16th  June, Volume 8, Issue 48

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SPOTLIGHT

Horse deal of the bribery sleuth

By Frederica Jansz

A special police investigation is to begin against an alleged fraud committed by former DIG, Logistics, Kingsley Wickremasuriya, who is at present a commissioner at the Commission to Investigate Allegations of Bribery and Corruption.

The police probe will center around the multi million rupee purchase of 24 thoroughbred horses from Australia in 1989. At the time, Wickremasuriya was DIG logistics and travelled to Melbourne together with CI Welimuni Siripala Mendis Abeysekera, who was the officer in charge of the police mounted division.

It has been alleged that of the 24 horses purchased for the Police department on a final approval given by Wickremasuriya, 13 were much older than the stipulated age. Also, that after the horses arrived in the country, three of the animals brought were not the ones selected and documented.

Some of these horses died soon after they arrived in the country, incurring a massive multi million-rupee loss to the government.

According to police specifications, the horses purchased should have all been less than five years of age. Though this was stipulated by the supplier after the animals arrived in the country, 13 of them were found to be older than five years, while one was as old as nine years.

Along with the horses 24 saddles were also purchased. It was later revealed that despite these saddles being certified as of Australian origin, when inspected were found to have been made in India and were of a very inferior quality.

Sleuths are trying to find out if the present bribery commissioner is guilty of having received a pay back for blindly buying 24 horses, 13 of which were too old whilst he also paid for 24 inferior quality saddles which had been made in India and not in Australia.

When contacted, Kingsley Wickremasuriya said, he could no longer remember how much had even been paid for each horse and saddle. "It was a long time ago - I cannot remember the details," he claimed.

The horses were bought from Bryan R. Muschialli, in Victoria, Australia and shipped to Sri Lanka on January 21, 1989.

After the animals arrived in Colombo, it was found that 13 were over five years old. A team of veterinary surgeons led by the Head of the Department of Veterinary Clinical Studies at the University of Peradeniya, Dr. V. Y. Kuruwita, upon examining the 24 horses imported for the police mounted division found a difference in age as against that given by the supplier. Dr. Kuruwita was assisted by Dr. L. N. A. de Silva and Dr. I. De Silva who were also members of the faculty.

The local doctors concluded that most of the animals were very much above the age as that indicated by Muschialli, who had indicated in writing all the animals were below five years of age.

One horse was as old as nine years while seven horses were found to be older than seven years. The vets arrived at this conclusion after studying the animals' dentition.

A horse can be used for police duties until it is approximately 15 years of age, after which its usefulness would depend on the animal's physical condition. It was also found that three other horses had been substituted from an original three that were selected among the 24.

After the controversy broke, Chief Inspector Abeysekera who had accompanied DIG Kingsley Wickremasuriya to Australia said in a statement to police that in respect of the 24 horses selected to be brought to Sri Lanka, Muschialli had provided a veterinary certificate to the effect that all the animals were below five years of age. Abeyesekra has stated that he has had no knowledge of veterinary science and therefore was in no position to judge the age of a horse by looking at it.

In his statement, Abeysekera who later retired from police service as an ASP, said, "I left to Melbourne, Australia along with Kingsley Wickrem- asuriya, DIG, logistics, in order to purchase 24 horses for the Police Department. About 60 horses were examined at the farm of the principle agent in Melbourne Brian R. Muschialli and out of them 24 geldings were selected to be brought to Sri Lanka for the Police Department. The selection was done within a period of three to four days. In respect of the 24 horses selected, the principle agent produced a veterinary certificate to the effect that all the animals were below five years of age. Therefore, I took the veterinary certificate for granted and believed that the animals were below five years of age. I have no knowledge of veterinary science and am not in a position to judge the age of the horse by looking at the animal. This is all."

DIG Wickremasuriya appears to have suffered the same problem and took at face value the Australian certificate and the horses. Wickremasuriya when asked to submit a report on the matter to the then IGP, he (Wickremasuriya) wrote on February 10, 1989, that, CI Abeysekera should be held responsible for not checking that the transportation of the horses had not been done correctly.

