Thursday, July 26, 2007

Protest Leaders Address the Public

Included are clips of Ranil Wickramasinghe, Ravi Karunanayake, SB Dissanayake, Mangala Samaraweera, Mano Ganeshan and Ranjan Ramanayake.

Video Footage of the Protest Rally

Video footage of the protest rally organized by the UNP, SLFP(M), and other affiliated parties/organizations.

Monday, July 16, 2007

The Jaded Glory of Thoppigala

Thoppigala has now been successfully captured and the entire east is now, according to the Government of Sri Lanka, under their control. Albeit the apparent lack of government control in Colombo, where abductions & murders are the order of the day, this is a significant accomplishment if not for anything else, but because the government says so.

The purpose of this post is not so much to discuss issues regarding the operation itself. Rather, its purpose is to examine the aftermath of the "victory," and the elaborate celebrations that are underway to serve the personal interests of certain individuals.

Primary celebrations are to take place at Independence Square, where the President is arrive ceremoniously, escorted by the fleet of BMW motorbikes as well as the mounted guards. This is to be followed by a military parade, 21 gun-salute, a fly-over by the air force, and a handing over of a sannasa by the Commander of the Army, to the President -- declaring the East is now in fact, under government control.

Parallel to this celebration, a number of parallel celebrations are also to be held in government schools and departments island wide. Principals, and other leaders are instructed to talk about the importance of this accomplishment of capturing the east.

In the backdrop all these celebrations, a few questions that I think are worth pondering, do come to mind.

First, the "national event" that is being planned is almost like Independence Day celebrations, including the pivotal venue, and the ceremonial activities. Does this imply that the Republic was liberated from an occupying foreign force? While the LTTE are obvious terrorists, and obviously maintained a presence in the East, comparing them to an occupying foreign force (such as the Brits, one might add) might just end up being a compliment to the LTTE.

Second, everybody keeps saying that the capture of the East is "important." However, apart from the obvious face-value of it, no one has so far pointed out the strategic importance of the East. Hence, what is the real, strategic importance of permanently occupying the East? No large stockpiles of weapons have been captured, and no significant casualties inflicted on the LTTE. If they have, it would've surely been broadcast all over.

Third, since the East is now completely under government control, will the government accept responsibility for any killings and/or recruitment of child soldiers? Will camps of the Karuna faction, with whom the government claims they have no connections, be shut down?

Finally, who are the real heroes of this battle? Although the authorities have been rather slow in releasing casualty figures, I am sure there were soldiers who either died or got injured in the battlefield. Why is the government wasting all this money in these elaborate celebrations without recognizing the true heroes? Wouldn't it have been a more sincere, more patriotic and a more appreciative act to recognize those men & women who fought? If not any other, just sharing the money spent on these event among those veterans would perhaps have given them a significant bonus.

Instead, what we have is a pompous pageantry symbolic of a monarch, carried out in a sorry bid to boost the popularity of the very man who has been accused of providing money to the LTTE.

Wednesday, July 11, 2007

How Mahinda Rajapaksa Channeled Money to the LTTE

Originally published in the Sunday Leader (subscription required). Reproduced on LWB for free in the public interest.

President's Tiger Deal Exposed
By Sonali Samarasinghe

Damning evidence of the government's secret deal with the LTTE has now surfaced, revealing President Mahinda Rajapakse granted unsolicited multi million rupee bogus housing projects to the Tigers to allegedly facilitate the transfer of money under the deal.

The bogus projects were being given to the Wanni even as a water crisis depriving some 15,000 farmers of water raged on in Mawilaru, a humanitarian crisis was brewing in Muttur resulting in thousands of Muslims being displaced from their homes, and hundreds of soldiers had been killed in fierce fighting ordered by Rajapakse no less.

The projects were whitewashed through a cabinet paper submitted on August 2, 2006 by Rajapakse himself well after the decision had already been taken and after a large sum of money had already been transferred to the said company.

Two Part Deal
In fact it was part of the deal agreed upon before the presidential election with the LTTE in exchange for the Tigers enforcing a boycott of the poll in the north and east.

