16 July, 2019

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Sri Lankan Airlines Rs 338 Million Fraud: In Flight Duty Free ‘Day Light Robbery’ Still Continues

The Board of Inquiry into the misappropriations of Sri Lankan Airlines findings highlights a massive figure of US $ 865,398 that was written off by Sri Lankan Airlines due to a retrospective amended change made to the original contract signed between the national carrier and Phoenix Duty Free Services. However Colombo Telegraph reliably learns that this particular finding led the airline to lose a further monumental amount of US $ 2,596,198 over the subsequent next two years of 2013/2014 & 2014/2015.

Raju Chandiram

Raju Chandiram

The Board of Inquiries’ findings revealed that the former CEO Kapila Chandrasena, the former Chief Marketing Officer G.T. Jayaseeelan and Head of Finance Yasantha Dissanyake had submitted a board paper on the 26th September 2013 seeking the airline’s Board of Directors to retrospectively amend the agreement seeking approval to write off a figure of US $ 865,398.

This amendment which was approved and changed by the former Board of Directors for the financial year 2012/2013 has now proved be a suicidal decision the former Board of Directors of the airline made as it affected the bottom line of the airline for the next two completed financial years of 2013/2014 & 2014/2015.

The report’s highlighted loss of US $ 865,398 per annum was only for the initial contractual year ending 2012/2013.

This meant that with the guaranteed payment terms been defined on an ascending ‘year on year’ that amendment realistically affected the struggling airline a minimum of US $ 2,595,198, which is three times the said written off figure which should include the now completed financial years of 2013/2014 and 2014/2015 as well.

With the now commenced 4th operational year of this contract in effect as of 01/04/2015, the airline is set to lose out at least another US $ 2 million in the next two years when the contract eventually expires.

“Should not this contract be immediately terminated as it is now proved to be the case where innocent tax payers monies are being robbed of in the broadest of day light?” asked a rather disgruntled employee of the national carrier.

The reason for the execution of what now seems to be a fraudulent ‘business deal’ from the beginning of this contract itself is that Phoenix Duty Free Services had agreed originally to pay a guaranteed fee to the airline per ‘passenger’ traveled as opposed to the sale of duty free carried out on board.

It is reported that Phoenix Duty Free Services on signing the contract and after a year questioned the airline about the definition of a ‘passenger’ travelling on multiple sectors on a single journey.

For example a single passenger travelling the journey from London to Mumbai would have to travel on two flights such as London/Colombo and then onwards from Colombo/Mumbai.

The confusion lay in if this said passenger is counted as ‘one’ or ‘two’ for the ‘Origin London’ to ‘Destination Mumbai’.

During the month of September 2012 a meeting was held at the Board Room of the Sri Lanka Airlines office at the World Trade Center where the then Chief Marketing Officer (CMO) G.T. Jayaseelan openly informed officials of both the national carrier and Phoenix Duty Free Services that a colossal count of an average of 37% of passengers who travelled on the entire Sri Lankan Airline network were classified as ‘Origin to Destination’ travellers and the passenger count was duplicated in their books.

This open revelation by the CMO Jayaseelan led to the writing off of 37 % of the guaranteed payment that Phoenix Duty Free Services had to pay the airline.

What has had many questioning the former Chairman Nishantha Wickramasinghe and CEO Kapila Chandrasena, the Board of Directors and the Phoenix Duty Free Services officials is if this was all part of greater well-orchestrated, strategically planned and execution of the perfect robbery of the national airline from day one of this signed deal?

A disgruntled airline official went on to say “anyone with an ounce of a brain would come to the conclusion that the national carrier with seasoned airline professionals such as Chief Marketing Officer G.T. Jayaseelan, Head of Finance Yasantha Dissanayake and the former Board of Directors could not have missed something as elementary as this?”

‘Who and who’ benefited

It will now be interesting to find out as to ‘who and who’ benefited and continues to still benefit from this ‘ongoing fraud’ as most of the Senior Management Team of the airline and former Directors of the Board all went ‘gaga’ then about this ‘unbelievable’ contract that was offered initially to the airline, said a senior manager who did not wish to be identified. He is barred from officially talking to the media.

Airline official also went on to say that due to the poor planning of the airline’s Senior Management Team a shortage of ‘Cabin Crew Supervisors’ took place, where a huge total of 225 flights in August and 189 flights in September of 2013 departed Colombo without the carriage of duty free goods for sale on board.