Wickremasuriya further argues that three of the horses selected were substituted due to various reasons. One being, that one of the horses chosen had received an injury before its departure and had to be substituted while another was rejected for similar reasons.

With regard to the saddles he says since there was no sample beforehand to compare with, he accepted Muschialli's claim that they were of Australian origin.

He adds for good measure that "the need to have a specialised officer in the mounted division who is  thorough in the knowledge of horses and allied matters concerning horses, cannot be over-emphasised. We may have to train and build such a creed at least in the future if we are to handle this subject with some confidence".

Why on earth the Police Department chose DIG Wickremasuriya and C. I.  Abeysekera to travel to Australia to select these horses and saddles given that neither had any knowledge of horses or saddles is the all important question.

Not having a clue about what he was about, Wickremasuriya yet, was bold enough, or foolish perhaps, to give a certificate of inspection on January 17, 1989, to the Australia and New Zealand Banking Group Ltd., stating that the horses and saddles inspected by himself and C. I.  Abeysekera were in perfect accordance with the specifications.

The Criminal Investigations Department has begun a probe into the matter and is awaiting the green light from Interior Minister John Amaratunga, to initiate a full-scale inquiry considering the fact, Wickremasuriya is today one of the three commissioners of the Permanent Commission Investigating Allegations of Bribery and Corruption.


SriLankan reduced to shame amidst blatant lies

 By Frederica Jansz

Four years into what now can be termed as being a disastrous partnership for SriLankan Airlines, Emirates Airlines has compounded some of the worst fears critics voiced in 1998 with regard to this marriage between the two airlines.

Today, The Sunday Leader can prove how Emirates Airlines has fallen far short of their pledges to make SriLankan Airlines one of the foremost carriers of the region.   

The implementation strategy of the business plan Emirates submitted promised that under a carefully structured business management programme, the operating income of SriLankan Airlines would be taken “from a loss to a positive result by year three of the plan.” 

Instead of a profit, three years after the partnership, SriLankan Airlines has had to declare a 6,000 million rupee loss on its core operation which is air transportation.

Emirates further pledged to “aim to have the airline profitable on a stand alone basis by year three.  If we are successful in achieving this target, we will expand the airline’s operations over and above the business plan.”

Downgraded

Exactly three years later, the operations of SriLankan Airlines has not been expanded but downgraded.

Another promise now broken is where Emirates vowed to “implement an operating programme, which centres on Colombo as a hub, thereby maximising traffic flows.”

What indeed Emirates Airlines has done is to create Male and Dubai as hubs, completely overshadowing Colombo.

The Middle Eastern airline promoted the sale and lease of six A330 aircraft which they said, “will be purchased under the favourable launch customer terms that Emirates achieved for its A330s. A sale and lease back will then be put in place by an operating lessor.” (See box for details on the purchase of the A330s)

In fact, Chief Director, Emirates Airlines, Tim Clark appears to have uttered a blatant lie when he on August 13, 1997, wrote to former Director General, PERC, Mano Tittewela, and stated that Emirates Airlines had negotiated the purchase of six new A330 aircraft for SriLankan Airlines at a flyaway price of only US $ 83,151,360. 

What is puzzling, is why SriLankan Airlines later paid Airbus Industrie over 97 million US dollars for each aircraft. None of the local directors of SriLankan Airlines can explain why.

Some of the other pledges made by Emirates and not honoured are: “to introduce employee incentive/bonus schemes; introduce performance and productivity measures to improve business efficiencies and practices; establish a full blown leisure business unit to promote and develop inbound tourism; to enhance the already good cabin service standards through training at Emirates Training Centre in Dubai — not a single cabin crew member has ever been sent to Dubai for further training by Emirates since the take over.

The UAE based airline also ignored a promise to operate flight operations procedures  that would be similar to Emirates, allowing pilot compatibility between both airline fleets. 

SriLankan Airlines in fact had to pay far in excess for pilot crew simulator training which was carried out for 42 crew members in Dubai at a colossal expense to the local carrier. 

The cash was collected by Emirates Airlines at the rate of US $ 119,048 per training session, which involved two pilots.  SriLankan paid Emirates Airlines US$ 5 million for this training exercise which could have been conducted for at least half the cost in Singapore.

