TAP CEO to explain in parliament about €500K pay off to ex-director

  • Lusa
  • 17 January 2023

The hearing of the airline's chief executive follows the potestative request of right-wing Chega Party, after the PS (Socialist Party) parliamentary group rejected the proposal for a hearing at first.

The chief executive of TAP, Christine Ourmières-Widener, will go to parliament on Wednesday to give explanations about the €500,000 compensation to former director Alexandra Reis, who was also president of Portugal’s air traffic controller, NAV, and secretary of state for the treasury.

The hearing of the airline’s chief executive follows the potestative request of right-wing Chega Party, after the PS (Socialist Party) parliamentary group rejected the proposal for a hearing at first.

The case of the compensation of half a million euros paid to former secretary of state Alexandra Reis for her early departure from the TAP board led to the resignation of the former minister of infrastructure and housing, Pedro Nuno Santos, and a reshuffle in the government.

Here are some key points about the case:

+++ Controversy ‘snaps’ on Christmas Eve +++

On December 24, Correio da Manhã newspaper reported that the new secretary of state for the treasury, Alexandra Reis, chosen by finance minister Fernando Medina, who had taken office at the beginning of December, had received compensation worth €500,000 for leaving the post of executive director of TAP early, when she still had to serve for two years.

Alexandra Reis joined TAP in September 2017 and three years later was appointed as a director of the airline, on the recommendation of the private shareholder.

The former secretary of state left the TAP board in February (2022) and in June she was appointed by the government to the board of Portugal’s air traffic controller, NAV – Navegação Aérea.

This issue prompted criticism from several opposition parties.

+++ The exit from TAP +++

In February, the airline sent a statement to the Securities and Exchange Commission (CMVM) that Alexandra Reis had resigned from her position on the board.

“Having been appointed by the previous shareholders, and following the change in TAP’s corporate structure, Alexandra Reis, a board member and member of TAP’s Board of Directors and Executive Committee, submitted her resignation today, deciding to close this chapter of her professional life and now embracing new challenges,” the statement sent out at the time read.

+++ Government asks TAP for explanations +++

After the news about the compensation, the ministers of finance and infrastructure and housing issued an order on 26 December asking TAP management for “information about the legal framework of the agreement” reached with Alexandra Reis, including about the compensation paid.

+++ TAP’s clarifications +++

In its response to the government’s request for explanations, which was subsequently forwarded to the General Inspectorate of Finance (IGF) and the Securities Market Commission (CMVM), TAP said Alexandra Reis had initially requested €1.4 million in compensation as part of the agreement to cease functions at the company.

According to TAP, of the €500,000 agreed, €56,500 “specifically corresponds to compensation for the termination of AR [Alexandra Reis]’s indefinite employment contract as a director of the company”.

On the other hand, “as compensation for the early termination of the term contracts relating to the functions of management, it was agreed an overall aggregate gross compensation of €443,500”, and underlying this “is considered (although not broken down) two items under negotiation”.

These items are €107,500 of “remuneration due, corresponding to holidays not taken” and €336,000 “of remuneration due, corresponding to approximately 1 year of base pay, considering the gross pay without reductions resulting from emergency agreements or other deductions”.

+++ Alexandra Reis’s explanation +++

In a written statement sent to Lusa, Alexandra Reis said that the agreement to cease functions “as a director of companies in the TAP universe” and the revocation of her “employment contract with TAP S.A., both requested by TAP, as well as its public communication, was agreed between the legal teams of both parties, mandated to ensure the adoption of best practices and strict compliance with all legal precepts”.

This version contradicts the information sent by TAP to CMVM in February that it was Alexandra Reis who had resigned from the position.

“I have never accepted – and would immediately return if I had already been paid – any amount for which I was not convinced of being anchored in strict compliance with the law,” Alexandra Reis stressed, guaranteeing that “this principle also applies to the terms” of her “termination of duties at TAP”.

