Ogiermann In Legal
Sits Out TIACA ACF
Oggiermann, Chairman of Cargolux of Luxembourg and current Chairman of
The International Air Cargo Association,told Air Cargo News FlyingTypers
that he will not attend the Air Cargo Forum in Amsterdam, which commences
Tuesday, November 2, after his indictment in the U.S.A. for alleged price
fixing last week.
"I sincerely hope everyone understands
my decision not to come to Amsterdam.
"I do not wish to take any attention
away from the 25th Air Cargo Forum itself that I think will be a very
"We have worked so hard to get IATA/FIATA
and TIACA on one platform for discussions in Amsterdam.
"I am quite sad I will miss all that.
The price of an air cargo industry willing
to pay huge fines in ongoing price fixing cases has just reached a new
level for the third time in three months.
To date, indictment, jail time and the threat
of financial and business ruination have been leveled against companies
willing and able to make large cash settlements and go on with life, counting
hundreds of millions paid in fines as a cost of doing business.
This is in addition to charges thrown against
middle management, which to us in the USA has always seemed like a maneuver
by law enforcement to get more information.
In any case, to date the US DOJ has charged
18 executives (four convicted so far) and collected $1.6 billion in fines
from 18 airlines.
But now, with the indictment of Joo Ahn
Kang, Former President, Asiana in August 2010; Meta Ullings, Senior VP
Cargo Sales & Marketing, Martinair in September 2010; and Ulrich Ogiermann,
President and Chief Executive Officer, Cargolux, and Chairman of The International
Air Cargo Association (TIACA), law enforcement is batting one top air
cargo executive every month and has kicked it up a notch. Ogiermann was
indicted last week in Miami and accused of conspiring to fix fuel, security
and other surcharges.
Once again it appears prosecutors may have
leaned on some people to try to bring forward their vision of "Truth,
Justice & The American Way."
In any case, it is interesting to note that
four executives from now-defunct Miami based carriers were also named
in an indictment on the same day.
Locating the beginning of this trail will
involve some connecting the dots.
What we have learned from middle management
people is that previously in these price-fixing cases, parent companies
(Qantas is a good example) have taken a hands-off attitude, allowing indicted
managers such as Bruce McCaffrey (Qantas USA) to face charges and jail
time and possible financial annihilation alone.
In the case of Bruce and some others, the
pressure has caused these executives to tell whatever they know to prosecutors
as part of a plea deal in exchange for shorter jail time and reduced fines.
But now with continued indictments of top
air cargo executives and charges such as put against Mr. Oggiermann (that
he willingly participated in a conspiracy from about October 2001 until
at least February 2006), the landscape has changed.
Under a worse case scenario, Uli could be
sentenced to up to 10 years in prison and receive a $1 million fine.
In any case, Air Cargo News FlyingTypers
is on the record, here and now, to state that we think these ongoing price
fixing charges are revolting.
So what is going to happen?
Will Mr. Ogiermann, who is a decent, hard
working, industry supportive icon of this business be left to go it alone?
Or will Cargolux and others finally say,
enough is enough and move with their money and power to stop this continuing
saga of prosecutors looking for bigger fines to levy and other lives to
ruin while making their own reputations in an air cargo feeding frenzy?
Air Cargo News Flying Typers does
not know anything other than what is in the public domain.
But when you look at what is going on here,
we believe in some respects air cargo is being legally looted with these
price-fixing fines by over zealous prosecutors who smell easy money from
the airlines that, as mentioned earlier, may mistakenly consider multi-millions
out the window as the cost of doing business.
It just seems to us that this rolling over
and paying huge fines is the wrong strategy.
What has emerged is that instead of price
fixing going away, an industry that for 35 years has rarely agreed on
much of anything is emerging with the public persona of a business that
skulks around willingly fixing prices in deals that continue to screw
the public for years.
As we wrote back in early 2006:
“Our view is that the entire air cargo
industry should be concerned that its image by allegation & insinuation
is taking a long, continual and not soon to end hit.
“Right now as the story widens, the
point will be brought forward that in a couple world cargo markets some
carriers are making more money on fuel and security surcharges than on
air cargo rates.
“But that condition has been brought
on in part by fuel prices at their highest rate in history, and security
demands driven by local and international mandate.
“The rates that cargo companies charge
for services are driven by available capacity and we believe by a healthy
dose of pretzel logic on the part of some businessmen, rather than surcharge
“There is no question that there are
some procedures that should be monitored at work today in air cargo, but
a multi-continent investigation into alleged cartel activity seems a bit
much at a time when enforcement resources might be directed toward the
cartels that seem to always get their piece of the action— the oil
companies and the mob.
“The air cargo industry needs to answer
these allegations on principle, and to assure its customers worldwide
as this story continues to unfold."
As to where all of this is leading, the
next step seems to include even more lawyers and future court dates.
Keeling, the outspoken CEO of Consolidators International based
in Los Angeles, said last week:
"It never ceases to amaze me
what goes on inside minds of USA government attorneys and the ‘causes’
they take up. The only advocate we have for taking on the corrupt
of the big and mighty is Andrew Cuomo, the N.Y. State Attorney running
for State Governor next Tuesday. The boys in DC, led by Eric Holder,
seem to avoid prosecuting the big wrongs taking place in American
society and choose petty matters for their attention. Case in point
is taking on the cargo divisions of airlines and now the airfreight
forwarders. And just to show how much muscle they have; prosecuting
U.S. corporations where evidence shows they have offered bribes
to potential and existing overseas customers. How laughable is that?
Airlines have collectively lost hundreds of billions over the last
ten years and most at one point or another have faced or fought
off bankruptcy. Hundreds of millions have been dished out in fines
to the carriers with several executive employees suffering the indignity
of being thrown into the slammer. Meantime, Lloyd Blankfein of Goldman
Sachs, who through corrupt practices almost single handedly sent
the world into a depression far more severe than the Great Depression,
gets handed a twenty billion bail out. Holder has made it clear
his office won’t be prosecuting any of those Wall Street thugs."
Looking ahead, a well-placed source
told ACNFT that the road ahead could be crowded with claimants:
"It is clear that many forwarders were
the victims of these manipulations, hence the additional action of claims
that are being filed against the carriers from forwarders, shippers and
"I think a lot of those fines will
be used to pay back those who are proven to have been cheated.
"Tough for the weight of law to fall
upon individuals, though.
"In hindsight, it seems that LH made
the best deal of all."
A postscript that speaks volumes to us is a paragraph added to every
DOJ indictment press release we have seen that states: “Anyone with
information concerning price fixing or other anticompetitive conduct in
the air transportation industry is urged to call the Antitrust Division’s
National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm,
or call the FBI’s Miami Field Office at 305-654-1918.”