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Witness fears for life after giving evidence at SriLankan Airlines probe

Jul 20, 2018 07:49 AM GMT+0530 | 0 Comment(s)

ECONOMYNEXT - A witness who bared details of a 400 million rupee procurement scam in state-run SriLankan Airlines involving a party with links to the then administration, at a commission of inquiry said she feared for her life if there was a change in government.

The witness said there had been no reply from the Department of Attorney General for her inquiries regarding witness protection.

The Commission is probing alleged frauds and malpractices at state-run SriLankan Airlines.

Procurement Process


Priyadarshani Epitawala, Network Planning and Research Manager at SriLankan, who was advertising manager in 2011, said then Chief Executive Kapila Chandrasena made her ignore procurement standards set by Emirates, which was managing the airline earlier, and award advertising deals to Kuma stickers without competitive tenders.

Epitawala said that Chandrasena’s predecessor, Manoj Gunawardena, who headed the airline following Emirates’ exit in 2008, had told her not to renew contracts for outdoor advertising hoardings, placed at good locations at lower prices, as part of a cost cutting strategy.

When Chandrasena took over in May 2011, he had and instructed her to place multiple hoardings through a company called Kuma Stickers, Epitawala said.

“Mr. Chandrasena told me that there’s a person who has a lot of clout on advertising and with municipalities. He gave me a number, for Kuma Stickers,” she said.

“Mr. Chandrasena said that the government does a lot of business with Kuma Stickers, and we should support them.”

“I didn’t know whether he meant whether we should go exclusively with Kuma Stickers. When I asked Mr. Chandrasena if we should go exclusively with Kuma Stickers, he said to get the best deal for the airline.”

She said that by then, most of the hoardings in areas outside Colombo where SriLankan wanted to advertise in were controlled by Kuma Stickers, while within Colombo, preference was given to locations held by Kuma Stickers due to Chandrasena’s request.

When Epitawala had begun negotiations with Kuma Stickers, Chandrasena had criticized her for taking too long, she said.

“I said that we needed to go through the proper procurement procedures, and he said that it would take too long. He said to go through the SMT (Senior Management Team) system,” Epitawala said.

“He said that since Kuma Stickers was doing a lot of work for us, we should not look at it like a normal supplier. By then, Kuma Stickers was working with us almost like an advertising agency. So he said we should look at another process.”

Kuma Stickers had quoted locations in Colombo where the per square foot prices ranged between 1,791 rupees and 3,928 rupees, while even their hoardings outside Colombo were more expensive than those of the other two suppliers, she said.

When Epitawala attempted to re-acquire hoardings in some of the locations Emirates had advertised in, for two of the best locations in Kandana (1,100 rupees per square foot) and Dematagoda (833 rupees per square foot) owned by two other suppliers, she had been transferred out of the advertising department.

She said that Kuma Stickers did not have the rights to these two locations. The Dematagoda hoarding location is now occupied by Coca Cola, she said.

Fears for Life

She said she had been compelled to give evidence at the Commission of Inquiry but she feared for her life if the government changed.

She had also given evidence at an inquiry on SriLankan by lawyer J C Weliamuna but felt no benefit had come to the airline as had nothing happened.

“I came to give evidence at this commission and the Weliamuna commission involuntarily," she said.

"There was a government change before. The government may change in the future, and I fear for my safety and my job security in the airline.”

“I was assured when I gave evidence earlier for the Weliamuna Report that what I said would be confidential, but two weeks later, the report was public. Even in this commission, what I say appears in the media.”

“I don’t have much confidence in the government, so my life and my job security is in jeopardy.”

“If something positive came out for the airline and the country from these inquiries, I would be satisfied, but nothing came out of the Weliamuna Report.”

 Retired Supreme Court Justice Anil Gunaratne who chairs the commission of inquiry said he was concerned but it was a legal matter and she had to give evidence.

"I note your statement with great concern, but we have to look at this from the point of law," he said.

"The law provides for witness protection."

But Epitawela said she had no reply for requests to protection.

 "I don’t have confidence in the system," she said. "I’ve asked from the Attorney General’s Department repeatedly what are the measures that will be taken to protect a witness. They haven’t replied”

"The commission respects your concerns and we will take up this matter at a later stage in the commission," the Commissioner said.

No Evidence of Competitive Bidding

She admitted that throughout the period in question, no feasibility studies were done for hoardings.

Saminda Perera, currently Senior Manager Marketing at SriLankan testified that there was no evidence at the airline to show that competitive tenders were held for of the contracts awarded to Kuma Stickers.

Only one tender document was available, for the only hoarding contract won by a company based in the Northern Province, where it had quoted a price of 790,000 rupees for the hoarding in 2014.

Kuma Stickers had quoted a price of 990,000 rupees, Perera said.

Mahesh Nanayakkara, Group Assurance and Advisory Services Senior Manager at SriLankan, who is in charge of the airline’s internal audits said he could not find any such evidence.

Nanayakkara said that there was no evidence of even calling for quotations from any supplier in the three years from 2011 to 2013, and that department heads may have even telephoned asking for quotations.

He said that by November 2013, an audit report had found that Kuma Stickers had signed up to 108 million rupees in agreements, and going by the sole supplier principal, these agreements should have been put together, and submitted for board approval given the size of the contracts.

Board approval came only in 2014, Nanayakkara said.

He said that Kuma Stickers was supposed to take out 3rd party insurance for all the hoardings as per agreements, but it had not obtained any insurance until this was pointed out in 2013, and even then, up to 100,000 rupees each for just six hoardings.

Kuma Stickers had in total received 415 million rupees in payments from SriLankan between 2011 and the start of 2018, for initial contracts of over a dozen hoardings, followed by extensions of these contracts.

After the current government took over in January 2015, SriLankan stopped giving contracts to Kuma Stickers, except for one in early 2015 under the interim Chief Executive Rakitha Jayawardena, the commission heard.

Another agreement entered into between Mihin Air and Kuma Stickers was transferred to SriLankan for the remaining five months of the agreement, when the budget airline was acquired by the national carrier in December 2016.

However, SriLankan had continue to make nearly 50 million rupees in payments to Kuma Stickers since 2015, due to agreements signed previously.

The biggest payments to Kuma Stickers, up to 140 million rupees, was made in 2014/15. (COLOMBO, July 19, 2018).

Please click here to read a clarification to this story - AG Not to blame: PCOI


 

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