ECONOMYNEXT – Sri Lanka’s cabinet of ministers had been told that Bank of Ceylon would benefit from buying shares in loss-making SriLankan Airlines after the exit of Emirates, and the share transfer itself had appeared to have been done in an irregular way, a commission of inquiry heard.
The commission is probing alleged irregularities in SriLankan Airlines and Mihin Lanka from 2006 to 2018. Emirate’s management of the airline was terminated in 2008, and the airline then started making losses.
Company Secretary Dalrene Thirukumar, who had joined the airline in 2013, presented documents filed by her predecessor in 2010.
A cabinet paper submitted by the Finance Ministry had said that it was desirable for strong institutional investors such as state banks be allowed to purchase shares in SriLankan, as they would benefit from the prevailing economic conditions and the tourism development to follow.
In addition to the Bank of Ceylon, People’s Bank, National Savings Bank and Employees Provident Fund had ended up taking shares of the loss-making airline, though the required documentation to carry out sales could not be located.
Thirukumar was asked whether she found a cabinet decision authorizing the EPF, NSB and People’s Bank to purchase shares held by Emirates.
She said she had not found such a document.
Thirukumar said that there was an incomplete transfer instrument copy between Emirates and BOC filed with SriLankan, and she was unable to confirm whether the copy was a draft or an original.
The transfer of Emirates shares took place in June 2010, but the next SriLankan board meeting held in August showed that BOC had only purchased 12.5 million shares from Emirates, while People’s Bank had purchased 4.2 million shares, NSB 4.2 million shares, and the EPF 1.8 million shares, Thirukumar said.
She was also asked whether there were instruments at SriLankan detailing the transfer of Emirates shares to People’s Bank, NSB and EPF.
She said that her office has conducted a ‘cursory search’, and had not located such documents. She said that a more detailed search will be conducted.
She said that according to the SriLankan Articles of Association, all transfers of shares should have an acceptable instrument.
She said that before the transfer, the government had held 51 percent of shares in SriLankan. Employees of the airline had held just under 6 percent of the shares.
The Valuation Department estimated the 51 percent of SriLankan shares held by the government to be worth 440 million US dollars in a letter written to the Finance Ministry. Cabinet documents showed the 43.36 percent of Emirates-held shares to be worth 53 million US dollars.
(COLOMBO, 02 August, 2018)