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SriLankan Catering boss inked unauthorized outsourcing deals; holes in IT system: inquiry

ECONOMYNEXT – A former general manager of state-run SriLankan Airlines’ catering unit had inked deals for outsourced workers without board approval and there were loopholes in software system that allowed overcharging by manipulating attendance, a commission of inquiry heard.

Some suppliers had also not provided workman’s insurance and defaulted on Employees Provident Fund payments breaking rules and laws, Group Assurance and Advisory Services Senior Manager Mahesh Nanayakkara told a Presidential Commission inquiries into irregularities at SriLankan Airlines and now-defunct Mihin Lanka.

The ex-GM had inked deals worth up to 55 million rupees, far above his limit of 15 million rupees.

"The contracts had been signed. We can’t do anything now," he said.

Five unauthorized deals amounted to annual payments of 130 million rupees.

But the general manager had selected the most suitable manpower companies through a proper tender process, Nanayakkara said.

The GM had left the airline much later, and he was not disciplined for his unauthorized approvals, Nanayakkara said.

This was because there had been no proper manual set out to discipline executive and senior management level employees, unlike a manual setting out penalties against lower level employees, the witness said.

A lower grade procurement official who had not been aware of the procurement guidelines and submitted the documents for the general manager to sign had resigned.

"He left. We had a lot of issues with him. He wasn’t following proper procedures and we put pressure," Nanayakkara said.





Senior State Counsel Fazly Razick questioned whether the general manager had forced the procurement official to send documents instead of submitting them to the tender board or the director board.

"He didn’t say the general manager forced him," Nanayakkara said. 

The GM signed for contracts the board of directors should have given approval, such as a 55 million rupee annual contract with a manpower outsourcing company, the witness said.

Two of the contracts the general manager approved should have gone to the board, which can approve transactions over 30 million rupees.

Another three transactions should have gone to the tender board, which is able to approve amounts between 15-30 million rupees, Nanayakkara said.

Nanayakkara said he couldn’t recall the name of the general manager, and would furnish the name to the commission on a later date.

SriLankan Catering, which has a staff of around 1,000 has only a core permanent staff, while most other positions are filled through outsourced manpower companies, Nanayakkara said.

This is because if one airline operating to Colombo decides to drop SriLankan Catering as a supplier for meals, the company would then have excess staff to let go, he said.

Most of the manpower agreements signed were not sent for vetting by the SriLankan Airlines Group Legal Department, even after the department requested it be done so, Nanayakkara said.

Seven manpower contractors also did not have valid insurance covers to protect the labourers they sent to work at SriLankan Catering, which violated the agreements, he said.

There were loopholes in the SriLankan Catering human resource management IT system which could have left room for manipulation, such as attendance of employees, he said

Some manpower companies had also not furnished the national ID numbers of some of their workers, which also left room for manipulation of pay, Nanayakkara said.

He admitted that some workers may have either worked for more than one shift risking safety, or claimed pay for multiple shifts without working.

The manpower companies had also not paid proper Employees’ Provident Fund and Employees’ Trust Fund benefits to the workers, Nanayakkara said.

All the shortcomings have by now been corrected, he testified. (Colombo/Oct04/2018)

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