Folk tales and fairy tales

Something abnormal has happened with the reorientation exercise of the national airline

Anniversaries are important. They help us recall events of history associated with experiences that hold some resonance and meaning for us. Anniversaries subject us to merciless, unforgiving scrutiny of hindsight. Hindsight is good at pointing to where we erred. It helps us to learn the truth about what we thought we knew. Yet, it does not tell us where we should go. So, these are meandering thoughts. Power can be good. Stupidity is harmless. Together it is catastrophic. . 

What happened in Hambantota is unfortunate. Good policies can fail in the absence of trust in top down implementation. The ‘Mahadenamuththa’ approach does not work in this age of communication. A crowd that shouts only slogans is only a crowd. That said, a crowd that understands the reasons for its discontent and also knows the needed remedies is much more than a crowd. 

We live in a new age of folk tales

Living with pipedreams, unheeding events unfolding in a surprisingly different manner and pace not anticipated has a crippling cost. On 8 January 2017, two years after the event, we arrive at the terrible discovery that what was bad before has become worse. Readers should forgive the folksy approach in identifying the main characters of this narrative. 

This is the second anniversary of dislodging autocratic ‘Appachchi’ and entrusting the care of our land to a soft spoken ‘Gamarala and an all-knowing Mahadena Muththa.’ Early in the business, Mahadenamuttha assured us that his word was as good as a sovereign bond. 

We live in a new age of folk tales. Readers should forgive the folksy approach in identifying the main characters of this narrative. We hear tales of Volkswagens, ‘Senocking’ at the door of progress, promising plenty.

The pumpkin carriage carrying vestal virgins of good governance to the grand ball of Mr. Clean will have wheels made in Horana by the phantom owner of the Mariette hotel. Apparently its courtyard accommodates an oil well that pumps dollars. The earlier story was that the dollars of the illusive phantom were those stashed away by Appachchi and his clan. Now we know better. BOI stands for Bogus Offshoring of Investments. 

The original Mahadenamuththa had five ‘Golayas’ or henchmen. Indikatu Pacha was needle shaped. Pol Be Moona had a face that resembled a half coconut. Kotu Kithaiya was thin as a stick. Puwakbadilla had a brain the size of an arecanut. Rabboda Aiya was fat and was the matured of them all. 

At this point it is necessary to assert the ‘all persons are fictitious disclaimer’. All characters referred to herein are imagined by this writer who according to his shrink is nearly bonkers, overtaken by remorse for voting for the common candidate on 8 January 2015. In today’s reality, at the age of 74, going insane is the wise option. So, any similarity to actual persons or events is purely and absolutely coincidental. 

Let us survey the world of contemporary Mahadenamuththa. Needle-sharp Charitha is the trusted ideologue. Pasky the fixer sporting the grin of a half coconut is good at scraping. Stick-like stickler is calling cops to prevent arrests. A one-stop super shop for milking is buddy badilla’s dream. Rabboda aiya squats on standing orders, ever-willing to defend the indefensible. 

Politics and governance gone mad

This is a conversation about sanity and madness. It is about our politics and governance gone mad. What is crucial in this conversation are the values and judgements of people whom we entrusted with governance in January and August 2015. For the purpose of the rest of this essay, sanity is presumed to be normality and madness is identified with abnormality. Something abnormal has happened with the reorientation exercise of the national airline. 

In July 2016, a wholly-owned subsidiary of the National Savings bank, the NSB Fund Management Co., Ltd., solicited expressions of interest from parties to reorient the national carrier SriLankan Airlines. It is best to be precise. The circulated document informed prospective bidders interested in reorienting the airline [whatever it meant] as follows.

“We request interested parties to respond with their Expressions of Interest (‘EOI’) via e -mail by 4 p.m. Sri Lankan time on 24 August 2016 to the below contact. A hard copy of the EOI, is also to be couriered to the below address thereafter. NSBFMC will contact shortlisted parties who have expressed an interest in the transaction to discuss the process further. “ 

The deadline was subsequently extended by a few more weeks. The EOI further informed the bidders the following. “To ensure that the Transaction is executed in a timely and efficient manner, NSBFMC has appointed a team of advisors. BNP Paribas (BNPP) and KPMG have been appointed as the Financial and Transaction Advisors, while FJ&G de Saram (FJGS) and Milbank, Tweed, Hadley & McCloy LLP (Milbank) have been appointed as the Legal Advisors. KPMG has retained Centre for Asia Pacific Aviation (CAPA) as technical and market specialist for this Transaction. The Attorney General’s office will overlook the interest of NSBFMC and GOSL in relation to this Transaction. For any enquiries on this Invitation for EOI and the process, please direct your questions via email to the NSBFMC contact below, who will then contact you directly or arrange for one of the advisors to contact you.” 

