Adolfo Facussé:
This relationship has been badly mismanaged, as much this administration as by the former

· Our investigation found many irregularities
· Honduras lost 100 million lempiras with SERLIPSA
· InterAirports is in a very weak position
· Why would the fines be forgiven?
· It turns out that the San Francisco International Airport was not the operator

Perhaps everything would have gone perfectly for InterAirports if ANDI (National Industry Association), responding to the urging of Adolfo Facussé, had not gotten involved investigating irregularities in the concession and management of Honduran airports.

The government of Honduras, facing scarce resources and the pressing need to promote tourism and better serve travelers, decided to privatize the airports.

Irregularities

"We found many irregularities in the case of InterAirports. Companies were invited to bid for the concession if they had experience managing so many millions of passengers. This applied to Honduran companies too, who have not managed so many million, but were perfectly able to partner with someone else who did have that experience. A number of companies entered the bid, and we were all shocked when we saw the final contract because it was very different from the elements defined in the bidding documents we had been given. There had been major changes made," declared Facussé.

There were addendums added, but they should have been shared with the other bidders. "We asked all the other participating companies if they knew about the addendums and they all said no. So the negotiations were not carried out with everyone equally. Everyone was not given the same information."

Many of the companies said that if they had known about the changes, they would have entered higher bids. There could have been a true competition that would have gained more for the country.

"Based on this, we made a formal complaint to the Public Ministry. We sent evidence for all these questions and we sent a copy of the proof to all the relevant institutions. But until today we did not know if this would be resolved because the process seemed to go nowhere."

Transparency

Most Hondurans have no way to know anything about these kinds of processes because the only ones invited to participate in concession bids are companies from a list made by the government. Only some parties will be able to meet the criteria to participate in the bidding. They are required to pay a fee and to be pre-qualified to have access to the bid.

"But my point is that people have no way of knowing what is going on because only the businesses listed by the government can participate, and making the details of the concession or the bid public is prohibited," emphasized Facussé.
A harmful contract

According to the contract, the government of Honduras is prohibited from building another international airport. President Maduro wants to build an airport in Copán but he is not allowed to. There are restrictions also on any future conversion of the Palmerola (U.S. military base) airport into a passenger terminal-it could be used for freight, but only perishable fruits and vegetable from the Valley of Comayagua.

"I do not know why the government would agree to closing itself off from any further participation in these activities," mused Facussé. "Any dispute about the contract, and this is included in the text proposed by the government, would have to be resolved in the London courts. It would good if the government said that any dispute would be dealt with in the Honduran courts. Then if someone does not trust the Honduran courts, they could propose going to London. But that the government proposed the London courts means that not even our own government trusts the Honduran judicial system."

Operator

One of the most controversial and questionable aspects of the case is the operator (the manager of the airports). At first it seemed like it would be SFO of the San Francisco International Airport, but now "it turns out that is not the operator." The City of San Francisco formed a private company called SFO Enterprises, which in turn formed a subsidiary called SFO Honduras, which is the operator. Both are limited liability companies. Right now the city of San Francisco is caught in the discussion of how they came to be involved in managing Honduran airports.

"The Tegucigalpa airports is considered to be one of the most dangerous airports in the world. The fear in San Francisco is that the city, who owns the San Francisco International Airport, was involved in a risky operation, because, God forbid, if a plane crashed here, San Francisco City would be liable for millions of dollars in compensations," Facussé explained.

The San Francisco Weekly has heavily criticized the city for getting involved in this situation. Here in Honduras the company passed itself off as being the San Francisco International Airport, but there in San Francisco they deny any legal connection to such an extreme that the company has ordered the subsidiary company to tell authorities nothing about the operation and to have no contact with the mother company. "As it turns out, we do not have an international operator," said Facussé.

