Duty free violations galore, witness tells PCoI

 By Rathindra Kuruwita 

Phoenix Duty Free Services, concessionaire for inflight duty free services for both SriLankan and Mihin Lanka had violated the agreement it had signed with the two airlines and the Customs ordinance, Marlon Perera, former Director of Sales and Development of the firm told the Presidential Commission of Inquiry (PCoI) on irregularities at SriLankan Airlines, SriLankan Catering and Mihin Lanka yesterday. 

Perera said that he doubted that the Directors of SriLankan Airlines had been ignorant of those violations.

"According to the agreement, Phoenix has to obtain duty free items on behalf of SriLankan and deliver them to a bonded warehouse in Sri Lanka. The return items also had to be delivered straight to the supplier. Phoenix can’t take duty free goods to a third location. If the supplier had got to know it he would have been able to sue SriLankan for millions of dollars. But Phoenix held those goods in its warehouses in Singapore. This is a serious violation of the agreement as well as the Customs laws," he said.

CEO of Phoenix, Dilan Wirasinghe, had been named in the offshore leaks database, released by the International Consortium of Investigative Journalists, Perera said. 

The company gave such favourable terms to the two airlines that it lost USD 1.2 million during the first year, according to his calculations, Perera said, noting that he was worried about his job security. "But the Managing Director, Raju Chandiram was cool as cool could be. And I used to continuously ask him, what would happen if we continued to lose money in that manner and finally he said, ‘We have to lose money here to make money elsewhere.’ I realised I was being used as a pawn in a game to cover up some other dodgy business that created ill-gotten gains and I left the company soon."

Perera added that suppliers provided duty free goods at extremely low prices and that if someone could divert those goods and sold them in the black market, a lot of money could be made. "For example the supplier gives a bottle of Red Label whiskey about USD 4 and even the duty free price is USD 20. Imagine the profits one can make if such supplies can be diverted."

Phoenix had not only violated commercial agreements and the laws of the land but also broken promises made to the inflight sales personnel of the two airlines.

"For example in the agreement with SriLankan, Phoenix promised to sell inflight duty free goods to SriLankan staff at a 25% discount. It promised a 5% payment to Mihin Lanka inflight sales personnel. However, it only gave a 15% discount on alcohol and 10% discount on cigarettes to SriLankan staff and only 3% to Mihin Lanka inflight sales personnel. SriLankan management didn’t care about these broken promises and unions had to make separate deals."

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