Dolce and Gabbana to go on trial for tax evasion

Loopholes under friendly skies. Photo ET.

Domenico Dolce and Stefano Gabbana saved $540 million in taxes by creating a Luxembourg company in 2004.

Like all governments that are spending like drunken sailors, the Italian government needs every dime it can put its hands on. Therefore owning a Luxembourg, Swiss or other company looks suspicious to both men's tax man.

So it becomes that question, that is often answered with a joke: what is the difference between tax avoidance and tax evasion? Answer: five years in prison.

For all those jurisdictions that occasionally or permanently are branded a tax havens, it is an ongoing concern to stay on the good side of that equation, which is to be on the tax avoidance side. Most governments won't like it, but it can be enshrined in international law as for instance in double taxation agreements. The only remaining problem is that compliance with any international standard in that matter is a moving target that changes as governments and the need for more tax money changes.

Cargolux and Luxair in phase 4: carpet bombing

My Orchids. Phalaneopsis chain reaction. Photo ET

Cargolux and Luxair in phase 4: carpet bombing

Today Luxair denounced the CWA just as Cargolux did a couple of weeks ago. Both companies are closely related as they have similar share holders, Luxair even is a share holder of Cargolux, and both are the two significant players based at the Luxembourg airport where they are also operationally tied together.

The move is not totally unexpected, given the intertwined relationship and the earlier initiative of Cargolux. It is however surprising, as this move is not following the "Luxembourg model".

What is disturbing in that respect is that there was no real dialogue. None of Cargolux and Luxair really brought up any issue for discussion. Both managements were advancing generally that competitiveness concerns were their motivation, indicating that cuts had to take place. But both were unwilling and unable to define the issues and to engage in a negotiation, a give and take.

The main reason: consultants are working on reports, which are expected to be ready later this year. Really? But why then is any action required now, as no one knows yet what there is to talk about? My conclusion is that no talks are actually desired, not now, and not when those famous reports come out. The wishful thinking is probably  that the experts' findings and conclusions are not intended to be discussed. Just applied. A dictate. The government, a key stakeholder, fakes neutrality, a player at arm's length. It is difficult to believe that there is no government approved policy backing those denouncements.

Assuming such a consent, both airlines will now be run like Air Forces, indulging in carpet bombing. No discussion tolerated. Of course the term carpet bombing comes from carpet, which generally covers a larger area. The area now covers the denounced CWA's of Cargolux and Luxair employees, and puts pressure on more and more people, to emphasize the crisis and undermine resistance.

Cargolux: the missing link !

My Three Orchids Phalaneopsis: Cargolux, ING, and QR. 
Photo ET.


Since day one of QR's acquisition of 35% of Cargolux, I was scratching my head. The numbers made no sense, the official declarations looked suspicious, and hard information from my old friends let almost no doubt: We weren't told the Truth, and actually misled by the powers to be. But now, look here, we have the missing link, that vindicates one year of skepticism. Véronique Poujol, an investigative reporter with Lëtzebuerger Land unearthed the trick used to make some people go away quietly, and that was played and buried deep in the banking secrecy of an intermediary bank, ING. The article in French "Traitement asymétrique" appeared yesterday in the Land.

Remember that one of the basic questions was, why would Cargolux sell shares to QR, the lowest bidder, if a Chinese bidder was offering 50% more? Several fishy explanations were offered: there was no other bidder (false), there were exclusive negotiations with QR (how intelligent!), there were excellent synergies with QR and CV needed that strategic partner, if not capital.

The deal in place however brought no new capital. It merely was designed to replace shareholders by someone else. Most prominent was BIP, a private investor. Why in the world would such a private fund neglect its fiduciary duty to please the wishes of government, and give up 50% of its potential sale? They didn't.

Véronique Poujol digged up the answer. BIP and other private shareholders kept quiet, as they got their due. Says the article, freely translated: "The acquisition of Cargolux shares by Qatar Airways on June 9, 2011, was set up through a secret transaction, covered by ING, in order to hide a preferential treatment in favor of the private investors."