Phoenix Duty Free Services then went on to compile the passenger loads of this total of 414 flight doubling it to include the return sectors and based on the original contract, another colossal amount was written off by the airline for the failure on their part to carry duty free goods for sale on board.

Other notable findings by ‘Colombo Telegraph’ is that the supply of the current Business Class toiletry kit branded ‘Bvlgary’ was offered to Raju Chandiram who was instrumental in submitting a sample to the Product Development Department of the airline and securing the deal without a tender been called for the supply of it. Currently that product is delivered to the airline through one of Raju Chandiram’s Chinese contacts.

One other openly violated practice of the existing contract is that the items purchased by Phoenix Duty Free Services using the Sri Lankan Airlines ‘bar code’ which in contractual agreed terms does not come directly from the supplier to the bonded warehouse in Katunayake but goes instead to a warehouse in Singapore.

Colombo Telegraph’ reliably learns that duty free goods such as alcohol, cigarettes and perfumes are widely known in the duty free circles to be fraudulently sold through what is known as ‘cross border’ sales otherwise known as the sale of ‘black market’ duty free goods to third parties.

The five year contract with a possible further two year extension was originally signed by the former CEO Kapila Chandrasena and Manager In-Flight Services Rashmore Ferdinands representing Sri Lankan Airlines and CEO Dilan (Rumesh) Wirasinghe and Managing Director Raju Chandiram of Phoenix Duty Free Services.

Rashmore Ferdinands one of the signatories of the now controversial duty free contract takes care of things for Phoenix Duty Free Services as an employee of the airline and continues to hold onto a lucrative Grade 10 Managerial position reaping the benefits of all the perks that comes with the post.

Formerly the job Ferdinands now holds was entrusted to an employee who held a lesser Grade 9 post within the airline when the entire business of duty free purchase, warehouse and sale was completed by the national carrier.

A member of the Flight Attendant Union (FAU) also complained verbally that during the first 18 months of the operation Phoenix Duty Free Services deprived the entire airline’s staff of the contractually signed discount percentage.

After a colossal loss and 18 months later it was rectified to what it should have been, where all staff now get a 25 % discount on all products purchased on board.

“I hope the Bribery Commission and Inland Revenue teams get on Raju Chandiram’s case and investigate him and also arrest Dilan ‘Rumesh’ Wirasinghe whenever he comes down to Colombo. The new Chairman Ajit Dias and his team should attempt to recover our robbed monies from Phoenix Duty Free Services in the first 18 months. This amount blatantly stolen by depriving the staff of their due discount seems meager and has gone unnoticed due to the severity of the bigger amount of money that has been scientifically siphoned off the airline” complained the FAU Member.

The panel headed by anti-corruption advocate and senior lawyer J. C. Weliamuna has observed that in September/October 2011, M/S Phoenix approached the former Chairman Nishantha Wickramasinghe and the former CEO, Kapila Chandrasena, and submitted a proposal to outsource the Duty Free Services at SLA to M/S Phoenix. The BoI also noted that the Srilankan airlines has never contracted with M/S Phoenix before.

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Latest comments

  • 9
    3

    Looks like some interested party is trying to secure this contract by hook or crook. [Edited out] If the facts are correct justice must take its course or is it a gimmick to secure the contract ? [Edited out]

    • 3
      0

      Yes. You have hit the nail on head. We will expose who these people are soon. We are waiting.

    • 8
      0

      Doesn’t matter if an interested party is trying hard to secure the deal…

      THIS IS DAY-LIGHT ROBBERY!!! ….

      First, bring to book the culprits from the airline and the CEO Raju.. make them pay back what is due along with interest… Then offer business via a tender so bidders get a level playing field..

      All associated with thE former regime seem to be crooks who raped the country in each and every possible way… NET THEM ALL… make they accountable and send em to jail for plundering the national wealth..whether it be a CEO, minor employee or even the ex pres… ROGUES ALL… why do they even wear clothes I wonder.. they all would sell their mothers if the price is right…SHAMELESS MORONS

      • 3
        2

        Snowden it matters. Those interested parties hell bent on deceiving this government and tarnish the image of the government. They are working on MR clan so once the report is really challenged in the court It is not these interested parties but government will get the bad name and the Government image will be spoiled. We should not let these MR sponsored coolies to discredit this government.

