How malpractices have crippled Srilankan

Following President Maithripala Sirisena’s announcement that he would appoint a Commission to investigate into allegations against SriLankan and Mihin Airlines, employees of the national carrier are now geared to testify before an impartial commission.   Chairman Ajith Dias, Chief Executive Officer (CEO) Suren Ratwatte and few members of the Director Board are also facing allegation similar to former Chairman Nishantha Wickremasinghe, who is said to have taken adverse decisions and made the national carrier a debt ridden institution.  

Promotions and salary increments approved by management despite alleged irregularities 

Ill-thought-out A350 aircraft cancellation reversed efforts to improve fuel efficiency

Recommendations of Weliamuna report not implemented while Board given free hand

Rs.28billion incurred in losses in one financial year 

Lease period of questionable old aircrafts extended without Board approval

Sources accuse govt. of appointing board members sans experience in airline operations

A group of high level officials at SriLankan Airlines (SLA), who claim that they never expected this situation under the good governance administration, told the Dailymirror that ninety percent of the airline’s employees are now in the process of safeguarding all important data related to controversial deals the present top management has entered into. The data is to be given to a future Presidential Commission. These officials said that the losses incurred starting from 2015 too would be exposed using documentary evidence. The exposé will show how the company was run by the former regime. Documentary evidence with this regard is to be presented to the Board of Inquiry (BoI) which is headed by eminent Senior Lawyer J.C. Weliamuna.   

“We want a Commission appointed similar to that of the Bond Commission and bring the corrupt to book. We understand that the Chairman and Board of Directors are to be replaced and a new Board is to be formed in order to restructure the airline. But we still want a future Commission or a new Board to hold the top management responsible for the losses incurred from 2015 to date. The old guard that aided and abetted the then-Chairman and the then CEO Kapila Chandrasena are still holding high positions or have even been promoted to higher grades at the national carrier without having had to face any inquiry despite being found to be at fault in the Weliamuna report. This has left frustration, discontent and loss of faith on the good governance administration in general,” the sources said on condition of anonymity.   

Meanwhile the sources accused the Government of appointing members to the Board who do not have experience in airline operations. They point out that this is what had led to Mihin Lanka ceasing its operations and also bringing Sri Lankan Airlines to the verge of collapsing.   

We still want a future Commission or a new Board to hold the top management responsible for the losses incurred from 2015 to date.

 “Politicians in the past and present Governments should think that this airline is not their private property, but a national asset. Had the present regime appointed at least three knowledgeable directors to the board, they could have helped out even to minimize the losses we ‘inherited’ from the previous management,” the sources further claimed.   

According to these sources, although many requests had been made to Ajith Dias, after he took over office in February 2015, no action had been taken so far. Dias had taken over office to allow the airline’s own accounts department to handle the salaries of the senior management that had been outsourced to conceal details of remunerations from rest of the staff. It is alleged that several millions of rupees are still being spent each month to the outsourced payroll operator. 

 
Making of salaries outsourced 

“They are merely following in the footsteps of their predecessors. Although the Weliamuna Report revealed that the former Chief Executive Officer (CEO) Kapila Chandrasena’s remuneration was over Rs. 1.5 million in addition to other allowances and that he had also obtained a salary from Mihin Lanaka as its CEO till he vacated that post, the situation has worsened. The salary and other allowances the present CEO Suren Ratwatte is drawing is nearly three times more than what Chandrasena drew. The present Chief Commercial Officer (CCO) Ramachandra too is enjoying a high monthly remuneration. There should be transparency and that was why we wanted the Chairman to allow our own accounts department to handle the salaries of all its employees irrespective of their positions. This could have saved the cash strapped airline millions of rupees. During the time of Emirates, making the salaries of a few expatriate officials was outsourced, but not the salaries of locals. But now the salaries of those at the top to the senior managerial level officers are handled by this private company,” sources claimed.   