Basically, ING took over the shares consisting of common and preferred shares as an intermediary and transferred them to QR, all converted in common shares. ING distributed the $117,5 million among the former shareholders on an agreed upon, but uneven key, advantaging the private investors. BIP getting away with $42,354 million, whereas Luxair's share in the sale, according to the same key should have been $101 million, but was only rewarded $27,75 million.

This according to the article raises new questions about the reason why such a secret strategy was used, and why the government owned entities were those treated with neglect if not abuse, and without protest from their representatives? The tax payers entrusted them with a fiduciary duty to be good stewards of the common good. Which rules if not laws, including European restrictions on this operation might have been violated? 

The overarching question remains: why did the Luxembourg government push the least attractive proposal for the sale of 35% of Cargolux? Why did it conceal the inner workings of the deal through the use of a third party? Why did it disadvantage its own holdings (SNCI, BCEE, Luxair) and privilege the private shareholders?  There are actually no more simple answers, excuses, non disclosure agreements, evasion and hiding. It is getting complicated. But we have the missing link.

Cargolux: a Strategy of Evasion and Silence

My Orchids. Naples, Florida.  Photo ET.

Two meetings within a week, on October 18th and on October 23rd, yielded little comfort for Cargolux employees. I understand that the first meeting between two members of the government, MM Schneider and Wiseler and the Unions gave some general indication that the government would not be disinclined  to consider favorably, of course circumstances allowing, to maybe eventually give all support as it may become available to Cargolux.

Not much else could be said. One has to wait for the various consultants to make their expert studies available first. I hope though that even without those expensive consultants, management has some idea in what shape their companies around the airport are. Aren't they the greatest experts of their own companies? So there is an imminent crisis, and decisions can be delayed for another couple of months? That's called evasion and conspiracy of silence. 

There is news however, through Radio 100,7 as related by tageblatt today, and if true, needs some explaining. The story is about a strange timeline and a surprise deal with Qatar Airways acquiring 35% of CV, that Minister Frieden is said to have done unbeknownst to other players. 

It sounds quite surprising that Mr. Frieden, who would easily claim that the government has no say in the affairs of Cargolux, a "private company", would go to Doha and sell a 35% stake in the name of that "private company". Even stranger would be the fact that among those 35% of existing shares were those not belonging to a government entity but a private company BIP. I would not have sold 35% for $117,5 million without a capital injection, if I could have had $175 million and a $100 million loan for the company from Yangtze. Help me understand. 

Any way, here is the timeline, according to tageblatt:

• Cargolux and Qatar Airways were negotiating a partnership, but they failed to reach an agreement and broke up their negotiations (ca 2010?).
• One year later, in February 2011, Minister Frieden travels to Doha, and to the general surprise comes back with the now well known 35% CV-QR agreement. Oops, he didn't know about the broken up negotiations, because he is not a CV Board member. So, what was his mandate, to negotiate in the name of others, as usually we are informed that the government cannot interfere with CV, because it is a "private company"? Why wouldn't the 35% sellers have agreed to rather sell their shares to Yangtze for almost $60 million or 50% more? 
• One year later, 2012, CV is worse off than a year ago.

That's a surprising action to sell a so-called "private company", where you cannot interfere, without the company knowing it, at a price that was not the best price available.

Update Oct.24. 
The heralded "Round Table" did not bring any result. Decisions can only be taken as soon as reports such as the Wyman report are available. As those conclusions, probably known to insiders from the beginning, a were not available, it was Berthold Brecht in the reverse: Imagine there is no war, and everybody attends. But there is another conclusion from all the above: don't talk to the ministers who don't know anything. Talk to Mr. Frieden only.

Cargolux: The Straw that broke the Camel's Back?

Wort.lu - Schneider wants to keep Cargolux maintenance in Findel

My Orchids. Naples Florida. Photo ET

 

 

So the Minister of Economy came out of the Luxembourg secret reservation. That is a definite statement for the record, that he made here. What took so long, and where are all the others? There are other members of the government who have to chime in. Minister Frieden is a key link here, as he is probably the keeper of the file. He was in Latin America, where he might or could have talked up Cargolux, which has so many destinations there. But probably not. The trip had an urgent LFF focus, where F doesn't stand for Flying.

