GalleyHag
4th May 2009, 01:34
From today's SMH
Ex-Qantas freight chief pays heavy price for cartelMay 4, 2009
Bruce McCaffrey's life has been turned upside down, writes Matt O'Sullivan.
QANTAS may have washed its hands of its role in a price-fixing scandal in the US but one of its former senior managers is still paying the price.
Bruce McCaffrey, 65, the former vice-president of freight for the Americas, will soon begin a six-month jail term for his part in a global air freight cartel among more than 30 airlines. He has already paid a $US20,000 fine after pleading guilty to fixing charges last May.
Although the airline has been hurt financially for its part in the racket - footing fines of more than $100 million in the US and Australia - no other Qantas managers have faced personal fines or time behind bars. A plea agreement reached with the US Department of Justice more than a year ago protected all of Qantas's management from prosecution.
McCaffrey's family and friends believe he has become a Qantas scapegoat. The five other freight employees who were excluded from the plea deal have avoided penalties.
The 26-year Qantas veteran was the first airline executive anywhere to agree to serve jail time for his role in the cartel.
The airlines involved in the cartel, which included British Airways and Korean Air, were first prosecuted in the US, triggering almost identical action worldwide. Qantas's admission of its role has meant that the legal pursuit - apart from class actions - has been concluded in Australia and the US, but settlements in Europe and New Zealand are yet to be reached. European authorities are expected to give Qantas a substantial penalty as early next month.
McCaffrey was due to begin his US jail term last month, but his New York lawyer told the Herald a date was still to be finalised.
His jail term had originally been set to begin in September but it was delayed because he needed a kidney transplant. McCaffrey also suffers from the after-effects of stroke, rheumatoid arthritis, hypertension and an injured knee and broken hip.
His sister, Karen McCaffrey, wrote in a character reference that his family and friends were "devastated, knowing he was the one taking the brunt of the blame for this crime".
"It seems that Qantas could care less about Bruce; he is no longer an employee, so they pinned him in a corner, and now they are hanging their loyal messenger. They apparently don't care what happens to Bruce, as long as their Australian management are not fined or sentenced."
As a middle manager, four tiers below the chief executive, McCaffrey reported to supervisors in Sydney. But his superiors will not face criminal punishment. They cannot be extradited to the US to face charges because price-fixing conduct is not a criminal offence in Australia.
"Why is it that senior management, the ones making all the decisions, are not forced to face these charges?" Ms McCaffrey said. "They refuse to be extradited back to this country to testify, for they know they are the guilty parties."
His lawyers have argued that the plan to engage in price-fixing came from Sydney hierarchy. "At Qantas, the plan to engage in price-fixing emanated from Sydney, which gave direction to Qantas managers around the world, including Mr McCaffrey, to co-ordinate certain aspects of pricing with their colleagues at other airlines," the lawyers told the judge.
Carl Fiel, a former Qantas executive in the US, also wrote in a reference that he was appalled by "the very unfair treatment" his former workmate received from the airline. Qantas declined to comment on claims that McCaffrey had been a scapegoat.
The executive, based in Los Angeles, was the first individual to co-operate with US investigators and plead guilty. The investigation has resulted in fines for airlines including Qantas, British Airways and Japan Airlines totalling more than $US1 billion. Last week a former freight boss for the Dutch airline Martinair agreed to serve eight months' jail and pay a $US20,000 fine, taking to four the number of executives who have pleaded guilty in the US.
The pursuit of airlines involved in the cartel has led to regulators - especially those in Europe and the US - taking a harder look at arrangements between carriers. Two weeks ago the European Commission began two separate investigations into seven airlines that have co-operated on trans-Atlantic routes. The European authorities are targeting airlines, including BA and American Airlines, which operate under the Oneworld banner for flights between the US and Europe and the Star Alliance.
The commission believes the level of co-operation, such as joint management of schedules, capacity and pricing, is "far more extensive than the general co-operation between these airlines and other airlines which are part of the Star and Oneworld alliances".
The Australian investigation into the cartel is now in its final phase. So far Qantas is the Australian Competition and Consumer Commission's biggest scalp in a two-year inquiry that has been the largest and most expensive in its history.
Singapore Airlines is the first carrier to fight the Australian regulator's claims that it broke the law by colluding with rivals to set high freight and security surcharges. The case against the Asian carrier was back in the Federal Court in Sydney last month, and Singapore Airline's lawyers contested the commission's definition of a market. Last Thursday Cathay Pacific also began fighting claims it had colluded with rivals after the Australian regulator began legal action.
Qantas, on the other hand, has largely avoided a public fight. It is banking on its assistance in investigations in Europe and New Zealand leading to lighter penalties. But for McCaffrey the real fight has only just begun.
