Magazine article New Zealand Management

LEADERSHIP : Lost at Sea - Lessons Pacific Shippers Should Have Learned

Magazine article New Zealand Management

LEADERSHIP : Lost at Sea - Lessons Pacific Shippers Should Have Learned

Article excerpt

Byline: Bruce Gilkison

The engineera[euro]s report to the Malaita Shipping Company board meeting made chilling reading. a[euro]We are risking the lives of passengers and crew on every voyage,a[euro] it said.

a[euro]It is only a matter of time before the horror of facing a sinking ship comes to lighta[euro][bar] the frequency at which holes are noticed indicates that the entire bottom plate is ready to goa[euro][bar] there is imminent danger of an all-out hull rupture with an uncontrollable ingress of water into all four compartmentsa[euro][bar] the ship may come apart about this pointa[euro][bar] frequent life-threatening incidentsa[euro][bar] the vessel itself and lives of humans are in danger of being lost.a[euro]

The boarda[euro]s response to the report was equally chilling. This was just one of many papers tabled at its monthly meeting. The engineer, it seemed, had been giving this warning for months. The directors agreed his report was accurate, but too negative. They had a shipping service to run. This was not helpful. The board was keen to move to the next agenda item.

I needed to speak. I had been in the Solomon Islands only two months. I was not familiar with local business practices, and knew very little about shipping. And, I had just been appointed finance and planning advisor to the Malaita Provincial Government, the Islandsa[euro] most populated province, which owned this company.

The ships were always full a[euro]" dangerously overloaded in fact, with up to 800 passengers on each sailing a[euro]" but the company had never paid a dividend. I wanted to know why. I travelled to Honiara and asked to attend at least part of the meeting. I had no speaking rights and, was due to leave in just a few minutes.

I understood, I said, why they wanted to provide a service. But, we could not let these ships sail in this condition. I commended the engineer, a young local employee, for saying what he believed, rather than saying what everyone had hoped for. It was fortunate he had brought the problems to our attention, and we could not ignore his report.

Thanks, buta[euro][bar]

The directors had the engineera[euro]s advice, and now they had mine. Safety was paramount a[euro]" the ships must not sail. The directors were courteous, and my speech was applauded. But after my departure the decision was made to continue sailings.

That night I had dinner with the chairman and gave him my advice in writing. The board, he said, wanted to continue sailing to generate funds to pay the crewa[euro]s wages and eventually to pay for repairs.

But the figures didna[euro]t stack up. The deeper I dug the next day, the worse they looked. The ships belonged to the Provincial Government, bought with large loans and leased to the company, and were now worth just a fraction of the funds borrowed. The lease required the company to service the Provincea[euro]s loans, with payments made directly to the lender.

Payments had not, however, been made during the several years of a[euro]ethnic conflicta[euro] in the Solomons, and the Province had a massive debt to the lender that it was unaware of. It was obvious, at least to me, that the company and the Province were technically insolvent. Accurate statements of the companya[euro]s finances had not been prepared for several years. It was likely that large losses had been incurred. It remained, so to speak, afloat by deferring repairs and maintenance, sailing without any insurance cover and not making lease payments.

A high proportion of free travel for a[euro]connected groupsa[euro], such as friends, family and militants, and often on uneconomic routes, no doubt contributed to the losses. The company had leased three vessels from the Province: Ramos I, II and III. Ramos II had already been repossessed by its funds lender. Ramos I needed major repairs. Ramos III was, at the time, still operating and the subject of the engineera[euro]s warning report. …

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