Emirates also lied when it promised to harmonise all commercial strategies including distribution with SriLankan Airlines, particularly in the European and Pacific rim markets. They promised that the “two airlines would thus complement each other’s activities in all geographical spheres of operations” and “where possible the two airlines will integrate their commercial schedule programmes to maximise market access and economic benefits.”

Instead, on the orders of Peter Hill and Tim Clark, SriLankan Airlines was forced to suspend their flights to Frankfurt and Rome while Emirates increased their frequencies to these destinations.

Their promise to upgrade the maintenance and technical facilities of SriLankan Airlines is also forgotten.  In fact, senior engineers at SriLankan Airlines confided that the aircraft being flown at present by SriLankan Airlines are not keeping to safety standards as laid down by the manuals authorised by the director general of civil aviation. “Even though they are certified as “release to service” by the engineers prior to departure, the malpractices in the Department of Engineering they said, “are of a serious nature.”

The Sunday Leader reliably learns that there are many SriLankan Airlines flights leaving the ground today, after modifications of a mandatory nature have been done, based on the instructions issued by unauthorised personnel in the Engineering Department. 

This is the dangerous and hazardous situation Emirates Airlines has placed the national carrier in today, apart from pillaging its financial resources for personal gain.

This is what Clark wrote in January 1998, three months ahead of the formal signing of a management agreement between SriLankan Airlines and Emirates Airlines: 

“We plan a great future for AirLanka as one of the foremost carriers of the region.  Its style and marketing muscle will make it a formidable force in its principal markets and we are confident that the government and people of Sri Lanka will be justifiably proud of their national carrier.” 

Clark penned these few lines for the ‘Foreword’ to the  ‘Business Plan’ initiated by Emirates Airlines for SriLankan Airlines (then called AirLanka).

Broken promises

Clark promised more.  He further wrote that the business plan for SriLankan Airlines sets out the way forward for the airline in the period 1998/99 to 2007/08.  The plan, he said “is both profitable and cash positive.” SriLankan Airlines, he vowed would be turned into “a high quality carrier with expanding international markets and will draw many benefits and synergies from the Emirates Group.”

He also pledged in black and white, that the business plan by Emirates would “provide sufficient cash to meet the costs of expansion without resorting to funding from principal shareholders. Clearly this is achievable and we would expect to expand upon the plan, most probably in year three, subject to improved aeropolitical entitlements and market access.”

“We plan a great future for AirLanka as one of the foremost carriers of the region,” he boasted, promising, “its style and muscle will make it a formidable force in its principal markets, and we are confident that the government and people of Sri Lanka will be justifiably proud of their national carrier.”

Brave words — which Clark doubtless has to now chew, as the national carrier of Sri Lanka has wilted and waned four years thence, under the management of Emirates Airlines.

The situation is so serious the government of Sri Lanka has been forced to appoint a special committee to study in detail the entire management contract between SriLankan Airlines and Emirates Airlines.

Having claimed a Rs. 6,000 million  air transportation loss, not once but twice, the national carrier has been reduced to shame. It is certainly no longer the pride of the government of Sri Lanka and her people. 

Dissatisfied and annoyed with the manner in which Emirates Airlines has performed four years into its partnership with SriLankan Airlines, Premier Ranil Wickremesinghe had decided to sign an open skies policy with both India and the United States of America.

Before concluding a three-day official visit to India last week, Wickremesinghe and the Indian government agreed to adopt an open skies policy regarding air travel service companies of Sri Lanka and India.

In addition, both India and Sri Lanka have agreed to launch a regional air service as the second national carrier of both countries.

Foreign Minister Tyronne Fernando has also been galvanised into action. Fernando last Tuesday, June 11, signed a similar agreement in Washington with US Secretary of State Colin Powell. The United States and Sri Lanka’s ‘open skies’ aviation agreement will boost air links and cooperation in air traffic security between the two countries.

Clark’s bold promises have long fallen by the wayside — four years into it’s business plan, the rewards SriLankan Airlines envisaged as a result of the partnership with Emirates Airlines proved to be gifts borne by a Trojan horse.

