Flying cosmetics and whatsitallabout

All the parties involved in the MIA drama over the skincare and cosmetics departures lounge outlet owe the public particular explanations, irrespective of where the merits of the case lie.

The government first. It should begin by making clear how it can reconcile the bolts of lightening thrown by the public investments minister at the airport company on the instructions of the prime minister with its privatisation programme. This programme is a key element in the administration's financial strategy, though not necessarily for the right reasons. The latest reminder came on Saturday from the finance minister, in the context of the ballooning structural deficit.

That monster, while it has to be tamed someday, has to be fed - financed - in the meanwhile. Privatisation means in the first instance partial or total stepping back by the state. In MIA this government moved back 60 per cent, retaining a strong minority with a 40 per cent shareholding. Its continued commercial involvement should be through the directors it appoints as a shareholder to the company's board and at annual - or extraordinary - general meetings.

As for the regulatory function under a regime of privatisation this has to be strengthened while simultaneously being devolved from the government. It does not remain in the hands of the public investments or any other minister. The premier's instructions to the minister to intervene, apart from potentially disturbing the serenity under which related court actions have to be dealt with, sends bad vibes to any potential investors' interest in further privatisation.

So why did the prime minister issue his brusque command to the public investments minister? That the minister is accountable to parliament for the companies in his portfolio cannot be used as a credible answer. He is accountable up to the extent of the state's remaining shareholding, no more. He is not empowered to barge in, citing business ethics, over matters of a commercial nature which should be addressed through set means open to all commercial companies. If ministers were so enabled, privatisation would be meaningless.

Next, the bidder for the right to displace the sitting concessionaire after his term expired on March 31. How did Franks Travel Retail Ltd (FTR) get into a position whereby it could make what the MIA has termed "an unsolicited albeit very detailed offer" (The Times - July 26)? The company may well be able to cite a string of reasons. There are few secrets in Malta. Anyone can keep track of developments, watch out for what seem to be good opportunities to exploit, collect relevant financial information from company data statutorily filed with the Malta Financial Services Authority, accessible at moderate cost.

And sharp observation takes in among other things the level of activity at a public place like the airport's lounges. Nevertheless, the company should tell the public what spurred it towards this particular action.

The most urgent explanation of all must be given by the directors and management of Malta International Airport plc. The company has provided a chronological exposition of the events that led it to opt to grant the concession formerly held by Leaders Ltd to FTR. It revealed the result of discounted cash flow exercises carried out by two separate accountants, who used different discount rates. That it did not explain how the accountants could quantify the intangible advantages the company felt were evident in FTR's offer is not the main gap in its weekend statement.

Nowhere in it did it say it had issued, or even thought of doing so, a public call for offers. MIA revealed it had considered an unsolicited offer from FTR. It said it had told the Grima Group about it. Counter offers were made. Argy bargy followed. But at no point, it seems, did it dawn upon anyone that the proper way to go about this matter was to make a public invitation to all those who may be interested in this business deal to put it an offer.

In the absence of such a transparent call for competitive offers, which could have seen more bidders come forward, the heat over MIA's choice between the old concessionaire and the unsolicited contender is operationally irrelevant. The court's judgement, whichever way it will go, will not alter that basic fact.

Normal business practice should impel the airport company to step back from the mess it has created, and start all over again, this time properly. Whether one calls that business ethos or business ethics is immaterial. It is how things should be done. That is what transparency is all about. That is how the shareholders and consumers can get the best deal. That is what commercial companies, whether private or partially privatised, are supposed to supply.