SriLankan airbus scam is a crime of the highest order
They decided to do the deals and they worked out all the details and the fraud and then they wanted to justify
The Treasury was also pushing through the transaction quickly rather than questioning it
The people to be credited for uncovering this are the brave Government servants, professionals, and the CID
I myself immediately came to the conclusion that there was corruption
So the SFO took the responsibility for Malaysia, Sri Lanka, Taiwan, Indonesia and Ghana
No credit goes to the present government, Present President or Rajapaksas at all
UNP parliamentarian and former State Minister of Finance Eran Wickramaratne, who has repeatedly voiced against the colossal losses the state-run SriLankan Airlines was made to suffer, specially after Mahinda Rajapaksa chased away Emirates Airlines in 2008 when he was president, says that the fraudulent airbus deal that came to light with the British Court judgement is one of the biggest scams in the history of Sri Lanka. The MP says that the national carrier, which made a profit of 4.4 billion rupees in 2008, has now become a national burden incurring losses amounting to hundreds of billions of rupees. This is mainly because of bad political decision making, corruption and frauds, that have been proved by an international court. Wickramaratne revealed that the bribes paid in connection with the 2013 airbus deal totalled over USD 16 million.
Following are excerpts of an interview done with Wickremeratne.
Q : When your Government assumed power in 2015 did you have any idea of what had happened at Sri Lankan airlines?
When the Government changed in 2015, the focus was to look at what had happened in the past. That’s why a committee headed by attorney, J. C. Weliamuna was appointed. This committee including Mr. Palihakkara, a Charted accountant, Chairman of the Finance Commission, Mr. Abeyagunawardena, an accounting expert and Mr. Bandara, a corporate lawyer were appointed in February 2015. By March 2015, they submitted their report and they had inquired into several irregularities that had taken place during the procurement and leasing out of aircraft. They released the final report on March 30, 2015 to then Minister of Aviation, Arjuna Ranatunga.
So we got this Weliamuna Report. White- collar crimes and financial crimes are very complicated.
In a murder you can do a scientific test or a DNA test or so forth and quickly establish some evidence. But in a white collar crime it is more complicated
Q : But there were allegations by the then opposition regarding the amount of money spent on this investigation?
Yes there was a big hue and cry that the report had cost Rs. four million. Actually those members were working 14 hours a day for six weeks continuously and had worked from February 16; the day they were appointed. Mr. Weliamuna was falsely accused at that time and I think we need to clear that record. When professionals put themselves forward to do things like this we need to defend the honour and integrity of such professionals. I want to clear that particularly because I can remember that it was done in bad taste.
Q : On January 2019 you were appointed as the chairman of the Restructuring committee of Sri Lankan Airlines. Did you have any idea of what had happened at the airline?
When I was appointed in January 2019 the job given to me was really to look at the airline’s state and if I could to arrest the losses in the airline and make it more financially viable and reduce the burden on the tax payer. That was the responsibility I was given. It was only later that I was appointed as the Minister in charge of the airline.
Q : There are allegations that, despite all these investigations and committees, the Yahapalanaya Government failed to bring the culprits who committed the massive scam in the airline, to justice?
So we got this Weliamuna Report. White- collar crimes and financial crimes are very complicated and they take a much longer time than investigating a murder.
The FCID was also brought in under the direct supervision of Mr. Thusith Mudalige of the AG’s Department. This was the most complex criminal investigation ever conducted in Sri Lanka because it involved eight jurisdictions
In a murder you can do a scientific test or a DNA test or so forth and quickly establish some evidence. But in a white collar crime it is more complicated. You know that something has been robbed, but to figure out how it was robbed and who robbed it takes a bit of time. But if you have a bit of a financial background, because when I looked at this in 2015 and 2016, I myself immediately came to the conclusion that there was corruption. In fact I had a press conference and went public on October 21, 2016 where I revealed that eight A350-900 airbuses were taken on lease.
Actually in the original transaction there were 10 aircraft plus 4. In the early stage we also didn’t have all the information, but with all the information we possessed we were able to speak out. Basically one thing that was very obvious was that the combination between the strategy and the aircraft and the fleet to route didn’t look like fitting to start with. But I will leave the judgment to the experts. From a financial perspective the over payment basically was very evident at that time.
Even at that time people didn’t understand it; just as they did not understand the bond scam.
So this was spoken of very early because we knew about it. Then after this inquiry concluded basically the decision to re-fleet right from the beginning appeared to have been driven by CEO Kapila Chandrasena of the airline and the committee.
Q : So what was done to find out as to what has exactly happened?
There was an interim report and there was a final report and it was submitted to the Inspector General of Police (IGP) Ilangakone, the Bribery Commission and the Attorney General by the Government on May 2016. The IGP joined the investigation which featured the CID, under the supervision of the then Director Shani Abeysekara, senior police officers Ampawila and P. K. de Priyantha.