      • 2
        0

        No hold an inquiry [Edited out]

      • 0
        0

        This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

      • 1
        1

        No one bothered to see how much profit Sri Lankan duty free made before contracted to Phoenix Duty Free Services. Prior duty free services was running at a loss and finally making profit with Phoenix. All the numbers provided to Weliamuna Investigation to Sri Lankan duty free allegation by director who is eying to get the duty free contract.

    • 5
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      One of the directors who is very keen to see current duty free supplier out from the Sri Lankan and wanted to get in to this business. this director who flies London -Colombo every week using discounted economy class ticket and confirmed upgrade to business class has very corrupted track record.

  • 0
    0

    This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

  • 15
    1

    How are there so many allegations and charges against this vulgar piece of dirt Rajapaksa but not one Rajapaksa dirt bag has been arrested???? Hey Ranil have the court give orders to arrest these dirt bags now!!!!! Charge them for treason, murder, mayhem, slaughter of innocent Tamil civilians and many more.

  • 5
    0

    While millions lost like this on fixed contracts passengers are cheated with on air gift vouchers for flight delay cancellation etc They insist to buy liquor!

  • 14
    0

    Interesting to find out who really want the Jokers back and why. Investigate those jokers as well and put them where they belong to. May be Mattala Airport could be turned into a Jail to house those found guilty of massive corruption. Please make sure the Air conditioners are removed.

    • 7
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      Mattala even without air con is super luxury to these morons… why spend any money> …use the bunkers that were used by the Army and the LTTE instead, so these asses will sweat their brains off for cheating the entire country… this MUST include the TOP executives along with the Country’s EX CEO, his siblings, sons kith and kin too(whoever benefited)

  • 5
    1

    The original Bulgari product is made is France. How is a Chinese contact supplying this item to UL?

    Has anyone bothered to verify if Phoenix was supplying original OEM products or Chinese knock-off’s?

    It is tragic to see how a country literally goes to the dogs, when the leadership is corrupt and criminal. Whilst the Rajapakses were plundering in the Billions, there was no-one paying attention to the Millions that were being stolen.

  • 0
    0

    The original Bulgari product is made in France. How is a Chinese contact supplying this item to UL?

    Has anyone bothered to verify if Phoenix was supplying original OEM products or Chinese knock-off’s?

    It is tragic to see how a country literally goes to the dogs, when the leadership is corrupt and criminal. Whilst the Rajapakses were plundering in the Billions, there was no-one paying attention to the Millions that were being stolen.

  • 5
    0

    Suggest Hambantota Zoo and Park be converted into an open prison and all the family and cronies be given life terms to feed and look after the animals and tend to the park.

  • 6
    0

    Most of the government service is stuffed with Rajapakshe appointees. The numbers must be staggering considering the years the UPFA has been in power when you combine the CBK years and the Rajapakshe years. To these people corruption by their own kind is invisible. They don’t see it. Even when they do they find some other irrelevant accusation that they can hurl at the opposition and hide behind it while doing nothing about their own corrupt practices. Eventually they got so good at this that they forgot what the correct procedure was, and enshrined the corrupt method of doing business instead. Now can you understand how hard it must be for these idiots to come to terms with what they have done and even begin to fix things. I am of the view that these mupets prefer to usher in Rajapakshe so they can continue doing business as usual rather than try to fix all the wrong and send to guilty to jail. Its too hard to do that!! Always follow the path of least resistance!

  • 6
    0

    Is it suggested that the company must pay the air line the guarnteed price on each sector of a flight ?A passeger flying from colombo to london with a stop over in Dubai to be considered two passengers ?

  • 2
    1

    What a scoop by CT. It’s better than weliamunne’s report !
    With almost every department if this airline robbing it how did successive governments expect it make profits ?

    The many clowns who were installed as Chairman, Board of Directors, useless CEOs and many others allowed these rackets to go on for so long and are today pretending they didn’t realise what was going on under their very noses ??
    These chaps should be made to pay back and their illgotten assets should be confiscated pronto. But what is Ranil, Maithree and yahapalanaya chsps doing except talk, talk & tslk ?

    Shame on these racketeers for robbing their country

  • 4
    2

    It is Crystal clear now that not only Nishantha and Kapila but the senior Managers of this Airline are also corrupt. Ranil should act now by replacing the entire senior Management team if this airline to have a future.

  • 6
    1

    There is no point referring this report to attorney general office for action.As Field Marshal Fonseka stated in recent sirasa program, the attorney general is inefficient, the reason for undue delay in prosecuting corrupt Mara cronies is that Attorney General is soft peddling with these cases in his office.