Clark may argue that the devastating terrorist attack on the Katunayake International Airport last year was a contributory factor to the steady decline of SriLankan Airlines. This however cannot be tolerated as an excuse. SriLankan for the financial year 1999/2000 as well declared a Rs. 6 billion loss.

The continuing deficit at SriLankan pushed its new Chairman Daya Pelpola into writing to Peter Hill, chosen by Emirates Airlines to be the chief executive officer of SriLankan.

Controversial transactions

Soon after taking office this year, Pelpola, sought a detailed account of expenditure the foreign management has incurred since taking over the business administration of the national carrier in 1998.

In a strongly worded letter to Hill, Pelpola stated that when analysing the past performance of the airline and its projected financial results it is clear the forecasted business plan of the Emirates management is not making a contribution to the system.

Since April 1, 1998, when the agreement with Emirates Airlines was signed, the new management has made abrupt and controversial decisions in managing SriLankan Airlines.  Uncontested since they took office in 1998, The foreign led management have strutted, not bothering to be held accountable for some of the questionable management and business administration policies they forced SriLankan Airlines to adopt.

Drawing fantastic monthly remuneration packages and enjoying other luxurious perks at the expense of the airline and the government of Sri Lanka, the foreign management of SriLankan Airlines has feasted in the name of uplifting standards at SriLankan.

Almost four years later, the airline has little to show for its decision to privatise and leave itself in the hands of personnel employed by Emirates Airlines.

Despite a stunning budget deficit, the foreign management at SriLankan Airlines continues to wine and dine. Barely a week after the LTTE led a devastating attack on Katunayake completely destroying four Airbus aircraft and damaging another three, Hill, was seen wining and dining at the JAIC Hilton together with a party of friends and other senior management personnel of SriLankan Airlines.

Subsequently, the management closed down operations to certain key destinations.  Frankfurt, Berlin, Stockholm, Rome, Dhaka and Karachi were lucrative flying destinations for UL.  No reasons were given for the sudden withdrawals. If any evaluation was done before the closure it has not been made known to the board of directors at SriLankan which include government appointees.

More questions

The foreign management introduced new destinations UL would fly to. These were Beirut, Berlin, Dhaka, Stockholm and Sydney. Last year, the Emirates led management took a decision to reduce some of these same destinations SriLankan was operating to and from. They were Beirut, Berlin, Dhaka, Stockholm, Sydney, Frankfurt, Rome and Milan.

Pelpola has demanded a detailed explanation from Hill to find out if there was a market to these destinations in 1999, which warranted the huge expansion of the fleet. If so, what has happened to these markets in the year 2001/2002 is puzzling. 

The new chairman has ordered that the Emirates management furnish copies of feasibility studies done when deciding to operate to the above mentioned destinations. Pelpola has also asked for names of senior officers at SriLankan Airlines who were responsible for this decision.

He adds that Hill must also justify the closure of the above destinations supported by evaluations done at that stage with details of the officers who are responsible for this decision.

Pelpola points out that when preparing the new plan for 2001/02 - 2003/04, the management was aware that the peace initiative was in place. Why, Pelpola has asked, was this scenario not taken into account?

What he points out is the strategy of SriLankan Airlines in operating flights via Male with the improving environment in Sri Lanka due to the peace process?               

He has further queried what steps have been taken by Emirates to help UL capitalise on the present demand to Europe?  Whether SriLankan has achieved the revenue targets during the last two years is also not known.

All this and more to date, has not been answered by Hill.  Instead, Emirates Airlines have steadfastly continued to ignore Pelpola’s queries leaving it to Sheik Ahamed Bin Saeed Al-Maktoum to sweet talk a high level government delegation who are attempting to re-negotiate the disastrous agreement which lends Emirates Airlines complete management control for 10 years until April 1, 2008.

Kept in the dark

Another A340 aircraft leased on a long term basis to SriLankan Airlines which arrived in the country on July 13, 1999 was preceded by controversy. It was the last straw that broke the back of ex-Chairman, SriLankan, Harry Jayawardena who resigned with regard to this transaction on the basis that he had not been given enough time to consider the deal before it was negotiated. 

Despite a claim by Emirates Airlines at the time that this commitment was fully supported by the board of SriLankan Airlines, there were rumblings from the board that the local directors were kept in the dark regarding the leasing of this aircraft. 

