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Tuesday November 29th, 2022

SriLankan Airlines security lapses glossed over: witness

ECONOMYNEXT – Security lapses at state-owned SriLankan Airlines operations, including through controversial Rakna Araksha Lanka (Rakna Lanka) had taken place without any punitive action, a commission of inquiry heard.

Senior Security Manager Titus Kannangara, currently Acting Head of Security, testifying at a Presidential Commission of Inquiry into irregularities at SriLankan, Mihin Lanka and SriLankan Catering, said that on five occasions since 2014, weapons such as knives and knuckledusters were found in the possession of staff.

On two of these occasions, the weapons were found on aircraft mechanics leaving the ‘security control area’ of an aircraft hangar, he said.

Security at the airport is divided into four sections, at the perimeter, security control areas, restricted areas and the aircraft, with increasing levels of security, he said.

The other three incidents had occurred when baggage handling staff were found leaving the restricted area near an aircraft with knives, he said.

Kannangara admitted that the baggage handling staff may be using the knives to rip open passenger bags and remove valuables.

Senior State Counsel Fazly Razik questioned whether Kannangara had heard of accusations that there was a major racket to pilfer baggage.

Kannangara said he had heard of "small stories".

In one of these instances, the baggage handler had stolen a knife from a passenger bag, Kannangara said.

In three of the instances, the state-owned Rakna Lanka, which employs ex-service men, were found responsible for not detecting the weapons, he said.

In 2009, after the end of the war, SriLankan outsourced many security functions to Rakna Lanka to cut costs and provide employment for ex-servicemen, Kannangara, who is an ex-serviceman, said.

In one of the other instances, SriLankan staff was found responsible, and another, SriLankan and Airports and Aviation Services security staff were jointly responsible, Kannangara said.

However, SriLankan were ultimately responsible for any security lapses in flights, he admitted.

"There have been absolute oversights," he said.

The Civil Aviation Ministry had not limited SriLankan from using only Rakna Lanka, but costs made it the most viable, Kannangara said.

He said he was not aware of who were the directors of the security firm at that time.

All five weapons carriers were detected due to the mobile ‘Security Strike Teams’ (SSTs) which conduct random security checks. One SST has three members working per shift, compared to over 110 internal security staff per shift, he said.

None of the normal security officers were disciplined, Kannangara said. He said he was not aware of what actions Rakna Lanka took."They (Rakna Lanka) have not done their job. We’ve taken up the matter with Rakna Lanka," he said.

The staff members found carrying weapons were not subject to disciplinary action, and continued to work at SriLankan, Kannangara admitted.

He said the incidents were not referred upwards to Human Resources for action, as a committee made up of the line division, the investigation division and the security division had not decided to discipline the staffers.

He said the internal security officers were not disciplined, and the books carried the incidents as ‘human error’.

Under questioning, Kannangara initially said that calling the lapses ‘human error’ was acceptable.

"Probably accept that there was total failure and we didn’t take adequate action," Kannangara later admitted.

An SST member by the name of Manjula Priyadarshana had made three of the five detections and was appreciated for the efforts,Kannangara said..

However, under Razick’s questioning, Kannangara admitted that Priyadarshana was later disciplined and let go for being involved in a traffic accident.

Questions were raised whether it was fair for the most exemplary officer to be disciplined so strictly for a motor accident when those who do not do a proper job are kept on service.

Kannangara admitted it was not fair. (Colombo/Nov29/2018)


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A new Sri Lanka monetary law may have prevented 2019 tax cuts?

ECONOMYNEXT – A new monetary law planned in 2019, if it had been enacted may have prevented the steep tax cuts made in that year which was followed by unprecedented money printing, ex-Central Bank Governor Indrajit Coomaraswamy said.

The bill for the central bank law was ready in 2019 but the then administration ran out of parliamentary time to enact it, he said.

Economists backing the new administration slashed taxes in December 2019 and placed price controls on Treasuries auctions bought new and maturing securities, claiming that there was a ‘persistent output gap’.

Coomaraswamy said he keeps wondering whether “someone sitting in the Treasury would have implemented those tax cuts” if the law had been enacted.

“We would never know,” he told an investor forum organized by CT CLSA Securities, a Colombo-based brokerage.

The new law however will sill allow open market operations under a highly discretionary ‘flexible’ inflation targeting regime.

A reserve collecting central bank which injects money to push down interest rates as domestic credit recovers triggers forex shortages.

The currency is then depreciated to cover the policy error through what is known as a ‘flexible exchange rate’ which is neither a clean float nor a hard peg.

From 2015 to 2019 two currency crises were triggered mainly through open market operations amid public opposition to direct purchases of Treasury bills, analysts have shown.

Sri Lanka’s central bank generally triggers currency crises in the second or third year of the credit cycle by purchasing maturing bills from existing holders (monetizing the gross financing requirement) as private loan demand pick up and not necessarily to monetize current year deficits, critics have pointed out.

Past deficits can be monetized as long as open market operations are permitted through outright purchases of bill in the hands of banks and other holders.

In Latin America central banks trigger currency crises mainly by their failure to roll-over sterilization securities. (Colombo/Nov29/2022)

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Sri Lanka cabinet clears CEB re-structure proposal: Minister

ECONOMYNEXT – Sri Lanka’s cabinet has cleared proposals by a committee to re-structure state-run Ceylon Electricity Board, Power and Energy Minister Kanchana Wijeskera said.

“Cabinet approval was granted today to the recommendations proposed by the committee on Restructuring CEB,” he said in a message.

“The Electricity Reforms Bill will be drafted within a month to begin the unbundling process of CEB & work on a rapid timeline to get the approval of the Parliament needed.”

Sri Lanka’s Ceylon Electricity Board finances had been hit by failure to operate cost reflective tariffs and there are capacity shortfalls due to failure to implement planned generators in time. (Colombo/Nov28/2022)

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Sri Lanka new CB law to cabinet soon as IMF prior action

ECONOMYNEXT – Sri Lanka’s new central bank law will be submitted to the cabinet as a prior action of International Monetary Fund with clauses to improve governance and legalize ‘flexible’ inflation targeting, Central Bank Governor Nandalal Weerasinghe said.

Under the new law members of the monetary board will be appointed by the country’s Constitutional Council replacing the current system of the Finance Minister making appointments.

“It will be a bipartisan approach,” Governor Weerasinghe told an investor forum organized by CT CLSA Securities, Colombo-based brokerage.

“The central bank’s ability to finance the budget deficit will be taken out. Thirdly the flexible inflation targeting regime will be recognized in the law as the framework.”

The law will also make macro-prudential surveillance formally under the bank.

There will be two governing boards, one for the management of the agency and one to conduct monetary policy.

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