USD 16.8 mil. bribe @SriLankan Airlines

- a response to Eran Wickramaratne

Reproduced herewith is a screenshot of page 8 from the airline’s 2007/8 Annual Report. Whereas Company Revenue amounted to Rs 78.128 billion, Operating Expenses amounted to Rs 82.154 billion, a Deficit of Rs 4.026 billion. Nevertheless, Profit Before Tax amounts to Rs 4.445 billion. The Profit Before Tax had resulted from the sale and leaseback of three A340-300 aircraft amounting to Rs 5.4 billion (Note 16.1 in Annual Report), in other words, by the sale of assets. In the case of laymen, it may be ignorance, but in the case of a banker, it is sheer skullduggery. Incidentally, the company's Profit Before Tax in 2006/7 is no better. Profit Before Tax amounts to Rs 568 mil. despite a deficit of Rs 1.4 billion in Operating Expenditure over Revenue.

by Rajeewa Jayaweera-February 29, 2020,

Former State Minister of Finance and line Minister for SriLankan Airlines (UL) for eight months from March 13, 2019, Eran Wickramaratne, took part in the Face the Nation talk show on TV 1 last week. Faraz Shauketaly moderated the programme. The other panelists were Chrishmal Warnasuriya, a former UL Pilot turned lawyer, Asoka Obeysekera, Executive Director of Transparency International, and Capt. Gihan (GAF) Fernando, a former UL pilot and President of Aircraft Owners and Operators Association. The theme of the one hour 20 minutes programme was "SriLankan Airlines in crisis" on the topic of the infamous Airbus deal. There were two journalists in attendance.

On Thursday, February 20, 2020, the Daily Mirror carried an extensive interview given by Wickramaratne to Susitha Fernando. It was titled, 'We suspect the Bribes paid on Airbus purchases were approximately USD 16.8 million.’

That same evening, the former State Minister had much to say during the Parliamentary debate on the Airbus corruption scandal.

This writer published a detailed essay titled 'SriLankan Airlines Airbus deal' in the Sunday Island on February 16, 2020. Those interested may access the article clicking on the link http://www.island.lk/index.php?page_cat=article-details&page=article-details&code title =218792 as it contains the aircraft acquisition process and other details. No repetition is necessary.

Having followed the Talk Show, carefully read the interview, and closely listened to the bombastic speech in Parliament, I decided to respond.

Wickramaratne holds BSc and MSc degrees in Economics from the University of London and is also an Eisenhower Fellow. He worked for Citi Bank for nearly two decades. Expectations from parliamentarians with such academic and professional credentials are much higher than from 'O' or 'A' Levels failures.

What stands out very clearly is the political bias and lack of objectivity in the arguments presented in all three instances. The focus is entirely on the wrongdoings of the Rajapaksa regime. However, Yahapalana misdemeanors in the context of the national carrier are sadly lacking.

Given space constraints, this writer will endeavor to provide a few instances utilizing selected examples. It will highlight the fact, whether it is the Rajapaksa or Yahapalana dispensations, what they do when in power, and say when out of power differ substantially. It is a case of ‘bale thibenakota mole naa, mole thibenakota bale naa.’

During the Talk Show, the former State Minister stated, "I was the Minister in charge of the airline in 2019 until the change of government. I inherited an airline Board in which I did not make any changes. It is usual when Ministers change that they change the Board, and they generally end up putting their friends and relations on the Board."

Rajapaksas appointed relations. Yahapalanites appointed friends from their alma mater and party hacks. The following are the Directors appointed by the Yahapalana government in February 2015 and their connections.

Chairman Ajith Dias (Prime Minister’s friend and ex-Royall College). Chanaka de Silva and Mahinda Haradasa, (PM’s friends, ex-Royal College, and members of UNP Working Committee). Rajan Brito (former President CBK’s friend), Hadindra Balapatabandi (former President Sirisena’s friend), Rakhitha Jayawardena (PM’ relative and old Thomian), Lt.Col. (Retd.) Sunil Peiris (Ravi Jayawardena’s friend and old Thomian), and N. De Silva Deva Aditya (PM’s friend and MP in European Parliament). CEO Suren Ratwatte, a pilot by profession, was the younger brother of PM’s financial advisor.

Ratwatte's ill-advised appointment had far-reaching consequences. At the end of six months, some directors wished to extend his probation period and assign Key Performance Indicators for evaluation in a few months. However, both the Prime Minister and Minister Kabir Hashim instructed directors to confirm him to his post without delay (Board Minute 2.6 dated April 28, 2016).

Financially crippled with lease charges of over USD 1 mil per month per new A330-300 aircraft, the airline desperately tried to lease out at least a few of them. One jet was wet-leased to PIA in early 2016 for six months. Discussions were ongoing to lease a total of three planes for three years.