Luxembourg and the United Nations Security Council

My Orchids. Naples Florida. Photo ET


Luxembourg's candidacy for a non-permanent Seat at the United Nations Security Council.

Today's election, from UN News:

18 October 2012 – The United Nations General Assembly is meeting today to elect five non-permanent members to the Security Council for two-year terms beginning on 1 January 2013.

At UN Headquarters in New York, the 193-member Assembly will conduct the election by secret ballot, with winning candidates needing two thirds of those countries present and voting. Balloting will continue until enough candidates reach that threshold, even if only one country is competing for a seat in a particular region.

Bhutan, Cambodia and the Republic of Korea are vying for the one seat for the Asian group, while Australia, Finland and Luxembourg are competing for two seats available for the Western European and Others category.

Rwanda is the sole candidate for one seat for the African group and Argentina for one seat for the Latin America and the Caribbean region.

The new members will replace Colombia, Germany, India, Portugal and South Africa, whose terms end on 31 December 2012.

The five permanent Council members, which each wield the power of veto, are China, France, Russia, the United Kingdom and the United States. Non-permanent members Azerbaijan, Guatemala, Morocco, Pakistan and Togo will remain on the Council until the end of 2013.

So Luxembourg is competing in its group "Western European and Others category" against Finland and Australia.

And the results are (asap = as soon as published):
Update1: Australia: 140
Finland: 108
Luxembourg:128 There will be another ballot between Finland and Luxembourg
Update 2:
And the final count is:
Finland: 62
Luxembourg: 131

Cargolux article at Cargoforwarder

My Orchids. Naples, Florida. Photo ET.

Mr. Heiner Siegmund, publisher of www.cargoforwarder.eu asked me some questions. Based on what we knoe, hear and see, how to read Cargolux' future?

Go to interview: http://www.cargoforwarder.eu/article.php?id=109

Cargolux squaring the circle at a tripartite and a Round Table

My Orchids. Photo ET

Cargolux Squaring the Circle at a Tripartite and Round Table

Usually Board meetings don't get as much attention as last week's Cargolux meeting. Expectations were high to see the selection of a new CEO, and important decisions about the company's next steps ahead. The really big news is that there were no news at all, or almost. This is important, as for the first time the Board, under pressure not to be seen as submissive to QA desires, decided to decide nothing. Gutsy move, and great strategy to calm down the game, except for the impatient and frustrated QA representatives, I must conclude. They threatened that QA might back out of Cargolux, if certain conditions are not met.

First of all, to the credit of the Board  is that they recognized probably the elementary flaw behind the decision making problem, at least for the public's eye. How could the Board have decided anything, if of the two main issues, only 50% of the needed information was available? I'm talking about the CEO selection and the Wymans report. Have decisions already been made, before even getting the underlying information?

Indeed 4 candidates for the CEO job have been selected, but only 2 had been interviewed before the Board meeting? Was a decision already taken in favor of one candidate who exhibited such overwhelming capacities among the 2 interviewed? Did the two other candidates hold only minor mock roles of spaceholders in a kabuki?

Maintenance outsourcing should also have been discussed according to the completed part one of the Wymans report. How can you do that if part two, the one recommending a future mix of aircraft is not yet ready and you don't know which aircraft are to be maintained? The ropes would have been too big to hide.

Actually even more surprising is the idea or also foregone decision spun at that meeting of a leaner Cargolux, with only 4 aircraft (747) on its balance sheet, all the others owned by QA, under QA flag, and available to be wet leased to Cargolux. So is that another foregone decision, before even Wymans concludes its report? Or is it so far only wishful thinking at the Board level, and who at that level is thinking that way? It obviously seems to be QA's thinking, saying my way or the highway, meaning they would quit? Let's look at the two options on the table then, which are that either QA stays and Cargolux has 4 aircraft, or QA quits.