Instead of appointing a qualified team to negotiate with the supplier in order to get the cancellation charges minimized- the officials who are ‘professional’ got involved and saw to it that the agreement was cancelled

They also pointed out as to how the Chairman promised the then Aviation Minister Reginald Cooray to probe into why Director Promotion (Europe) Manoj Gunawardena was posted to London when the European market he had to handle was much smaller than that of his predecessors time. “His predecessors handled a much larger European market, but they operated it from Sri Lanka. Why was Gunawardena allowed to station in London with higher expenses which is an advantage to him but a loss to the airline? Why couldn’t the Chairman bring Gunawardena back to the country and allow him to operate from Colombo,” sources queried?    According to the Weliamuna Report, the decision to send Manoj Gunawardena, who held post of CEO till July 30, 2011, to London was a move intended to make way for a planned succession – to appoint Kapila Chandrasena as CEO. He had been sent on a five year contract with a salary of Rs.1.5 million (equivalent in Great Britan Pound) while GBP 1800 had been approved as a posting allowance which was later increased to GBP 2000 because the wife is with him. GBP 2600 was allocated for housing/ electricity/ utilities, apart from a company maintained car and fuel. The report further states that it was the SLA that had borne the income taxes including council taxes.   

Later, on Gunawardena had made a request to the Company Secretary to make an arrangement so that his pay will be handled by an independent operator in London working outside the operational ambit of the SLA London office and not by the M/S Management Services Limited in Colombo, which handles the payroll of SLA’s top management. According to the letter of the contract the salary should remain Rs.1.5 million and his GBP payments on this component should have now reduced progressively in line with the depreciation of the rupee against the GBP which had never happened. SLA has also reimbursed the National Insurance Contribution and Gunawardena’s UK Tax Contribution as well as the Council Taxes due in respect of his accommodation. Although Council Taxes are paid by the land owner and not by the tenant the airline had still reimbursed the council taxes to Gunawardena’s account. 

Meanwhile eyebrows have been raised as to how Ajith Dias had not implemented the recommendations given in the Weliamuna Report regarding former CEO Chandrasena. 

  
Appointment questionable   

The Board of Inquiry had observed that the appointment of Chandrasena as the CEO was questionable on many grounds. His only airline experience was his short stint at Mihin Lanka. His appointment as CEO was void of any competitive interview process, which questions further his suitability for the job. According to the Weliamuna Report, Chandrasena’s appointment was not motivated in the best interest of the airline, but was for a clear collateral purpose.   

The salaries of those at the top to the senior managerial level officers are handled by a private company

However, the sources expressed their sincere gratitude to the former Aviation Minister Arjuna Ranatunga for appointing a Board of Inquiry (BoI) headed by eminent Senior Lawyer J.C. Weliamuna, to unearth the malpractices and misappropriation of the airline’s funds during the previous regime.   
“Even Reginald Cooray, who became the subject minister after Ranatunga, was adamant that these recommendations should be implemented forthwith and gave few months to the Board to study the recommendations to which Dias agreed. Unfortunately Minister Kabir Hashim took over the ministry after the 2015 general elections and the present board was given a freehand to manage the airline to their whims and fancies that pushed the institute from pillar to post,” sources said.  According to these sources, the last financial year, commenced on April 1, 2016 and concluded on March 31, 2017 during which a loss of Rs.28 billion was made. These sources added that the reason for such a huge loss could be attributed to many factors.   

“When this Government assumed power it said that the order given to purchase five A350 airbuses would be cancelled to avert massive losses. Instead of appointing a qualified team to negotiate with the supplier in order to get the cancellation charges minimized- the officials who are ‘professional’ got involved and saw to it that the agreement was cancelled. The massive cancellation charge imposed by the supplier made the airline incur further losses,” sources alleged.   

Cancellation  

However, sources from the aviation industry said that the cancellation of the A350 was a loss to the airline as this had never happened in the past. “We have never paid so much even to buy an aircraft. When the Chandrika Kumaratunge Government that came into power in 1994 cancelled two aircraft out of the five that were ordered by the UNP Government in 1992, the airline did not pay such a penalty. The decision to purchase these aircraft was taken after a careful assessment. After the war concluded, there was a necessity to re-fleet the airline as Sri Lanka became a vital tourist destination. At that time we had only 12 aircraft, but by 2012 we got this number increased up to 22. When the aviation fuel prices went over US $ 110 per barrel, all airlines in the world switched on to cost effect aircraft. The fuel consumption of A350 aircraft guarantees of a 15% fuel savings,” sources added. 

