Air Namibia house deal raises stink

AIR NAMIBIA sold a house to its Chief Executive at a loss, in a deal that has been described as not being in the interest of the cash-strapped airline.

But both Air Namibia Managing Director Gernot Riedel, who benefited from the deal, and Chairman of the board Vekuii Rukoro, said there was nothing wrong with the sale as it was done according to company policy and transparently. Air Namibia bought the house from its former CEO Jaafar bin Ahmad in December 2001 for N$854 000 following his dismissal.The company then sold it to Riedel for N$663 000 a year ago.No auction was held, nor was there an attempt to fetch the highest price for the house.This, said Rukoro, would have been against policy and could be considered “an irregularity”.Rukoro said in an interview this week that the house was sold strictly according to the airline’s housing policy which states that an occupant gets the first option to buy a dwelling at 20 per cent below the price evaluated by the bank when the company disposes of the property.He said Air Namibia found it expensive to maintain the house and therefore decided to sell it.In addition, Rukoro said, keeping the house would be outside Air Namibia’s business.”The dwelling was not financially viable for Air Namibia,” said Rukoro, adding that according to municipal evaluation a quarter of the 1 400 square metres plot was too steep and “cannot be used”.Riedel occupied the house after he was appointed MD in March 2002, as part of the company’s rejuvenation plan.Rukoro said they gave Riedel the house to stay in because he did not have a place while in Windhoek, and that he, former trade unionist Ranga Haikali and the General Manager for Technical and Operations, André Compion, were paid lowly while in acting capacity.The Namibian has learnt that the Windhoek municipality’s valuations currently price the number eight Lessing Street house at N$96 000 for the land alone and and additional N$465 400 as improvement.Bank Windhoek declined to say how much it had valued the house because of client confidentiality.But Air Namibia said Bank Windhoek valued the house at N$828 390, adding that the “property needed serious maintenance” and that it was sold”as is” who has registered it in a close corporation.Riedel dismissed the suggestion that he registered the house through a close corporation called Santiago Investments Three CC in order to conceal the deal.The deal was 7 000 per cent transparent, he said.”There is absolutely nothing to hide, nothing to conceal or whatever.The CC is in my name, my personal name and my wife’s names.We know why CCs are registered – it has a lot to do with testaments at the end of the day, if you are married outside the community [of property] etcetera, etcetera,” said Riedel.Rukoro has informed the Minister of Finance about the sale of the house and told staff one and a half month ago, Riedel said.The official airline acquired the property after having entered into an agreement with former CEO Ahmad that, should he leave, the airline would be obligated to buy the house.Air Namibia is one of the parastatals which heavily relies on Government bailout to stay in business.The national carrier received a subsidy of N$1,4 billion from the taxpayer over the past four years, and its annual bail-out has surpassed some of the Government Ministries such as Higher Education.Air Namibia bought the house from its former CEO Jaafar bin Ahmad in December 2001 for N$854 000 following his dismissal.The company then sold it to Riedel for N$663 000 a year ago.No auction was held, nor was there an attempt to fetch the highest price for the house.This, said Rukoro, would have been against policy and could be considered “an irregularity”.Rukoro said in an interview this week that the house was sold strictly according to the airline’s housing policy which states that an occupant gets the first option to buy a dwelling at 20 per cent below the price evaluated by the bank when the company disposes of the property.He said Air Namibia found it expensive to maintain the house and therefore decided to sell it.In addition, Rukoro said, keeping the house would be outside Air Namibia’s business.”The dwelling was not financially viable for Air Namibia,” said Rukoro, adding that according to municipal evaluation a quarter of the 1 400 square metres plot was too steep and “cannot be used”.Riedel occupied the house after he was appointed MD in March 2002, as part of the company’s rejuvenation plan.Rukoro said they gave Riedel the house to stay in because he did not have a place while in Windhoek, and that he, former trade unionist Ranga Haikali and the General Manager for Technical and Operations, André Compion, were paid lowly while in acting capacity.The Namibian has learnt that the Windhoek municipality’s valuations currently price the number eight Lessing Street house at N$96 000 for the land alone and and additional N$465 400 as improvement.Bank Windhoek declined to say how much it had valued the house because of client confidentiality.But Air Namibia said Bank Windhoek valued the house at N$828 390, adding that the “property needed serious maintenance” and that it was sold”as is” who has registered it in a close corporation.Riedel dismissed the suggestion that he registered the house through a close corporation called Santiago Investments Three CC in order to conceal the deal.The deal was 7 000 per cent transparent, he said.”There is absolutely nothing to hide, nothing to conceal or whatever.The CC is in my name, my personal name and my wife’s names.We know why CCs are registered – it has a lot to do with testaments at the end of the day, if you are married outside the community [of property] etcetera, etcetera,” said Riedel.Rukoro has informed the Minister of Finance about the sale of the house and told staff one and a half month ago, Riedel said.The official airline acquired the property after having entered into an agreement with former CEO Ahmad that, should he leave, the airline would be obligated to buy the house.Air Namibia is one of the parastatals which heavily relies on Government bailout to stay in business.The national carrier received a subsidy of N$1,4 billion from the taxpayer over the past four years, and its annual bail-out has surpassed some of the Government Ministries such as Higher Education.