1. QA stays with a leaner, but not meaner Cargolux.

The key is that QA, which has a virtually unlimited budget to achieve its strategy, has a vision which is to make QA a dominant airline and Doha a major hub with its airport a major source of revenue. The airport construction has been impressive. Down the road, it will handle 50 million passengers, cargo and services, such as maintenance. No one knows where the point of profitability lies, but given the enormous investment, that has to be sooner than later, or, according to Mr. Al Bakr, "His Highness will kick ass." May I point out that probably Mr. al Bakr himself has a bulls eye painted on his behind, which explains the urgencies: get planes, get passengers, get clients, get cargo, fill the hangars with maintenance, even sell Whisky in tax free shops.

So the idea about slimming down Cargolux to 4 aircraft makes sense to QA:

·         I guess about 8 -12 aircraft could be taken off Cargolux'  balance sheet and acquired, I bet you at a discount, by QA to alleviate pressure from CV.

·         Those aircraft will be under QA colors, and maintained and stationed in Doha. Luxembourg will immediately lose more than half of its maintenance.  QA's promotion of the 777 mirrors another hypothetical reason to opt for this strategy.

·         The "wet lease" can be a complicated agreement. I would think that we are talking about the classical variety where QA as a lessor would provide the plane, the crew, the insurance and fuel, possibly at market price. Unless Cargolux pilots apply for a job at Doha, they will not fly the leased aircraft. There goes more than half of Cargolux' pilot pool.

·         In order to get started, QA can show real savings for CV, and still make a good profit on the wet leases in 2 ways: save on QA's tax free salaries and on discounted fuel. QA pays Captains a tax free monthly salary of approximately US$ 11,300 (assuming 70 block hours), First Officers a monthly tax free salary of approximately US$ 8,100 (assuming 70 block hours), whereas CV in Luxembourg has to pay a gross salary. As about half the operating costs are fuel costs, QA gets its at half price, which would become a huge potential for profits on the back of CV. (Actually a privilege that CV used to have in Kazhakstan, but seems to have abandoned it for more civilized higher pricing at Luxfuel).

·         QA has full authority over the leased aircraft. They specifically didn't mention other lease options such as dry lease, a less precarious solution, if leaving Cargolux with 4 aircraft is a solution at all. A corollary is that maintenance in Luxembourg could hardly survive. Gone would be dozens of pilots, other staff functions, and loss of all maintenance, huge volumes of cargo, revenue for Luxair and the airport as well as considerable economic activity up- and down- stream. There goes Luxembourg for Logistics.

2. Cargolux without QA

This is a QA threat , if not a secret wish, and a challenge, or maybe not for CV. QA doesn't seem to have done anything valuable for CV so far, but got a lot instead. Nothing positive as far as I know for CV. One of the first gut reactions of the Luxembourg public was surprise at the rapprochement with Qatar. As a veteran of economic development, I would argue that business is business, to a certain point. In this case we have a culture clash, that had to be bridged right from the beginning, answering the question: "How can one reconcile two business cultures, that differ so much?"

Here is an illustration of  that culture clash: A majority of workers in the GCC countries tend to be immigrant male workers from Bangladesh, Pakistan, India or the Philippines. Qatar's overwhelmingly male population  (about 5 males to 1 female), is explained by this migratory phenomenon. The migrant worker is happy with the prospect to make a salary that looks like the cavern of Ali Baba compared to salaries in his home country. He is probably employed by a construction company, that houses him in temporary shelters at a "labor camp" on the building site, maybe charges rent, maybe withholds passports. On payday, our brave man, who probably has no bank account, brings his pay to a Western Union remittance office, which charges up to 11% in fees, maybe also a deposit fee, and at the other end, where the family staying at home lives from remittances, Western Union probably converts into local currency for another 5-6% fee. This is amply documented by United Nations surveys about "remittances" by migrant workers.  Some published statistics in 2011 put the monthly wage of an average uneducated migrant worker in Qatar at $330 a month, and he is officially "happy" to work 6 days a week and 9 hours a day. Reconcile that!

But QA would leave CV under which conditions? I would argue, it sells its 35% back to Cargolux (or another bold thought, to its employees so they have skin in the game) for € 1 and zero cents. Unless there is a secret clause in that secret agreement that again handcuffed Cargolux onto other commitments and precludes that outcome?

