Sunday, April 12, 2009

Don't Kick'em When They're Down

So said Xavier-Luc Duval in Parliament this week. He was referring to the outrage that was sparked over the pay packet of the new CFO at MK. What the Minister seems to be forgetting is that an otherwise healthy and strategic company was kicked to the ground by an incompetent CEO and a Chairman that were handpicked by the Prime Minister and a board, which includes Ali Mansoor, that failed to uphold even the basic principles of corporate governance. And ironically that all of these people, save one, are still around to get at least another chance to kick MK while it's down.

Nevertheless, the compassion expressed by XLD this week puts him in a special position to understand the sufferings of the beautiful people of Mauritius who have been brutally thrown to the ground by Mansoor and Sithanen before being relentlessly kicked by these two bean-counters. The latest kick is the accounting gimmick of making us pay for the outlandish Rs3 billion of hedging losses sustained by the STC so that it doesn't show up in his deficit numbers.


Mamoujee said...

It's no accounting gimmick at all, as we are picking up the tab from our pockets with knees down, while the VAT windfall on increased fuel prices keeps widening the good doctor's fiscal space..... for him to kick another hedging goal under our belt !!

Sanjay Jagatsingh said...

It is actually worse than that. The way Sithanen revised the formula for the APM last October was to ensure that we don't benefit as we should have from the collapse in oil prices in the second half of last year so that oil-related VAT receipts are kept artificially high. That's why pump prices for a litre of petrol is more than Rs10 rupees than what it was when oil were at USD50 a barrel back in 2005.

The accounting gimmick refers to the fact that STC should not have passed that hedging loss to us but it should have appeared on its books and eventually counted in the deficit numbers of the finance minister. The STC and Sithanen still have to tell us how all this happened because the STC is effectively hedged against oil price risk via the APM. I smell cowboy trading.

Richard Le Bon said...

It's really a shame the population has to pay for the poor forecasting of oil prices by the STC. The real gimmick is that our citizens don't rebel against such injustice. Instead they are subsidizing the STC.

Richard Le Bon

Sanjay Jagatsingh said...

Well the prices did come down a bit when people started to slow down traffic. But they haven't come down anywhere close to where they should be to reflect current international prices let alone in these times of economic slowdown.

What would happen if traffic was slowed again?