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‘HR division ditched rules to make recruitment’
Administrative lapses and lack of professionalism at the Human Resources division of the national carrier, SriLankan Airlines, led to losses of billions of rupees while adding to the financial burden of the Airline.
This was revealed this week by a witness appearing before the the Commission of Inquiry (CoI) probing allegations of large scale frauds and malpractices in SriLankan Airlines, Sri Lankan Catering Ltd and Mihin Lanka (Pvt) Ltd.
Mahesh Nanayakkara, the airline’s senior manager in charge of Group Assurance and Advisory Services, told the commission that the airline had been recruiting at least 200 cadres annually since 2015, and, as a result of this recruitment policy, certain departments were overstaffed while the salary budget soared to a staggering Rs2bn a month.
No proper ‘checks and balances’ were followed by the HR department to identify the needs with regard to promotions and filling vacancies.
Submitting the internal audit reports on the activities of the HR department, Mr. Nanayakkara acknowledged the department’s failure to comply with company regulations as set out in the manual.
In his observation reviews attached to the periodic audits, he said he had highlighted several areas as key “significant concerns’.
These remarks were made when State Counsel Fazly Razik led evidence this week.
Mr. Nanayakkara said some areas of significant concern required rectification on a priority basis and they included concerns over the failure to obtain annual cadre approvals on time; multiple promotions/upgrading given to the staff within a short period and the lack of proper checks on educational qualifications.
According to the Company regulations, annual cadre approval should be sought three months ahead of the financial year which starts on April 1 to work out the estimated cost of expenditure. However, this ‘due approvals’ were not obtained on time from the Board. The witness said his department was not given adequate documents from the HR division in this regard.
The Commission’s Chairman, retired Supreme Court Justice Anil Gooneratne, intervened to emphasise that the Commission’s mandate went back to 2006, and documents related to past recruitment and appointments and the procedures followed on those appointments should be submitted before the Commission. “If there were no business plans in place for a company, how could it have recruited new cadre in significant numbers annually?” he asked.
The Commission was told that cadre recruitment with regard to 1,381 vacancies from grade 1 to 8 had been carried out from January 2015 to January 2018 but the top management staff at grades 9 to 13 were not subjected to any audit process. Only 11 appointments grade 9 and above were made in the period.
When the Commissioners queried from the witness whet her any directives were issued by the top management not to carry out the audit, the witness said there were no such directives but his department did not want to ‘go behind the personal files of top management staff because their salary details were kept confidential.”
State Counsel Razik noted that, since the SriLankan was a state-owned company, the public could access the salary details and other information of the top management by simply filing a Right to Information (RTI) petition.
The Commission was also told that the HR department failed to keep files related to Position Request Forms (PRF) at the Talent Resources Section of the department before filling automatic vacancies that arose due to resignation/retirement or promotions/upgrading. Going a step further, the department also intended to amend the company’s manual to headhunt persons for selected job slots.
The witness said the audit inquiry found that the HR department’s senior officials recruited two employees who were rejected at the initial interview stages. They were recruited to the cabin crew services section arbitrarily without citing any proper reasons.
The witness also told the Commission that there were no interviews held when recruiting persons on a contract basis directly from the Civil Aviation College and the International Aviation Academy. Most of them were later absorbed into the permanent staff without subjecting them to any interviews.
The state counsel then commented that this mechanism of not vetting candidates not only led to unsuitable persons being recruited through the backdoor, but also caused further financial strain to the company.
The Audit reports placed before commission also indicated that multiple promotions skipping three grades were approved by the HR department. Some promotions came with transfer from a particular department. Within a short period of time, four employees attached to the HR department were promoted from grade five to eight, which is the entry level for executive affairs of the company, without proper evaluation of their past performances.
The Commissioners noted that the HR department top management should not have judged their own staff and, instead, an independent panel should have been constituted to obtain approval.
State Counsel Razik noted that the Internal Audit Department should have acted more aggressively when it identified these issues and called for explanations from the respective departments or brought it to the attention of the management to avoid poor performance of the company and further losses. “The department failed miserably to act promptly by taking adequate steps through the powers it is vested with to avoid this kind of disaster,” he said.
The State Counsel questioned whether the HR division head Pradeep Kekulawala was competent enough to handle the affairs of his department.
Testifying on Wednesday, the Central Bank’s Deputy Governor S R Attygalle told the Commission that, since 1997, treasury bonds had been issued based on a market analysis made by Treasury officials even though Registered Stock and Security Ordinance (RSSO) regulations clearly indicated that the subject minister — Minister of Finance — was vested with powers to do so.
“This has been the practice for decades since Sri Lanka began issuing treasury bonds and bills. We also followed the same procedure,”he said.
His evidence was led by Additional Solicitor General (ASG) Neil Unamboowe. Mr Attygalle told the Commission that, from 2012 to 2014, the government pumped in Rs 46.2 billion as capital infusion to improve the balance sheet of the lossmaking airline.
Mr Unamboowe argued that the Financial Regulations (FR), a compilation of financial circulars formulated by top Treasury officials in the 1990s, were followed blindly by the airline’s officials even now although those regulations without parliamentary approval lacked legal teeth. He noted that these ‘assumed practices’, technical lapses and flaws in the FR clauses had become an excuse for officials to slip from administrative lapses and engage in financial misappropriation.
The Commission was told that publication of Treasury bonds or bills transaction had become a ‘post activity’ where the public would come to know about the transaction only after it was concluded by officials. As officials took the decision on behalf of the Minister who was answerable to Parliament, they could not be held accountable due to these assumed practices.
“Had there been a strong law in place to set out the duties of the Treasury Secretary, the Deputy Secretary and the Treasury’s Director General, it would have been easy to hold those individuals accountable for the actions they initiated in addition to carry out their duties more effectively,” ASG Unamboowe noted.
Also testifying before the Commission on Thursday was V Kanagasabapathy, former Director General of Department of Public Enterprises. He answered questions on the practice of the FR regulations in Treasury. He stressed that according to the Constitution and the Financial Regulations, Ministry Secretaries are the Chief Accounting Officers of their respective ministries. His evidence was also led by ASG Unamboowe.
The CoI comprises retired Supreme Court Justice Anil Gooneratne (Chairman), Retired Supreme Court Justice Gamini Rohan Amarasekara, retired High Court Judge Piyasena Ranasinghe, retired Deputy Auditor General Don Anthony Harold and Sri Lanka Accounting & Auditing Standards Monitoring Board Director General Wasantha Jayaseeli Kapugama. The sittings will continue from Tuesday onwards.