Full background story about Air Bus deal

Full background story about Air Bus deal

It was from information revealed according to an investigation carried out by criminal investigation department about airbus A-350 of Sri Lankan Airways that details about the airbus deal came to light. When the relevant authorities were placed in a quandary as to what action should be launched in this connection when and were dilly dallying for many months when attorney general
suddenly issued an order and gave instructions to police last week saying that a fraud has been committed and that Mr. Kapila Chandrasena, a former chief executive officer of Sri Lankan Airways and his wife, Mrs. Neomali Wijeynayaka be taken into custody. 

The CID were unable to locate any place where they were while what one minister said was that they are no longer in the country. Later on the couple has surrendered to criminal investigation department office last Wednesday. After statements were recorded, they were produced before the leading magistrate, Mr. Ranga Dissanayaka and the magistrate ordered that the two of them be remanded till next 19th. 

The root cause for this incident is that the air bus company has deposited a sum of 168.4 dollars across a particular company registered in Brunei on behalf of a certain individual or company under the name of the wife of an executive officer of Sri Lankan Airways and that an influence was made on Sri Lankan Airways to purchase 10 airbus aircrafts and also to purchase 4 extra aircrafts under a lease  scheme which information in the end was revealed in a court in Britain. Further information was revealed in the presence of court that a sum of only 20 lakhs dollars was recovered from the sum of 168.4 dollars which is supposed to be granted, London Special Fraud Office (SFO) has found. 

While four of the 10 aircrafts were of the A350-900 type which were to be bought and it was regarding those aircrafts that the CID launched an investigation. This information which the CID was able to uncover remained in a passive state until other matters related to this same incident came out into the open in a British court. 

A certain director in Sri Lankan Airways had understood that all was not going in the proper manner ... 5 years before this. Though he brought out this issue and wanted to take the matter forward, it did not become successful. If this is taken in summary-form .. it is as follows. An agreement to purchase aircrafts was entered into between Sri Lankan Airways and Airbus SAS Company on June, 2013 to manufacture 4 aircrafts of the A350-900 type and to transport them to Sri Lanka. The date on which the aircrafts were to be given to this country was mentioned on the reverse as the second quarter of 2020. The last aircraft was to be delivered in the first quarter of year 2021. 

The total cost amount to purchase the 4 aircrafts was 222,356,600 and 85 cents. That sum of money of 2.2 million dollars was over Rs. 28.2 billion according to the exchange rate at that time. According to financial data presented to the cabinet in 2012-2013, it was reported that Sri Lankan Airways had earned a sum of 948 dollars. It was for providing travel facilities for 4,140,305 passengers. 

The total earnings of Sri Lankan Airways during the period 2015-2016 was 1251 million dollars and that was for providing transport facilities for 4,789, 902 passengers; which then is that the value of the airbus is more expensive than operations of Sri Lankan Airways. Sri Lankan Airways has settled payments from November, 2016 as a pre-transport payment. The payment made in this connection is 19,214,638 and 45 cents. Whatever it is, the director board of Sri Lankan Airways came to a decision to suspend further payments from that month itself. 

By that time, the United National Freedom Alliance government was dismissed from power. It was the 'Yahapalana' (Good governance) government that had come into power. While payments were being made by bringing various reasons, time passed as usual. The true facts came to light only when financial matters were being inquired into about the 2016 Yahapalana regime. Mr. Kabir Hasheem who functioned as the minister of common industries and development under which Sri Lankan Airways too belonged, told in the presence of the cabinet that as sum of close upon 14.5 lakhs in dollars per mensem had to be expended. He said that the said money has to be paid throughout a period of 12 years forwarding a cabinet paper on April 19th, 2017. The minister further said that the total expenditure of this deal would run into 835 lakhs in dollars. 

It was Arcap, a company which supplies aircrafts on a lease scheme with whom the lease agreement was entered into. Arcap company secured the certificate of international leasing company in the year 2014. The point that this agreement entered into with the relevant company was limited only for purchase of skeleton structure of the aircraft and the propulsion system only which matter should be focused attention on. In the case of buying and acquiring other essential aspects (including engine) of the aircraft was entered into separate agreements with separate companies. For example, an agreement relating to production and service with Rolls Royce company; an agreement with Zodiac City, French company for purchase of new seats; an agreement for purchase of entertainment equipment with Thales Aviotronics INC Company and an agreement to design pilot's cockpit with Lukdesign Company in France. 3 different agreements have been entered into with airbus company for the purpose of purchasing A350-300 aircrafts. 

