News / 'Confidential' letters reveal breakdown between Cargolux board and management team over HNCA deal

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The pressure on the Cargolux board of directors grew more intense yesterday when it was revealed that two top executives who recently resigned had previously warned chairman Paul Helminger that the relationship between the board and the carrier’s executive committee (ExCom) had become “untenable”.

They had written to him, separately, saying they believed there was a lack of trust in the management team and that “a clear conflict of interest” had arisen over the appointment of a consultant hired to analyse the controversial sale of a major shareholding.

Mr Helminger was also accused of showing “fundamental disrespect” to all who worked at the carrier.

The letters, from the then chief operating officer Peter van de Pas and sales and marketing vp Robert van de Weg, were obtained by Luxembourg’s Radio 100.7 .

They say that “informateur” Robert Schaus – appointed to advise the government on the sale of shares in Cargolux to Chinese company HNCA – was also a key candidate for the role of CEO. This amounted to a “clear conflict of interest”, wrote Mr van de Pas.

The sale of a 35% stake to HNCA was highly controversial within the workforce at the carrier and is the prime reason for both executives leaving the company.

Mr van de Pas wrote to Mr Helminger: “After three weeks of analysis, Mr Schaus’s (expert) opinion on the commercial co-operation agreement is in sharp contrast to ExCom and larger management’s opinion, and yet again it appears to be embraced by the board of directors as the leading opinion.

“This is incredible, as, furthermore, Mr Schaus appears to be in a clear conflict of interest, considering that you have mentioned, before his final report, that he is a key candidate for the position of Cargolux CEO.”

Mr van de Weg also wrote that he was “puzzled” by how Mr Schaus could be convinced of the benefits of the HNCA deal just two days after being appointed.

“My surprise subsided when you told me a week later (before the Schaus-report was final) that he was a CEO candidate for Cargolux.”

In the letters, (excerpts can be read here) Mr van de Pas also accuses the board of directors – with one exception – of having no experience in aviation or air freight, and of failing to trust the executive committee.

He also denied government claims that the management had been “blackmailing” the board.

“I am baffled at how voicing concerns and flagging perceived risks (which is, by the way, the duty of every ExCom and board member) can be perceived as blackmailing,” he wrote.

“I can only repeat what I mentioned before, ExCom will not blackmail nor sabotage, as this would not be in the interest of the company and its staff, but ExCom, at least not myself, can also not be asked to execute a commercial co-operation agreement that in its view is not achievable and not in the interest of the company and its employees.”

Mr van de Weg’s resignation has been widely deemed to be a severe blow for the carrier. The letters reveal that he believed the problems at the carrier began when  Qatar Airways sold the 35% stake it held in Cargolux to the Luxembourg government, putting it firmly in control of the carrier.

“The Ministry of Transport, instead of ‘cleaning ship’ and recognising the real motivations behind the ousting of Frank Reimen and behind the Oliver Wyman study, appointed you as chairman and decided to continue with Richard Forson as interim CEO. Certain Cargolux ExCom members made it clear on numerous occasions that this was an unfortunate decision as the company needed credible leadership in the wake of the Qatar debacle.”

He added that the ministry’s “agenda” was clear as early as April last year. “HNCA was ‘the one’ all along and that other offers, or other alternatives were not taken seriously.”

The excerpt of the letter ends: “The way the company has been governed can in my eyes no longer be maintained.”

In his final confidential report (here), Mr Schaus, however, points to the management team as the problem.

He wrote to the newly appointed government: “There is a broad and remarkable consensus among the vast majority of players (management, board, even trade unions and third-parties) that the management team in its current configuration and mode of operation is dysfunctional.”

He added: “If these issues are tackled, the partnership with HNCA sounds promising. Risks are limited, but much more importantly, this may be the opportunity to give Cargolux a new lease of life and to support it in securing a stable base in Luxembourg based on sustainable global growth.”

This being Cargolux, the story doesn’t end there. This week, the employees wrote a letter to Mr Helminger expressing their concern over the resignations and the appointment of a new CEO.

“We are truly concerned that nominating a political appointee without extensive knowledge of the industry will jeopardise the future of Cargolux.”

Embattled Mr Helminger yesterday replied stating: “It is imperative for the company to have ExCom giving their full support to the mandate [for the share sale] received from the board of directors.”

He also noted that the search for a new CEO could not “be conducted successfully in an atmosphere of constant rumour-mongering and biased public debate.

“We seriously run the risk of losing good potential candidates who do not want to be associated with a company which so blatantly discusses sensitive internal matters in all manner of public forums for whatever reason.”

This letter is available on Radio Television Luxembourg’s website.