18 April, 2024

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Sri Lankan Airlines & Weliamuna Report: Prosecution Of Negligent Auditors & Directors?

By Amrit Muttukumaru

Amrit Muttukumaru

Amrit Muttukumaru

Large-Scale corruption will continue to thrive so long as professionals – particularly auditors and lawyers (i) are not held accountable (ii) ‘named & shamed’ (iii) punished – for dereliction of duty and wrongdoing. Can any large-scale corruption occur without the complicity of professionals? Are not accountants and auditors the first line of defense against corruption in all entities dealing with financial resources?

This is precisely what is avoided even by purported good governance activists and the media in Sri Lanka. Although they talk the hind legs off a donkey on the evils of corruption, they fail to bite the bullet in regard to ‘naming & shaming’ professionals and bigwigs in the corporate sector.

Based on the Prime Minister’s statement, the J.C. Weliamuna Report into alleged corruption and abuse of power in Sri Lankan Airlines confirms this malady.

The Report which confirms in shocking detail what the discerning public has long suspected appears to have missed the wood for the trees by neglecting to give due attention to the fact that the alleged corruption and abuse of power by Chairman, Nishantha Wickramasinghe, Kapila Chandrasena (CEO) and others took place under the watch of the airline’s long standing auditors – Ernst & Young and its Board of Directors which included Messrs. Susantha Ratnayake, Nihal Jayamanne PC, Sunil G Wijesinha, Sanath Ukwatte and Manilal Fernando – many of them also in its Audit Committee – some even as Chairmen!

SriLankan airline 1

*Picture courtesy SriLankan Airlines Facebook page

Directors

As per Annual Reports, former Directors include:

Mr. Susantha Ratnayake – Chairman, Audit Committee for some years. He is a former Chairman, Ceylon Chamber of Commerce and incumbent Chairman, John Keells Holdings PLC – arguably the country’s leading private sector entity. He is also Chairman, Ceylon Tobacco Company PLC.

Mr. Nihal Jayamanne PC – Chairman, Audit Committee and its member for some years. He is a leading lawyer who is Chairman of the Law Commission of Sri Lanka and the Company Law Advisory Commission. He is also Chairman, Seylan Bank PLC.

Mr. Sunil G Wijesinha – Chairman, Audit Committee. He was a Director when Dr P B Jayasundera was Chairman and continued for a period when Mr. Nishantha Wickremasinghe succeeded him. He is a Chartered Engineer and until recently was Chairman, NDB Bank. Previously he was Chairman, Employers’ Federation of Ceylon and Deputy Chairman, Sampath Bank PLC.

Mr. Sanath Ukwatte – Member, Audit Committee is a leading hotelier. He is Chairman, Mount Lavinia Hotel Group

Mr. Manilal Fernando – a Director for some years is a lawyer. He is a Director of Aitken Spence & Co. PLC and Ceylon Guardian Investment Trust PLC (A member of the Carson Cumberbatch Group). These are leading corporate entities in Sri Lanka,

What does this convey about the professionals concerned and the private sector projected as the country’s ‘engine of growth’?

The Weliamuna Report while rightly recommending “criminal investigationsinto instances of alleged corruption which includes the entire re-fleeting process with brand-new aircraft costing $2.3 billion and “noting instances” where former Chairman Wickramasinghe and some others in top management should be “prosecuted” is apparently silent on proposed punitive action against the airline’s auditors and Board of Directors for any negligence of fiduciary responsibility inimical to the public interest.

‘Mihin Lanka’

Since we are on the subject of airlines, was it not a Past President of the ICASL and the OPA – Mr. Lakshman Watawala who was mainly responsible for the alleged “within 24 hours” BOI approval of ‘Mihin Lanka‘ not withstanding his reported admission to then COPE member Ravi Karunanayake (now Minister of Finance) “under normal circumstances it would take six to eight weeks at least”! (‘The Sunday Leader’ 10 December 2006).

The question is – will the government hold Mr. Watawala who has responsibility for many accounting bodies accountable?

Ernst & Young

The case of the airline’s longstanding auditors – Ernst & Young is intriguing.

Does not the question also arise why auditors are allowed to hold office in the same entity for extended periods?

