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Aviation History
1988
1988 - 1348.PDF
BCal fined for Libyan Airbus deal by Alan George A UK Customs and Excise investigation into the sale to Libya of two ex-British Caledonian Airbus Industrie A310s ended late last year with British Caledonian Aircraft Trading, the airline's trading arm, quietly paying a £600,000 penalty for its role in the affair. The fine was paid just a few weeks before BCal was taken over by British Airways. The two Airbuses, plus a package of spares which included one engine, were sold to Libya, via intermediary brokers, in 1986, at a time when BCal was in financial trouble. Libyan Arab Airlines paid £77 million for the aircraft, while BCal received £15-5 million, with the balance going to the middlemen. The deal violated US sanc tions against Colonel Gadaffi's Libya because the aircraft, although European-built, had American-made General Elec tric engines. The Americans were furious, and threatened to suspend BCal's traffic rights in the United States. Although Britain has no embargo on the supply of aircraft to Libya, the transaction deeply embarrassed London, which has proclaimed its full support for American sanctions against Tripoli. The British Customs investigation centred on the spare parts and engine for the Airbuses, since UK regulations require no export licence for civil aircraft. The spares were sent first to France, whence they were flown to Dubai and then on to Tripoli. The £600,000 penalty is understood to have been for a Customs regulations offence known as "misdescription" of the end- user. From the start, BCal has protested its innocence, claim ing that it had been duped by a forged telex into believing that the end-user would be a French airline, Europe Aero Service. At the behest of the British author ities, who were no less anxious than the airline to appease the Americans, shortly after the sale BCal began a series of legal actions against the other parties to the deal, claiming that they had violated a clause of the sales contract stipulating that US restrictions should be respected. Writs were issued against the intermediary brokers, Hong Kong-based Service Airlines and UK-registered Cobra Airways, against their directors, and against two banks which financed the deal, Dubai-based Arab Bank for Investment and Foreign Trade and London's UBAF Bank. Both are one-third owned by the Libyan Arab Foreign Bank. In the spring of last year, however, the actions were quietly suspended "for lack of evidence", according to BCal. In France, meanwhile, Europe Aero Service sued BCal after an expert appointed by a Paris court had said that the telex naming EAS as the end- user of the Airbuses might have been forged by BCal itself. EAS president Georges Masurel says that his firm is claiming damages for all the adverse publicity it has suffered. The claim is now outstanding against British Airways, with which BCal is now merged. BA has declined to comment on the affair. The £600,000 payment was a so-called "compounded settle ment"—effectively an out-of- court fine. Such settlements are subject to strict confidentiality, and HM Customs refuses to discuss the BCal payment at all. Centrally involved in nego tiating the settlement was Lean- ard Bebchick, a Washington lawyer who specialises in aviation cases and who was BCal's joint company secretary. However, he prefers not to discuss his role, saying: "I cannot in any way confirm or deny that I acted as counsel in this matter". The case was closely monitored by the Transport Minister Paul Channon and his senior officials, including Hanley Stevens, who until recently headed the Depart ment's International Aviation Division. However, a spokes man said that the Department "has nothing to say on this matter". In the event, Libya proved unable to secure sufficient spare parts to keep its new Airbuses flying. After sitting idle on the tarmac at Tripoli for months, the two aeroplanes were leased to Air Algerie late last year, with whom they are now flying. MBB already has an agreement with General Electric to power the MPC-7S Allison joins MBB/China propfan project MBB and Allison have signed a memorandum of understanding to pursue the launch of a version of the MBB/Catic MPC-75 regional airliner powered by an Allison T406-derivative propfan. The proposed propulsion system consists of a T406- derivative engine coupled to an advanced gearing system and a counter-rotating propfan pro- pulsar. Although the MPC-75 is the primary target of the joint initiative, alternative propulsion systems and airframes may be jointly investigated by the two companies. MBB has overall control of the MPC-75 project, which is being developed in collabo ration with the China Aero- technology Import and Export Corporation (Catic). Hunting expands civil business Hunting Associated Industries has forged a conditional agree ment to buy computer display firm Lynwood Scientific Devel opments. It is Hunting's sixth purchase outside of the defence sector since early last year, as it attempts to become less financially reliant on UK Minis try of Defence business. Geoffrey Dollimore, chair man of Hunting Engineering, the group's defence subsidiary, says that MoD procurement officials are increasingly "unsympathetic" to the idea that defence suppliers should be able to rely on the Ministry for a sound financial base. Erosion of the distinction between Hunting Engineer ing's main defence product (bombs) and guided missiles, arising because of technical advance, means that Hunting Engineering, which once held a monopoly for certain muni tions, now faces competition from British Aerospace for the Royal Air Force's next anti- armour weapon, Dillimore says. Depending on Lynwood's profitability over the next three years, Hunting will pay up to £19-2 million for the company in an "earn-out" deal. Privately owned Lynwood recorded a £1-2 million profit on a turn over of £15-3 million last year, and is destined to operate as part of the recently reorganised Hunting Electronics. Previous Hunting purchases cost £5 million, making Lynwood the most significant diversification step. Other acquisitions were FTG Air Service Flugcharter, Somet, Field Aviation Engineering (Stansted), and Metair Aircraft Equipment. Metair was the most signifi cant previous purchase, and will strengthen Field Aviation's position in specialist aircraft completion. 14 FLIGHT INTERNATIONAL, 21 May 1988
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