The deal with the Tigers our investigation reveals was two fold. The first part was the payment of a large sum of money by Basil Rajapakse to the LTTE front man Emil Kanthan. Some of the money was in dollar notes, the numbers of which the LTTE had noted before putting it to good use to further their goal for a separate state.

The second part of the deal was to come into effect in the event of Mahinda Rajapakse's victory and was to include inter alia a housing project for the LTTE, disarming the Karuna group, appointing LTTE nominees to various political offices and resumption of talks in Thailand.

The cabinet note forwarded by the President on August 2, 2006 sought approval to grant the first housing project in the north and east in terms of the post election part of the deal. It was for forms sake to be under the Rebuilding the Nation Jayalanka Housing Programme and given to B & K Holdings (Pvt) Ltd. of No. 437A, 3rd Lane, Hirunavukulam, Thandikulum, Vavuniya. The deal was for the construction of 400 housing units at Trincomalee; and another 400 units in Batticaloa was awarded to Everest Civil Engineering services of 113/1, Mill Road, Kulangkulam, Vavuniya.

The note also states ambiguously that 400 other housing units will be implemented in other districts but do not even name the districts, merely stating the entire cost estimate for the 'required' 1200 housing units would be Rs. 757,166,000 (inclusive of consultancy fees).

Key Player
The key player in the entire drama was of course Emil Kanthan, the man the Attorney General's Department and the Terrorism Investigations Division have identified as a key LTTE intelligence officer in records filed in court.

In fact, former Airport and Aviation Chief Tiran Alles was arrested for allegedly providing funds to Kanthan, a matter he has hotly denied but an investigation by The Sunday Leader reveals it was none other than President Mahinda Rajapakse who provided funds to a front company of Kanthan under the guise of a housing project.

The consultant named in the cabinet note is GS Builders & Consultants of Vavuniya, who top sources said was also connected to Emil Kanthan.

Sources also said that while the cabinet note attempted to allude to some sort of procedural propriety by stating that approval was granted for invited and solicited offers no such thing had actually occurred and the reality was that President Rajapakse engineered the entire post secret deal operation.

It was in fact President Rajapakse who had directed the Reconstruction and Development Agency to put up a board paper and approve the project to be granted to the Emil Kanthan front.

Therefore there had been no cabinet approved tender board, no cabinet procurement committee approval as is mandatory in such development projects and certainly no pre qualification of contractors as per the government rules under ICTAD's Grade M1 certification.

Shadow Offensive
Ironically even though a shadow military offensive was continuing in the north and east and the armed forces were engaging in combat with the terrorists, Rajapakse did not force a full blown military confrontation until after the Mawilaru incident and well after his cabinet paper was tabled.

President Rajapakse meanwhile maintained publicly he was a patient man who did not rush to war and was observing the Ceasefire Agreement even though there was to be a marked increase in civilian and military deaths in the north east, while privately seeking to allegedly honour promises made to the LTTE.

To top the diabolical deception the Rajapakse administration while making good its promises on the secret deal with the LTTE on the one hand was facetiously calling on the international community to convict the Tigers of war crimes over the Mawilaru anicut.

Our investigation shows that the trumped up projects were handed over to Barkavi Shanthikumar, the common law wife of whom the government identifies as a LTTE intelligence wing member and go-between Emil Kanthan and her two brothers Shanthikumar Kishokumar and Shanthikumar Gajankumar,. The projects were handed over through a construction company - B & K Holdings (Pvt) Ltd. of No.437A, 3rd Lane, Hirunuvakulam, Thandikulam, incorporated just one month after Mahinda Rajapakse took office as the President.

Diabolical Deed
President Rajapakse himself signed the cabinet note on August 2, seeking approval to grant the over Rs. 700 million project to the bogus company whose stated Vavuniya address in the cabinet note is anything but an office.

A Sunday Leader search revealed the company was incorporated on December 23, 2005 in Colombo and not in Vavuniya as stated in the Cabinet Memo giving as its address No.45/4, Church Road, Wattala. However our investigations found the address to be as mysterious as the one given in Vavuniya. There was certainly no office with that number on Church Road, Wattala.