The FCID was also brought in under the direct supervision of Mr. Thusith Mudalige of the AG’s Department. This was the most complex criminal investigation ever conducted in Sri Lanka because it involved eight jurisdictions. And also it lacked specialist skills within the country, and the financial and forensic skills to probe this kind of crime. So eight jurisdictions and you can imagine how complicated this is.
Since it was clear from the beginning that there was probably a potential for assets being stolen, a Special Presidential Task on Recovery of State Assets was appointed. In short it was known as START and it assisted Police investigations and it also facilitated the international support that was needed. Over 14 mutual legal assistant requests were made by the CID and the FCID to many countries including the United Kingdom, the United States, France, Singapore and Brunei.
Basically one thing that was very obvious was that the combination between the strategy and the aircraft and the fleet to route didn’t look like fitting to start with. But I will leave the judgment to the experts
Q : So how come the British Court announced that a USD 2 million bribe was allegedly taken by former SriLankan CEO Kapila Chandrasena’s wife?
With the Sri Lankan initiative to probe corruption and this jurisdiction asking for mutual legal assistance, others became aware of this and the Serious Fraud Office (SFO) in the UK also commenced a separate investigation. All these jurisdictions were aware that Sri Lanka has a problem and the Sri Lanka Police was investigating into it.
Thus they started their own investigations as the SFO collaborated with the French institution because if you remember the Southwark verdict that was given basically covered five SFO jurisdictions and it covered another six other jurisdictions relating to this airbus investigation. So the British, the French and the Americans all were together on this and the SFO initiated a joint investigation with the French Parquet National Financier (PNF) and a parallel investigation was conducted by the US Department of Justice (DOJ) and the United States Department of State (DOS).
Each prosecuting authority had taken responsibility over a number of geographical areas into its respective judicial, public interest and so forth. So the SFO took the responsibility for Malaysia, Sri Lanka, Taiwan, Indonesia and Ghana. And the other six jurisdictions responsibilities were taken by the French authority.
Though in silence and without much public display, these investigations were continuing in Sri Lanka.
Besides former SriLankan CEO Kapila Chandrasena and his wife were living outside Sri Lanka. They basically slipped back to the country several months before the Presidential Election. But since the CID investigations were continuing from 2015 and the system was in place no sooner Mr. Chandrasena and his wife arrived in Sri Lanka, they were prohibited from leaving the country.
I would say that this is one of the most successful investigations handled by the CID given its complexity. Therefore all the CID officials should be commended. They waited till Kapila Chandrasena and his wife arrived in Sri Lanka and they immediately obtained a travel ban to ensure that they couldn’t leave. This is a crime of the highest order.
So this is the best case of international cooperation Sri Lanka has had and I am confident that if we continue to use experts on the stolen assets recovery that a large percentage of bribes paid out could be recovered by the state. I am convinced that it can be done.
We suspect that the bribes were paid on the airbus purchases were approximately USD 16.8 million. The criminal investigations against these individuals have now been named and others will continue even in other jurisdictions. It is not just here.
Q : Now that former Sri Lakan CEO Kapila Chandrasena and his wife were arrested and remanded during the tenure of present Government, some say that these investigations were done by the Rajapaksa Government. What is your response?
It is absolute nonsense. No credit goes to the present government, Present President or Rajapaksas at all. This is an ongoing investigation and the people to be credited for this are the brave Government servants, professionals, and the CID. They are the people who should be given the full credit for this and no politician can take credit for this.
And I feel strongly about it because I was the Minister in charge of this apart from being the Chairman of the Presidential Committee. One principle that I strongly adhered to is there was no political interference on the investigation. These are commercial institutions and they must be run commercially and there can not be any political interference. So anybody trying to earn credibility should not be given the opportunity except for those who deserve to get it.
I would say that this is one of the most successful investigations handled by the CID given its complexity. Therefore all the CID officials should be commended
Q : Even though public servants and the CID had done a tremendous job in uncovering the frauds relating to the national carrier, your Yahapalanaya Government didn’t take necessary action. Do you agree?
There is an unknown fact which I want to state here. President Sirisena appointed a Presidential Committee headed by the former Supreme Court Judge Anil Gunaratne to probe the matters relating to SriLankan airlines. It focused on many aspects including finances and re-fleeting. We mustn’t forget the report we submitted under the chairmanship of J. C. Weliamuna.
These were basically committees set up by the minister of aviation. This report is a very substantial report and I must state with some regret at the political level that my government, where I was involved in, didn’t probably give this report due recognition. Even though I directly came to handle the airlines four years later, I might still say that. So the Presidential Committee focused on many aspects including finances and re-fleeting. I think President Sirisena also wanted to get to the bottom of it otherwise he would not have appointed a commission.
Q : Given that SriLankan is comparatively a small airline, was there necessity for so many airbuses to be purchased?
