Monday, November 19, 2018
State House did not seek legal advice before signing the airport/border security tax contract with SECURIPORT and no exit clause in the contract.
The $20.00 airport security tax for each airline passenger traveling to and from Banjul International Airport - or $40.00 for each return ticket holder - proposed by government to go into effect next January was immediately opposed by airlines and tour operators alike. FTI, the German tour operator's letter of October 30th, 2018 addressed to the Secretary General informed government that proposed tax comes with added hidden costs of $15.00 due to VAT and rental commissions to be paid in the destination of origin, increasing the total figure to $55.00 instead of $40.00.
FTI's further informed the government that if it is serious in creating a conducive investment climate, authorities must guarantee that additional costs similar to those currently being contemplated will not be implemented because it will have dire consequences. In fact, the Board of the FTI has directed that should the tax be implemented, any and all investment will be put on hold, including the $100 million the company plans on investing in The Gambia in the next 5 years. Its summer plans are also being put on hold until an amicable resolution is found.
The TUI Group has also put the government on notice. For many years, they have been operating to Banjul and have increased the number of flights substantially since. They operate 5 flights per week from Amsterdam and 2 flights from Brussels which means that over 21,000 seats are allocated to The Gambia this winter. TUI also plans to operate in the summer, all of which will inevitably cause a reduction in tourism spending and therefore negatively impact the local economy should the proposed tax be allowed to take effect.
Among the reasons advanced by IATA, the international air transport association, on behalf of member airlines was the lack of consultations with airlines prior to implementation.
The setting of airport and air navigation charges falls under the purview of the International Civil Aviation Organization (ICAO)'s policies on charges (Document 9082) and taxation (Document 8632) and the manner in which the proposed airport/border security tax was handled by the government seemed to have contravened these regulations. Tour operators such as FTI, the German tour operator, hotel resorts and others in the business followed suit in objecting to the proposed tax.
In addition to the stiff opposition from airlines and tour operators to the new tax because of the threat it poses to the tourism sector that generates 20% of of the country's GDP as well as the second foreign exchange earner, the contract between the government and SECURIPORT was negotiated and signed without the benefit of any legal advice from the Attorney General Chambers.
And as far as it can be ascertained, the project was neither subjected to rigorous appraisal nor publicly tendered to attract other eligible companies, making the entire transaction susceptible to standard financial and ethical scrutiny.
To further compound the problems of the government of Adama Barrow, the contract, according to our sources, doesn't have an exit clause that would allow for the contract to be terminated under certain circumstances specified in the clause. A standard clause in a government contract gives the government the right to unilaterally terminate a contract with or without giving reason or reasons. The contractor in certain cases is entitled to a negotiated settlement.
In the case of the SECURIPORT contract, the government can only extricate itself from the contract if it is willing to pay the contractor the full amount of the projected profit the company is projected to earn during the entire contract period of 5 years. Insufficient due diligence was conducted on the company, otherwise it would have shown that the company's Sierra Leone experience would have been a red flag based on local reporting by Standard Times Press of a US$16M that was allegedly fraudulently billed to the Ministry of Internal Affairs.
It goes without saying that such a contract clause is as disadvantageous to the government as it is callous disregard of a fundamental norm of making use of a team of lawyers as an integral part of any contract negotiations for the singular purpose of providing legal advice.
In this case the lawyers were conspicuously absent and so where the ministry of Finance responsible for all fiscal affairs of the government, the Gambia Tourism Board and the Gambia Civil Aviation Authority responsible for managing the Banjul International Airport.