The subscriber shareholders of the company - the common law relatives of the infamous Emil Kanthan -- have given their address as No. 48A, Albert Place, Dehiwala. Though this address exists our investigations found only a deserted residence which had been padlocked from the outside.

What is also potentially treacherous is that the bogus company to which the President and Commander in Chief of the Armed Forces was now handing over construction projects had as its primary objects not only the business of construction building but also building, owning, managing and operating plants for the generation of electricity using hydro power, thermal power, wind power, fuel or oil and bio gas or other resources not to mention the business of telecommunications.

The very fact the government had not checked the credentials of the companies to which the President was seeking to hand over a project running into over Rs. 700 million was evident from the above details alone and it was so because what was in play was part of the secret deal and the only credential required was that of the man who delivered Rajapakse the Presidency, Emil Kanthan. After all which other company incorporated just six months earlier with no credentials would be given a project worth over Rs.700 million? And just to cover their tracks a bank guarantee was sought.

Be that as it may, the authorised share capital of B & K Holdings Private Ltd. is stated as Rs. 10,000,000. The Secretaries are LM Management Services (Private) Limited of No 291/32A, Havelock Gardens, Havelock Road, Colombo 5.

Funnily enough President Rajapakse would have us believe that the cabinet was satisfied that this recently incorporated bogus company was sufficiently able to undertake a Rs.700 million project to construct homes in the north east when even the Vavuniya addresses given in the cabinet paper of both the consultant firm and B&K holdings were false to say the least.
A Sunday Leader investigation revealed there were no offices at these addresses. No. 113/1, Mill Road in Vavuniya was a residence where one P. Nandakumar and one Rajeswari Nandakumar lived.

No. 437A, 3rd Lane in Vavuniya was also a residence occupied by one Wannisingham Subramanium.

Of Little Concern
Certainly these did not look like the offices or the employees of two companies able to construct, maintain, manage and operate electricity generators, leave alone construct 700 million rupees worth of houses in the difficult north and east area.

For Rajapakse who is willing to waive the government's right to first refusal and transfer 25% of NTT shares in Sri Lanka Telecom to a company hastily incorporated in the Netherland Antilles like Global Telecommunications Holdings such a matter may be trivial.

Certainly even the cabinet note seeking approval seems to be mere chicanery and only an attempt to launder the money transfer under the alleged deal.

Pre-Election Promises
Both Sooriyaarachchi and Alles who were President Rajapakse's closest allies at the time revealed it was Basil who had been the main negotiator for the President. Sooriyaarachchi also alleged Basil had paid millions in furtherance of the deal.

More importantly Alles had stated in his statement to the TID that Rajapakse had asked him to secure a connection to the LTTE during the presidential campaign and he had informed the then prime minister he could only give him a business contact - Emil Kanthan.

Once the contact was introduced however it was Lalith Weeratunga, P.B. Jayasundera and Basil Rajapakse who decided on the nitty gritties and allegedly clinched the deal.

Keeping Promises Post Win
While President Rajapakse is not known as a man inclined to honour legal agreements or Memoranda of Understanding the promises to the LTTE which secured his victory and fulfilled his lifelong dream, he was determined to keep.

Once Emil Kanthan had made a request to hand over the moneys under the alleged deal through some project, President Rajapakse shortly after he took oaths as Chief Executive, was made aware of this. He immediately informed Treasury Secretary P.B Jayasundera to do the needful.

To this end President Rajapakse also requested that housing projects be handed over to persons nominated by LTTE's Emil Kanthan.

By a happy coincidence it was Tiran Alles then still close to Mahinda Rajapakse who headed RADA, the agency now in charge of reconstruction. However Alles had wanted tenders called and evaluations done before handing over such large housing construction projects but Rajapakse, sources alleged, had insisted that both the construction company and the consultant should be nominated by the LTTE link.

Approved Without Question
Rajapakse had also insisted a board paper on the subject be put up for approval to the RADA board and as it was a request by the President himself the RADA board -- as is the habit in Sri Lanka and other underdeveloped, simple-minded third world countries -- had approved it without question.

President Rajapakse was to then call P.B. Jayasundera and tell him to release the money to RADA in order to facilitate the unsolicited projects.

