‘Beggars on Horseback.’ In modern Sri Lanka it is beggars on A- 320s.

‘Beggars on Horseback.’ In modern Sri Lanka it is beggars on A- 320s.

Rajapakse brothers who are involved in the deal consider this ‘investment’ of Rs 1.1 billion mere peanuts.
Editorial

Probe Viability Of Mihin Lanka

Top executives of America’s three automobile manufacturing giants — General Motors, Chrysler and Ford — flew into Washington last week in their executive jets to plead with the US Congress for a $ 25 billion bailout to prevent their firms going into bankruptcy by the end of the year. Congress refused the plea and asked them to produce a viable plan for the recovery of the automobile industry before risking $ 25 billion of the taxpayers’ money could be considered.

This concern of America’s supreme legislature to safeguard the taxpayers’ money is quite relevant to Sri Lanka in the context of the approval of Rs 1.1 billion by the cabinet last week for the resurrection of the government’s dead duck airline Mihin Lanka which was grounded a little after one year of its operations, having incurred a debt of $ 15 million and was unable to pay the leases for the aircraft it had hired. What those patriotic cabinet ministers whose patriotism seem to effuse through every pore of their bodies should have considered like what the US Congress did was whether the pumping in of another Rs 1.1 billion of state funds with the economy in a perilous state was the need of the moment and basically whether this dead duck could be resurrected.

Was there a plan for the development of the airline submitted to parliament or even the cabinet of ministers? No report indicated such exercises in transparency. Apparently the Rajapakse brothers who are involved in the deal consider this ‘investment’ of Rs 1.1 billion mere peanuts.

The American legislators had also taken umbrage at the auto industry executives flying in their private jets to Washington to plead for $ 25 billion. A Congressman told the auto industry representatives: ‘You don’t fly in executive jets with a tin cup in your hand and ask: Buddy, can you spare me $ 25 billion?’

This example too has parallels in impoverished Lanka. Our President with his large entourages has been flying to many countries with the begging bowl — Iran, China and Japan pleading for economic assistance. And the irony of it all is that at times the loss making Mihin Lanka has been the carrier of our royal expeditionary entourages.

In ancient times they spoke of ‘beggars on horseback.’ In modern Sri Lanka it is beggars on A- 320s. Why on earth this poor country needs another airline defies simple logic and reason. We have a national airline, SriLankan, now at the sole disposal of the government — its major shareholder, Emirates, having given up their role in management. Mihin Lanka is named after Mahinda Rajapakse, not Mahinda the Arahat who brought Buddhism to this country. Mahendra, Mahinda and Mihin are all one and the same name. But whether the establishment of this airline is an ego trip or not, it is run on public funds.

This is the worst time for commercial airlines. Leading airlines such as TWA have closed down. A few weeks ago Italy’s national airline Alitalia was threatened with closure. In India big private airlines have run into deep financial air pockets. But Sri Lanka in a deep economic mire with Rs. 177 billion allocated for an internal civil conflict and now hard put, and with foreign reserves at a low ebb compelling it to cut down on imports, surprisingly votes Rs 1.1 billion to revive a dead duck.

The public will be entitled to know whose enfant terrible this airline is. The interest evinced by the ruling Rajapakse brothers is all intriguing. As reported exclusively in last week’s The Sunday Leader, the Cabinet Memorandum for provision of Rs 1.1 billion had been signed by the elder brother (Loku Aiya) Chamal Rajapakse. The report indicated that some kind of drawing room family drama was enacted at the cabinet meeting with President Mahinda playing at one stage, the role of the devil’s advocate to demonstrate his impartiality on the deal.

The advantages and disadvantages of the aircraft proposed to be leased and that leased earlier were discussed, brother Chamal citing the advantages of the proposed aircraft and brother Mahinda defending the earlier leased out aircraft. After much discussion with loyal yelps from Ministers like Bogollagama and Susil Premajayanth and traditional pot shots taken at Ranil Wickremesinghe, the Rs 1.1 billion for Mihin Lanka and Rs 6 billion for the proposed Weerawila Airport were approved from the budget of 2009.

