Perhaps Mr. Costas will someday explain why activities presumably done on behalf of a private corporation are being carried out from the offices of a city agency. Perhaps he will tell me where SFO International Services is registered, who its officers and directors are, and who will receive the $120 million in contracts SFO Honduras LLC will be handing out over the next two decades.
Perhaps this Honduran airport deal is all perfectly on the up and up, and completely in line with the interests of the people of San Francisco. Maybe SFO International Services isn't a profiteering vehicle that channels money to airport and city government insiders. Or is it that the airport itself won the contract in Honduras, rather than the private corporation set up specifically to pursue such opportunities?
Fred Harper
Related Content
More About
Until the elusive Mr. Costas decides to speak up, I guess we simply won't know.
There's a reason why ordinary companies -- that's to say, companies that aren't strange, secret, quasi-private entities like SFO International Services -- take great pains to avoid having their good names associated with business deals they do not control. If a valuable corporate name is sullied, millions, even billions, of dollars of public goodwill can be lost, resulting in the massive diminishment of future sales. In the modern business world, a good corporate name can be the most valuable thing any entity owns.
That's why it would be too bad if SFO's Third World privatization deals were to go sour, and San Francisco were to become known as the city that screws over developing countries, just to make a buck.
In the case of Honduras, that may be precisely what is happening.
SFO Honduras LLC placed a bid for the right to privatize the country's airports that was so high -- 39.7 percent of gross revenues, or twice the rate economists predicted the airport sale would generate -- that this entity has been forced to charge increased fees for the use of customs warehousing and processing facilities. And these high fees may end up hurting the local economy.
Serapio Umanzor, the La Prensaeditor, tells me there's been an outcry in the local business community over high customs fees the new airport has been charging. Indeed, according to Connie Gorospe, president of Antillas Air-Worldwide, which handles much of the country's maquiladora cargo, the rates the airport charges to allow merchandise to pass its customs bays have been raised thirteenfold. Worse, shippers such as Antillas are no longer allowed to use their own warehouses; they must pay steep SFO Honduras LLC fees to warehouse their cargo for the few minutes between unloading and inspection. The new warehouse that shippers must use is, as it happens, in a most inconvenient location, about a mile away from the airport's main landing strip, and connected by a poorly maintained road that's not even passable by truck.
"We have to use a tractor hauling little carts," says Gorospe, who adds that the increased shipping costs and delays have so far driven 20 percent of his maquiladora manufacturers to other countries. "They can't afford this surcharge -- a lot of them have moved out of the country. The big guys have production going on in different countries. They've taken a lot of production out of Honduras and taken it to their other facilities."
Whether or not one likes the international textile business, the fact is that Central American countries such as Honduras have staked their economic futures on it. So the SFO Honduras LLC maquiladora purge "has affected the finances of a lot of Hondurans," says Mercedes, the Tegucigalpa cargo clerk.
Do the people of San Francisco really, really want to be in the business of torching Third World economies for a few General Fund bucks we may never, ever see?
And do we really want the boys at the airport to continue running their public-private, developing-country, airport-privatization shop with absolutely zero public oversight, as has been the case so far?
Isn't it, perchance, time we pulled SFO International Services Inc.'s britches down, to see what we might find?
1 "What the hell are we doing in Tegucigalpa?" 2 Quoting from a memorandum by City Attorney Louise Renne: "To the extent that international consulting services are provided by a division of the San Francisco International Airport, the City itself could be potentially liable for successful claims arising from international services activities. Therefore, one purpose of the corporate form is to protect the city from such liability."