Ernst & Young (together with PwC) was faulted for ‘Professional Misconduct’ by (i) the Supreme Court (ii) the Attorney-General (iii) Parliament’s COPE vis-à-vis the fraudulent privatization of the Sri Lanka Insurance Corporation. The ‘Supreme Court’ (SC FR Application No: 158/2007) in its landmark Judgment delivered on 4 June 2009, held the SLIC privatisation to be “illegal and invalid ab initio” and had ordered the removal “forthwith” of the auditors, Ernst & Young.

Although ICASL’s ‘Ethics’ Committee more than eight years ago endorsed the findings of its Investigating ‘Panel’ that a prima-facie case of ‘Professional Misconduct’ had been established against Ernst & Young and PwC and all their Partners, the ICASL has still not concluded its purported investigation of my ‘complaint’ of ‘professional misconduct’ made as far back as 8 August 2005. This appears to be of no interest to anyone!

It must be noted that (i) Dr. P.B. Jayasundera – former Treasury Secretary and former Chairman of the airline was Senior Policy Advisor to Ernst & Young (ii) The auditors of the private media controlled Press Complaints Commission of Sri Lanka as per its website is Ernst & Young.

Any guesses who the auditors are of Transparency International Sri Lanka of which Mr. J.C. Weliamuna is Chairman? As per its website it is Ernst & Young!

To cap it all, the incumbent President of ICASL – Mr. Arjuna Herath is a Partner of Ernst & Young.

Since it seems inappropriate to have the ICASL under the Ministry of Trade and Commerce, it is suggested that it be brought under the ambit of either the Ministry of Finance or Ministry of Policy Planning and Economic Affairs.

Conclusion

On the subject of ‘complicity’ Wikipedia makes the following observation:

“An individual is complicit in a crime if he is aware of its occurrence and has the ability to report the crime, but fails to do so. As such, the individual effectively allows criminals to carry out a crime despite potentially being able to stop it from happening, either directly or by contacting the authorities. The offender is a de facto accessory to the crime, rather than an innocent bystander.”

In this instance we are referring to auditors and Board Directors with fiduciary responsibility!

Those reluctant to hold professionals accountable and ‘name & shame’ wrongdoers have clearly lost the moral authority to speak of good governance and any pretense to combat corruption.

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Latest comments

  • 13
    3

    Oh! Amrit Muttukumaru, you have brought in something very big here. I agree with you 100% that these big guns like Ernst & Young and PwC are responsible too like Meryl Lynch etc messing up the world economy. Many thanks for disclosing names of all these big guys, hope fully they will be a little cautious now. So, what are we going to do. Going head on with these big shots are unimaginable with more than 80% crooks amongst the legal fraternity and the police soiling their pants when they see a lawyer. Only way out is to bring the Saudi law like someone has suggested before.

    • 3
      1

      Amrit Muttukumaru

      RE: Sri Lankan Airlines & Weliamuna Report: Prosecution Of Negligent Auditors & Directors?

      RE” *Picture courtesy SriLankan Airlines Facebook page

      Does that picture represent the former Chairman of the Ail Lanka, Mickramasinghe, the The Brother in Law of Medamulana MaRa, with his three Air Hostesses being taken to the three houses?

      “the former President’s brother-in-law Nishantha Wickramasinghe in his capacity as the Chairman of SLA, misappropriated funds of the institution to lease three houses which he had used for ‘other purposes’.”

      Just Curious.

      SriLankan AirLines’ Sexual Harassment: Rajapaksa’s Brother-In-Law Used Three Houses For ‘Other Purposes’

      https://www.colombotelegraph.com/index.php/srilankan-airlines-sexual-harassment-rajapaksas-brother-in-law-used-three-houses-for-other-purposes/

    • 1
      0

      It is very valid case Mr Ajit raised.If Ernst & Young and PwC are the auditors they should be ashamed and held accountable for being auditors.

  • 8
    1

    Ernst & Young should be fined and debarred from any Government audits. The “big names” mentioned should make sure that they are shamed and that never again will good men stand by and allow rogues to run the nation as they please. But will RW support this!?

  • 11
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    A brilliant expose! The author asks the question ….What does this convey about the professionals concerned and the private sector projected as the countrys ENGINE OF GROWTH?
    Perhaps,this is the ENGINE OF CORRUPTION!

  • 10
    1

    The government must proceed with the prosecution of the culprits without delay to show the present governments sincerity and action against corruption.

