Rejected invoices: SriLankan incurs US$1.1 Mn loss

SriLankan has incurred a loss of US$1.1 million in 2014, 2015 and 2016 because of the delay in submitting 15 rejected invoices by SriLankan to Lufthansa Technik AG, the Company which takes care of all aspects of the component supplies, the PCoI into irregularities at SriLankan, SriLankan Catering and Mihin Lanka was told today.

Five witnesses from several divisions of SriLankan in their evidence said SriLankan had paid US$1.1 million to Lufthansa Technik AG for 15 rejected invoices despite the fact that the Engineering Division of SriLankan had rejected them.

Sri Lankan's Senior Manager, Revenue Accounting Upekha Abeysekara informed the Commission that SriLankan had entered into component support with Lufthansa in 2012.

She spoke of how SriLankan had continued transactions with Lufthansa through IATA Clearing House, a company which provides billing and settlement services in multiple currencies for the air transport industry.

“So when we get something from Lufthansa, IATA makes the initial payment and SriLankan pays IATA within seven days. If there is a rejection of the component and we want our money back we have to start that process within six months,” she said.

However, she informed the Commission the SriLankan has not been able to re-claim US$1.1 million from the 15 rejected invoices because the engineering division had not taken up the matter within six months of the rejection.

Looking at a report of the internal audit of SriLankan, the PCoI discovered that the Component Management Section (CMS) of SriLankan had mentioned that it had rejected the 15 invoices to get a 100% waived off on those components.

CMS Head Sajeewan Kuruppu informed the Commission that they were in the process of negotiating with Lufthansa to ensure a 100% payback on the US$1.1 million.

However, leading the evidence, Senior State Counsel Fazly Razik pointed out that SriLankan operates from borrowed money and even if SriLankan recovered this amount, it will not be able to recover the interest the airline pays to its lenders.(Yoshitha Perera)