S. K. Wickremasinghe, the new chairman of SriLankan at the time said he knew little. Wickremasinghe confessed he did not even know what the new logo would look like. He however asserted that all new purchases of aircraft had received full board approval.

The aircraft was flown from Paris to Colombo on Tuesday, July 13, 1999 sporting a new logo. This was despite the fact that the late Minister of Aviation, Dharmasiri Senanayake had mentioned in parliament when a no-confidence motion on the privatisation of SriLankan took place, that there would be no change of the existing logo which depicted a peacock.

Irregularities in aircraft purchases

SriLankan Airlines in 1998 received special cabinet approval to ignore government tender procedure and release over 600 million US dollars to Airbus Industrie for the purchase of six new A330-200 aircraft. This approval was lent by President Chandrika Kumaratunga who ordered the then aviation minister the late Dharmasiri Senanayake to also place his signature on the relevant cabinet memorandum.

According to the Financial Manual at SriLankan Airlines, the national carrier is bound to follow the purchases procedure as laid down by SriLankan. This requires them to subject any purchase of Rs. 750,000 and above to a tender board.

This procedure requires in the event of refleeting of aircraft, the appointment of a refleeting committee (this was done in the earlier instance when aircraft were purchased by the local management); to study the corporate plan in terms of the forecast made for route development, sector traffic and priority services. Once the requirement is established, the number of aircraft to be purchased must be decided against the requirements. It is only after this that bids are called for.

According to this Financial Manual, bids must be called in terms of aircraft and financing packaging. A technical evaluation committee must be appointed to evaluate the bids.  Thereafter, the tender board should make a recommendation to the cabinet. 

In this instance, SriLankan Airlines did nothing. The entire transaction was handled by the Public Enterprises Reform Commission (PERC) which submitted a package deal to the cabinet for approval which again received a carte blanche stamp of authority from no lesser personage than President Chandrika Kumaratunga.

On this occasion, no bids were called for and SriLankan Airlines only made the remittance for Airbus — US $ 29 million in one single transfer.  This particular remittance was signed by Presidential Secretary Kusumsiri Balapatabendi, who was  also a director of SriLankan Airlines at the time.

 Balapatabendi signed after the then Chairman, Harry Jayawardena refused to do so. Once Jayawardene found this was a disastrous deal for the country, he had indicated his displeasure at placing his signature to such a ‘deal.’

Emirates Airlines are on record as having said that a “discount was available on this purchase” and that this discount would be obtained by Emirates and that they would give credit to SriLankan Airlines against the value of this discount.

This is contrary to all accepted practices as if at all, the discount should have been given directly to the purchaser (which was SriLankan Airlines in this instance) vis-a-vis Airbus Industrie. The discount needless to say should not have been made available to an intermediary.

PERC meanwhile, had absolutely no legal mandate, no expertise, no competence and above all no responsibility to handle this purchase. This institution has no authority whatsoever to play a role in the purchase and procurement of aircraft.

Mano Tittewela and his team at PERC did not have the sense to evaluate previous purchases made by SriLankan Airlines for A340-300 Airbus aircraft in 1994 and 1995. 

If he had done so, Tittewela would have found that the credit discounts Emirates Airlines boasted they secured for SriLankan as a result of being ‘launch clientele’ of Airbus Industrie was nothing more than a shallow boast. 

In fact, when SriLankan Airlines purchased aircraft from Airbus in 1994 and 1995 the credit discounts the airline secured were double of those finalised by Emirates Airlines in 1998.

The credit discount on the aircraft SriLankan secured in 1994/95 was 16 million US dollars against the aircraft for a list price of US $ 79,220,000.00.

In stark contrast, when Emirates Airlines handled the purchase together with PERC in 1998, the maximum credit discount they secured for the A330-200 aircraft was US $ 13,102,000.00 against a list price of US $ 83,315,000.00. 

Inexperienced and incompetent in this field, PERC did not or chose not to recognise this glaring difference in credit discount ratings whereby SriLankan Airlines had efficiently secured a much higher discount than Emirates Airlines, a mere four years previously from the same supplier.

 

 

 

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