    This is total mismanagement and the non working Directors should have shown their objections atleast on some important matters. The names in the audit committees are all prominent persons in the industry and it is a shame they too did not respond with their objections which they should have been able to with their vast experience, knowledge etc.

    Nevertheless, some serious action must be taken by the government……..

  • 5
    1

    Late Awakening! They also work for a FEE like everyone else E&Y or PWC do audits in small areas for a fee and the big stories are hushed for a fee as well. Who knows off these payments again a kick back is given to the top heads, as mentioned in the report by all Sri Lankan air outsourced companies.

  • 5
    0

    I am sure these guradians of the “Accounting” world have their Reporting duly “covered”
    in the wordings of their Annual Audit Reports. Further any negative aspect of the Report
    is not in the public domain due to the Report being hidden in the first place and thereafter no journalist will dare to publish them under MR/White-vanning Democracy.

    Lets hope at least Weliamuna Report has gone into the SLA Annual Audit Reports, in each aspect of wrong doing they have now Reported on, to “Name & Shame” Professionals?
    Under MR, PBJ damed by Courts was brought back, with impunity.

  • 4
    2

    Mr. Muthukumaru

    Thank you for an excellent piece of writing . It is abundantly clear now , that due to a multitude of reasons including their own dishonesty , our politicians will not bring the miscreants to justice . Who do we turn to ?

  • 5
    1

    A very well thought out Amrit and this is what I was to think when the time of the Pamuka bank that went down as well.

    In this case, all these Big4 Auditors as well as those other Auditors like BR De Silva & Company whose principle Partiber is one accused in the Ravi K money laundering are just crooks who will do anything for perks.

    What is Nishantha Wicks, the former Chairman of SriLankan throw away a Rolex for any of these E&Y Partners and some free Business class tickets for a family vacation in Europe – all the accounts are doctored and all live happily.

    Interesting what the ICASL the Accounting watchdog have to say in this day time robbery of public funds?

  • 5
    0

    Yahapalanaya will have to also take action against some of the green minister too when taking action against professionals Even Ranil put his foot in the mouth by appointing a fraudster as governor central bank.
    Politics is you scratch my back and I will scratch your back and we are the idiots who put the tortoise on the fence post cos they are up there and do not know what to do there.

  • 4
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    All these people know each other, or know someone who knows someone, or is related to someone. Nothing will be done. When the whole body is riddled with disease, the politicians are arguing what shade of lipstick is suitable for an evening out.

    Who do we turn to? When there is nobody to turn to, situations like this often end in a military or civilian dictatorship trying to wipe out all the past evil and start again. We can see this with Islamic State today and Mao’s Cultural Revolution and Pol Pot’s Year Zero in the past.

    The alternative is for a determined leader to start cleaning up the mess from the top down and establishing a meritocracy. There is not much hope when he starts off by appointing his brother SLT Chairman.

  • 5
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    On the spot Mr. Muthukumaru. Was this manilal fernando appointed after he was sacked from the FIFA, the world soccer body for giving a bribe to another soccer official. If he was , it shows you MR’s standards and morals.
    The other guys have no standards. They will do anything for money or just to please someone and here to please the first family(Rajapakses)
    I do not think they are gentlemen , they are merceneries wearing a tie and carrying a brief case.
    If tehy cared for the country why didthey allow these two (Wickramasinghe and kapila Chandrasena ) to suck the money out of airlanka ? shame, shame

  • 4
    1

    The govt is too busy trying to incriminate MR and GR with corruption and they allow all other crooks to get away. The named men are from the top echelons of commerce and probably with connections to the Royal Club. They will be allowed to get away with their crimes. Corruption will soon reach new heights.

  • 3
    1

    IT SEEMS TO ME THAT MR WELIAMUNA BEING WHO HE IS WOULD HAVE SAID A LOT ABOUT THESE ROGUES IN HIS REPORT THE WHOLE OF WHICH WE HAVE NOT SEEN.

    IF HE HASN’T, METHINKS, HE TOO, AMONG OTHERS, HAS A CASE TO ANSWER.

    • 0
      0

      Mr Weliamuna here is your chance to say something and clear your name. Otherwise it will be a case of ” Umbe kateth pas – Mage kateth pas (= veli or sand in both your and my mouths).