On the same day 23 July 2016 Minister Kabir Hashim explained the logic of the invitation for bids to reorient the national carrier. The Sri Lankan taxpayers had paid out 80 million dollars (about Rs. 11.7 billion) to bailout State carrier SriLankan Airlines which has been making losses since ex-President Mahindra Rajapaksa reversed a privatisation, he said. The 80 million dollar subsidy had only managed to cover “oil and old bills”.

Deputy State Enterprises Minister Eran Wickramaratne said though it was considered a nice thing to have the Sri Lanka flag flying through a national carrier, ordinary citizens who never travelled by air were paying for it every time they went to the shop (kadamandiyata yanakota) to buy goods through sales taxes.

We do not know how many serious proposals were received by NSB Fund Management handling the transaction. No doubt with the help and assistance of the team of advisors consisting of BNP Paribas, KPMG , FJ&G de Saram and Milbank, Tweed, Hadley & McCloy LLP together with the Centre for Asia Pacific Aviation, the lead manager would have evaluated all bids and shortlisted the final three bidders who were to meet a cabinet subcommittee. 

Who are the three finalists vying to manage our national airline? The Sunday Times of 4 December 2016 provides the information. 

Peace Air

The Sunday Times reported that the shortlisted parties will be spoken to by a committee appointed by the Cabinet. “Depending on the outcome of the meetings, a recommendation will be sent to the Cabinet Committee on Economic Management (CCEM). The parties shortlisted are Super Group Partners, Peace Air and Texas Pacific Group or TPG.” 

Earlier on, I warned readers that this is a conversation about sanity and madness. One of the three shortlisted bidders is Peace Air owned by a Sri Lankan businessman Gamini Wettasinghe. His airline Peace Air has no Air Operator’s Certificate from the local civil aviation authority. Wikipedia lists Peace Air of Sri Lanka as one of Asia’s defunct airlines. 

Peace Air Sri Lanka is one of three finalists shortlisted by this Government that excels in good governance. His bid document contains an introduction by the late Governor of the Western Province Alavi Moulana who describes Wettasinghe as the son-in-law of the daughter of the late William Gopallawa, former Governor General and later President. Credentials that may have surely impressed the professional consultants hired by NSB fund management. There follows a synopsis of the offer – titled ‘The offer at a glance’. Dear reader, you are again reminded of my earlier warning. In a world gone mad, the sane run the risk of being branded as insane. 

Please read on Page VI of the first bid document:

Srilankan Airlines engaged Nyras, a British Aviation Consultancy company, which recommended to create a New Zero Debt Balance Sheet. This is accepted by us. We will pay the Full Amount of US $ 1000 Million towards this Debt to the Government of Sri Lanka GOSL to create a debt free Srilankan Airlines and Mihin Lanka Airlines.

Willing to Buy up to 70% of Shares in Srilankan and even 90% of Shares in Mihin Lanka Airlines and buy 100 % of Shares in SriLankan Catering Facility. We Offer a further sum of US$ 250 Million for both Airlines and Catering Facility.

The bid offers to increase the fleet up to and in excess of 50 aircraft. The new destinations it hopes to add will include five destinations in Africa, five destinations in Australia, five destinations in China, 10 destinations in India, five destinations in Europe and six destinations in Asia/Far East. These flight operations will create the desired hub and Sri Lanka will become a mass tourism destination. The bid document suggests that ‘Lufthansa Consulting’ and ‘PrivatAir’ will corporate with Peace Air in this venture. 

The pièce de résistance of the whole business appears on page 172 of 179 pages of pure unadulterated balderdash. 

“Our Funds are available to be remitted immediately. To do so we need the Award Letter given to us. The Award Letter is then sent to Bank of Ireland, with written instructions. Then, the Bank of Ireland will immediately release Funds as per the written instructions given to them by Peace Air.

“We have also been told that we will be given an opportunity to negotiate with the Government of Sri Lanka to come up with the Final Terms and Conditions to Close the Transactions. Shares and Debentures will be issued when payment is made to the Government of Sri Lanka.” 

Here is a man who declares to have parked a billion dollars in the bank of Ireland awaiting his instructions. 

I am mad. Since I am mad, it occurs to me that any madman would have asked from where he found his loot of a billion dollars. Sane people don’t ask such stupid questions. This Government has very sane people who shortlisted the bid of a grandson-in-law of a Governor General and former President. Claiming kinship with a Kandyan potentate seems a good substitute to a reference from Forbes or Bloomberg. Or, is there another link?