Meanwhile, lease agreements of three older A330-200 aircraft MSN 303, 306, and 311 were due to expire in a few months. The CEO informed directors, if PIA leased the three aircraft, the three older planes would be necessary to operate the schedule. Directors gave him the mandate to renew lease agreements of the older planes subject to PIA leasing the more expensive jets. Finally, PIA did not take the aircraft. Meanwhile, the CEO had extended the lease agreements of the three older planes exceeding his mandate at a total cost of USD 54.5 mil. over 72 months, excluding related maintenance costs.

It eventually split the Directors into two groups. Four directors opposed the extension of lease agreements of the three older aircraft, whereas the Chairman and two others were in favor. One director abstained (Board Minute 10.4, dated January 25, 2017). The decision was overturned by the Cabinet Committee on Economic Management (CCEM item 22/3/2017/10 dated March 22, 2017), and lease agreements extended.

Several directors decided to suspend the CEO from work pending issuance of a Charge Sheet and also give him the option to resign (Board Minute 6.3 dated January 25, 2018). The Secretary to the Ministry of Public Enterprise Development, in a letter dated February 01, 2018, overturned the decision of directors.

UL is still in possession of these aircraft. Warnasuriya, in his opening statement, flippantly referred to the acronym UL as the ‘Usually Late’ airline. Wickramaratne taking umbrage, stated, "I would like to state, in 2019, SriLankan Airlines, in two months, won the world's most punctual airline awards. That credit goes purely to the senior management of SriLankan Airlines. When I left things to them, they knew how to make decisions and run the airline."

This assertion is pure eyewash. The reason for winning the said awards is due to the fact, the fleet contains three additional aircraft, signed up for 72 months by the Yahapalana appointed CEO. The management should be found fault for not achieving the award throughout the year despite the additional planes. According to the 2018/19 Annual Report, the daily average aircraft utilization of the six A330-200 planes was 10.92 block hours and of the seven A330-300 jets, 14.35 block hours, a clear case of severe underutilization of the older machines.

One of the journalists raised the question, "the Chairman appointed by the Yahapalana government declined to even internally investigate some of the less critical findings in the Weliamuna BoI report. The whole BoI report was added to history. Who can we hold responsible?

The question was avoided by giving unnecessary details of criticism of Rs 4 mil paid to Weliamuna. According to the response, the report was passed to the IGP, Bribery Commission, and the Government for necessary action. Paying for professional services is standard. What is not acceptable is to spend taxpayer’s money and do absolutely nothing with such reports.

The former State Minister’s offhand response, "I won’t comment on what SriLankan Airlines did internally with the report," fools no one. The question being, what the Yahapalana appointed directors did with the report, he should have answered it and not brushed it aside.

One area highlighted in the BoI report was the recruitment of over 500 persons from the ‘Nil Balakaya’ gang. Another was of a Flight Stewardess seconded to work in MP Namal Rajapaksa’s private company drawing two salaries besides flying allowances. Did the Yahapalana government and directors wait for the Serious Frauds Office in the UK to investigate such matters?

Shauketaly put it very aptly. He stated, "You said a number of factual things, but you forgot what happened under your watch (presumably under the Yahapalana watch).

During the interview with Susitha Fernando of the Daily Mirror, reference was made to profits amounting to Rs 4.4 billion in 2008 before the exit of Emirates management. Reproduced herewith is a screenshot of page 8 from the airline’s 2007/8 Annual Report. Whereas Company Revenue amounted to Rs 78.128 billion, Operating Expenses amounted to Rs 82.154 billion, a Deficit of Rs 4.026 billion. Nevertheless, Profit Before Tax amounts to Rs 4.445 billion. The Profit Before Tax had resulted from the sale and leaseback of three A340-300 aircraft amounting to Rs 5.4 billion (Note 16.1 in Annual Report), in other words, by the sale of assets. In the case of laymen, it may be ignorance, but in the case of a banker, it is sheer skullduggery. Incidentally, the company's Profit Before Tax in 2006/7 is no better. Profit Before Tax amounts to Rs 568 mil. despite a deficit of Rs 1.4 billion in Operating Expenditure over Revenue.

Truth be told, the Yahapalana government failed to investigate the Airbus deal chiefly due to its loss of moral authority, having embroiled itself in the Central Bank bond scam.

The former State Minister turned the spotlight on the Treasury for not having "questioned" the decision to acquire aircraft and for "allowing" it. Not since 1977 has the Treasury, or its Secretary overruled the Finance Minister, Prime Minister and President. Treasury Secretaries also kept silent during the ten-year Emirates management period over some very questionable decisions.

On the one hand, the Treasury remained silent and did not ‘question’ the decision to acquire aircraft. On the other hand, no one questioned the former Prime Minister’s interventions in the national carrier’s administration, not forgetting the loss of USD 54.5 mil. due to the incompetence of the CEO brother of one of his confidants.

Many believe, educated professionals are made of a different clay from that of the hoi polio. That is a misnomer.

From these few examples, one thing is clear.

Any person who remained silent through such malpractices does not have the moral authority to point fingers at others and pontificate in Parliament over "peers remaining silent."