News
Presidential Commission exposes sky-high corruption in national carriers
The Presidential Commission of Inquiry (PCoI) which investigated into SriLankan Airlines and Mihin Lanka operations from 2006 to 2018, has slammed politicians for interfering with the management of the two airlines, incompetent boards that flouted the companies law, and widespread corruption among a host of other issues.
It has called for the restructuring of the national carrier by floating it in the Stock Exchange while concentrating as a regional airline.
In some startling disclosures, the PCoI states that the airline’s staff has also been involved in gold smuggling, human trafficking and in the gaming business.
The extensive 800 plus page report with annexures presented this week to President Maithripala Sirisena, the Sunday Times learns, has broken down its findings to Abuse of Power, influence and interference; the Duties and Liabilities of the Directors; the Business Plan of the Airline; Engineering; Termination of Agreements; Malpractices in Selection and Promotions; Human Resources Management; Purchase of Flight Simulators; Revenue; Government intervention; Charter Flights; Open Sky Policy; GSAs; Baggage; Procurements; Mattala Airport; Contract Agreements; Delivery of Wines and Champagne; Annual Reports; Financial Reporting; Borrowings; Issuance of Treasury Bonds; Credit Card Transactions; Capital infusion etc.
The PCoI has pointed out that the decline of the airline “maybe” started in 2008/2009 with the termination of the partnership with the Dubai-based Emirates Airline. Calling for a Best Practices law for the airline, the report states that the airline made a financial turn-around in 2006 during the partnership with Emirates, but an incident involving the entourage of President Mahinda Rajapaksa visiting the UK resulted in the termination of that partnership, the sacking of the Emirates-appointed SriLankan Airlines CEO and that the annual loss of the airline by 2017 had risen to Rs. 28.9 billion.
According to the report, the CEO, Peter Hill, had been asked by Mihin’s CEO Sajin Vaas Gunawardene to off-load 35 pre-booked paying passengers in the high-yielding December 2007 from a flight from London to Colombo to accommodate members of President Rajapaksa’s entourage in the Business Class and front row Economy Class seats. As Mr. Hill had refused to carry out the instructions, he was sacked from his post, his BOI business visa cancelled and the partnership with Emirates terminated.
The PCoI refers to SriLankan Airlines creating Mihin as a subsidiary airline and being the “worst blunder” that was open to corruption. The airline was kept afloat on the misconception of it being a “Going Concern”. The accumulated loss of Mihin from 2007 to 2016 was Rs. 17 Billion (Rs. 17,273,515,781).
Among the PCoI findings was an instance where Mr. Vaas Gunawardene paid for a lunch to 17 Mihin employees while in Uganda costing Rs. 2 million by questionable company credit card transactions.
Several persons who were supposed to appear before the PCoI such as Mr. Vaas Gunawardene, Kapila Chnadrasena, a CEO of SriLankan, and one-time Chairman Nishantha Wickremesinghe made statements, but quoted legal advice as reasons not to present themselves in person for examination.
In its list of recommendations, the PCoI has suggested that at least three board members be those proficient in the field of finance, engineering, aviation, business; that retired airline experts serve as consultants; a forensic audit be done every three years; and that strict compliance with the Companies Act be maintained as mandatory provisions of the law have been flouted. The PCoI has also called for a National Airline policy with a Business Plan and the airline not to be run on the basis of family connections or political affiliations and to ensure that professionals in the field be treated with respect.
The PCoI refers to the threatening of witnesses who came before it, and makes a passing reference to the brief appointment of former CEO Kapila Chandrasena back to his post during the 52-day ill-fated “Government” in October last year when he was the subject of scrutiny by the Commission.
The report makes a final recommendation to take the findings seriously and for polticians not to ruin professions “with narrow minded thinking and ideas”. It says that those who were responsible for the colossal losses of public funds, particularly in the management of Mihin will have to face “karmic consequences”.
The PCoI comprised (Retired) Justice Anil Gooneratne (Chairman), Justice Gamini Rohan Amarasekera, (Retired) Judge Piyasena Ranasinha, Retired Deputy Auditor General Don Anthony Harold and Sri Lanka Accounting and Auditing Standards Monitoring Board Director General Wasantha Jayaseeli Kapugama.
Additional Solicitor General (retired) Neil Unamboowa PC together with Deputy Solicitor General Shanaka Wijesinghe and Milinda Pathirana, Senior State Counsel Chathura Guathilaka, Leshan Ratnayaka and Sajith Bandara led evidence.