Former Chairman and CEO of SriLankan had no airline experience whatsoever” -Eran

25 May 2016 12:00 am - 0     - {{hitsCtrl.values.hits}}

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The woeful plight of SriLankan  Airlines is a major issue under close scrutiny.  People also seem disappointed that action against those who are alleged to have been responsible for this  situation is dragging too long. Seeking an insight into this burning issue, the Dailymirror  interviewed Deputy Minister of Public Enterprise Development Eran  Wickramaratne. Following are the excerpts of the interview.

Q What is the role and the main concerns of the Public Enterprise Development Ministry? 
This ministry is a new one which was created to monitor many loss-making state-owned commercial enterprises in the country.  They have been found to be inefficient and the administration corrupt. So, the  government was of the view that this is not fair for the public to keep financing the waste, losses and  the corruption. The government wanting to put their   affairs into order are looking  at options. We are also studying examples of other countries such as Singapore and Malaysia. It is a big  portfolio so I am assisting the minister. 

 


Q  Let’s  talk about SriLankan Airlines which has now become a heavy burden to the  government. You had said that the cancelling of the deal with Emirates  caused the current financial situation of the national carrier. Was  that the only reason? 
The perspective is not like that. I talked about aviation history of  the country. After years and years, ‘Air Ceylon’ did not make progress  so we created ‘Air Lanka’ that also went  bankrupt.  Then, we created the ‘SriLankan’ that did not do well either. However, in a period of ten years in which Emirates  had a management contract with SriLankan airline, the losses  were minimised; the airline became profitable later. However, Emirates pulled out as a result of the way the then government treated them. It is unfair that top people flying high are paid by people walking on roads. There is no one reason why SriLankan is  making losses. Firstly,  the airline industry is  very tough industry; secondly  there is corruption; the Weliamuna report gave some  direction on the corruption. We have clearly overpaid for a  purchase of aircraft. These purchases have to be probed and criminal  investigation launched into them. According to the government  estimates, SriLankan has accumulated a loss of Rs.140 Bn (US $973 Mn) on top of a  massive liability of Rs.137 Bn (US $ 950 Mn) at March 31, 2016. The former regime made  so many appointments of unqualified and inexperienced people to posts of the airline that is part of very  specialised industry. The previous government had appointed two people without any airline experience whatsoever as Chairman  and CEO of SriLankan Airlines. 

 


Q  Currently, the government is looking for a  possible tie-up with another airline. Will anyone be willing to buy  this airline and shoulder this burden? 
 No.

 


Q   The Finance Minister has recently said the Treasury funding of the  airline would be continued only for another six months. If the  government cannot find a partner in another another airline during these six  months, are there any options being considered by the government? 
Logically, unless the government can find a partner to revamp the  airline after six months, it will have to be closed. If the  government wants to have the airline as a going concern, it will  not be a commercial decision but a political one. Countries make  political decisions on their airlines. If that is a political decision, we should find the best way to fly our flag. The best  way is to find a partner that will bring some equity into the  transactions and their management of  the airline just like Emirates.  

 


Q  Shouldn’t the SriLankan undergo restructuring before it is sold to another airline? 
I think both should be done simultaneously. While we are also looking  for a partner, Sri LankaAirlines should go ahead with their restructuring programme that can be discussed when a potential partner arrives. If we keep looking only for a partner  for three months or one year, we will be in the same  place. SriLankan has a  restructuring plan.

 


Q  If the carrier is to be restructured, will the current management of the carrier be changed? 
 There have already been some changes in its management. There is now a  new board of control that was appointed more than year ago. SriLankan now has a  commercial head and a CEO. These people appointed by the board have international experience.  Any future changes, will be  board decisions.  But, I think there will be no more changes in the  management because at the moment they are working on a [feasible] plan. 

