SriLankan purchased 8 aircraft sans Cabinet approval: COPE

The Committee on Public Enterprises (COPE) will submit a special report to Parliament, pertaining to the acquisition of 8 aircraft and cancellation of their Lease agreements, based on two comprehensive reports it commissioned to the Auditor General's (AG) Department, said Chairman Sunil Handunnetti, while submitting its quarterly report this week in Parliament.

COPE has directed the Auditor General to submit two comprehensive reports on administrative lapses into Lease and Termination agreements that cost millions.

Highlights of COPE's 1st Quarterly Report covering the period July 1-September 31, 2017:

At least 190 officers at SriLankan Airlines (SriLankan) each draw a monthly salary of over Rs 1 million at present. After analysing SriLankan’s audit reports, COPE expressed its dissatisfaction at the absence of a report, as requested by COPE, for information on their educational qualifications, ages and the duties assigned to those paid high salaries.

Noting the deterioration in SriLankan's financial situation in 2017, with poor cash flow and additional losses, COPE found that a proposal had been submitted to the government for a grant of Rs 150 million as capital, but it was not successful.

Currently, the government is engaged in discussions to transfer 49% of SriLankan's Shares to a foreign party. A restructuring plan has also been submitted.

Though no Cabinet approval was granted to purchase 8 aircraft, as per Cabinet Memorandum of 27.03.2013, the then SriLankan management went ahead with the deal, even though it is not vested with powers to do so.

Despite the Cabinet Committee on Economic Management setting a limit of about US$ 75-85 million for termination of aircraft lease agreements, efforts had been made to terminate it at a cost in excess of the said limit, and the Committee inquired the reasons for the increase to US$ 98 million.

On querying whether Legal clearance had been obtained from the AG for the termination of the aircraft purchase agreement, SriLankan confirmed that it had not consulted the AG, as the AG is consulted only if the Cabinet directs it to do so. The COPE Chairman stated that advice was taken from an institute named Aviation Legal Experts in England, and the termination agreement had been prepared under their guidance.

COPE found that Dr Rajan Sarah, an advisor to the then Minister of Finance, took part in those negotiations. COPE pointed out that, "it is problematic that only the Ministry of Finance and SriLankan had participated in these negotiations, while the Ministry of Public Enterprise Development, which is the subject Ministry, had not participated," The 16-Member COPE Committee comprises Parliamentarians Rauff Hakeem, Ravindra Samaraweera, Sujeewa Senasinghe, Dr. Harsha De Silva, Ajith P. Perera, Wasantha Aluvihare, Ranjan Ramanayake, Ashok Abeysinghe, Anura Priyadharshana Yapa, Lakshman Seneviratne, Chandrasiri Gajadeera, Mahindananda Aluthgamage, Dayasiri Jayasekara, Jayantha Samaraweera and Mavai S. Senathirajah.