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Flying Blind 

Are San Francisco International Airport managers running Honduras' airports? If so, why?

Wednesday, Mar 28 2001
Shipping bra and panty material to Honduras used to be a simple matter. You'd land one of your ABX Air DC8-63F cargo craft on the tarmac of the Aeropuerto Internacional Ramon Villeda Morales outside of Tegucigalpa, cart a few 450-cubic-inch containers to your nearby red-and-white warehouse, wait for a customs agent, then ship the material over to the Maidenform factory. Once the bras and panties were manufactured, you'd follow the same simple procedure with the finished product, only in reverse.

No more. Ever since an outfit called SFO Honduras LLC won the right to privatize the airport, everything seems to have run amok. For one, facilities fees have gone sky high. And the delays? Don't even ask about the delays.

"Everything takes forever," says Mercedes, a clerk at the Tegucigalpa offices of Antillas Air, a cargo company that does most of its work with Caribbean maquiladora textile manufacturers. "Now we've got to haul cargo from the old customs facility, near where we land, to a new one. It's a narrow dirt road, and it's dangerous; one runs the risk of having cargo hijacked, and it definitely slows down the operation."

By now you're probably asking yourself, "Why in the hell is a San Francisco newspaper columnist writing about potential panty hijackings in Honduras?" If you are, I share your pain. I felt that exact same "what in the hell are we doing here?" sensation when I learned recently that an outfit describing itself as a division of the San Francisco International Airport had just won the right to privatize the airports of Honduras. It was similar to the "you've got to be kidding" feeling I had when I learned that this very same outfit -- which appears to be run out of the offices of San Francisco International Airport -- is bidding on airport privatization contracts in the Sultanate of Oman, a traditional monarchy bordering Saudi Arabia; in Panama, a banking capital just north of Colombia; and in Jamaica, a place where, I'm told, people smoke a lot of marijuana, which may be for the good. Readers may need a few tokes by the time I'm done explaining why the good name of San Francisco's airport is being used to delay lingerie deliveries in Honduras.

It's a tale that involves possible misuse of the name of San Francisco International Airport, a trademark potentially worth millions. It's a tale of Third World business deals set up in a way so convoluted and with such a high degree of secrecy that they create at least the appearance, or the possibility, of profiteering by public-payroll airport employees. It's a tale of a mysterious private corporation, supposedly set up to enrich the city of San Francisco's General Fund, but with no clear indication that it has given, or will ever give, the city a dime. It's the tale of perhaps the most unusual business arrangement you've ever heard of, one that begs, no, implores the question: ¿Qué chingados hacemos en Tegucigalpa?¹

As with any Latin American surrealist work, to understand the present of SFO Honduras LLC, it's necessary to travel to the past, in this case, the past back to July 1997. Then, the San Francisco Board of Supervisors approved legislation, carried by Barbara Kaufman, creating an untoward, private, for-profit California corporation, to be called SFO International Services, that would supposedly generate money for the city government's General Fund by doing consulting work for foreign airports.

The fact that our city's airport might do international consulting work wasn't in and of itself unheard-of. An airport-privatization fervor had gripped the Third World during the late 1990s, much in the manner that a craze for privatizing banks, roadways, and telecommunications, electrical, and sewage utilities had enveloped developing nations during the prior half-decade. The airport privatizations were being handled in most cases by consortia involving publicly owned airports in cities such as London, Vancouver, and Madrid.

The boys at SFO wanted in on the action, so in 1996 they tried their hand, bidding as a governmental entity on an airport privatization program in Peru. They lost, but didn't merely chalk the loss up to experience. Instead they did a truly cagey thing, and blamed their failure on the airport's status as a city agency. They told the Board of Supervisors that they could never compete against public agencies such as Heathrow Airport and VCR airport in Vancouver unless they were allowed to keep their business completely secret, something a public agency is legally prohibited from doing. (That other public airports seemed to be winning these contracts handily despite their governmental status went unmentioned.)

So the board, remarkably, approved the creation of a private corporation with no guarantee that the new entity would provide a dime of profit to the city. According to bylaws approved by the Board of Supervisors, SFO International Services Inc. would be structured in such a way that neither the Board of Supervisors nor anybody else outside the firm could gain access to information about the firm's activities or management. The only outside entity with formal access to such information would be the Office of the Mayor.

SFO International Services was presumably set up to earn money for the city's General Fund -- at least that's what supervisors were told. But according to the new corporation's bylaws, the city would get money only "if the [firm's] Board of Directors declares a dividend for shareholders." In short, the supes set up a secretive corporation with a board of directors who would give money to the city if and when they met -- in secret -- and decided to do so.

The resolution was approved by Supervisors Kaufman, Amos Brown, Leslie Katz, Susan Leal, Jose Medina, Gavin Newsom, Mabel Teng, Michael Yaki, and Leland Yee, with only Tom Ammiano and Sue Bierman opposed. And that, apparently, is the last the city would ever hear of SFO International Services Inc. -- until last October, when unusual notices began appearing in the Honduran press. They described how a consortium "led by San Francisco International Airport" had placed an astoundingly high bid to win a 20-year privatization contract for Honduras' four international airports. The bidding (shown on national television to counter Honduras' reputation for corruption) resulted in a contract in which a consortium called SFO Honduras LLC/(Interairports) would invest $120 million to improve airport facilities during the next 20 years. The consortium also includes Servicio Littoral Pacifico SA, a Peruvian warehousing and shipping company known as Serlipsa; Swissport SA, an international firm that provides airport ramp services; Pacific Architects and Engineers, an L.A.-based contractor that, among other things, provides grounds and facilities maintenance at U.S. military air bases; Calmaquip Engineering Inc., a Miami-based contractor that, according to the Broward Daily Business Review, has been supplying Latin American airports with technology since the late 1950s; and Honduran partners CIC and Interoceanica.

About The Author

Matt Smith


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