  • 4
    0

    My congratulations to Mr. Weliamuna and Mr.Mutukumara for their bold statements.This occurs is worse in the Private Sector where I am involved at a school. I hope one day just will prevail in this institution too. Can I have any help?

  • 5
    11

    Amrit was warned by the courts for defamation and was asked to stop slinging mud at people when he started his usual tactics with Raveendran, Rotary International head.

    Looks like he has started the nonsense again.

    • 9
      2

      Jagath Fernando ,

      “Looks like he has started the nonsense again. “

      could you be more specific , which part of the article is nonsense to you ?

      • 0
        0

        Some statements on the analysis would heart a few! Anyhow bottom line is that man called N Wickramasinghe around whom all the Leaches stuck!

    • 1
      0

      For my credibility, I am constrained to respond for purpose of record.

      The only response of one Jagath Fernando to my article to give perspective to the alleged corruption in Sri Lankan Airlines is his fairy tale that I “was warned by the courts for defamation” vis-à-vis “Raveendran, Rotary International head”.

      This is not factual and therefore he has made a statement that is defamatory of me.

      If Fernando considers that I have indulged in “slinging mud” by the same token he also considers the Weliamuna Report as an exercise in “slinging mud”

    • 4
      2

      I am constrained to respond since an aspersion has been cast on my credibility.

      The only response of one Jagath Fernando to my article to give perspective to the alleged corruption in Sri Lankan Airlines is his fairy tale that I “was warned by the courts for defamation” vis-à-vis “Raveendran, Rotary International head”.

      This is not factual and therefore he has made a statement that is defamatory of me.

      No court anywhere in the world has ever “warned” me for anything – let alone “defamation”!

      Since Fernando has mentioned “Rotary International” I state with responsibility that it is a corrupt organization.

      Let me inform Fernando that I am not in the business of “slinging mud”. All I state is based on fact which may not be to the liking of some.

  • 3
    1

    All Lankan state enterprises have appointed “auditors” who monitor the financial progress of these institutions and table an annual report.
    Some ‘doctor’ these reports to show a ‘rosy’ picture of ‘achievement’ by them – by various ruses.
    One such is by not showing ‘depreciation of assets’ which always is considered a ‘loss’.
    In the eighties, the board of directors & family members of Air Lanka were entitled to free annual trips to countries of their choice as determined by the board itself – which was a ‘loss’ not shown in the annual report.
    Thus, Annual Reports can be ‘doctored’ in various ways,to give a ‘rosy’ picture of ‘achievement’ when the reality was the opposite.
    Such ‘doctoring’ may happen only in some annual reports or, only in reports of some state enterprises.

    Ernst & Young appear to have behaved in this manner – else, how could the financial losses/improprieties of the two airlines, been kept a secret so far.

  • 3
    0

    SPOT ON MAN! FULL SUPPORT FOR YOU. HOW CAN WE MAKE THIS HAPPEN. THESE ARE THE TRUE SOURCES OF CORRUPTION. IF THEY HAVE ANY INTEGRITY THEN CORRUPTION WILL NOT BE POSSIBLE.

  • 3
    0

    Maintaining professionalism and integrity is a separate science in any person’s life. And the beauty of this deal, is that it has nothing to do with the qualifications or ranks you already possess in an organisation.

  • 4
    0

    Gunning for MR & GR for votes and now big wigs in SL Commerce in the melee with Auditors and the network exposed. Many clapping hands.

    Dump on the CID. The O/L & A/L passed Investigators for an inquiry of such magnitude. ITS NOT FAIR.

    Royals, Thomians, big wigs, Company Chairmen, Auditors all in the net.
    Its a RW & Yahapalanaya soup.This has now become a COMEDY CUNTRYAK.

    GET THE man on the street TO iNVESTIGATE….. OMG. has Ranil chopped his own Onions again ???

  • 4
    2

    First file the case against those who, irrespective of their status and chairmanship , directorship etc, had fiduciary responsibility , then all the related party for plundering will get caught.including the so called auditors.

  • 8
    2

    What do you expect? Rogues monitoring other rogues. Setting roges to catch other rogues. Sri Lanka rich and powerful all belong to a family of rogues.

  • 18
    3

    The author of the article has used a broad brush to judge and condemn auditors and directors. What we need is not sensationalism but a due processes to be followed in such an investigation.

  • 18
    4

    Had the auditors and directors being given an opportunity to give their views?