  • 3
    0

    This is how MR and family/friends managed the country. Robbed, wasted, misused, ruined the image of the country and let down the people who voted them to power.

    What is the present government doing? They promised to catch all thieves and punish them. What we have seen is only a few people being inquired by the Bribery commission,a few produced in courts and bailed with ban on foreign travel. Is this good enough? Has their passports been withdrawn? We also appreciate no “jungle laws” are applied now but all actions are being done in a very legitimate manner and the present government also would be having difficulties in pushing faster the probes as there are plenty of men in important positions who support and want to cover the previous regime. However, this should not be an excuse by MS/RW government
    But they should find suitable people to per sue these investigations and punish the culprits without delay. People are losing patience!!!!

  • 5
    0

    It is well understood in airline business if a passenger travels from London to Mumbai will travel in two sectors. That is London/Colombo and then onwards from Colombo/Mumbai. If any rationale thinking person knows for duty free it is only one passenger as his origin is London and Destination is Mumbai. The airline ticket also will purchased by that person for one amount for London to Mumbai. If the report argues this is a wrong practice we need to reexamine the validity of the reports if the people submit this reports not understanding the fact.

    It is also missing in the report that the rates adjusted for reassigning the passenger definition by increasing original rates. That is the another fact not revealed in the report. If report is to be complete and not biased why it is not revealed in the report. It seems someone in the airline so desperate to hide the facts and misled this government to wrong path to satisfy their own needs. CT please look into these. There are lot of things in the report I can reveal that done in the same manner. When truth comes out it is going to hurt. We will reveal all other truths about this report very soon. More to come. Interested parties will get hurt and this government will know who are the people in Sri Lankan Airlines cheating this government.

  • 4
    1

    no wonder why Wicramasinghe and Chandrasena were gifted with Rolex watches

    • 1
      0

      those also could be copies from China but, with pride the idiots wear…

  • 5
    0

    Sick of reading these allegations. If you have proof, arrest them and let us talk later. Politicians, Police and the Legal Team, this is for your attention.

  • 2
    0

    It is to my amusement that CT published this articles without verification. All i can see there are lot of facts which are critical to evaluate duty free are greatly missed. When it goes through process CT will know the source of articles intention and their background though it says by Colombo Telegraph.

  • 9
    2

    Nothing is impossible when the TSUNAMI HORA was elected as the PRESIDENT of our country.

    When a crook as bad as a person who robbed the poor victim’s money who were tormented by a disastrous catastrophe without any shame or feeling, was foolishly elected as the Head of State, all these should have been expected.

    The worst part is still there are learned idiots like DAYAN,VASU,GEMBAMPILA AND OF COURSE MUTT BOORUWNSA still clamouring to bring back this MONSTROUS STATE PLUNDERER, what more could you expect from a gullible innocent village folk.

    That sums up the IQ level of our country, which point always raised by Amarasiri in this forum.

  • 4
    1

    CT Please check the new CEO Rakitha history and What connection he is having with duty free business. [Edited out]

  • 0
    1

    This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

  • 4
    0

    Absolutely disgusting, we knew the ex-regime was stealing from the Tax Payers money, but only now do we see the magnitude of it. One can only imagine how much of the stolen wealth they are going to enjoy from now to death.

    President Maithripala Sirisena was voted by the public with the hope for better livelihood, should the crooks from the past be brought to justice, Sri Lanka can be easily developed into the Paradise country it is. Employment opportunities can be created in SL for the poor maids and laborors currently struggling in the Middle East and other countries.Well qualified Sri Lankans can be given their entitlement while they help the country develop.

    Why is it none of these are happening, are we being hoodwinked again?If so, may the lot of them rot in hell. God Bless my mother country.

  • 0
    1

    This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

  • 2
    6

    I am a crew member with Srilankan. I can categorically state that since Phoenix have taken over the duty free inflight business, our personnel commissions and revenue earned from duty free sales has been at its highest levels. Many times I have earned monthly commissions that are higher than my salary . Their catalogue and products are world class, and with the discounts and incentives they are one of the cheapest in the world . I can see that somebody is trying hard to knock them out for their own personal interest … yahapalanaya ???

