Is this the kind of investment Honduras wants? There is also the treat of losing the case in the London courts. But Facussé says, "The government thinks it is in a weak legal position, but we do not agree. Honduras has a strong legal standing in this case."

According to Congressional Representative Jack Arévalo, Honduras would have very strong arguments to offer in any legal case in the London Courts if Honduras broke the agreement with InterAirports and the issue went to arbitration. He cited the list of victories the nation has had in foreign courts, including the judgment in favor of the National Electric Energy Company against Texas Power for 2.5 million dollars.

All of this points to the fact that all of the haste in on the part of InterAirports. In San Francisco, an audit of SFOE could present interesting revelations. A new operator will surely demand a more favorable contract with more profit and less work for the company. But if the original concession was designed in a way that is harmful for Honduras, could the future prospects be any worse? Right now the company may be able to say that InterAirports only followed what the government wrote, but after these negotiations they will not be able to claim that the contract "was only made by the will of the Honduran government".

Future

With such negotiations underway, the country has little hope of gaining much in the future. The government's tendency is to continue privatizations with concessions. A concession privatizing the country's main port is on the horizon. It is worthwhile asking if the port of Puerto Cortés will be contracted out in the same way the airports were. Privatization of the El Cajón power plant and the highways cannot be far off. And then they will contract out management of the potable water system and Honduras will lose control of the little infrastructure and means of survival we have.

It is true that as a country we lack dignity. We urge courage in defending what is ours and preserving our national heritage. We must claim what rightfully belongs to us.
This case is an opportunity for the government, the leaders of the country, civil society and popular forces to make an effort to ensure that the future for Honduras brings a better quality of life.

www.revistazo.com
9-9-03