Even before Cabinet approval was granted for the setting up of Mihin Lanka Ltd, the Lankaputra Development Bank had given Rs.300 million out of its capital to Mihin Lanka, flouting the banks usual procedure on the mere strength of a letter sent by the Presidential Secretariat.
Acting General Manager of the Lankaputra Development Bank Ranjith Dissanayake disclosed this in his evidence before the Presidential Commission investigating alleged Fraud, Corruption and Misappropriation of State Funds and properties in SriLankan Airlines, SriLanka Catering Services and Mhinn Lanka on October 12.
Cross-examined by Additional Solicitor General Neil Unamboowe PC, witness Dissanayake said the said letter dated November 22, 2006 was addressed to then Chairman of the Lankaputra Development Bank, A. De Vaas Gunewardena by Gamini Senarath, Additional Secretary to President Mahinda Rajapaksa at that time.
“The Rs. 300 million was provided to Mihin Lanka from the Rs. 1.5 billion capital funds released to the Lankaputra development Bank,” Dissanayake said.
He said this was the first time the bank had made such a large investment since its inception.
Apart from this, another short term loan of Rs.425 million was granted to Mihin Lanka as a bank guarantee even before one year had elapsed after the inception of the bank.
Although the Rs. 300 million had been requested in the name of Mihin Air Private Ltd, the money had been released to an institution called Mihin Lanka Pvt Ltd while the loan had been obtained for a firm which had no clear name.
The money had been released flouting the normal bank procedure of going through a loan application, feasibility report, assessment report, business plan and a Board Paper, witness accepted before the Commission.
He said Cabinet approval had been granted for setting up Mihin Lanka on December 20, 2006, but this transaction between the bank and the airline had occurred much before that due to a father-son relationship.
Chairman Lankaputra Development Bank A. de Vaas Gunewardena was the father of Mihin Lanka Director Sajin de Vaas Gunawardena.
The witness submitting relevant documents said the Board of Directors of Mihin Lanka launched on October 23, 2006 prior to obtaining Cabinet approval included Nandasena Gotabhaya Rajapaksa, Punchibanda Jayasundera, Roshan Mahes Gunateilleke and Sajin Vaas Gunawardena.
Lankaputra Development Bank and Mihin Lanka had signed a financial agreement on January 11, 2007 and the signatories had been Chairman A.de Vaas Gunawardena and Chief Executive S. Cooray on behalf of Lankaputra Development Bank, while a rubber stamp of two directors had been placed on behalf of Mihin Lanka. There was no official Mihin Lanka frank on the document.
The messages issued on behalf of Lankaputra Development by former Chairman A.de Vaas Gunawardena and Chief Executive Mrs. Shiromi Wickremasinghe to mark its inauguration were also receive by the Commission. They stated that since the rural masses had been neglected, the bank was set up under the Mahinda Chinthana programme to achieve the vision of President Mahinda Rajapaksa in catering to them.