Basically 2 years of efforts would have been lost. And much insider knowledge would have been lost to QA, which would be the net winner. However QA has probably made up its mind that a lean CV with 4 aircraft cannot or should not make money in the future, and its threat to leave is therefore real and not without self-interest. For CV there comes a time when you have to cut your losses, and protect your trademark when time is of the essence.

There is no doubt CV needs capital and I trust those quotes of about € 750 million that would be needed over the next three to four years. For once that sounds true, and is a probable number. Where to get that financing? It is very difficult. Three possibilities come to mind.

·         The aircraft and engine manufacturer should be able to provide financing solutions. Actually I believe that one, financing through EximBank, has already been used by CV.

·         Replace QA by another partner who is willing and able to boost CV's finances, and may provide other advantages, as was expected from QA. Yangtze River Express might still be around, flying into Hahn several times a week. Hahn?

·         Explore other possibilities for aircraft financing. The US has several specialized firms. I trust an average CFO knows how solutions can be engineered, that could give CV its freedom and independence back. Examples are dry lease or sale with lease-back etc. QA so far has brought no relief to CV, no capital, no other advantage. And that "no result" took 16 months so far !?

The whole discussion reveals some chronic weaknesses in the Luxembourg system: how can you know that you are told the truth, the whole truth? We need Mr. Bodry's Freedom of information  bill to get passed. And a "Whistleblower Act". We all acknowledge that according to the Luxembourg Prime Minister, we'll have an ethics code for government and civil servants before year end. Definitely! Transparency and liability would help.

Strangely, the Luxembourg government has been very quiet recently. Most telling is its silence in the episode, or rather the unprecedented decision by Mr. Forson to unilaterally cancel the CWA agreements. Walking around as if it were not a 65% owner is no longer an option, as Mr Forson is their employee and controlled by a Board stuffed with government preferred civil servants who have oversight. I guess they are leading from behind, the QA way.

With such a critical pillar of the Luxembourg economy and its vision of a logistics center, shouldn't the government step up and be ready to give its guarantees to CV to develop its own solutions? It did so to salvage BIL (oh, what a coincidence) by signing up to € 3 billion  in guarantees for DEXIA. But it let Cargolux sell its soul for $117.5 million.

Cargolux Board Meeting, October 11, 2012. Great news: there are no news.

My Orchids. Naples Florida. Photo ET.

Cargolux Board Meeting, October 11, 2012. Great news: there are no news.

Observers of the Cargolux Saga today got No News, but got to see plenty of clues of what the future holds. Those are that today no decision was made on the selection of a CEO. No decision was made regarding future orientations and strategies, mostly regarding the survival of MRO operations in Luxembourg. Oh, and someone leaked that QA, according to Mr. al Bakr, might back out of its Cargolux participation, if ... not sure if what happens or doesn't happen. Though that could be a forgone decision.

Given the now well known opacity around Cargolux and Luxembourg governmental practices in general, today's silence and non-action speak volumes.

I would refer to some prior conclusions about Cargolux'  Modus Operandi seen in the recent 15 months, after QA joint the company, as laid out in my blog from last week in French:

http://feierwon.blogspot.com/2012/10/cargolux-quinze-mois-dagonie.html

There you find 3 phases, identified and already in the works.

The first phase was the "moving in together", characterized by a very short period for QA to assert itself in the new household and to domineer. That was the "Shock and Awe" phase, with the Boeing hickup.

The second phase seamlessly flowed out of phase I, and took away clients, profits, duplicated routes, questioned long established choices and solutions, replaced or chased away the old guard and floated questions threatening employment and strategies. The "Numbing" phase. It went on today with no decisions, no action, continuing uncertainty. Actually if spectacular or anticipated decisions had been taken, confirming many fears, it would probably have awakened the numbness too much. So it was artful strategic delaying, while waiting until after a calming down period. Time out for the unions.

