The Treasury had pumped a sum of Rs. 14.5 billion from 2007 to 2014 into Mihin Lanka, the local budget carrier, to ensure that it was maintained despite the continuous losses it had been making, it was revealed at The Presidential Commission to inquire into allegations of large scale frauds and malpractices in SriLankan Airlines, SriLankan Catering Ltd. and Mihin Lanka (Pvt) Ltd, last week.
In the meantime it was also revealed that Mihin Air was primarily set up without Cabinet approval. The airline had commenced operations on October 27,2006 whereas Cabinet approval was granted on December 20, 2006.
Mihin Lanka which was considered a pet project of former President Mahinda Rajapaksa had incurred a loss of Rs. 17 billion up to the time of its closure in 2016 was revealed in Parliament a few years ago.
The capital infusion of Rs. 14.5 billion had included a Rs. 300 million loan to obtain an A320 aircraft by the SriLankan Airline on a wet lease basis, from a separate fund call, ‘Shipping Development Fund’ which was operated under the Ministry of Ports and Aviation then.
The witness Champa Balasuriya, the Director of the Department of Public Enterprise Development (PED) at the Treasury, was unable to clarify the procedure through which the loan had been obtained.
It was also revealed that the Treasury had not paid a single rupee as the interest due, creating a Rs. 37 million loss to the Shipping Development Fund which apparently had no connection with the airline industry of the country.
The Auditor General also had highlighted this as a loss to the Shipping Development Fund.
“The loss to the Treasury was a loss to the public. Am I right?”Senior State Councilor Sajith Bandara questioned the witness to which she replied in the affirmative.
This loan was taken on a guarantee to pay it back in two months whereas it had been fully paid after 16 months.
Retired Supreme Court Judge Anil Gunarathna, Court of Appeal Judge Gamini Rohan Amarasekara and Retired High Court Judge Piyasena Ranasinghe chaired the Commission.