“Since I took office, my place belongs to the Prime Minister”: Pinto Luz after IGF report on TAP

The infrastructure minister, who was secretary of state during the privatization of TAP in 2015, said on Tuesday, following the publication of a report by the General Inspectorate of Finance, that the legitimacy of his current functions lies with the prime minister.

“The legitimacy of a member of the government always belongs to the prime minister. So from the day I took office, my place belongs to the prime minister, and therefore the legitimacy that I have,” Miguel Pinto Luz told reporters in Porto on Tuesday.

The Minister of Infrastructure and Housing spoke to journalists upon arrival at a meeting at the headquarters of the Metropolitan Region of Porto (AMP), a day after the General Inspectorate of Finance (IGF) published a report on TAP, which, among several topics, examines: The 2015 privatization process.

Miguel Pinto Luz was Secretary of State for Infrastructure, Transport and Communications in the second government of Pedro Passos Coelho (PSD/CDS-PP), which lasted only 27 days in 2015 and completed the privatization of TAP, but was later overthrown by a proposal for censorship from the left-wing parliamentary majority.

“I will continue to play my role with all my competence, with all my seriousness and with all my loyalty to the Portuguese people,” Miguel Pinto Luz said on Tuesday after being asked about his legitimacy to hold the post and lead the new privatization of TAP.

Speaking to reporters at the end of the meeting at AMP, a government official insisted the IGF report “does not slow down” privatisation “at all”.

“The privatization process of TAR was initiated by the previous government. It is ongoing. Just yesterday there was an open meeting, the Minister of Finance and I [Joaquim Miranda Sarmento] with a potential interested party [Lufthansa]”We have met and will continue to do so,” he stressed.

The government has already forwarded the IGF report on TAP to the Justice Ministry and the Assembly of the Republic after receiving it last week, a government official said on Tuesday.

“There is nothing to hide, everything was transparent, that is why this government is fighting. It is fighting for transparency, for complete openness of processes. This is what we have done, we will wait for the results,” he said.

The IGF report on TAP said Atlantic Gateway, a consortium of David Neeleman and Humberto Pedrosa, acquired 61% of TAP’s equity, SGPS, “committed to capitalising it through additional capital payments, of which US$226.75 million (MUSD) was made through partner DGN Corporation (DGN) using funds received from Airbus.”

This capitalization amount, he adds, “coincides with the value of the fine (US$226.75 million) that TAP, SA will receive in the event of non-compliance with the agreements for the acquisition of 53 aircraft (A320 and A330), which highlights the possible causal relationship between the acquisition of shares and the capitalization of TAP, SGPS and the contracts signed between TAP, SA and Airbus.”

The IGF proposes to forward the report to the MP, especially in view of the findings regarding the TAP privatisation process and its links to the contracts for the purchase of 53 aircraft from Airbus in 2015, as well as the remuneration of the board of directors.

On the latter topic, the IGF concludes that “the available evidence” allows it to conclude that “the payment of compensation to the administrators in question [Humberto Pedrosa, David Pedrosa e David Neeleman] was carried out by means of a simulated contract for the provision of services (since, apparently, the purpose was not the one for which it was concluded), presenting itself as merely a means to achieve the intended effect.”

According to the report, this procedure “appears irregular in the payment/receipt of compensation to board members, who thereby relieve themselves of liability for IRS taxation and Social Security contributions.”