The third phase, also coming seamlessly out of phase II is more complex, and more difficult to gauge, most of all because the covenants in the existing contracts are not known. So what are the intentions for the future? First of all, I would advise anyone to never try to interpret the other party's intentions, but to analyze its POSSIBILITIES. Of course everyone will show the best intentions, but eventually when reality kicks in, it might be wonderful, or it might be horrendous. So asking the real questions, not just wishful thinking, tells us what the possibilities are. And basically the main question is: why did QA buy? There are many possible answers. The covenants in the contracts would tell us a lot. But in the absence of those, the possible answers why QA bought are:

·         It wanted to increase profits. Cargolux was profitable at the moment of acquiring 35% of the company, but CV lost clients to QA since. So increasing profits as a shareholder of a profitable company was not the reason. However poaching is one. Done.

·         It wanted to acquire know-how and expertise. QA had the time to analyze and investigate all of Cargolux, finances, operations, contracts, you name it, they saw it. Done.

·         It wanted to expand its services. QA duplicated Cargolux' North American routes. They called it synergies. Or was it surgeries? Done.

·         It wanted to enter markets. Cargolux clients were so relieved to leave Cargolux for the cheaper newcomer. What a coincidence. Done.

·         The QA deal did not provide new capital to CV. It just helped some shareholders to run away, and maintain CV in a chronic state of weakness and inferiority in the partnership. Done.

·         If we knew the covenants, they would probably show an elaborate setup to corner CV and the other shareholders, with all options open to QA to dictate the outcomes. Including to quit, and leave the exhausted partner on the ground, or to stay, because of other emerging advantages: Luxembourg government subsidies, mutual leases or other deals on 747 and 777, maintenance in Doha and any other hidden agenda.

But those are only the possibilities and usually one or the other can be expected to happen. I rarely have seen almost all of them happening all together. The perfect storm.

BIL: Let them eat cake !

My Orchids. Phalaneopsis. Naples, Florida. Photo ET.

A Luxembourg economic paper, Paperjam, reported about the finalization of the sale of BIL, the oldest Luxembourg bank, that got bought, abused and then let by the wayside by DEXIA, the brilliant, too big to fail French-Belgian behemoth that lost tens of billions of Euros in the crisis. The French, Belgian and Luxembourg  governments share a Euros 90 billion guarantee for the failed bank. One result was the spinoff of former BIL, back to Luxembourg. Actually to be acquired by the Qatar Precision Fund (90%) and the Luxembourg government. 

Much discussion ensued when Qatar went on a spending spree in Luxembourg and the Luxembourg government looked auspiciously pleased: Qatar bought BIL, KBL and a 35% stake in the all cargo carrier Cargolux, all three being considered national monuments. Public opinion reacted accordingly, all the more that valuations for those acquisitions seem to have been offers no one could refuse.

According to Paperjam, the 2,100 employees of BIL got an unexpected surprise: everyone got a "signing bonus" of € 1,000. But of course, everyone enjoy ! But it looks a little bit like an awkward damage control after weeks of criticism around the three deals, even more than in the two other cases, there was no such bonus. At the same time the new Board of BIL has one Qatari citizen onboard and 11 Luxembourg citizens, which looks like window dressing for the same reason.

Here's is the happy news: http://www.paperjam.lu/article/fr/la-bil-rachetee-le-personnel-gratifie

Dexia wants more gov't funds before unit sale to Qatar - Banking & Finance - ArabianBusiness.com

My Orchids. Naples, Florida. Photo ET.

Dexia wants more gov't funds before unit sale to Qatar - Banking & Finance - ArabianBusiness.com

A very good summary, I suppose. It confirms Precision Capital knows how to do it. From initial quotes of Euros 1.5 million for the acquisition, the renegotiated price settled at Euros 730 million, with the seller injecting another 204 million. Because of covenants in the acquisition agreement tied to Basel III. 

Qatar now owns 90% of BIL and the Luxembourg government acquires the remaining 10%. A trophy for the loser in some ways, as Luxembourg is guarantor of the very sick DEXIA to the tune of Euros 3 billion, which means a huge risk.

Qatar has been magnanimous in allowing 11 Luxembourg citizens and one Qatari to sit on the Board. It can be viewed as a little window dressing, after public opinion, unions and employees became increasingly uncomfortable with the almost simutaneous sale of a number of Luxembourg household names to Qatar such as Cargolux, BIL and KBL.