Ex-Qantas freight chief pays heavy price for cartelMay 4, 2009
Bruce McCaffrey's life has been turned upside down, writes Matt O'Sullivan.
QANTAS may have washed its hands of its role in a price-fixing scandal in the US but one of its former senior managers is still paying the price.
Bruce McCaffrey, 65, the former vice-president of freight for the Americas, will soon begin a six-month jail term for his part in a global air freight cartel among more than 30 airlines. He has already paid a $US20,000 fine after pleading guilty to fixing charges last May.
Although the airline has been hurt financially for its part in the racket - footing fines of more than $100 million in the US and Australia - no other Qantas managers have faced personal fines or time behind bars. A plea agreement reached with the US Department of Justice more than a year ago protected all of Qantas's management from prosecution.
McCaffrey's family and friends believe he has become a Qantas scapegoat. The five other freight employees who were excluded from the plea deal have avoided penalties.
The 26-year Qantas veteran was the first airline executive anywhere to agree to serve jail time for his role in the cartel.
The airlines involved in the cartel, which included British Airways and Korean Air, were first prosecuted in the US, triggering almost identical action worldwide. Qantas's admission of its role has meant that the legal pursuit - apart from class actions - has been concluded in Australia and the US, but settlements in Europe and New Zealand are yet to be reached. European authorities are expected to give Qantas a substantial penalty as early next month.
McCaffrey was due to begin his US jail term last month, but his New York lawyer told the Herald a date was still to be finalised.
His jail term had originally been set to begin in September but it was delayed because he needed a kidney transplant. McCaffrey also suffers from the after-effects of stroke, rheumatoid arthritis, hypertension and an injured knee and broken hip.
His sister, Karen McCaffrey, wrote in a character reference that his family and friends were "devastated, knowing he was the one taking the brunt of the blame for this crime".
"It seems that Qantas could care less about Bruce; he is no longer an employee, so they pinned him in a corner, and now they are hanging their loyal messenger. They apparently don't care what happens to Bruce, as long as their Australian management are not fined or sentenced."
As a middle manager, four tiers below the chief executive, McCaffrey reported to supervisors in Sydney. But his superiors will not face criminal punishment. They cannot be extradited to the US to face charges because price-fixing conduct is not a criminal offence in Australia.
"Why is it that senior management, the ones making all the decisions, are not forced to face these charges?" Ms McCaffrey said. "They refuse to be extradited back to this country to testify, for they know they are the guilty parties."
His lawyers have argued that the plan to engage in price-fixing came from Sydney hierarchy. "At Qantas, the plan to engage in price-fixing emanated from Sydney, which gave direction to Qantas managers around the world, including Mr McCaffrey, to co-ordinate certain aspects of pricing with their colleagues at other airlines," the lawyers told the judge.
Carl Fiel, a former Qantas executive in the US, also wrote in a reference that he was appalled by "the very unfair treatment" his former workmate received from the airline. Qantas declined to comment on claims that McCaffrey had been a scapegoat.
The executive, based in Los Angeles, was the first individual to co-operate with US investigators and plead guilty. The investigation has resulted in fines for airlines including Qantas, British Airways and Japan Airlines totalling more than $US1 billion. Last week a former freight boss for the Dutch airline Martinair agreed to serve eight months' jail and pay a $US20,000 fine, taking to four the number of executives who have pleaded guilty in the US.
The pursuit of airlines involved in the cartel has led to regulators - especially those in Europe and the US - taking a harder look at arrangements between carriers. Two weeks ago the European Commission began two separate investigations into seven airlines that have co-operated on trans-Atlantic routes. The European authorities are targeting airlines, including BA and American Airlines, which operate under the Oneworld banner for flights between the US and Europe and the Star Alliance.
The commission believes the level of co-operation, such as joint management of schedules, capacity and pricing, is "far more extensive than the general co-operation between these airlines and other airlines which are part of the Star and Oneworld alliances".
The Australian investigation into the cartel is now in its final phase. So far Qantas is the Australian Competition and Consumer Commission's biggest scalp in a two-year inquiry that has been the largest and most expensive in its history.
Singapore Airlines is the first carrier to fight the Australian regulator's claims that it broke the law by colluding with rivals to set high freight and security surcharges. The case against the Asian carrier was back in the Federal Court in Sydney last month, and Singapore Airline's lawyers contested the commission's definition of a market. Last Thursday Cathay Pacific also began fighting claims it had colluded with rivals after the Australian regulator began legal action.
Qantas, on the other hand, has largely avoided a public fight. It is banking on its assistance in investigations in Europe and New Zealand leading to lighter penalties. But for McCaffrey the real fight has only just begun.