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Salaries, allowances, increments at SriLankan sans Treasury approval: Ex CEO
Salary packages and other additional allowances for top management officials at SriLankan Airlines (SriLankan) were not subject to approval by the Public Finance Department of the Treasury, as outlined by a circular, and the practice still continues to this day, a top official told the Commission of Inquiry (CoI) investigating irregularities at SriLankan, SriLankan Catering and Mihin Lanka (Mihin) on Friday.
- Testifying before the CoI, former Chief Executive Officer (CEO) of SriLankan Manoj Vass Gunawardena, said he was not aware of the existence of such a circular issued by the Treasury, and additional increments and allowances were decided by a committee appointed by SriLankan’s Board of Directors (BoD).
With a starting salary of Rs 825,510 per month at Grade 13 in the national carrier in 2008, Mr Gunawardena received various increments throughout his brief career as CEO, with the BoD’s approval. In 2011, his monthly salary went up to Rs 1,063,257, along with additional 15% annual increment.
Mr Gunawardena also informed the CoI that he had declined 2 more allowances, considering the financial condition of SriLankan, and conveyed his decision to the BoD at that time. He also brought to the attention of the CoI that he had voluntarily worked 2 days a month without pay during 2009-2010, along with some 10 other top management staff, which amounted to a personal loss of Rs 436,743.
Mr Gunawardena, a senior officer who held various portfolios at SriLankan, over the last 25 years, told the CoI that he was appointed CEO through due process of calling for applications, followed by interviews with top management, whereas his successor Kapila Chandrasena was appointed CEO by the BoD, directly, shortly after the BoD decided to sack him from the post.
According to Mr Gunawardena, the management level differences between him and then Chairman Nishantha Wickramasinghe came to a head when the latter became full-time Chairman, interfering in management affairs including trade unions of Flight Attendants, Human Resources Department, overruling CEO’s decisions and undermining his functions.
In 2011, the BoD unanimously decided that the Chairman should take up a full-time role in order to run the struggling airline.
Mr Gunawardena told the CoI that, following the ongoing management level crisis, after Chairman Wickramasnghe assumed a full-time role, he informed the Chairman of the difficulties in carrying out his duties and functions and hence, would not be seeking an extension of his present contract with only 3 months left for its expiration.
Nevertheless, at an urgent BoD meeting, the Board decided to sack Mr Gunawardena and appoint Mr Chandrasena CEO, with immediate effect.
CoI Chairman Retired Supreme Court Justice Anil Gooneratne, intervened to ask whether Kapila Chandrasena was ‘headhunted’ by then BoD, in view of the sudden removal of the incumbent CEO. Mr Gunawardena replied he had not seen any evidence to suggest due process was followed in appointing his successor.
Following his removal as CEO, Mr Gunawardena was promised by then Chairman Nishantha Wickramasinghe of a post with the same salary package within SriLankan.
He was appointed Director Promotions in Europe, tasked to cover SriLankan’s management services in Europe and North America.
“I had no option but to accept the post, as I was not given adequate time to consider other alternatives before my removal as CEO, 3 months earlier than scheduled in my contract.” said Mr Gunawardena.
Denying it was a dummy post created by the then management to accommodate Mr Gunawardena, as noted in the J.C. Weliamuna Committee report, Mr Gunawardena claimed that, though there were no clear demarcations set out on his job description, he formulated a document on his own of his plans to boost SriLankan’s revenue. His proposal to collaborate with other airlines for tourism and opening new potential air routes, were approved by the then Chairman.
- Testifying before the CoI on Monday, People’s Bank (PB) Assistant General Manager Corporate Banking, Kumari Nayana Senaratna said the Srilankan BoD approved a proposal to borrow US$ 32.5 million from the PB, to pay the imposed penalties for the cancellation of the leases of 4 Airbus A350-900 aircraft.
The CoI was told that a letter from the Prime Minister’s Office was sent to the PB seeking another loan of US$ 65 million for SriLankan and US$ 5 million for Mihin to restructure the 2 airlines.
- In January 2018, Chairman Suren Ratwatte requested the PB to convert an earlier loan of Rs 13.5 billion into a US$ loan, with a lower interest rate, on the basis that SriLankan was considering partnering a potential foreign investor. Consequently, SriLankan also paid Rs 3.93 billion as interest for the same loan taken in 2015.
The CoI comprises Retired Supreme Court Justice Anil Gooneratne (Chairman), Court of Appeal Judge Gamini Rohan Amarasekara, Retired High Court Judge Piyasena Ranasinghe, Retired Deputy Auditor General Don Anthony Harold and Sri Lanka Accounting & Auditing Standards Monitoring Board Director General Wasantha Jayaseeli Kapugama. The CoI hearings will continue on Tuesday.