We are expecting the airline to submit the details we requested by February 6 as it wouldn’t be good for the airline to release this information after an order is given by the RTI Commission,” sources warned

 
According to the sources, by having the A350 for long haul destinations like London and Melbourne, could have saved the airline a few millions of rupees because with this arrangement the airline could have carried more passengers and cargo.   

“Comparing to A340, the A350 has a passenger capacity which is 10% more while its cargo capacity is more than 100%. Isn’t this a viable option to follow?,” aviation sources queried.   

Meanwhile questions have been raised as to why SriLankan Airlines is reluctant to reveal information sought under the Right to Information Act (RTI), by the Airline Pilots’ Guild of Sri Lanka   

Although the request made by the Pilots Guild from the Information Officer of SriLankan Airlines to obtain information pertaining to the alleged misuse of public funds, the multitude of irregular practices, the losses incurred by the airline since the new management took office in 2015, the remuneration of CEO Cap. Suren Ratwatte and the Head of Human Resources (HHR) Pradeep Kekulawela it was turned down. The Guild had made an appeal to the RTI in September last year, regarding this.   
“Our request was turned down by the Information Officer claiming that the institution does not give consent to disclose any of the requested information claiming such information is exempted by Section 5(1) (a) and Section 5(1) (g). This is untrue. We then made an appeal against the Information Officer to Lalith Vithana, the Designated Officer SriLankan Airlines. Upholding the Information Officer’s stance, by letter dated August 23, 2017, Vithana too declined to provide the information requested. How can they make such a claim when the RTI Act No. 12 of 2016, has vested absolute powers with the organizations to provide requested information and does not interfere with the proceedings. Having known the regulations of the RTI Act, the Information Officer, who is also the Group Legal Affairs Manager, had requested RTI Commission to advice on the matter to which the Information Officer had been advised to take their own decisions which the Commission will not interfere with unless an appeal is made to them (Commission) by the requested party,” sources added.   

According to confirmed reports the RTI Commission on January 8 (Monday) had requested SLA to release the necessary details to the Pilots Guild by February 6 failing which an order would be given to the airline. “We are expecting the airline to submit the details we requested by February 6 as it wouldn’t be good for the airline to release this information after an order is given by the RTI Commission,” sources warned.    The sources meanwhile revealed how the management had given promotions and salary increments to the HHR Pradeep Kekulawela despite he being identified in the Weliamuna Report with regard to irregularities allegedly propelled by him where certain promotions and key appointments had affected the morale and productivity of the airline.   

 Secretary Ministry of Public Enterprise Development Ravindra Hewavitharana meanwhile confirmed that Suren Ratwatte had entered into an agreement to extend the 19-year-old aircraft lease agreement by a further six years without obtaining Board approval.    Hewavitharana further said that though he had raised his concerns and called for explanation from CEO Ratwatte to clarify why he entered into an agreement to extend the lease period of the questionable old aircraft without the Board approval, Ratwatte had sent his clarification which was not relevant to the subject matter.   

 
“The Board has approved to extend the lease period of these aircraft if the Pakistan International Airline (PIA) agrees to take two of these aircraft on lease. When approval was given subjected to this condition, ignoring the board’s decision, Ratwatte went ahead and entered into the agreement to extend the lease period knowing well that PIA has refused to take these aircraft from SLA. This has burdened the airline. When explanation was called, Ratwatte did not send in his clarifications in keeping with the manner in which the Ministry wanted him to provide answers,” the Ministry Secretary said.   

Although an e-mail was forwarded to the Manager Media Development SLA seeking the airline’s comments against the allegations levelled by the employees, there was no response till the paper went for publication.