As global events, especially in the United States and the United Kingdom, continued to grab headlines the past week, reminding us Sri Lankans that we are not alone when it comes to own goals and political shenanigans, Prime Minister Ranil Wickremesinghe returned to Colombo after receiving an all-clear over some nagging health concerns, ready to take on all-comers with some renewed vigour.
In the United States, President Donald Trump was calling the investigation launched by the Special Prosecutor, Thomas Muller, appointed under his own watch, to investigate allegation of collusion between Trump´s campaign and Russia, a “witch hunt” as information leaked out that Trump himself was now under investigation.
Interestingly enough, the term “witch hunt” originates from the infamous Salem witch trials began during the spring of 1692, after a group of young girls in Salem Village, Massachusetts, now a northern state of the US, claimed to be possessed by the devil and accused several local women of witchcraft. According to History.Com, “As a wave of hysteria spread throughout colonial Massachusetts, a special court convened in Salem to hear the cases; the first convicted witch, Bridget Bishop, was hanged that June.”
In the United Kingdom, Prime Minister Theresa May called for an early election, expecting to boost her majority in the parliament, “to strengthen her hand in the negotiations with the European Union on Britain leaving the Union, or Brexit for short”, only to find her hand weakened substantially, and having to go for a coalition government to keep herself floating.
Meanwhile in Colombo, Prime Minister Wickremesinghe had to contend himself with a minor kerfuffle at the cabinet meeting held on Tuesday, June 13.
Minister of Public Enterprise Development and General Secretary of the United National Party, Kabir Hashim reportedly moved cabinet colleagues to complain against the Sri Lankan Airlines board amidst delicate negotiations and preliminary contacts being made with potential investors in a renewed bid to seek new equity to rescue the airline.
According to some reports, Prime Minister had indicated he might move to reconstitute the board in the face of increasing pressure from several cabinet colleagues. The pressure is despite the airline reporting declining losses under the current board.
According to a report released by the Airline last week, losses declined progressively from approximately Rs. 31 billion in 2014 to Rs. 16 billion in 2015 and nearly halved again to Rs. nine billion in 2016. However, due to a fuel price increase and the much-needed upgrade of the airport runway at BIA, losses increased in the first half of 2017. Some of these losses will be recuperated in the second half of this year. One off write-offs necessitated by aircrafts being leased by the former regime at exorbitant and unviable rates are also causing balance sheet to run into red.
“Contrary to inaccurate reports in the press, the management of Sri Lankan Airlines would like to point out that since the Unity Government was formed, the airline’s losses have been dramatically reduced.
“The fuel price reduction of 2015 saw a drop in ticket prices that did not recover when fuel increased again. The effect of this, coupled with the acceptance of several new (and expensive) aircraft, a depreciation of the LKR and other currencies against the USD (the majority of airline costs are in USD) saw a weakening of the balance sheet.
“The runway re-surfacing project at Colombo Airport, which was necessary, also forced the national carrier to cancel over 600 flights, equivalent to two entire weeks of scheduled services, in the first three months of 2017. These factors combined to worsen the performance of what could have been a successful financial year in 2016/17.
“The airline continues to pay a heavy price for the extremely high lease rental agreements entered into by the previous government. The cost of terminating the leases on four A350-900 aircraft that were grossly overpriced and completely unsuitable for the national carrier imposed a further burden on the airline. The airline is now undergoing a modest recovery in revenues and is about to launch significant regional expansion. Three new destinations in India, direct flights to Hong Kong &Bangkok, and a long awaited non-stop service to Australia are all planned in the coming months.
“Further restructuring is required in order to reduce the cost base and make the company competitive in this extremely challenging market,” a statement issued by the airline said last week.
Unlike the board under the previous regime, where its Chairman was the brother-in-law of then President, Mahinda Rajapaksha, the current board constitutes of management and accounting professionals, with:
* Chairman Ajith Dias having over 40 years of experience at senior level management positions in the private sector, including being the Co-founder of the Brandix group, amongst the top three apparel exporters of Sri Lanka and today a conglomerate in its own right;
* Rakitha Jayewardene, a former CEO of Sri Lankan Airlines and its first General Manager when Sri Lankan Airlines was created as Air Lanka under a management agreement with Singapore Airlines in the early 1980’s. Rakitha subsequently became a inflight retail business specialist with consultanciesto global airlines including British Airways, after having developed the largest inflight retail and supply company in the world;
* Mahinda Padmasiri Haradasa is a Senior Partner of Varners, one of Sri Lanka´s most respected firm of Lawyers, Notaries & Agents for Trade Marks and Patents. Mr Haradasa is a Barrister of High Court of Australia;
* Rajan Joseph M. S. Britto, the Deputy Chairman and Managing Director of Aitken Spence, one of Sri Lanka´s top five blue chip companies, an accountant with over 40 years of experience at Director level of multi-national companies;
* R. Chanaka De Silva, with over 40 years management experience of which more than 30 years has been at Director/Chairman level. He served as the Chairman of Kelani Tyres PLC since 1992 and hasserved as the Chairman of Sri Lanka Insurance Corporation, Trans Asia Hotel, Club Robinson and Union Bank of Colombo Ltd;
* Niranjan Deva Aditya, a Member of the European Parliament representing South East England since 1999. He was previously a Member of Parliament (MP) in the British House of Commons from 1992 to 1997, representing the constituency of Brentford and Isleworth, and holds numerous directorships including Browns Beach Hotels Plc., MTD Walkers Plc., Melstacorp Ltd., Aitken Spence Hotel Holdings Plc., The Kingsbury Plc., Aitken Spence Plc., Distilleries Co. of Sri Lanka Plc., Aitken Spence Hotel Holdings Plc. (Sierra Leone), Serene Residencies Pvt Ltd. in addition to SriLankan Airlines Ltd. Deva-Aditya was previously employed as President by Europe India Chamber of Commerce;
* Harenda K. Balapatabendi, who serves as the Chairman and Chief Executive Officer of Opel Group, an accomplished entrepreneur with over 20 years experience ranging from security printing, franchise banking to luxury home development (Australia). He was instrumental in introducing Nike and Reebok brands to Sri Lanka. Balapatabendi also served as Executive Director at Ceylon Shipping Lines;
* Colonel Sunil Peiris, credited with creating the Sri Lanka Army Commandos and gaining invaluable management experience at top level private sector companies since his discharge from the Army after 22 years of distinguished service in the late 1980´s. Col. Peiris also serves as Managing Director Amalgamated Graphite (Private) Limited and has served as Chairman of Plastipak Limited, Australia and Managing Director of Nippon Nature Foams (Private) Limited. He Joined Ceylon Tobacco Company Limited after his discharge from the Army and was Group Risk & Safety Manager and General Manager C.T.C Trading Company Limited. He served as Director Sales & Marketing of Richard Pieris Exports Limited and Director Richard Pieris Distributors and Richard Pieris, Keells Plantations Limited.