Does that constitute a violation of the concession requirements? Facussé says yes, "because there should be an Operator." He explained, "Then we told the government they should communicate directly with the San Francisco International Airport to find out if they say they are the operator of the Honduran airports or not. If they say yes, they are assuming responsibility for the issue. If they say no, it would be clear that InterAirports is not working. We do not know if the government made this inquiry or not. Now they are saying that the operator will change from San Francisco to Vancouver."
From 40% to 5%

Some functions were not addressed in the contract, like customs. But it seems that InterAirports is managing customs through a subcontract to a partner company called SERLIPSA. SERLIPSA has raised customs tariffs 1700% and has rerouted all cargo, even that entering through the Port of Puerto Cortés, through the Tegucigalpa Toncontin airport.

SERLIPSA pays InterAirports 13% of its income. Then InterAirports pays 40% of that to the government. All of which means that the government receives 5% of the income generated by customs. "To me that seems like fiscal fraud. The agreement applies to the operations carried out in the airport. So even if they choose to contract a subsidiary to do the work, they still should pay the government 40% of the income generated by the subsidiary. We absolutely denounce this, and I cannot imagine that the government accepted this."

Negotiations

"We believe that this relationship has been badly mismanaged by this government and by the previous administration," judged Facussé.

There have been many meetings between the government and InterAirports. But the government has not included ANDI or the Airport Commission in the meetings. According to the government, they have had good success because they have gotten InterAirports to agree to lowering the tariffs for take-off and landing by 45% in exchange for lowering the fee for InterAirports from just over 39% to just over 34%. We are not happy with the negotiations because they still have not resolved the problem with SERLIPSA.

"Mario Duarte, Director of Income, told me that the government lost 100 million lempiras because of SERLIPSA," said Facussé. "But there has been no objection. Apparently they think the subcontracts are legal and that there is nothing they can do about it."

In the concession contract the company is permitted to use the contract as a guarantee in securing bank loans. If the company does not repay the loan, the bank would become the owner of the contract, but then the government would be left with no guarantee that the bank would fulfill the terms of the contract.

When ANDI put its findings together with the bidding requirements for the airport concession, "Congress named a Commission to be led by Congressman Leonel Ayala. This commission basically decided that InterAirports had fulfilled the requirements," reported Facussé.

Future Concessions

"We are nervous about this situation," Facussé said. "InterAirports has set a disturbing precedent. We are not opposed to privatization, but there should never be a lack of superivision. We know that the person in charge of supervising the concession, Mr. Aquino, complained that his department did not have the funds he needed to do the job. Without adequate supervision, a company like InterAirports can become an unregulated monopoly."

The people of ANDI (National Industry Association) are worried that situations similar to that of InterAirports could happen again. The government does not have the capacity to invest in Honduras, and Honduras needs investment in building infrastructure. The port of Puerto Cortés, for example, needs a lot of investment to repair and improve the port. One estimate figured it would take 27 million dollars, for example, to repair the damage done to the wharf by woodworms.

"The government does not have that kind of money, and we are afraid that the government will decide to privatize the port and that some company with 10,000 dollars will come and grab it and we'll be facing doubled tariffs the next day," said Facussé. "It's like the time they said they were going to sell El Cajón, the biggest power plant in the country, and management of electricity. At that time private businesses and the Popular Block (an association of community councils) told us: 'We opposed the sale strongly and our opposition stopped it this time, but later they will do it.' "

Suggestions

"We are asking that ANDI and the Airport Commission be incorporated in the Negotiation Committee. We believe that InterAirports is in a very week position legally, because we can object to the issue of their failure to pay the 40% tax," argued Facussé. Furthermore, the contracts says that any dispute must go to London courts, which won't give InterAirports much to work with. Their alleged positions is that the Honduran government did not appropriate the land needed to make the required airport expansions, but that would not be any reason to fine Honduras. That only lets them say you didn't comply so we didn't comply. Suppose they took the legal case and went to London, they would have problems because to sue a government in London, the government would have give up its sovereign immunity. You can't just go around suing a government," concluded Facussé.

Special Protection

Why is there fear about the possibility of revoking the contract? Why is there so much protection for InterAirports? "In reality," said Facussé, "we have not explained this. There is a 40 million lempira fine against InterAirports that I believe the government will forgive, don't ask me why. I think the government believes it is in a weak legal position, but I do not agree. Honduras is in a strong position legally."

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2-9-03