SriLankan and Hyatt scams cause Rs. 40 b loss, claims JO

By Skandha Gunasekara

The Ministry of Public Enterprise Development has incurred a loss of Rs. 40 billion due to fraudulent deals pertaining to SriLankan Airlines and the Hyatt Hotel, the Opposition alleged yesterday. 

UPFA MP Mahindananda Aluthgamage said that the subject minister had not authorised the cancellation of the order to acquire a fleet of A 350-900 Airbuses from the parent company and that SriLankan Airlines conducts its business without the directives of the ministry. 

“I don’t fault the subject minister for not knowing what is going on in SriLankan Airlines. The decision to cancel the order for the Airbus fleet was given via an email from one brother to the other,” MP Aluthgagame said.

Elaborating on the matter, the Minister said that although a Cabinet decision had been taken to negotiate the Airbus agreement, senior adviser to Prime Minister Ranil Wickremesinghe, Charitha Ratwatte, had emailed his brother SriLankan Airlines Chairman Suren Ratwatte saying that the Prime Minister had decreed the order should be cancelled. 

MP Aluthgamage claimed that fraud was carried out even with the payment of compensation to Airbus.

“We have to pay $ 110 million as compensation but from that, $ 10 million was taken as a commission by a certain individual,” he said, adding that top officials of SriLankan Airlines would have to appear before the Judiciary to face corruption charges. 

UPFA MP Arundika Fernando severely criticised SriLankan Airlines CEO Suren Ratwatte for his mismanagement of the national carrier.  The MP asserted that Ratwatte had spent $ 50,000 from SriLankan Airlines to further develop his piloting licence.

Furthermore, the MP said that SriLankan Airlines was flying seven times a week to Australia solely because the CEO’s house was situated there while repeated weekly flights to London were for the purpose of the carrier’s chairman Ajith Dias, who had a house in England. 

“Why are there so many flights to Australia and London? The CEO has a house in Australia while the Chairman has a house in London. It is the season now so there are customers but once the season is over the Australian route is going to incur heavy losses,’’ MP Fernando said, adding that there are no flights to mainland Europe, from where tourist will come to the island, but London was given prominence. 

With regard to the Hyatt Hotel, MP Aluthgamage said the Government had cancelled a contract with an Italian company for the interior design of the hotel upon the instructions of Bank of Ceylon Chairman Ronald Perera, resulting in the State having to pay € 7.4 million (Rs. 2.2 billion) plus 2% interest. 

“The former Finance Minister Ravi Karunanayake cancelled the agreement on the advice of Ronald Perera. Now that Italian company has gone for an arbitration case in Singapore where it was decreed recently that we would have to pay that company € 7.4 million as compensation. For what reason was this agreement cancelled?” MP Aluthgamage asked, noting that the Government has had to obtain a loan of $ 2.2 million to pay the compensation.

“Just one ministry has to pay Rs. 40 billion because of these scams,” said MP Aluthgamage.

Public Enterprise Development Minister Kabir Hashim, responding to the allegations, said the cancellation of the Airbus deal was the right move. 

“It was the correct decision to cancel the order. The problem stems from the fact that the initial agreement did not have an exit clause,” the Minister said.

Concerning the Hyatt Hotel, the Minister said that he would look into why the contract with the Italian company was dropped and that the Government would appeal the arbitration case.