SriLankan Airlines pressured to hire unsolicited advisory firm for business plan
ECONOMYNEXT – SriLankan Airlines had been pressured to hire a firm called Amerasian Corporation which came with unsolicited advice to validate a business plan prepared an ex-employee, raising questions whether it was ‘fixed’, a commission of inquiry heard.
Sri Lanka’s Airlines Former Chief Financial Officer Seneka Chandrasekera was appointed in March 2010 to develop a business plan, Financial Management Head Yasantha Dissanayake told a commission of inquiry probing irregularities at SriLankan Airlines and Mihin Lanka.
Chandrasekera was paid a monthly fee of 250,000 rupees for three months to write the plan which involved a capital injection of 300 million dollars.
Chandrasekera had in 2008, also authored a business plan which required a 180 million US dollar capital infusion. The plan was not fully followed after a civil war ended in 2009, Dissanayake said.
Amerasian Corporation, which had an office in Texas and in Sri Lanka, which seemed to have unusual clout at higher levels of Sri Lanka’s ports aviation and finance ministries and its partner Via Capital Partners, had then been hired to validate the plan.
Documents also referred to verbal discussions about Boeing aircraft with Amerasian Corporation between SriLankan Airlines Chairman Nishantha Wikremesinghe and then Ports and Aviation Ministry Secretary Ranjith De Silva.
Dissanayake said that in January 2010 Amerasian Corporation had written to then Public Enterprise Department Director General Suren Batagoda offering unsolicited consultancy services for SriLankan.
On February 15, 2010 then Ports and Aviation Ministry Secretary Ranjith de Silva had written to then SriLankan Chairman Nishantha Wickramasinghe requesting his observations on the services offered by Amerasian, Dissanayake said reading out a letter.
The witness said the airline does not usually operate in such a manner, and a procurement process is in place, where the airline calls for proposals.
On February 17, 2010 Batagoda had written to Amerasian Corporation informing that the Sri Lankan government is looking at a major restructuring for the airline, including re-fleeting, Dissanayake said.
He said the strategic business plan on restructuring and calling for a capital infusion of 300 million US dollars had not been authored back in February 2010.
He said the business plan was submitted for board approval only on July 31, 2010.
Senior Deputy Solicitor General Niel Unamboowe asked Dissanayake how Batagoda would have known that a re-fleeting and restructuring would occur in February.
Dissanayake said he wasn’t sure. He said since the Treasury is the main shareholder of the airline, and since the Public Enterprise Department is within the Treasury, Batagoda may have got hold of documents discussing the restructuring.
Dissanayake said the Public Enterprise Department had not interfered with SriLankan before then.
He said Batagoda had written to Amerasian requesting proposals on restructuring be forwarded to SriLankan Airlines, the Treasury and the Ports and Aviation Ministry.
On February 19, Ports and Aviation Ministry Secretary de Silva had written to SriLankan Airlines Chairman Nishantha Wickramasinghe, stating they have a ‘verbal agreement’ about Amerasian, the witness said.
He said in the same letter, the two had mentioned a ‘verbal agreement’ about writing to Amerasian about Boeing aircraft.
However, SriLankan then had a fleet of Airbus aircraft, and the business plan which was later submitted also had plans for Airbus aircraft, Dissanayake said.
He said de Silva had requested Wickramasinghe to list SriLankan’s requirements at the earliest possible moment to Amerasian in order to get financial consultation.
Unamboowe questioned Dissanayake whether the actions of the public officials were similar to ‘match fixing’, in favouring Amerasian and asking the requirements of SriLankan to be submitted to Amerasian.
Dissanayake said that is a difficult question to answer.
He said as head of finance, he had found no reason for the airlines’ details to be submitted to Amerasian.
In March, the SriLankan Chairman Wickramasinghe had written to de Silva, asking Amerasian to make a detailed presentation to senior airline staff to enable the creation of a feasibility report and further discussions with Amerasian, the witness said.
He said in April 2010, Amerasian had written to Batagoda, saying its joint venture company Via Capital Partners is able to support SriLankan’s restructuring with consultation and funding.
Dissanayake said the airline’s board decided Chandrasekara’s business plan submitted in July 2010 should be validated by a foreign party, and out of 12 foreign consultancies, Amerasian’s Via Capital was chosen.
The witness said then chief executive Manoj Gunawardena had communicated the need for foreign validation due to requests from the board and Treasury. (COLOMBO, 3 September 2018)