Conduct of ex-Chairman of SriLankan Airlines was “appalling”: Board of Inquiry

Thursday, 9 April 2015 00:00 -     - {{hitsCtrl.values.hits}}

There is an almost consensus among the senior staff including Kapila Chandrasena that the former Chairman’s conduct as a Chairman has been appalling in several aspects. This compelled the BoI to examine the available material to ascertain whether the Chairman’s conduct affected the operations, business and the reputation of the SLA, leading to abuse of power. Observations 1] Appointment of the Chairman on full time basis and perks (i) Nishantha Wickramasinghe was first appointed as a Director by Letter dated 20th January 2006 signed by P. B. Jayasundera, the then Secretary to the Treasury. Subsequently, he was appointed as Chairman on 15th May 2010 by P.B. Jayasundera. Mr. Wickramasinghe told the BoI that it was the then President Mahinda Rajapaksa who invited him to join the SLA as the Chairman. (ii) The Minutes of the Board of Directors dated 5 March 2011 state that: “ required the services of the Chairman on fulltime basis........ stressed the importance for the Chairman to take on a fulltime role in Sri Lankan. .... accordingly the Board was of the unanimous view that the chairman should be taken on a fulltime role as early as possible, not later than 1 April 2011”. (iii) However, it is only on 30 May 2012 that Mr. Kapila Chandrasena, CEO, sought concurrence of the Board to pay the following perquisites to the Chairman with effect from 1 May 2012: “Monthly allowance – Rs. 500,000 Housing allowance Company car/driver and fuel Company mobile” (iv) There is no apparent justification for the former Chairman to be engaged on a fulltime basis. Chairman on the other hand told the BoI that it was the former President who wanted him to be in one place, that is SLA, but on fulltime. On examination, the CEO and other officials were unable to give any reason, whatsoever, on the necessity to engage the Chairman on fulltime basis. To our surprise, it was revealed at the inquiry that the former Chairman had allegedly taken over some duties of the CEO, though it is not clear exactly what exact functions the former Chairman was assigned. (v) When the former Chairman Wickramasinghe was examined by the BoI, he described himself as an experienced board member with hands-on experience in the airline industry. He repeatedly said that as the Chairman he should have led the SLA and not the CEO. He first said that he did not get involved in operational side but later admitted that he was involved in certain operational and management decisions of the SLA. (vi) The former Chairman was given a housing allowance but the amount was not specified. However, he availed himself of this benefit by requiring SLA to lease a house (three houses, but one at a time) in Ja-Ela/Andiambalama and Seeduwa. Mr. Wickramasinghe justified his obtaining housing facility on the basis that he visits SLA office, etc. at night and he said he lived in those houses. On being confronted with the electricity bill (which is in a range of Rs. 3,000 per month), he said that he was living single. However, Major General Chandrawansa informed the BoI that Mr. Wickramasinghe did not live in these houses but they were used by Mr. Wickramasinghe for “other purposes”. (vii) The former Chairman was provided with a company car [Mercedes Benz bearing Registration No. KL-4449]. However, he was assigned two other vehicles that were procured through loan agreements SLA entered with certain financial institutions. He was also given two vehicles, Montero Registration No. WP KV 3836 and Toyota Prado bearing registration number WP CAB-707. BoI notes that the Montero jeep has been secured by submitting fraudulent documents, which issue is separately dealt with under SriLankan Catering dealt with in detail in Chapter 6. (viii) The former Chairman was also provided with several phones and phone connections, an Apple iPad and other perquisites. However, even though the former Chairman tendered his resignation on 9 Jaunary 2015, he has not, to-date, returned six mobile phones and the Apple iPad. (ix) The former Chairman has also claimed medical bills, though he was not entitled to. It is the CEO who has approved many such bills. 2] Blatant abuse of power by the former Chairman The BoI has come across blatant abuse of power by the former Chairman, Wickramasinghe. It must be noted that, there is no evidence that the CEO together with the higher management of SLA have taken any steps to prevent such abuse of power. Corporate culture was to cover up such abuses. A few of such examples are as follows: (i) Diversion of the UL flight 319 (KL-CMB) on 22 January 2014: There is evidence that the above flight, which was scheduled to operate directly from Kuala Lumpur to Colombo, was diverted via Singapore on the direction of the former Chairman. According to the relevant flight records, a UL flight in which a “Government delegation” was originally to fly from Singapore to Colombo (UL307) had been delayed due to technical reasons and therefore the Chairman had given instructions to deviate the Kuala Lumpur-Colombo flight via Singapore, in order to pick up a “Government delegation” from Singapore. The records does not mention from which location the Chairman had given instructions or who the members of the delegations were. The relevant passenger manifest shows that the so-called Government delegation referred to was the Chairman himself, Minister Amunugama and Mrs. Wickramasinghe, who were