Col. Peiris is holding the pivotal position of Director in charge of Human Resources Management at Sri Lankan. Col. Peiris has a reputation of being a tough, no-nonsense manager and is reportedly cleaning out the Augean stables of Sri Lankan Airlines methodically and with care.
The criticism levelled against the board by the Prime Minister’s cabinet colleagues however is that the board has been slow to take action against airline staff identified by the Weliamuna report as causing losses and damages to the airline during the previous regime while taking tough action against others who were whistle-blowers during that period.
The friction between Minister Hashim and the Sri Lankan Airways Board is said to be due mainly to a difference of opinion regarding senior level appointments in the airline.
This is not the first such disagreements between professional managers pressed into service by the government of Prime Minister Wickremesinghe and the line ministry in charge of the state owned enterprises slated to be privatised following the UNP election manifesto of August 2015.
Last year, Professor Kennedy De Gaulle Gunawardene, appointed as Chairman of the Janatha Estates Development Board (JEDB) by Minister Hashim himself, resigned under controversial circumstances following a management disagreement. Professor Kennedy was the Professor of Accounting and Management at the University of Sri Jayewardenepura, and is considered one of the foremost authorities in management and accounting standards in Sri Lanka.
After less than a year of heading the JEDB and putting into place a scheme to utilise a large portion of the currently unproductive land belonging to the JEDB for productive purposes in conjunction with the Export Development Board and the Ministry of Primary Industries, Professor Kennedy was asked to resign.
Speaking of Augean stables, a correspondent writing to our sister newspaper, the Daily News, on August 12, 2015 under the headline of “Full Story Of Treasury Bonds Issue: Who Scammed Whom?” wrote; “The Augean stables that Mr Wickremesinghe inherited on Jan 09th of this year are not just messy, smelly, intricate and hides not one but many monsters, it needs a herculean effort to clean,” referring to the role of Central Bank insiders and their incestuous relationships with Primary dealers during the previous regime.
Last week, a crucial piece of evidence came to light when the Presidential Commission that is investigating the
issue heard a tape containing a conversation made between Steffi Fernando, an officer attached to the Public Debt Department of the Central Bank and the Chief Dealer of the Bank of Ceylon Treasury Division, J.K. Dharmapala on the afternoon of the Bond auction where Perpetual Treasuries, bided through the Bank of Ceylon for over 10 billion rupees worth of Treasury bills at approximately 12.5% strike price.
After a general chit-chat where both Ms Fernando and Mr Dharmapala expresses their surprise (in somewhat strong terms) of the hike in the interest rate which resulted from the auction, Mr Dharmapala drops the bombshell, a piece of information, that was known already to a select group of people, but for reasons better known to them, was never divulged to any of the other bodies who investigated the so called “bond scam¨, including the COPE committee.
According to the content of the tape, Dharmapala claims that an officer of the Central Bank, walked into the Bank of Ceylon, the day before the auction, and asked the Bank´s treasury division to bid on his behalf for Rs 750,000 worth of treasury bills at exactly the strike price of 12.5% as “it will open at that price”.
Clearly, as the correspondent to the Daily News averred in his article on the 12th of August 2015, “the market players were fully aware of two pieces of confidential information before the bidding started on the 27th – that is that the government needed more money and that the monetary board had expressed a sentiment that the 30 year bond issue will be used to re-profile the debt profile and extend the yield-curve” and were able to come to a reasonable guess as to where the strike price will be.
Another piece of crucial information divulged by Dharmapala to the Presidential Commission was that again a select group of Bank of Ceylon officials, who had access to the government account maintained at the Bank of Ceylon by the Deputy Secretary to the Treasury, had knowledge about the amount of money the government needed at every treasury auction and that the Bank itself bided on these auctions accordingly, using what amounts to be insider information.
It is now for the Commission to decide as to why some of this crucial information was withheld from previous investigations by the Bank of Ceylon.
Elsewhere in today´s newspaper, we report on the developments concerning the Chief Minister of the Northern Province, Justice C.V.Wigneswaran. As far as the centre is concerned, Wigneswaran is someone they can speak to and is considered a moderate amongst extremists.
While there is a possibility of exacerbating a split within the Tamil National Alliance because of the spat between Justice Wigneswaran and his colleagues, the centre should attempt to mediate between the parties to prevent such a split and to loose an avenue the centre can deal with in the person of the chief minister.
Meanwhile, in Colombo, time appears to have stuck in one place. Garbage is mounting while traffic is becoming unbearable. Unless the government accelerates its development plans and executes them efficiently and in a timely fashion, no investor will come to Sri Lanka.