Separate payments had to be made in the case of each separate agreement. Sunday Times was able to observe first hand the tragic manner in which airbus company has proceeded to act in the instance of buying the aircrafts was most clearly displayed across reports of the director board of Sri Lankan Airways, other papers, cabinet papers etcetera. Not only the cabinet ministers were able to probe into about this deal; but neither was the agreements brought to the attention of the attorney general either. 

The argument that has arisen in this instance is that Sri Lankan Airways is a company and that it is not a part of the government. But it is for the public taxpayer's money that was necessary to maintain it. The treasury on the other hand pumped these funds to Sri Lankan to the extent that not even the bottom became out of sight. 

Cabinet ministers decided on June 24th, 2015 to set up a plan to restructure Sri Lankan Airways to turn it into a profit-making industry. For this purpose, the government secured advice from the two companies Nairas and Skyworks and what those companies informed was that an additional expenditure of 300 lakhs of dollars would have to be incurred for operational matters in the case of a single A350-900 airbus and therefore those aircrafts are not recommended. Thus, under such circumstances the government decided to cancel the agreement. However, according to what Kabir Hasheem said that the airbus company has given a response of this sort: 'Cancelling is not an alternative. It is impossible to make changes in the order placed to include only narrowboard-type of aircrafts. 4 wideboard aircrafts and sometimes one narrowboard aircraft could be accommodated. That company further added that failure to pay prepaid-transport fees would result in the agreement entered into by Sri Lankan and airbus company being cancelled and in such circumstances airbus company is in a position to recover the monies from Sri Lankan Airways. The agreements in fact had been created in a manner that it was favourable for airbus company. 

It was under such circumstances that the government decided to abolish the airbus deal. It was the criminal investigation department to whom the conducting of an investigation was first handed over. Thus the airbus company rejected any further discussion about the purchase of aircrafts until they were notified about that information. Thus it was possible to stick everything in one place as such. In the meantime the government was searching for sources that could be utilised for further information or data. 

Sunday Times was able to set their eyes on the committee meeting report of the director board of Sri Lankan Airways held on 27th October, 2015. It was Mr. Ajith Dias who was the chairman of the board of directors at that time. The report is as follows: the European Union is conducting an inquiry regarding an allegation of corruption against the relevant company based on aircrafts supplied to Switzerland and United Kingdom by airbus company, director Mr. Joseph M.S. Britto mentioned. He thus said that on such grounds it would be appreciated if a letter is directed calling for a confirmation to the effect that since purchasing of aircrafts from airbus company was not something executed under the clear desire of Sri Lankan Airways and apart from that, the said deal in total was carried out solely based on commercial reasons but one carried out after taking various financial matters into account. 

He further pointed out that though A350 aircrafts were secured under the lease scheme at a sum of 14 lakhs dollars, but during the period the agreement was signed, the price value of one such aircraft happened to be 12 lakhs dollars. Director Britto subsequently tabled drafts of letters directed to airbus company to purchase the aircrafts, letters prepared to be directed to Rolls Royce company for purpose of purchasing engines and letters to be directed to Arcap Company to purchase aircrafts under the leasing system. The chief executive officer (who had presented himself on invitation) then consented to forward those letters to the relevant parties. Director, Mr. N. de Silva Deva Adithya then volunteered to forward copies of those letters to chairman of European Commission and to forward the chairman's address. 