 


Q  What is that plan? How will the revamping of the airline be done?
 Basically, our objective of the revamp is to bring in a partner,  to help with management and also   to bring in equity. We are representing  the shareholders of SriLankan and want to eliminate losses so  that tax payers do not have to fund the airline. Currently, the  National Savings Bank is in the process of  appointing their international financial adviser. That will be done in  the next few days. After that, the National  Savings Bank will issue a proposal at which stage any  international airline or investor will be able to express their interest  formally. 

 


QIn order to get the country out of its  economic problems, the government has decided to increase taxes. At  this rate, the government will be unpopular. What would you say about  this? 
 Theoretically we like if there  are no taxes. Government revenue is essential in order to provide  basic services to society. At our level of capital income, the  government revenue should be at least 20% of the GDP. Countries with  developed economies have 30-35% of the GDP. It is a myth that the  taxation is bad; but, taxes must be used properly. Sri Lankan  government revenue is very low. What did the former regime do? They gave tax concessions to the privileged and business classes by  disadvantaging the poor and the working class. The former government  kept the economy rolling by borrowing. While the  opposition is trying to highlight a single issue like taxation and the VAT,  they should have a look at the total picture. 

 


Q  Apart from taxation, are there any other options?
 It is actually a very important and valid question. Taxation is only  one side of it. Other sides are the fiscal policies such as costs and revenue. Further, the actual economy also must grow. When the former  government launched public expenditure programmes by deciding to build  an airport which has no aircraft, a port which has no ships and roads  which don’t give an economic return, the net benefits have not been  considered. There was no multiplier effect on the economy. The real  economy will go up, if the people manufacture more, export more, create  jobs and begin new industries.

 


Q  All of these problems  have been  caused by the reckless decisions taken by the former government. But it is now the people who have to shoulder the burden. Why is  the Yahapalana government putting more burdens on people? 
 It is the people who elect representatives and politicians. They take  good decisions and bad decisions. If they take good decisions, they benefit by it and if they make bad decisions, they will suffer its down sides.  While corruption needs to be  punished through the law, the   people too have a responsibility. If they want a better outcome,  they need to elect people who have integrity and  knowledge. 

 


Q Even after you have found all the  information regarding the current fate the SriLankan and what caused it,  why don’t we see any legal action being taken against those who were  responsible? Is there any pressure to stop the matter being investigated?
 I am ashamed to tell you that we have been slow in prosecuting those answerable based  on the Weliamuna report. We will follow up issues as highlighted on that report according to which the capital  commitments the SriLankan Airline had made amounted to Rs.2.3 billion in addition to its losses. The report included a high level of corruption, serious  financial crimes and suggestions of money laundering by the airline management. We will not sweep them under the carpet. 

 


Q After this government was elected, many allegations of corruption,  murder and misuse of state property were leveled against the Rajapaksas.  On the SriLankan issue, apparently it was former president Mahinda Rajapaksa  who was responsible [for its debacle]. When will the blame game stop? 
 There are two sides to it. It is actually not a blame. It is  justice that needs to be pursued on behalf of the people. It is the people who  are telling us to take action against those who have robbed the  country. There are hundreds of files on which work has been  completed but they have not been able to put into the legal prosecution frame because  there are too many things to be done in the judicial  system. I am calling for a special court to hear corruption and fraud so that we can speed up the process of all of these  cases. 

 


Q  This is about the  Economic and Technology Cooperation Agreement to be finalised with  India. Are there any possibilities of long-time negative impacts on trade and other sectors of Sri Lanka due to the ETCA? 
 It is a wide agreement. We are not selecting sectors to be  focused on the pact, neither are they. India is the next fast growing  economy and geographically we are next to it. We have two  options either we benefit from it or ignore it. Already many countries  have had free trade pacts with India. Sri Lanka has debated issues but have  not taken decisions missing out on almost a decade. If we had signed a trade agreement with India ten years ago, we  could have become the second country in the world next to Singapore. 

 


Q  Are you happy you are in politics? 
I never answer that question. If you observed  how I responded to the previous phone call; did I look happy? I never ask  myself whether I am happy or not. I came into politics to do what I think  right and I will quit at the right time.

 

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