BOC finances Mihin Lanka with no interest

Colombo (News 1st) - The Presidential Commission of Inquiry further investigated into Sri Lankan Airlines and Mihin Airlines today (August 10). It was revealed at the commission that Mihin Lanka had depended heavily on Bank of Ceylon to fund their operations, starting with a Rs. 250 million Over Draft facility which was withdrawn in 2006. The evidence presented to the commission by senior staff members at Bank of Ceylon, showed that the Airline had leveraged their connections with the Bank on multiple occasions in order to gain financial assistance. These financial facilities ranged from OD's, Loans, Letters of credits to bank guarantees. The airline has leveraged treasury guarantees and treasury comfort guarantees that helped in obtaining financial facilities. It was revealed that a number of repayments including those that had been delayed were made on the 31st of March 2009. This was done using a government loan carrying loan number 370 Sri 01. A total sum of Rs. 1,381,700,195.45 was borrowed from Bank of Ceylon with the burden of the loan taken on by the Public Debt Department. This has been reaffirmed by a letter from Director General Vidaanaarachchi of Treasury Operations. The loan had been obtained to pay back both Bank of Ceylon and Sinhaputra bank. According to the evidence presented, BOC has wiped off interest on payments made following January 2009, meaning payments up to the end of the calendar year 2008 carried an interest rate of AWPLR + 2%. This resulted in a loss of revenue for the bank and a drop in profits.