  • 1
    2

    I agree with the comments made by Business Class…….. with all the much bigger business going on in the airline , why is this small matter which is in fact bringing the company the highest revenue ever in this sector , being singled out. [Edited out]

  • 5
    1

    Harry Hatton hit the nail on the head. It is ridiculous to assume that a passenger (customer) traveling from Colombo/Dubai/London is likely to purchase duty free in both sectors and expect the operator to pay a guaranteed commission for each of the sectors for the same passenger! Very rarely duty free operators offer a minimum commission guarantee these days based on number of passengers flown as it is advantageous to the airline and detrimental to the operator. Kudos to the airline for securing a minimum commission guarantee contract. The bottom line however is did the duty free service make more money before it was subcontracted to Phoenix???? Understandably the duty free supplier who preceded Phoenix is disappointed and bitter. Guess what, the new government appointed him to a prominent position in Sri Lankan airline. Believe it or not!

    • 0
      1

      [Edited out]

  • 2
    0

    think about this- the current newly appointed ceo has his own duty free supplying company and isn’t that a conflict of interest for the airline?? I don’t understand why such a person is appointed but the organization need a person like Peter hill as the ceo who is a consultant now. Seriously what’s going on ha!

  • 0
    2

    why not make the Maththala airport a prisona and hold all these Rajapaksas and their henchmen in a single location?

    That is a way to use that property for some viabale project too.

  • 0
    4

    Guys,

    Have you heard about the old funny story about Southern Region of Sri Lanka? When you bring a cat from South they say “Tie strictly the eyes of the CAT if you are bringing a cat from Beyond Bentota River?” It is such a critical thing even a cat comes from South to Colombo and Kandy. Do you see the truth on it now? It is really funny, but very visionary story. People of this country certainly need to study from this. We had 6 presidents before My3. All 6 presidents are from the following regions:

    1.My3: Pollonnaruwa
    2.MR: Werakettiya (Beyong Bentota River)
    3.CBK: Colombo or Gampaha
    4.DB, Kandy
    5.Premadasa: Colombo
    6.JR: Colombo
    7.W.Gopallawa: Matale

    Do you see the geography of these peoples? Since this country consists full of multi-ethnics, religions, values, believes, histories, and traditions of people, it needs a president/prime minister who can appreciate the multiple subject issues and should come from diverse background to deal and make sustainable decision. It clearly underlines places like Colombo, Kandy, Gampaha, Matale,and Pollonnaruwa are ideal for leadership where we can see diversity. Werakettiya and Beyong Bentota River, I do not think so! – It does not match the requirement for Sri Lankan geography and its diversity. Werakettiya or Medamulana, Hambantota are isolated with bunch of countryside philosophies and close mind-set up. Even Northern region people cannot rule this country as once again isolated with one way thinking because of its geography and political demarcation. I do not speak this with hate speech. With all respects to the Southern and Northern hospitalities, I had a lot of respects to Southern culture. But because of this Medamulana, Hambantota culture, I have lost my faith in South. May be all presidents had their own problems, and failures due to the situation of the country. But nobody steal the country like Mahinda. Because he and his cronies clearly adapted Medamulana, Hambantota (beyond Bentota) culture for his presidency. His isolated sick thinking, failures, and frauds are 36,000 feet high like Sri Lankan Airline. This is why visionary person said don’t even bring a CAT from / beyond Bentota river. It is danger. If so, can we have a president from Beyond Bentota?

    Watch this space!

    • 1
      0

      I feel really “worried” for disturbed people like you “Worry”. Go seek mental treatment soon or else you are a threat to sane people. Hurrrrryyyyyy

      • 0
        0

        Business Class

        I knew, I made a tough statement and I acknowledge that. I appreciate your concern and I am so sorry if I hurt your feeling. As I said, with all respects of South and North and their hospitality and as such, please study the location, geography, language skills, thinking process, ethics, reconciliation, moral values, so and so forth of Prabakaran and Mahinda. You will understand there is not much different between these figures. It is simply polarization and isolation (North-South mentality). You want to make a change, then come to the main stream.

        Cheers,

        • 0
          0

          It’s not a tough statement by any means, it’s a really stupid statement . Hurry and seek medical treatment.

  • 0
    0

    all the revelations allegations made nothing have been done, by the time
    you finish proving all this corruption murders, robbing the country Blind
    The people would have forgotten.
    Why don’ you do what the previous regime did to General Fonseka and so many others. Lock them all up and let them prove their innocence.
    This should work wonders. Judiciary was a mockery, Now Take ACTION, before it is too late.

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