In my last Post, I had spoken about the Mauritian PM’s visit to the Boeing factory in Seattle to look at the assembly of the two 767s on order by MK.

A few months later, I received a telex from the Finance Director that we would be receiving a sum of $7.5 million from the Export/Import Bank (EXIM Bank).  The  telex also stated that the amount would be directly credited to our account at our Bank - Irving Trust - and that on receipt, I should advise the Finance Director. 

Shortly thereafter, Irving Trust called and stated that an amount of $7 million had been received from the EXIM Bank.  I promptly telexed the Finance Director and:

1. Mentioned that the amount was less than what he had stated; and
2. What would he like me to do with it?

I did not hear back and sent a reminder to which there was no reply.  The money was lying in our Bank account and earning no interest.  Additionally, I count not place it in an interest bearing account as that would require MK to start filing Tax returns with the U.S. IRS, which may open a Pandora's Box as, being an international airline, we were not filing any returns.

Over a month passed and we still had no instructions from the Finance Director. I consulted my personal Investment Adviser who suggested that we open an “off-shore” account and place this sum in that account, which would earn a good rate of interest and at the same time, not have to declare the income to the IRS.

I decided to do that and we started earning a fair amount of interest every month.

About 6 months later, we received a telex from the Accounts Department asking us to pay a sum of money to an Aviation Fueling Company against an Invoice for services rendered.   We were also told to take this money out of the $7 million received from the EXIM Bank.  I instructed my Investment Adviser accordingly and kept a record of the transaction.

Shortly thereafter, we received similar telexes asking us to pay additional Invoices and take the money from the $7 million account and this process carried on for over an year.

I am not clear about the exact date, but about 2 years after the $7 million was credited to our account, we received instructions to “remit the balance to the MK Bank account in Paris”.  We complied with the instructions and I told my Investment Adviser to close the Off-shore account.  I also informed the Finance Director the exact amount transferred.

About a month later, my Investment Adviser informed me that there was a small amount of about $25,000 in interest that had accrued and what I wanted done with it?  I told him to remit it to the MK account in Paris.

Lo and behold, someone in MRU finally woke up and asked for details of this transaction and when I responded, I received a frantic call from the Finance Director asking me to explain how we earned this amount of interest.  When I told him of the other interest amounts that we had earned and explained how we had opened the Off-shore account, he "hit the roof".  He stated that I had no authority to do so, because opening of any Bank account would need the approval from MK’s Board and that he could not do so retroactively.

By this time, I had had enough and I asked him point blank, why he had not responded to my various telexes on the subject.  He had no answer and we left the matter unresolved until my next visit to MRU.

On my next visit, the CMD brought up the subject over lunch when the Finance Director and other senior executives were present and I related the entire incident and mentioned that:

1. We had received no responses to various telexes sent to the Finance Department
2. We had earned substantial interest
3. Till date, no one in MRU had asked for an accounting of the monies spent and interest earned on this account.  Isn't anyone interested in knowing what happened to this large sum of money?

I was delighted when the CMD congratulated me for my initiative, at which point the CD humorously stated that instead, I should have called him and that both of us would have emigrated to Brazil with the $7 million as that country had no extradition treaty with the USA.

I am relating this incident because I want to highlight the culture of the airline and relationships between various top executives.

On the one hand, there was a great deal of camaraderie and yet, on the other hand, there were a lot of loose ends.

Let me go back to November 1972 and the appointment of Nari Dastur as Air-India’s Commercial Director.  Nari had waited a long time for this appointment and suffered quite some humility at the hands of Mr. Kooka, particularly when he was the sole Regional Head who was never given the title of Regional Director. He remained Regional Manager until he took over as CD.

Nari Dastur had considerable ambitions and had done some long term thinking.  He wanted to become the Managing Director of the airline, but at the back of his mind, had back-up plans.

Very soon after coming back to Bombay, he made a trip to Mauritius.  On his return, Nari Dastur convinced the Air-India Board to purchase 10% of Air Mauritius who had recently started international operations.  Nari was the AI representative on MK’s Board; a position he maintained until he left AI and I took over as the representative.

Nari Dastur quickly established excellent relations with the top management of MK. He invited their Chairman, Dede Maingard and his wife to visit India as our guests and he was very close to Harry Tiruvengadum who was not only the No. 2 man in the airline, but the Communications Secretary of the Mauritius Government who owned the majority shares in the airline.  Harry would eventually take over as the CMD.

He kept up his contacts and was very smart in ensuring that he did not “ruffle any feathers”.  He arranged for Mr. K.K. Unni to be invited to visit Mauritius as the guest of MK (I accompanied Mr. Unni on this trip).  It was a grand affair - the red carpet was rolled out.  We not only met the Sir Seevoosagar Ramgoolam, the Prime Minister, but were invited to attend a session of Parliament and have lunch with the P.M. and members of his Cabinet.

Nari Dastur’s rise in Air-India took a step forward when he was appointed as Deputy Managing Director (Commercial).  He was now one of two Deputies to the M.D. (the other being Mr. KG Appusamy who held the title of Dy. M.D.).

However, when Mr. Unni retired, his replacement as Managing Director was Mr. Appusamy  and Mr. Dastur became the only Deputy.  It was at that time, that he realized that his ambition to take over as the Chief Executive of Air-India had come to an end.  He decided to look at various options and settled on Air Mauritius.  He was appointed to the newly created position of Regional Director - Europe.

Interestingly, Nari himself raised the subject with me when Mr. Appusamy took early retirement from Air-India.  I was on a visit to Geneva for a European Sales Conference and was having dinner with him.  He was extremely upset with Mr. Appusamy’s decision stating that he had lost out in AI because Appu had made such an issue of his seniority and now gave up the post which could and should have come to him.

Changing the subject, I was interested in reading conflicting news about Air-India’s profitability.  On the one hand, a news item stated that AI had doubled its operating profit in the latest financial year.  On the other hand, the Net Loss had widened substantially - from Rs. 38 billion to Rs. 57 billion.  And in another news item, the Aviation Minister stated that Air-India’s debt was much higher than originally stated.

WHAT GIVES?  Are we getting correct information or is someone hiding the truth?

In my next Post, I will speak of the hierarchy in Air Mauritius and its culture.