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Monday, 8 June 2015

KING’S $3.5m JET SAGA BACK IN COURT

The saga of the alleged unpaid US$3.5 million debt owed by King Mswati III of Swaziland, for upgrades on his luxury private jet resumes at the Court of Appeal in Ontario Canada on Thursday (11 June 2015).

A judge is then expected to make a final ruling on whether the King must pay.

This should bring to a conclusion a story that began in May 2010 when, in the depths of Swaziland’s worst financial crisis in its history, King Mswati III secretly bought himself a private jet for US$11.45 million.

He then committed himself to paying another US$6 million over five months for luxury modifications.


While this was happening the Swazi Government, which he handpicked, was slashing department budgets and public services by E1.5 billion (US$150 million) in an attempt to keep the kingdom out of bankruptcy. Seven in ten Swazis continue to live in abject poverty with incomes of less than US$2 per day.
In December 2010, unable or unwilling to pay his debts, the King sold the plane to Millers Capital, a Singapore-based investment company, for US$7.5 million – US$3.95 million less than he paid for it five months earlier. In April 2012, he bought the plane back from Millers for US$9.5 million – US$2 million more than he had sold it. He then claimed to the Swazi people that the plane had been donated to him by development partners.
The tangled financial history of the King’s MacDonnell Douglas DC-9 jet (also known as MD87) has been revealed in papers at the Court of Appeal, Ontario, Canada.
Papers presented to the court on 9 April 2015 revealed that on 20 May 2010, SG Air Leasing, a company incorporated in the British Virgin Islands, sold the jet to Inchatsavane, a company whose sole shareholder was King Mswati, for US$11.45 million. The sale was for the shell aircraft and engines and did not include the interior.
There was an additional agreement between Inchatsavane and Goderich Aircraft Inc (GAI) of Ontario, Canada, to modify the interior of the aircraft for a price of US$6 million, which was to be paid by the King’s company in instalments between 7 June 2010 and 8 November 2010.
In November 2010 GAI said that Inchatsavane was in arrears of payments by about US$2.6 million.
A close business associate of King Mswati introduced him to Millers Capital to assist Inchatsavane to obtain financing to pay off the debt.
On 30 December 2010, Millers Capital bought the aircraft from Inchatsavane for US$7.5 million, of which US$3 million went to GAI to pay off the arrears and US$4.5 million went to the King through his company Inchatsavane.
The court papers revealed that there was a verbal agreement between Millers Capital and Inchatsavane that the King would be allowed to repurchase the plane at a later date for US$9.5 million.
While the King was making this secret deal to secure the future of his private luxury jet, the Swazi economy was in free-fall. The mismanagement of the Swazi economy was so grave that in August 2010 both the International Monetary Fund and the World Bank refused to support Swaziland’s attempt to raise a US$500 million loan from the African Development Bank.
In August 2011, GAI said it was insolvent and could not complete the upgrading of the aircraft. SG Air agreed to fund the continuing upgrading on the understanding that the King’s company Inchatsavane would repurchase the aircraft from Millers Capital for US$9.5 million.
The court papers stated that if Inchatsavane did not buy back the plane, SG Air had an understanding with Millers Capital that the aircraft would be sold and SG Air would recover its expenses from that sale.
As of 17 April 2012, the costs paid by SG Air on behalf of Inchatsavane for the modifications to the jet totalled US$3.275 million. 
SG Air paid a further US$1.37 million in connection with repairs and improvements to the plane. This took the total amount payable to more than US$4.6 million.
The upgrades were all to increase the luxuriousness of the jet and had nothing to do with ensuring the King’s security. The court papers stated the jet had nothing in it ‘making it unique or necessary for HMK [His Majesty the King] to conduct any state / sovereign business’.
The papers added the aircraft had, ‘no missile detection  system, no military radar, no ammunition resistant steel, no in-flight refuelling connection, nor does it have any advanced avionics and defences or electronic counter measures to interfere with enemy radar. 
‘Practically speaking, the aircraft is an “ordinary” airplane retrofitted with luxury amenities.’
The King through his company Inchatsavane repurchased the jet on 18 April 2012 for US$9.5 million from Millers capital, through Wells Fargo in its capacity as trustee. This was in line with the verbal agreement they had made in December 2010.
The government which is hand-picked by King Mswati, who rules Swaziland as sub-Saharan Africa’s last absolute monarch, made several public statements in April 2012 to say the jet had been donated to the King as a gift by ‘development partners’.
This was the first public announcement made about the plane, although it had originally been purchased nearly two years earlier in May 2010.
The King’s Prime Minister Barnabas Dlamini, said on government-controlled radio that the King had been given the jet as a birthday gift, ‘from development partners and friends of the King, to be used by their majesties for travels abroad’.
Government spokesperson Percy Simelane said at the time, ‘The donor has asked to remain anonymous and we stand by that agreement.  We don’t owe anybody an apology for having been lucky to have someone purchase a jet for the King.’ 
In April 2015, the court papers stated that although Inchatsavane had not remitted the outstanding monies owed, SG Air did not press for payment ‘aggressively’. But, by November 2014, more than two-and-a-half-years after the plane’s repurchase, SG Air told the King it was ‘imperative’ that it be repaid.
To facilitate a speedy resolution, SG Air agreed with King Mswati that US$3.5 million should be paid to SG Air as ‘full and final’ settlement of the costs in connection with the aircraft. By making this offer, SG Air wrote off US$1.1 million of the debt.
By 16 December 2014, the debt had not been paid and SG Air succeeded in obtaining an attachment of the plane for unpaid debts of the aircraft which was in Goderich, Ontario, for routine maintenance. The plane was eventually released after the Swazi Government delivered a letter of credit for US$3.5 million which is being held in trust in a bank until the court case is concluded. This guarantees the King will be able to pay the debt if the court orders him to. 
See also


SWAZI KING NOT ABOVE LAW IN CANADA
SWAZI KING IS ABOVE THE LAW, COURT TOLD
WHO PAID FOR SWAZI KING’S JET
REVEALED: COST OF FLYING KING’S JET
SWAZI MPs CONFUSED OVER KING’S JET
REVEALED: DETAILS OF KING’S NEW JET
KING'S COMPANY AT CENTRE OF JET ROW
SWAZI KING ‘REFUSED TO PAY JET DEBT’
SWAZI KING’S JET HELD FOR UNPAID DEBTS
‘SWAZI KING TO BUY US$44m PRIVATE JET’
http://swazimedia.blogspot.com/2015/04/swazi-king-to-buy-44m-private-jet.html

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