RADA sources told The Sunday Leader there were many other bona fide projects discussed relating to the north and east. It is obvious the bogus projects were to be embedded within the bona fide projects to camouflage the government's subterfuge.

Cabinet Paper
It was to this end that President's Secretary Lalith Weeratunga, ever the bureaucrat and expert in cover-up documentation, who at a meeting at the Presidential Secretariat which included RADA officials, suddenly realised that the project which had been already granted to Emil Kanthan should be 'covered' by a cabinet paper.

By this time some Rs. 150 million had already been paid to the bogus company of Emil Kanthan.
Furthermore once the Chief Operating Officer (COO) of RADA Saliya Wickramasuriya was appointed to the Ports Authority as its chairman it was Shanthi Fernando, wife of Sunimal Fernando, special advisor to President Rajapakse who took over as the COO of RADA.
The cabinet paper was therefore prepared by Lalith Weeratunga and the information had also been communicated to Shanthi Fernando.

The cabinet not surprisingly had approved the project which was indicated as the first housing project for the north and east under Rebuilding the Nation Jayalanka Housing Project. (See box for full text of cabinet paper)

Deal Struck
While speculation was rife during the 2005 elections the Rajapakses had struck a deal with the Tigers to disenfranchise over 600,000 voters in the north east in a bid to ensure a Mahinda Rajapakse win, details of the diabolical deed only came to light when ousted Minister Sripathi Sooriyaarachchi publicly announced he was privy to certain aspects of the secret deal with the Tigers and alleged a large sum of money had changed hands.

It was at about this time that former Rajapakse confidant and Airport & Aviation Chief Tiran Alles was also becoming increasingly distanced from the President. But it was not always so.
It was Alles, who was earlier widely rumoured to be the link man between the government and the LTTE, that Mahinda Rajapakse appointed as head of the lucrative Reconstruction and Development Agency (RADA) even though it was first speculated RADA would come under the purview of UNP cross-over Mahinda Samarasinghe's Disaster Management Ministry - an agency Samarasinghe had eyed when making his decision to jump. Though promised to Samarasinghe, we know now why RADA was kept within presidential control.

RADA was established in November 2005 under a Presidential directive, as successor to the Task Force for Rebuilding the Nation (TAFREN).

End of Silence
Meanwhile Alles who was credited with securing the deal with the LTTE for Rajapakse prior to the presidential election had maintained silence throughout the controversy over the secret deal which led to the Tiger enforced boycott of the election but finally broke his silence May 30.
In a statement to the Terrorism Investigations Division (TID) Alles revealed details of the pre-presidential election deal with the LTTE and informed the TID he was requested by Mahinda Rajapakse as prime minister to establish a link with the LTTE to coordinate the presidential election strategy for the north-east.

So happy was Percival Mahinda Rajapakse with the results at the time that Alles was one of the first persons he rushed up to and delightedly hugged at his Presidential inauguration ceremony in November.

Be that as it may, Alles was arrested shortly after making the damning statement indicting the Rajapakses, for allegedly funding a LTTE intelligence wing member identified as Emil Kanthan.

Startling Revelations
However Alles in his statement while maintaining he at no stage was informed by Sri Lankan Intelligence that Emil Kanthan was a LTTE member, made some startling revelations including that Presidential Advisor Basil Rajapakse, President's Secretary Lalith Weeratunga and Treasury Secretary P.B. Jayasundera had also in his presence had discussions with Emil Kanthan on matters agreed upon prior to the presidential election.

He further said it was Basil Rajapakse who had several rounds of discussions with Emil Kanthan, a fact reiterated by former Minister Sooriyaarachchi on several occasions in public fora.

He also told the TID a full affidavit revealing the entire sequence of events was sworn by him on February 12 and that he would furnish it to the TID for further investigations. Indeed, Alles has revealed that it was Basil Rajapakse who gave money before the presidential election to the LTTE, details of which no doubt will also surface through the affidavit when it sees the light of day.

