If it’s too good to be true…
It’s not every day that someone you’ve come to know reasonably well through the airline business appears on every evening TV news programme around the world accused of an $8.9 billion fraud. And yet this is the bizarre situation that has developed during the last week as the accusations started to fly at Sir Allen Stanford and his international banking activities.
Soon after I arrived in the Caribbean in 2006 I was warned by a very credible local businessman that it was alleged that there were many dubious aspects of Stanford’s organisation. While this warning stayed with me, I had no option but to engage with the Stanford Empire – and eventually Sir Allen Stanford himself (although he wasn’t a Knight at the time – but that’s another story….) as the then owner of Caribbean Star and Caribbean Sun airlines.
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©Joseph Jones Photgraphy |
When I took over at LIAT we were in a battle to the death with Caribbean Star Airlines and Caribbean Sun Airlines – both airlines 100% owned by Sir Allen. What struck me as strange at the time was the ‘money-no-object’ approach to running an airline – something that otherwise only seems to happen in oil-rich gulf states. And yet, there we were facing competitors who were clearly losing their owner a fortune (the best guess is at least $200 million since their launch in 2001/2) and yet he didn’t seem to be showing any signs of shutting-off the $$$$ ‘fire-hose’.
In addition to spending a fortune subsidising the airlines on a daily basis, he seemed to be taking some very strange decisions. He had assembled a powerful and competent management team. What was wrong with that? I hear you say. Well, that would have been fine except that he had based them in Fort Lauderdale, Florida – even though the business HQ for Caribbean Star (the larger airline) was Antigua, 3 ½ hours away by jet. Frankly, I find it difficult enough managing our business being on-site 24/7 – I cannot imagine how he imagined that a complex regional airline could be managed by remote control. But he had a solution to this little conundrum – he let his executive team fly up and down to the Caribbean on his fleet of private jets. Of course, an obvious, practical and low-cost solution!
Surprises continued along the way after we started negotiating with Stanford over the future of LIAT and Caribbean Star/Sun. Initially he wanted 50% of the combined business; then 30%; and eventually we negotiated him down to 0% – and yet he provided very generous bridging finance of several million dollars – and for a while was offering a substantial multi-million loan to our shareholder governments on soft terms to re-captialise the business. What struck us as strange at the time was how ‘little LIAT’ seemed to get its way in negotiations, when we were faced with a hard-bitten Texan multi-millionaire. At the end of the negotiation process all we paid Sir Allen (who had by then been Knighted) was for some spare parts and we took on aircraft leases. No premium was paid for the business. Thank god this was the case – I can’t imagine what a mess we would be in right now if he had continued to have a stake in the airline.
The ‘money-no-object’ approach wasn’t just restricted to his airlines - all of his businesses were run on a similar basis – perhaps too much ‘form’ over ‘substance’? – certainly anyone who has passed through Antigua can’t have failed to be impressed by the manicured “Stanford-land” enclave (2 banks, athletics club, up-scale Pavilion restaurant – it would seem seldom used by anyone other than Stanford’s customers, ‘Sticky Wicket’ sports bar and private cricket ground) that comprise the approach to the airport terminal. This provided would-be customers of his banks with the impression that here was a solid and credible business.
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| Mark Darby is chief executive of Caribbean regional airline LIAT |
On a personal level, encounters with Sir Allen were very pleasant. He’s a good host and good company. However, it was clear that he was very used to getting his own way. The command and control structure was clearly very autocratic. A small example: if you work for part of the Stanford empire you were required (almost on ‘pain of death’) to wear a gold Stanford Crest lapel pin – something I always felt was vaguely reminiscent of belonging to a James Bond arch-villain’s empire. Woe betide any employee (even the most senior executives) seen without the pin – who received an immediate and very public dressing down.
As ever, it’s the ‘little people’ that will lose out: Many people will probably lose their jobs here in Antigua; the suppliers to his many businesses might not get paid; many small and not so small investors may lose their money; and I’m certain that unless carefully managed, it will knock the region’s confidence – which until now seems to have been hardly troubled by the rest of the world’s economic problems.
And then of course there’s the cricket - but that is another story!
Source: Airline Business