This fraud and cheating go way beyond the airbus re-fleeting. Now, one is consultancy. There is in my mind they decided on re-fleeting and then they decided to justify it by having a plan. Normally in a business you have a strategy, you have a plan and then you look at how you fulfill that. With the business background I have it is quite evident here that the opposite had happened.
They decided to do the deals and they worked all the details out, the fraud out and then they wanted to justify. Then they go in and they basically hire consultants. According to the investigation report there was one company among the others and it required on USD 600,000 for all the above services which is quite low. It is customary that this transaction is only a percentage and the size of this deal is unbelievable. This is the biggest financial deal this country had done commercially. And the airbus payment and the Southwark court judgment in terms of fines is probably the biggest in British history. So you can imagine what this is about. So this is not something that happened on the side.
Then if that is a case of corruption with the management then we have to go deeper and investigate for corruption at other layers as well. So the obvious question that should have been asked is how the airline is going to meet its future financial lease commitments?
Q : According to the findings, who in the airline was exactly behind this alleged scam?
There was a four-member team that pushed this whole thing and this team included the CEO, Head of Finance, COO must be the Chief Operating Officer and Head of Engineers. At the early stage to be fair the Chairman Nishantha Wickremesinghe of the airline kept pleading innocent saying that only a four-member team was making all the decisions. Whether it is true or not, the subsequent investigations would prove.
Q : From 2008 on wards, SriLankan was incurring losses in billions of rupees and it was run by the tax payers’ monies. Why were such massive deals struck when it was a loss making state-run institution?
Current liabilities of SriLankan is Rs. 71346 million and asset is Rs. 54905 million.
SriLankan is technically insolvent. It is a gross negative network company, but it is in the air. Legally it is not insolvent because it is backed by the state. The big question is why did the government or the treasury allow such a large purchase when airline was making huge losses? That is a valid question to ask.
That is the role of the minister. That is the role apprising the Cabinet if a transaction like that took place. Because it doesn’t make logical financial sense, why did the Treasury allow it to go? It had at that stage Rs. 105 billion of accumulated losses. It had accumulated losses on negative net assets worth Rs. 65 billion. And why did the Treasury allow that? It is an important issue. Because are we saying that the responsibility is only with the airline’s management or are we saying that the responsibility is also with the Treasury?
Then if that is a case of corruption with the management then we have to go deeper and investigate for corruption at other layers as well. So the obvious question that should have been asked is how the airline is going to meet its future financial lease commitments? That should have been the obvious question that should have been asked.
So the colossal capital commitment on this transaction approximately is about USD 2.3 billion. If you consider the exchange rate at that time it was about Rs 290 billion. So there is no real hope of ever breaking even though they try to show in their financial analysis that three years or four years down the road they could do it.
Q : Did anybody caution or warn about the dangers of this transaction at that stage?
No they hadn’t. That is my point. Why didn’t the Treasury question? The likelihood is that the committee put it to the board and the board approved it and then probably it was given to the relevant ministry which in turn got the Cabinet approval. There was news that the final board meetings and transactions happened in the then Speaker’s resident. So it is very clear that given the competitiveness of this industry SriLankan Airlines was not going be able to service that or make substantial incremental revenue.
So the Treasury has not made a serious observation and we don’t know what that means, whether the Treasury was supporting it, given that the corruption that is now proven then we have to investigate and find out whether the others were also involved. So on paper it was proven that the Treasury was also pushing through the transaction quickly rather than questioning the process.
We mustn’t forget the report we submitted under the chairmanship of J. C. Weliamuna. These were basically committees set up by the minister of aviation. This report is a very substantial report
Q : Why do you say that?
Because this transaction looks so absurd and the Government is finally going to end up in the oblique with this transaction. The Treasury should have immediately questioned it. The Finance Minister at that time was Mahinda Rajapaksa and the Secretary was P. B. Jayasundara.
This crime has criminal liability. They have placed a huge debt burden on the citizens of Sri Lanka.
Q : What should be the next step of all these findings including a verdict from the British court?
So now the Attorney General’s Department basically needs to charge the people because already the evidence is clear that we should proceed and charge for criminal liability. The judicial process should not delay. In Sri Lanka what normally happens is that judicial process is delayed and people are losing confidence in the system. For example Udayanga Weeratunga was arrested.
But he was not arrested on arrival, he was extradited by a middle Eastern country. I am sure in his case also a lot of investigations must have been done and I am sure that there is lot of evidence and that should be pursued. People of the country are loosing the confidence they have in the judiciary mainly because of the delays. When suspected criminals are connected to politicians and political families the confidence levels go further down. And therefore rather than blame anybody professionals, lawyers and Attorney General Department and judiciary should all act with the highest levels of professional conduct. They have the responsibility not towards the governors, but towards the citizens.