Cardinal, politics, force SriLankan to fly to Rome, Moscow despite losses: inquiry
Sep 28, 2018 08:22 AM GMT+0530 | 1 Comment(s)
ECONOMYNEXT - State-run SriLankan Airlines had to continue flights to Rome and Moscow despite making losses due to the intervention from a Catholic Cardinal and political interference, a commission of inquiry heard.
Head of Finance Management at SriLankan Yasantha Dissanayake told a Presidential Commission of Inquiry into frauds at state airlines, that the airline's board of directors and the Treasury had wanted to cut down routes which were making losses in 2011, as the company was in financial trouble.
He said a special report on cutting expenditure had recommended halting flights to Rome, Moscow, Zurich and Milan.
"European routes were losing more money, so we wanted to cut down," he said.
However, he said then-Chief Executive Kapila Chandrasena had informed the SriLankan Board that it would take four more months to stop the Zurich and Milan flights, and that the Moscow and Rome flights cannot be cancelled.
Senior Deputy Solicitor General Niel Unamboowe questioned why the Moscow and Rome flights could not be cancelled.
"He (Chandrasena) told me higher authorities had asked him not to cancel," Dissanayake said.
Upon further questioning, he said that Chandrasena had told the senior management team that the Cardinal of Colombo had complained to then President Mahinda Rajapaksa against SriLankan’s plans to cancel flights to Rome.
Chandrasena had not given a specific reason for why the Moscow flight could not be cancelled, Dissanayake said.
The commission earlier heard that excessively high fees had been paid to a General Sales Agent for Russia which was connected to a network of agencies run by the same person.
The agency had been selected on the request of then ambassador Udayanga Weeratunga, who was a relative to President Rajapaksa.
Sri Lankan LLC, the airline’s GSA in Russia, had received 5.5 percent commissions on passenger tickets and 5 percent cargo commissions, initially, which was much above the 2.5 percent ceiling for passenger commissions and 3 percent for cargo set in a manual prepared in 2009.
In 2014, the terms were changed to 4 percent commission and fuel surcharge fees, as well as 1 percent online sales commissions, despite fuel surcharges and online sales commissions not being a part of the 2009 manual.
The commission was told that the GSA agreement was extended for 3 years in 2014, despite Sri Lankan LLC performing below targets given by the airline. (Colombo/Sept28/2018)