No action however followed Britto's request. He once again brought out this issue at the board of directors meeting held on 24th November, 2015. What appears on that committee meeting report is as follows: Britto brought to memory the request he made in connection with directing letters to airbus company and Rolls Royce company. On that occasion the chairman stated that discussions were underway by Sri Lankan Airlines and airbus company about securing an engine for 350 aircrafts. He pointed out whether the Sri Lankan company has notified those companies on a definite basis whether that engine would be accepted. He also mentioned that discussions are going on about an A330 aircraft which was expected in 2020. The chairman then remarked that the rapport developed between Sri Lankan Airways and those companies which have already entered into agreements in the instance of directing those letters to chief officers of the company, chief administrative officer, chief technical officer and Menik Gunasekera (CCAO). In this connection, opinions were obtained from Mayuka Ranasingha (HGLO). Miss Gunasekera pointed out that as discussions were already underway by Rolls Royce Company with airbus company, it would not be suitable to direct letters of matters stated. The board of directors agreed to this. The financial crime investigation unit and the criminal investigation department who were engaged in conducting an inquiry regarding accumulating new aircrafts for operational activities and the chairman said that several revelations were uncovered in such investigations; matters included at the board meeting report but which were not sent to the relevant parties ... matters exposed by Britto's letter are many more. 

It is as follows: "Hon. sirs, Your attention is drawn to 8 aircrafts of 350900 type expected to be delivered to Sri Lankan Airways during the period October 2016 to 2020. Since it is observed that the decision to enter into this deal of aircrafts, it rested not only on commercial interests but was founded on monetary aspects, we have been advised by two world acclaimed airline advisory companies that though acquiring those aircrafts do not go in line with our priorities and are unsuitable. 

Other than that, we were made aware that the monies paid for these aircrafts are comparatively in excess of the market value at that time. Taking these matters into consideration, we wish to be made aware of as to whether you were involved with a third party agent and advisor who provided facilities to sell these aircrafts to Sri Lankan Airways. If it was so done .. we kindly request you to forward us complete information about payments made to such a party or is to be repaid whether in the form of commissions or salaries; that value and their names and addresses and all related information. We further request you to furnish us with particulars of individuals or agents who provide these facilities; names and addresses of the company or the limited company who have acted so, all names and addresses of all persons who represented any such company with whom you maintained such connections to sell even a single such aircraft. Since we are in no way pleased with the manner in which the buying process was carried out, we have been informed that an investigation has been launched on an international level by the European commission in relation to allegations related to acts of corrupt transactions which have cropped up in the deal of the airbus sale concerned. Under these circumstances in order to remain alert in this connection, we take steps to send copies to chairman of European Union. We thank you for the co-operation extended to us and look forward to your co-operation in future. 

Mr. Kabir Hasheem forwarded a cabinet paper by explaining the abolishing of the transaction arranged under conditions agreed upon with approval of the ministry of finance and stated as follows: 

Fee for abolishing airbus A350-900 avonyana agreement - payment: 1540 lakhs  dollars

Fee for abolishing the deduction of the three airbus A350-900 aircrafts - 980 lakhs dollars 

Security deposit (already settled) - 75 lakhs dollars

Payments due from Sri Lankan Airways - 905 lakhs dollars

While this agreement was given under the leasing system to Sri Lankan Airways by Arcap company, Sri Lankan Airways accepted that payment and in the process the two narrowboard aircrrafts were included in it. Sri Lankan Airways was was given the opportunity of entering into discussion to abolish the tri-aircrafts after a lengthy discussion and the issue had to be settled after bearing a cost of 750-850 lakhs. It is so mentioned in a cabinet committee meeting report (who granted approval for this) held for economic development. According to the agreement under the topic of abolishing and amending which was entered into between Sri Lanka Airways and leasing companies on October 4th, 2016 .. which incidentally caught the eyes of Sunday Times ... the party who should pay the lease within 8 months, should pay a sum of 146,000 dollars. It is in fact Mr. Suren Ratwatta who functioned as chief executive officer of Sri Lankan Airways who placed his signature to that agreement and it is chief executive representative, Mr. Shaun Sulaiwan who placed his signature by representing the international finance and leasing company. It is a mystery as to the extent of funds that were spent on abolishing the agreement as well as the manner in which airbus company is covering up the bulk of mysterious problems. 

All monies spent on airbus A350-900 has simply been blown into the skies without bringing any profit to Sri Lanka or Sri Lankan Airways. This has occured in a country where a certain visitor who came to meet passenger after the scheduled time of meeting was given the opportunity by a watcher to meet the patient after extracting Rs. 5 from him. On the very first occasion that watcher was remanded for a fortnight. It is only a handful who have moved about the paradise of Sri Lanka. The question is whether it would be possible to uncover who that handful is.