waiting in Singapore. Mr. Wickramasinghe attempted to disassociate himself with the incident and in fact said that he could remember meeting Minister Amunugama, seated next to him, when he was aboard the aircraft UL 319 on that day. He denied having contacted the Flight Operations Department or giving any directions. He admitted that if there was a diversion, those who are responsible should be punished. CEO Kapila Chandrasena and COO Druvi Perera both said that their hands were tied because it was the Chairman who ordered the deviation. Having examined the contemporarily records, and the material, BoI can conclude that this diversion of flight UL 319 was done on the unlawful instructions of the then Chairman Nishantha Wickramasinghe. The diversion is completely untenable and contrary to any acceptable aviation norms or practice and has caused financial loss. This incident has also been reported in the media widely, causing serious reputational damage to SLA. However, no meaningful action has been taken on this. The Board has called for a Report on this incident, but no action has been taken thereafter. When questioned on this, the management did not offer any acceptable explanation. (ii) Change of decision not to accommodate 75 transfer passengers to flight UL 563 Colombo-France, 26 January 2014 It was disclosed before the BoI that due to Aircraft on Ground (AOG) of UL109 in Male, UL flight was delayed to accommodate 75 transfer passengers. The 75 passengers were rerouted via France on UL553. There was a commercial justification to delay the UL563 flight. On examination of flight disruption report, BoI finds that on specific instructions received from Chairman Wickramasinghe the UL 553 was reinstated to operate on time, misconnecting 75 transfer passengers. The SLA had to reroute the misconnecting passengers. There were various representation made on why former chairman had made the directive to operate this flight in time, when a valid decision made to do so in the best interest of the SLA. There were suggestions that Ms. Chaturika Muhandiram was on the UL 553 flight as a cabin crew member. In fact, Muhandiram admitted that she was a cabin crew member and was kept informed of the delay and subsequent on time departure, by the Operation Control. Former Chairman Wickramasinghe was evasive on his involvement but appeared to know the entire episode. On being confronted on the report submitted to the Board on flight interruptions (and contemporary messages) involving UL 319 and UL553, his only defence was that he did not give such instructions but he thinks all flights should leave on time which is the responsibility of the flight operations. Delay of a flight could be justified mainly only on a technical, weather or commercial reasons. BoI is of the view that there was a justification to delay UL553 to accommodate the 75 passengers. BoI also concludes that the change of the decision to delay the flight was unjustified and was on unlawful instructions on the part of the former Chairman. This decision has caused financial loss to the UL, which can be quantified by the SLA. (iii) The former Chairman’s inappropriate interest in cabin crew There is prima facie evidence to support that the Chairman had personal interest in certain members of the cabin crew. Strangely, he has personally participated in the interviews of the cabin crew. A large number of representations made to us refer to favouritism and inappropriate association between the former Chairman and certain cabin crew members. BoI does not wish to deal with personal relationships of any individuals except to ascertain whether such relationships were contributory factors in abuse of power. Those allegations are not without merit as there is evidence pointing to such behaviour, causing reputational risks to the airline as well as financial losses. There is prima facie material to conclude that the above mentioned incident involving UL553 is one such instance. The former Chairman has, without any authority, “appointed” a member of the cabin crew, namely, Ms. Chathurika J. Muhandiram, as “SLA Brand Ambassador”. There is no such appointment or recognition officially known to SLA. The CEO, Head of Human Resource or his Senior Management Team were unable to provide any explanation how such appointment was made. Ms. Muhandiram on examination said that she was appointed by SLA as a Brand Ambassador and on probing she was evasive and obviously did not want to speak about it. Former Chairman on the other hand tried to justify her accompanying Ms. Muhandiram on official work abroad on the basis of competence/talent and thereafter said that she was related to him and was known from childhood. There is evidence to support that the former Chairman together with Ms. Muhandiram in 2014 travelled, among others, to Vietnam for the APOT Asia Forum on two Business Class tickets – revenue tickets purchased by SLA from another airline. SLA possesses evidence of a large number of revenue tickets being obtained by SLA on the instructions of the former Chairman for this individual to travel to several countries. In our investigation, we can conclusively hold that former Chairman’s association with Ms. Muhandiram exposed SLA to abuse of power, causing reputational risks as well as financial losses. BoI can also hold that there was no corporate culture in the Board or the top management to raise such issues when a senior officer or the Chairman was involved in such behavioural issues adversely affecting the company.