Probe into Sri Lankan airlines uncovers shady duty free dealings

COLOMBO (News 1st) - Attention was drawn towards Phoenix Duty-Free Services Lanka Ltd, the company SriLankan Airlines had entered an agreement into for in-flight duty-free services, at the Presidential Commission of Inquiry today (June 20). The witness - Marlon Perera, a former employee at Phoenix Duty Free Services Lanka Private Ltd said he was recruited in 2012 to provide training for the cabin crew at SriLankan Airlines and to enhance the duty free sales onboard flights. He said while providing the training and keeping track of the sales carried out on board flights, he occasionally visited the Katunayake Airport and on one such occasion came across a contract entered in to between the SriLankan Airlines and Phoenix Duty Free Services incorporated in Canada. According to the contract, Phoenix Duty Free Services Lanka Private Ltd. is to bring down goods for duty free sale under the name of SriLankan Airlines and thereafter move them to the bonded storage at Katunayake. According to the witness these goods have been given duty free concessions by the Board of Investment. However, according to the contract, the understanding between the seller and SriLankan Airlines was that the goods need to be sold or returned. The witness said he found certain anomalies in the contract and went on to note as he kept track of the in-flight duty free sales there was an issue about the revenue and expenses of the company. He said from the date acquired, Phoenix Duty Free Services Lanka Private Ltd would make annual sales of USD 5.54 million, however, when taking in to account the expenses of the company and the dues that should be given to SriLankan Airlines as commission, the company would incur a loss of USD 1.2 million. He believed something was happening behind the scenes as the Managing Director Raju Chandiram and Finance Manager Mohamed Hamza kept financial statements a secret. Phoenix Duty Free Services Lanka Private Ltd. was initially incorporated in 2011 as Phoenix Rising Ventures Private Ltd. It's founding director and founding shareholder was Phoenix Duty Free Services Lanka Private Ltd. According to the Companies Act of 2007, provided that a company may have a single shareholder, such a single shareholder is the secretary to the treasury who is holding the shares on behalf of the Government of Sri Lanka. Raju Chandiram served as a director of SriLankan Catering in 2007 and at SriLankan Airlines until 2008.