‘No one wants to liquidate RJ, but…’

Those who oppose the liquidation of Royal Jordanian were silent when the company was suffering and its losses were accumulating due to corruption involved in most of its deals and agreements; they were also silent when the prices of its shares were plummeting.

At the time, Jordanian shareholders, who thought they had invested in a leading national company with good international reputation, were wondering what was going on.

Unfortunately, shareholders were naïve when they thought that the privatisation of the company meant that the government would let go of RJ and allow Jordanian and foreign shareholders to freely choose the board of directors and the managing staff.

Moreover, consecutive governments failed to commit to all their promises and slogans about interest, incentives and revenues privatisation would get investors, especially in the private sector, but got involved in every detail concerning RJ, pushing out Jordanian shareholders from the decision-making circle and preventing them from becoming members of the board of directors, intervening in the hiring process.

Every government came up with its own auditors, while shareholders looked on with sadness as their investments fell apart, the company registered more losses and more cases of mismanagement kept on appearing in annual reports.

Shareholders did complain, but no one listened, so they left the matter in God’s hands when all the “honeyed” promises every prime minister made failed to become reality and things kept getting worse, leaving shareholders with worse choices than before.

The worst choice here is not to liquidate the company, whose losses exceeded the legal percentage accepted for the capital, which was increased in vain, but to help an Arab investor who forced the previous government to heed his conditions in return for agreeing to increase RJ’s capital in order to benefit.

Even though the capital increased, the company continued to lose, which shows that the board of directors’ ways had not changed, and its members only saw in it a way to make gains and a privilege they used when making deals and profits, a state of affairs that was revealed time and again by the figures made available to MPs and the public.

Liquidating RJ does not help anyone, nor is it in the national interest.

What is needed is to limit government intervention in the company’s affairs and enable shareholders to look for practical solutions with economic benefits in the medium and long run, in order to avoid liquidation.

This can be done only by creating an extraordinary, exceptional, public authority that elects a new board of directors and appoints a consulting company, either Jordanian or of mixed partnership, to come up with recommendations to end RJ’s crisis.

The crisis could be tackled through reviewing the feasibility of certain routes or of some of the company’s offices, or through restructuring and downsizing the company, and by having the government announce that is will no longer intervene in RJ’s affairs and that its investment arms, whether through the Social Security Corporation or through direct shares, will work in accordance with the law and will be commensurate with the shares it owns, which will also determine its role and limitations.

The fact that the Lower House referred the issue of “RJ shares” to its Transport Committee may be a good step on the way to discovering the secret of the deal between the previous government and the Lebanese investor, and how “legal” was the illegal government promise to buy the shares of the Arab investor at four times their actual price, again ignoring the Jordanian investors whose losses do not seem to count for the government.

Does the Lebanese investor have the right to make such a huge profit, in addition to his other gains from RJ, which come from renting planes or through controlling the decision to increase the company’s capital?

Liquidating RJ is in nobody’s interest, but if the board of directors’ performance and the government intervention remain the same, together with the latter’s readiness to seal a deal with the Lebanese investor to buy his shares at JD1.8 per share, then RJ and its shareholders are doomed to a fate worse than liquidation.

The writer is a Jordanian economist and investor. He contributed this article to The Jordan Times.