Is CAL a strategic asset of T&T? | Local company

This inquiry process led to a search of the airline’s published audited financial statements, which revealed the following in CAL’s 2007 Annual Administrative Report: “On October 1, 2007, CAL acquired all of the issued share capital of Tobago Express Ltd and assumed all responsibilities for the operation of the domestic route, previously handled by Tobago Express Ltd.

This sentence reminded me that the national airline – now CAL, but before it BWIA – was not always fully responsible for the domestic airlift. Tobago Express was established in 2001 and was 55% owned by private investors, mainly from Tobago, and 45% by BWIA. Tobago Express was preceded by Trinidad and Tobago Air Services (TTAS) – which operated from 1974 to 1980, until its acquisition by BWIA – and by Arawak Airlines, which operated from 1970 to 1973.

Inevitably, the search for information on CAL led to the 2016 report of a committee led by Dr. Terrence Farrell to review 100% state-owned companies. This report states: “CAL was established in 2006 following the report of the BWIA task force which recognized the strategic role of a national airline in the current circumstances of air transport in the region. The issues surrounding LIAT require serious consideration of “the current circumstances of air travel in the region.”

But, researching information about CAL has led to the discovery that CAL may not be as responsible as it should be.

Accountable to whom?

According to parliamentary records, the Ministry of Finance has submitted the following reports on the CAL to Parliament since its operational launch on January 1, 2007:

the 2007 annual administrative report;

the 2008 annual administrative report;

lFinancial statements for the period ending December 31, 2012;

lConsolidated financial statements for the period ended December 31, 2013; and

lConsolidated financial statements 2015.

The annual administrative reports for 2007 and 2008 were submitted by the CAL Board of Directors chaired by Arthur Lok Jack, with Gervase Warner, Shafeek Sultan Khan and Robert Riley as directors. Both of these administrative statements contained independent auditors’ reports.

CAL submitted its 2015 consolidated financial statements to the Ministry of Finance on September 6, 2021, as listed by the Board of State Enterprises as of November 2021.

While CAL was launched on January 1, 2007, that is, on just five occasions in its 15 years of operation, have audited financial reports from T&T’s majority state-owned flag carrier been submitted to Parliament. Five times in 15 years!!!

Questions

1Why did CAL submit its audited financial statements for the year ended December 31, 2015 to the Department of Finance in September 2021?

2Why were the audited financial reports for the other ten years not submitted to Parliament?

3Who is responsible for CAL’s failure to submit audited financial reports for the years 2016, 2017, 2018, 2019, 2020 and 2021 to the Ministry of Finance?

4What is the responsibility of CAL management to ensure financial audits are purchased and delivered in a timely manner?

5What is the responsibility of CAL’s Board of Directors to insist that management obtain and deliver timely financial audits?

6And, finally, what is the responsibility of the Sole Corporation (Minister of Finance) to ensure that financial audits of CAL are submitted to Parliament in a timely manner so that the performance of the SOE can be submitted to parliamentary scrutiny by the Public Accounts Committee (Companies)? ?

Government policy on the publication of SOE financial statements is set out in the SOE Performance Monitoring Manual. Unless it has changed, the policy, as stated in the manual, is as follows: “State-owned enterprises are required to publish in at least one major daily a summary of their audited financial statements in the four months following the end of the financial year and a summary of the unaudited half-yearly accounts within two (2) months from the half-yearly date subject to the approval of the Minister in charge of finance.

“These summary statements must contain the information required by the Securities Industry Act, 1995.”

Why was CAL allowed to violate this policy?

On the issue of parliamentary oversight of SOEs, the SOE Performance Monitoring Handbook states: “SOEs are required to submit the following:

a. Audited financial statements (two originals and 120 copies) to the Minister of Finance within four months of their fiscal year end. These reports must be tabled in Parliament and then submitted to the Public Accounts (Business) Committee for review;

b. Copies of their letters of recommendation issued by the auditors.

Is CAL consistent with this mandate?

The manual also stipulates that each SOE is required to appoint an audit committee, consisting of a minimum of two non-executive directors and other professionals independent of the company. The Minister of Finance may appoint other independent professionals to the committee.

According to the manual, the audit committee is appointed by the board of directors to help it monitor:

a. Periodic financial reports and other financial information provided by the company to management, any government agency or the public;

b. The company’s systems of internal controls relating to finance, accounting, legal, compliance and ethics that management and the board of directors have established; and

vs. The company’s auditing, accounting and financial reporting processes

Does CAL have an audit committee and, if so, does it operate in accordance with its terms of reference?