Former finance minister supports decision not to invest in LIAT

Speaking to MiyVue.com on the LIAT issue, he expressed his belief that Prime Minister Harris was being unfairly criticized by some in Grenada for the stance he took. He said, “I felt obliged to respond to that criticism because it was unfair.” He noted that several sources were being critical of the St. Kitts stance without knowing or understanding the background.

Caines stated for the record that St. Kitts and Nevis was one of the original shareholders of LIAT and indicated that the country “always honoured its obligations to LIAT”. Those obligations, Caines said, included exemptions from Landing Fees and any other charges that LIAT accumulated while operating in federation.

He explained further, “Whenever the balance sheets were presented, if they (LIAT) made a loss, the owners (shareholder governments of the Caribbean) would pick up those losses that came in the form of subventions.”

According to Caines, for St. Kitts and Nevis, the subvention amounted to hundreds of thousands of dollars each year. He said, “Over a period of years, it ran into millions of dollars.”

But subsidizing LIAT’s losses was not the only problematic issue for the Government at the time. Caines outlined a pattern of behavior on the part of LIAT’s management. He said, “Our country had representation on the Board. But, when you look at the Minutes, you will find that the decisions of the Board were hardly ever obeyed or undertaken. It seemed as though management had its own agenda.”

R-Caines-2According to Caines, the Ministry of Finance eventually reviewed what was paid to LIAT over a period of years, and he brought the results to the Cabinet.  Caines explained his stance at the time, “While LIAT was providing a service, we were not required to pay for that service. It was a commercial airline. However, we were an owner of a certain percentage of shares, and I thought it was not worth it.”

He disclosed that Cabinet took several weeks before a decision was taken. Caines said, “A decision was taken by the Cabinet based upon the facts that were presented to them. It was decided to tell LIAT to take the shares. We did not ask for one cent. We surrendered the shares to LIAT and opted out of the ownership.”

He continued, “So, it would not be correct, what the gentleman in Grenada was saying. He was speaking as if we were never a part of the organization (LIAT), but it was the frustration that we had, as a Government, with the operations of LIAT, the unnecessary financial burden that we were carrying, why we opted out.”

Several years have gone by since then. LIAT has new aircraft and most Eastern Caribbean economies are more tourism oriented than ever. Wouldn’t a new management at LIAT create a better environment for investing in LIAT?  Caines retorted, “I want to think that you’re going back into a worse situation… What you are really being asked to do is to throw good money after bad.”

But is LIAT too important to ‘die’? Is it too crucial for Caribbean integration, business, trade and a Caribbean identity? Caines said, “The service that LIAT renders is a vital communication link for all the islands, but it cannot be at any cost or any price. If LIAT continues to make losses, am I to understand that we will forever be supporting such an organization? I don’t think so. No Government anywhere will accept that as a position it can take to its people.”

Caines purports a certain level of denial, in some quarters, that LIAT has a big problem, along with an unwillingness to take tough, perhaps unpopular decisions. Speaking with passion, Caines said, “Don’t tell me that shareholders of any company would sit idly by and see their company making losses year after year and don’t find a plan of action to correct what is wrong then go forward.”

Caines believes that the history and record of LIAT do not inspire confidence for investors. Pointedly, he said, “The record of LIAT, financially, is abysmal.”


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