Answer to Public
President Percival Rajapakse not only as the country's first citizen but as the Commander in Chief has to now answer the people why he was to continue to deal with Emil Kanthan as the Head of State while the LTTE had only weeks before taken control of the Mawilaru anicut cutting off the water supply to 15,000 innocent civilians in the Seruwila area and resulting in the destruction of some 30,000 acres of paddy lands.

The LTTE when closing the sluice gates on July 20, 2006 claimed that under an ADB scheme meant for uncleared territory as well had been taken out of the implementation programme. According to TNA Parliamentary Group Leader R. Sampanthan the LTTE claimed this was the work of the new governor for the north east and the new government agent for Trincomalee.
It was even as the SLMM was sitting and talking to the LTTE and to local villagers to resolve this problem that the air force dropped a bomb in the vicinity and the meeting was thwarted.

Attempts to resolve this conflict continued with even Norwegian Special Envoy Jon Hanssen-Bauer arriving in Sri Lanka and visiting Kilinochchi.

An agreement was reached but when the SLMM Chief, the Political Head of the LTTE and some people from that area went to release the water on Sunday, August 6 more military attacks were to follow.

Following this it was reported in the media the SLMM was holding the government totally responsible for the breakdown in the settlement to the Mawilaru water crisis after the security forces allegedly launched a fresh shell attack on LTTE cadres near the anicut just before the LTTE was to open the sluice gates.

Other Agendas
It was reported the "SLMM Spokesman Thorfinnur Omarsson had in fact charged it was clear the government had other agendas in mind but stressed that it was not the end of the road as negotiations for a settlement were still continuing."

While the water war was raging on the one hand with the government only intent on a prestige battle rather than supplying water to the starving villagers, simultaneously the LTTE moved in to Muttur and heavy clashes between the Tigers and the military ensued resulting in the displacement of over 53,000 Muslims.

The army meanwhile vowing to recapture the anicut was to commence military operations from Kallaru army camp on July 28 risking the lives of soldiers even as troops attempted to move towards the anicut through heavily mined fields and amidst LTTE artillery attacks. By July 30 a fierce battle had commenced some 400 metres from the anicut which left several military personnel dead.

The incident was getting to such proportions the UNP also warned that an armed conflict between the LTTE and the government would result in the destruction of the Mawilaru tank, calling on both parties to adhere to the Cease-Fire Agreement (CFA).

Government Stance
On July 24, the Government Peace Secretariat released a report which stated the LTTE action was a war crime under International Law and the Roman Statute of the International Criminal Court, also saying; "The LTTE has forcibly closed the water supply from the Mawilaru Anicut (irrigation channel) to the Seruwila, Muttur and Ichalampattu areas in the Trincomalee District, preventing the flow of water that sustains approximately 15,000 families and feeds approximately 30,000 acres of paddy land. The LTTE has prevented the Irrigation Department from opening the sluice gates. In addition, the LTTE has prevented the SLMM from having access to the location and blocked efforts by the SLMM to facilitate restoration of the water supply."

Two days later the Government Peace Secretariat, now desperate over Mawilaru stated, "The Government of Sri Lanka, at the highest levels, has repeatedly called upon the LTTE, through the Norwegian facilitators and the SLMM, to restore the water supply to over 15,000 families in the Trincomalee District who have been deprived of water since the LTTE forcibly closed the Mawilaru Anicut on Thursday, 20 July, 2006."

The report went on to add, "The Government of Sri Lanka has also raised the matter with the diplomatic community and international organisations. There is agreement that the denial of water to civilians by the LTTE is a blatant contravention of all norms of civilised behaviour and the rules of international law.'

In what was to become a cruel joke and in their haste for prestige both the LTTE and the government claimed they had opened the sluice gates. However the SLMM confirmed the sluice gates had been opened by the LTTE.

It is during this horrendous ordeal that the Commander in Chief of the Armed Forces was continuing to deal with the LTTE. It was during this period of starvation and suffering that the Chief Executive of this country who neither honoured his pre election commitments to the Marxists or to the Buddhist monks was to be hell bent on honouring his agreement with the terrorists.

Meanwhile it is ironically Tiran Alles who is arrested by the TID for keeping company with the LTTE point man to whom it is in fact the President of this country Mahinda Percival Rajapakse who granted projects signed under his very hand.