Luxembourg's PM doesn't want chit-chat about Cargolux.

Grey Heron heading home. Naples, Florida. Photo ET

Luxembourg's Prime Minister Jean-Claude Juncker, who hasn't held a Press Conference in 8 months (!) despite a Solferino-like field of ruins in the Luxembourg economy, took to the Press on Friday. He had to squelch down voices in his own ranks that criticized a cowardly budget plan for 2013, that obviously lacks the minimum courage warranted in these times of crises. Our grandchildren will pay for that. He also wanted to squelch the voices that demand urgent clarification when it comes to Cargolux, its destiny and the future of its employees, the Luxembourg airport, even Luxair and the dream of "Luxembourg for Logistics".

Mr. Juncker makes the case that all the public talk is going to hurt Cargolux with the bankers. Well, the best way to stop it, is transparency. So you stop chit-chat with openness, truthfulness and honesty.  

The public has a right to know, and I would make the case, that the State being directly or indirectly a 65% owner of Cargolux, it is NOT a private company. It is the same issue that recently got a lot of attention and a court decision in Germany, that in the case of a majority holding in a company, the government needs to disclose information. Unfortunately, even in that case, it is difficult to find the truth, as Luxembourg, unlike all advanced democracies, has no "Freedom of Information" legislation (it has been blocked for 12 years already). It would allow the public, who has a right to know, to ask for any official documents, records, mail exchanges, etc. In the absence of such a right, one can only rely on insider information and on methodical analyses of what leaders say, but mostly who they are, what they have done before and if they do now what they said they would do. Without the right to know, that is the only way to figure out what is going on. But we all have the right to ask questions, and without truthful answers, speculate. Answers vs. Chit-chat. So, what can be done?

1. At the present juncture, only the Luxembourg government is (hopefully) aware of what is going on. It alone can give the public answers and appeasements, or it can still change the direction if need is. That is, if the still secret agreements with Qatar don't preclude the Luxembourg government from changing anything. Which is the case if the Qatar negotiators were really as good as I think they are, and our side was not. I'm led to worry about this, as Mr. Al Bakr treated management as incompetent. He is a shrewd negotiator, knowledgeable about negotiating terms and methods in private equity, venture capital and the like. He's not a win-win strategist but an "I win, you lose" one, which explains his disdain for the former management: he won, they lost, and now he is condescending. Witness his declaration upon signing the agreements: "Our investment in Cargolux, a sound, healthy and profitable company and a leading all-cargo carrier, will deliver great value to Qatar Airways proving to be an excellent strategic partnership". That sounds like a one-way relationship ! I would argue that the public who has taken a keen interest in the fate of Cargolux, employees and their representatives, should get full and truthful answers from both the Government and management about the totality of the agreements passed with QA.

2. I hope that there are no covenants in the agreements that at this stage have cornered the government and Cargolux, with no escape from agreeing to cede control to QA. That is the greatest fear, because over the last 15 months QA hasn't helped Cargolux (e.g. with capital) but hurt it (by competing unfairly), while we had still a say. We would find out very fast what QA's final agenda would be, without a say anymore. Alternatively, the public would be happy to learn that its widely held perceptions were without ground.

3. I see some rumors and even a report by Heiner Siegmund in "Cargoforwarder" about a QA claim, saying we want 100% of Cargolux, or we leave. That would be an immediate crisis, and it depends on what kind of agreement exists, but we don't know (yet). Depending on those, there might be no other choice than to give in. Or one  could call QA's bluff and offer a buy-back of shares,  or renegotiate fair practices and eliminate dangerous covenants. Unfortunately, good natured Luxembourg may have been trapped. The need for new capital remains in any case, if necessary from the Luxembourg shareholders. Which will be difficult if QA has a non-dilution clause or some veto power, all of which they could have negotiated for their 35%. We don't know how much they got in concessions. The government should also stop its practice to delegate Board members who are civil servants, and instead appoint knowledgeable independent representatives of various backgrounds to really support the company, defend the Luxembourg government's interest, and in this case to push back on a bullying new partner, and live a true partnership together, if that is the outcome.

Chit-chat until you tell us the truth.