+++ New clarification from TAP +++

In a statement to the CMVM on 28 December, the airline said that Alexandra Reis’ resignation “was the result of a negotiation process initiated by TAP to reach an agreement on the termination of all existing contractual ties between Alexandra Reis and TAP”.

+++ Resignations in the Government +++

On 27 December, Alexandra Reis tendered her resignation as secretary of state for the treasury, requested by the finance minister, Fernando Medina, after the clarifications received from TAP and after the prime minister himself, António Costa, admitted that he was unaware of Alexandra Reis’ background.

In a statement, Medina explained that he had taken the decision to “preserve the political authority of the finance ministry at a particularly sensitive time in the lives of millions of Portuguese”.

In the early hours of 29 December, the then minister for infrastructure and housing, Pedro Nuno Santos, and the secretary of state for infrastructure, Hugo Santos Mendes, resigned.

In a statement issued by the ministry of infrastructure and housing, Pedro Nuno Santos explained that “given the public perception and the collective feeling generated around” the TAP case, he decided “to take political responsibility and submit his resignation,” which was accepted by the prime minister, António Costa.

“Following the explanations given by TAP, which led the minister of infrastructure and housing and the finance minister to send the case for consideration by the CMVM and the IGF, the secretary of state for infrastructure [Hugo Santos Mendes] decided, given the circumstances, to tender his resignation,” the ministry also clarified.

+++ Parties want to hear those responsible in parliament +++

The Left Bloc announced on 3 January that it was going ahead with a proposal for a parliamentary commission of enquiry into the public and political control of TAP’s management, which the PS has since said it will enable.

The following day, the PS parliamentary group ‘rejected’ requests from the opposition PSD (Social Democratic Party), PCP (Communist Party), BE (Left Bloc) and Chega to call for hearings in parliament of Pedro Nuno Santos, Fernando Medina, Alexandra Reis, the chairman of TAP’s board of directors, Manuel Beja, and the executive chairwoman of TAP, Christine Ourmières-Widener.

Consequently, the PSD presented a potestative request, to force the hearing of Fernando Medina, which took place on 6 January.

At the hearing, the finance minister assured that Alexandra Reis was not part of his group of friends, following news reports of an alleged personal relationship with Fernando Medina’s wife, who was legal director of TAP.

In addition, the leader said that no record had been “found” in his ministry about the compensation received by Alexandra Reis, justifying her choice for the government because she has a “well-established curriculum in Portuguese public management”.

For its part, Chega has filed a potestative request for a hearing of TAP’s executive chairwoman.

+++ Succession of controversies at TAP +++

In addition to the compensation to Alexandra Reis, TAP has made headlines for other reasons, including the hiring of a personal friend of Christine Ourmières-Widener to take over as head of the continuous improvement and sustainability department and the intention to replace the company’s fleet of cars for directors and officers.

The deal did not go ahead and the company then decided to allocate €450 to directors who did not get a car, to use on an electronic transport platform.

With regard to labour issues, TAP is in negotiations with the National Union of Civil Aviation Flight Personnel (SNPVAC) to avoid a new crew strike at the end of the month, after a two-day strike at the beginning of December, which had an impact of around eight million euros on the company.

+++ What the prime minister says +++

On 2 January, António Costa stressed at a press conference that the TAP board will remain in office.

“TAP is flying and soon they will give good news when it presents the 2022 results. As for the board, it is in office and in office it will remain,” the leader of the executive replied, before referring to the compensation case.

The following week, in the debate on general policy in the Portuguese parliament, the prime minister said that the sale of TAP’s capital could be partial or total, a process that is still underway, and he was sure that the Portuguese flag would continue to decorate the airline’s planes.

On the same occasion, the prime minister considered that Alexandra Reis violated the status of public manager when she was appointed to NAV and did not return part of the compensation she had received from TAP.

+++ Waiting for the report +++

While we await the IGF report, Correio da Manhã reported on 14 January that Parpública, the Portuguese state holding company with exclusively public capital, and the Directorate-General of Treasury and Finance (DGTF) were not informed, nor did they authorise the payment of compensation to Alexandra Reis.