News
SriLankan followed Business Plan sans Board approval
The debt-ridden National carrier SriLankan Airlines (SriLankan) followed a Business Plan (BP) formulated by an international aviation consultancy firm, without the approval of its Board of Directors (BoD), from 2013 onwards, it was revealed at a Commission of Inquiry (CoI) this week.
Seabury, a reputed international aviation consultancy firm was paid millions to formulate a BP after then management disregarded an earlier plan formulated by a newly established company called Via Capital at costly consultancy fees.
Through comprehensive testimonies of top SriLankan employees who appeared earlier before the CoI probing allegations of large scale frauds and malpractices at SriLankan, SriLankan Catering Ltd and Mihin Lanka (Pvt) Ltd, it was established that both companies were brought in as external consultancy firms to assist aviation strategies, but later came up with their own BPs for SriLankan.
SriLankan Head of Finance Yasantha Dissanayake, said he was not aware that Seabury’s BP was not approved by the BoD, while referring to the Board papers submitted before the CoI.
Evidence was led by both Neil Unamboowe P.C., who has been leading the Attorney General’s (AG) team after retirement as Additional Solicitor General (ASG) and Senior State Counsel (SSC) Fazly Razik. They were assisted by State Counsel Chathura Gunathilaka and Leshan Ratnayake.
SSC Razik asked witness if the Seabury BP was not accepted by the BoD, as established in the CoI, under which BP was SriLankan managed from 2013-2015. When the new government took office in 2015, the new management was asked to prepare a fresh BP.
“CEO Kapila Chandrasena gave instructions to print and distribute the Seabury BP among senior management officials. As formulating BPs does not come under the Finance Division, but the Strategic Management Division, I was not aware of the approval. We considered that it was approved by the BoD,” Mr Dissanayake responded.
The CoI’s attention was also drawn to the remark of ‘Confidential- Not to be shared with third parties’, on the front cover of the Seabury BP.
Mr. Dissanayake also informed the CoI that the Finance Service Manual, an internal circular in the Finance Department, is in place as a ‘checks and balances’ mechanism of payments to employees, third parties and other suppliers, but obtaining loans from local or international banks is not included in the manual.
On Friday, SriLankan’s Group Legal Affairs Chief Mayuka Ranasinghe was scheduled to appear before the CoI to provide evidence on the cancellation of the Lease Agreements for aircraft, but was unable to do so, and Mr. Dissanayake was summoned yet again.
The AG’s Team continued quizzing the witness on SriLankan’s decision to enter into agreements for aircraft to the value of Rs. 147.7 billion, when they were in the pit, financially, since 2013.
Mr. Unamboowe called out SriLankan for going ahead and signing a Memorandum of Understanding (MoU) with Airbus for 10 aircraft, prior to obtaining Cabinet approval for funds.
The Cabinet met on May 22, 2013, to consider the Cabinet paper submitted to this effect, but SriLankan’s BoD went ahead and signed the MoU on May 16, 2013. “There was no decision taken on re-fleeting by the Cabinet, but somewhere someone decided to wield their power and sign an MoU,” Mr. Unamboowe proclaimed.
The MoU was signed by then Chairman Nishantha Wickramasinghe, which he was not entitled to do, as MoUs can only be signed by the Chief Executive Officer (CEO), according to SriLankan’s manual.
Following this, the BoD sanctioned the signing of purchase agreements in June. However, a working group comprising Mr. Dissanayake, then CEO Kapila Chandrasena, then Chief Operations Officer Capt. Druvi Perera and then Head of Engineering Priyantha Rose, surveyed the aircraft leasing market which the BoD didn’t sanction.
The CoI was told that all these proposals were included in a resolution tabled at the Annual General Meeting for 2013. Mr. Dissanayake, despite having drawn the BoD’s attention to the financial situation of SriLankan, with monthly reports, had not stated this in the resolution.
He defended his decision saying he had done so in June as Head of Finance, but his role in the working group was different, and it didn’t require him to mention it again. Mr. Unamboowe then pressed the witness once again with the question as to why SriLankan entered into these agreements, when they couldn’t afford to do so.
An impatient and emotionally charged Dissanayake responded, “I honestly don’t know how to answer that. I have told you everything I know and that it was the BoD’s decision. You have to ask that from the CEO and Chairman. Everything I say here is reported in the newspapers, and sometimes I am misquoted. I have a job to keep.”
The CoI’s proceedings will continue on Tuesday.