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Saturday, 21 July 2018 00:00 - - {{hitsCtrl.values.hits}}
By Maleesha Sulthanagoda
SriLankan Airlines awarded advertisement contracts worth over Rs. 108 million to Kuma Stickers Ltd. without following proper company guidelines, the Presidential Commission of Inquiry (PCoI) heard on Thursday.
The PCoI into alleged frauds and misconduct in SriLankan Airlines, SriLankan Catering, and Mihin Lanka was told that Kuma Stickers were given Rs. 108 million in contracts without the national carrier following due process prior to 2011. At previous hearings, it was revealed that over Rs. 450 million in contracts was also awarded between 2011-2018 to Kuma Stickers and Vihanga Marketing Ltd., which were owned by the same family.
SriLankan Airlines Group Assurance and Advisory Services Senior Manager Mahesh Nanayakkara, who provided evidence regarding internal audits on corporate communications, noted that the Airline did not follow proper company guidelines when awarding advertisement contracts to Kuma Stickers Ltd.
He mentioned that the contracts worth over Rs. 108 million, which were awarded to Kuma Stickers Ltd. and Vihanga Marketing and Advertising Ltd, had not been given through proper methods.
“According to the company procurement manual, contracts worth over Rs. 75 million should be awarded after getting approval from the Board of Directors. Even though the procurement manual specifies this, the contracts worth over Rs. 108 million which were awarded to Kuma Stickers and Vihanga Marketing did not go through this process,” he said.
The Commission of Inquiry also heard that the audit committee did not know that Kuma Stickers and Vihanga Marketing were owned by one family.
“We came to find out that Kuma Stickers and Vihanga Marketing were owned by the same family when Vihanga Marketing sent a quotation on a Kuma Stickers letterhead, which resulted in an internal investigation,” Nanayakkara added.
SriLankan Airlines guidelines also specifies that minimum insurance cover of Rs. 10 million should be obtained by advertising firms for hoardings and other advertisements. However, this specification was not met by Kuma Stickers.
“The billboard contracts given to Kuma Stickers required insurance of Rs. 10 million, but they only obtained Rs. 600,000 worth of insurance. This is a direct violation of company guidelines but no action was taken by the Board of Directors,” he said.
SriLankan Airlines Network Planning and Research Manager Priya Epitawela, also testifying before the PCoI, said that former SriLankan Airlines CEO Kapila Chandrasena ordered the Network Planning Manager to approve contracts to Kuma Stickers Ltd. as it was deemed urgent by him without any Board decisions.
“The ex-CEO told me to give approval to a few outdoor hoarding contracts to Kuma Stickers as it was urgent. We did not have time to conduct feasibility studies on most of the awarded contracts. We just accepted their proposals and awarded contracts. We didn’t even have time to compare the proposals submitted by Kuma Stickers with other bid proposals,” she said.
She also noted that the contracts were given without any tender process, but the final company was picked based on several contracts submitted by Chandrasena.
When the Commission inquired from Epitawela whether she had informed any other authorised personalities about the irregular duties given to her to be carried out, she noted that she informed the human resources (HR) department, although no action was taken.
She also mentioned that after a major dispute between Opal Digital Media Productions Ltd. and officials of the national carrier over a hoarding contract in Kandana, they gave contract details of the Kandana land owner that belonged to Opal Marketing to Kuma Stickers to carry it out after negotiations fell apart.