Mihin Lanka and even SriLankan also seem to be entwined with the trinity of the Vass Gunawardena family. Young Sajin Vass Gunawardena who had developed a close friendship with Mahinda Rajapakse is widely regarded as the God Father of Mihin and his brother Manoj Gunawardena is now the CEO of SriLankan. Father Ajith Vass Gunawardena who was appointed head of the newly created development bank Lankaputhra dumped a colossal Rs. 300 million into Mihin while the Bank of Ceylon was asked and did provide Rs 1.1 billion in overdrafts. Meanwhile Mihin Lanka owes Rs 645 million to the Petroleum Corporation which is now buried under the hedging funds obtained from foreign banks running into millions of dollars. With inflation running around 30 per cent the government has made massive borrowings from international banks such as the HSBC, JP Morgan and Barclays running into millions of dollars.

The state of finances of the country is as chaotic as the traffic at the Colombo North entrance by the Kelani river and the financial stench much greater than that from the mountains of garbage dumped near by. The government is no doubt in a happy state winning the war against the LTTE with Rs 177 billion of funds allocated to it although the casualty figures of our war heroes are not disclosed to the media.

The stench emanating from Mihin Lanka cannot be ignored. It has to be investigated by parliament and even foreign donors to whom we extend our tin cans because it is the people who eventually have to foot the bill for this wasteful extravagance.

Bogollagama bats for Mihin

Foreign Minister Rohitha Bogollagama yesterday defended the bankrupt budget airline Mihin Lanka by claiming that the appropriate question was not whether the airline was mismanaged but whether sufficient capital investment was made in the first place.

Speaking during the committee stage budget debate in parliament yesterday, Minister Bogollagama said the country should be justly proud of the fact that after launching Air Ceylon some four decades ago, Sri Lanka had progressed to the level of launching a second airline.

"It is easy to criticise and condemn. But anyone should know, that a mere Rs. 250 million would not be enough even as an initial investment to launch any airline, budget or domestic. It required more capital and that was not available. Perhaps its failure was largely due to lack of initial capital," he argued.

Bogollagama added that he had traveled with President Mahinda Rajapakse on Mihin Lanka and enthused that no president would ever fly on a budget airline.

UNP MP proposes cut of entire Mihin allocation

UNP frontliner John Amaratunge yesterday called to increase the traditional cut of Rs. 10 on the allocations on Mihin Lanka to Rs. 6,000 million.
Amaratunge opening the committee stage budget debate on Ports and Civil Aviation said the entire allocation for Mihin Lanka should be struck off without token cuts.

He said the loss making airline had crash landed with losses amounting to a staggering Rs.3. 2 billion and charged the contract lacked transparency and accountability.

The MP alleged that the company was illegally formed in the first place and cabinet approval was granted only much later.

"Mihin Lanka utilised government funds like nobody’s business. This included Rs. 250 million from the Treasury, Rs. 1072 million from Bank of Ceylon and Rs. 300 million from Lankaputra Bank."

Amaratunge charged that there was no parliamentary approval for the initial allocation of Rs. 250 by parliament and expressed no surprise that the institute soon had to bite the dust. "Some drew salaries over Rs. 400,000 and there was a vehicle spree."
He added that while the government allocated Rs. 300 million for water supply there was Rs. 6000 million for an airline which was a mistake from the very beginning.

He added that former CEO Sajin Vass Gunawardena mismanaged the entire operation and in two years, the institution collapsed. And the present management also did not inspire confidence given the fact that they too were political appointees with no airline experience. Amaratunge said that it was much better to revive SriLankan Airlines than to invest money on a project that should not have been launched in the first place. It is financially prudent to concentrate on economical routes and operate more flights to such destinations," he said, adding that flying to Rome was a welcome move.

UNP walks out on Aviation Ministry vote

UNP legislators staged a walk out when the vote on the Ministry of Ports and Civil Aviation was taken yesterday evening.

Before walking out, UNP senior John Amaratunge said that a vote was unnecessary as the government had the majority but said the allocation for Mihin Lanka would only go down the drain as the airline would not prove a success this time around either.

The UNP called upon the Chair to record the UNP’s protest with Amaratunge claiming that the party found it impossible to support the allocation for Mihin Lanka.