    I know some of the directors; they will never bow down to power or influence to compromise their values.

    its a known fact that they did not summoned regular board meetings for the past few years as well

  • 2
    3

    I am constrained to respond since an aspersion has been cast on my credibility.

    The only response of one Jagath Fernando to my article to give perspective to the alleged corruption in Sri Lankan Airlines is his fairy tale that I “was warned by the courts for defamation” vis-à-vis “Raveendran, Rotary International head”.

    This is not factual and therefore he has made a statement that is defamatory of me.

    No court anywhere in the world has ever “warned” me for anything – let alone “defamation”!

    Since Fernando has mentioned “Rotary International” I state with responsibility that it is a corrupt organization.

    Let me inform Fernando that I am not in the business of “slinging mud”. All I state is based on fact which may not be to the liking of some.

  • 3
    1

    Well done Amrit. It is sad to see people we think as decent professionals been so callous. A similar group of professionals work for few top seriously corrupt businessmen who control the private sector. Then the Chartered Institute gives newly created awards to these same crooks. What a sad state our professional institutes are in . Survival and profits and money the only mantra they know

  • 1
    0

    Where does the responsibilities and accountability of the Board of Directors come in. Have they obtained benefits indirect benefits for themselves or their other institutions through these corrupt deals and acts? Have the auditors not pointed these to the SLA directors for action if not why? If so who no action was initiated? What was the COPE doing?

  • 2
    0

    a good reading for those against corruption in Sri Lanka.
    when the pretty daughter of Arjuna Mahendran married the guy in the center of this scandal, the wedding dress was from Vera Wang for USD10,000 who is the first choice for royal weddings and celebrities including Chelsea Clinton, Ivanka Trump, Alicia Keys, Mariah Carey, Victoria Beckham, Avril Lavigne, Jennifer Lopez, Jennifer Garner, Sharon Stone, Sarah Michelle Gellar, Hilary Duff, Uma Thurman, Holly Hunter, Kate Hudson,Khloe Kardashian and Kim Kardashian. Wang’s evening wear has also been worn by Michelle Obama.

    http://www.fashionscandal.com/2012/11/amritrajs-big-fat-wedding-in-colombo/

    Is this the money belongs to you and me?

    • 2
      0

      WOW, good find Sulochana who says we are a poor country when some of our countrymen can afford a USD10,000 wedding dress from none other than Vera Wang no matter how that money came in.

      Yes, it was a big fat wedding with our tax money and guess what, nothing will come out of this drama of a inquiry by known UNP lawyer troika as all of them are inter related in schools/clubs/family/society and we the fools are the masses who expect them to deliver a sociery free of graft and insider trading on 8th January.

  • 0
    0

    Mr.Muthukumaru. Doesn’t the ‘COPE’ has to bear its fare share of the blame IF the Weliamuna report is proved RIGHT?

    • 1
      0

      who is ultimately responsible for taking actions against “COPE” ? Mafia king made all the findings of COPE report null & void , contact DEW Gunasekara for futher details .

  • 4
    0

    I as an ex-employee shareholder of Srilankan Airlines questioned Earnest & Young at the Annual General Meetings of 2012/2013/2014 as to why they fail to make a qualifying statement to the effect that the company is not a going concern with huge losses incurred and expressed my displeasure when their representative failed to answer.The Chairman & the Board were very annoyed when I questioned them for hiring Earnest & Young as an external Auditor continuously for more than five years as I felt that Earnest & Young were toying the line with the company and reports are made to please the company and hoodwink the public and the shareholders.Criminal charges must be brought against the rest of the Board of Directors and Earnest Young for aiding and abetting the large scale manipulations.

  • 1
    0

    What about a Secretary to Minister, Lalith, who places the final signature, for any deal that is passed by his superior. Would he also be an accomplice according to the Wiki definition.:“An individual is complicit in a crime if he is aware of its occurrence and has the ability to report the crime, but fails to do so. As such, the individual effectively allows criminals to carry out a crime despite potentially being able to stop it from happening, either directly or by contacting the authorities. The offender is a de facto accessory to the crime, rather than an innocent bystander.”

    • 0
      0

      No, I think Lalith is not guilty in this instance.To be “aware of its existence” one has to be knowledgeable and has the ability to read and understand the report and operations of the enterprise. A stupid Royalist like Lalith would not have such knowledge.

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