The company that sued King Mswati III of Swaziland
for US$3.5 million in unpaid bills relating to his luxury private jet has lost
its case on a legal technicality.
But, the Appeal Court in Ontario, Canada, said the issue
of the unpaid debt could still be pursued at a different court.
Air Leasing (SG Air) had sued in the Canadian courts
under the Repair and Storage Liens Act. It said it had paid the money for
repairs and upgrades to the King’s private jet, a MacDonnell
Douglas DC-9 jet (also known as MD87). It had expected the money to be repaid
by King Mswati, but this did not happen.
The Appeal Court in Ontario in a judgment dated 17 June 2015 decided
that SG Air was not eligible to sue under the Repair and
Storage Liens Act because the company was not an aircraft repairer and it did
not undertake the repairs to the jet aircraft itself. The court accepted that
SG Air might have paid the money for other companies to make upgrades to the
jet.
The court said the issue of the unpaid debt was not
within its jurisdiction and this would have to be pursued elsewhere.
The Appeal Court denied a request from King Mswati’s
lawyers to release a US$3.5 million letter of credit the Swazi Government was
forced to deliver in order to get the jet released from the custody of the
court in May 2015.
The letter will still be held in trust in a bank in
case SG Air decides to appeal the decision to the Canadian Supreme Court.
SG Air has not yet said if it will appeal the
decision.
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.
Papers presented to an Ontario court on 9 April 2015 revealed that on 20
May 2010, SG Air, 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 alleged 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