It is now Tiran Alles and funnily enough UNP Minister Jayalath Jayawardena who are being questioned by the TID on their knowledge of Emil Kanthan.

President Percival should know this. Knowing a man is one thing. Doing deals with him in order to disenfranchise hundreds of thousands of people in order to perpetrate election fraud is quite another.

Mahinda's Note to Cabinet

Rebuilding the Nation under Jayalanka Housing ProgrammeFirst Housing Programme for North and East

The Reconstruction and Development Agency (RADA) has been directed by me to commence projects for equitable assistance to all needy communities, irrespective of whether they were affected by conflict or Tsunami, in the fields of housing, livelihoods, social and physical infrastructure.

One of the first projects identified for immediate and speedy implementation is the construction of housing units for conflict-affected communities in Kilinochchi, Mullaitivu, Trincomalee, Batticoloa, Ampara, Vavuniya and Mannar districts. Housing requirements obtained from 42 GN divisions in these districts amounted to 1200 housing units. The Board of Management of RADA granted approval to invite offers from consultants and contractors in the area to implement this project. Funds for the project are to be obtained from the Consolidated Fund.

ccordingly, offers were solicited from prospective consultants and parties willing to undertake housing construction in the stipulated areas. GS Builders & Consultants of Vavuniva was selected as the Consultant for the project.

B&K Holdings (Pvt) Ltd of No. 437A, 3rd Lane, Hirunavukulam, Thandikulam, Vavuniya, which offered the lowest quote for a 500 sq. ft housing unit at Rs 624,725/(exclusive of VAT) was selected as the Contractor for the construction of 400 housing units at Trincomalee. Another 400 units in Batticaloa was awarded to Everest Civil Engineering Services of 113/1, Mill Road, Ukulangkulam, Vavuniya, at the same rate of Rs 624,725.00 (exclusive of VAT).

Housing projects in Trincomalee and Batticaloa are in progress, and the total cost estimate for both projects is Rs 499,780,560/-. With the addition of 400 housing units to be implemented in other districts shortly, the entire cost estimate for the required 1200 housing units is Rs 757,166,000/- (inclusive of consultancy fees).I seek the approval of the Cabinet of Ministers to proceed with the construction of the 1200 housing units as envisaged above.

August 2, 2006
Mahinda Rajapakse President

P. B. Jayasundera Sheds Light

When The Sunday Leader spoke to P.B Jayasundera regarding the secret deal significantly he did not deny meeting Emil Kanthan but referred instead to a meeting at ousted Minister Mangala Samaraweera's house and stated he had met people but did not know who they were.
Q: Your name has transpired as having been present at meetings..
A: I can only say I have not participated in any discusions with the LTTE

Q: With Emil Kanthan?
A:I haven't participated with anybody because I attend various discussions with various people. I don't know the peole who come to those meetings and from which group.
Officially Minister Mangala Samaraweera invited us for a meeting so we have gone, so there must have been people but we went as officials. But our dealings are as officials. So I don't know why Tiran Alles made that statement because my dealings with him was only as chairman RADA, not beyond that.

Tuesday, July 10, 2007

Humiliation of a Wounded Soldier

Charity is always a good thing. When done, it makes the giver feel good, while completely altruistic charity is almost never found. However, people in a rush to do charity often fail to empathize with the receiver, and fail to understand that the receiver is not some sort of a "circus" for the rest to observe. This was very sadly and more widely observed in the aftermath of the tsunami, where some people were donating used clothes while some others flocked to see how little kids ran after vehicles for sweets. Those people were never beggars. They were ordinary people who were displaced by a natural disaster. They were helpless.

The July 9th issue of the Daily Mirror splashed a picture of a beaming "President’s eldest son Namal Rajapaksa handing over a gift to a wounded soldier" apparently released by the President's office. This of course is no surprise. The fact that Rajapaksa's place a great deal of importance in photographs is not evident anywhere else than at A quick visit to the site will prove that it lacks anything of any substance except a collection of airbrushed pictures of Mahinda Rajapaksa and a bunch of press releases. Nothing, in terms of results are there to be found.

Getting back to the "charity visit" it is obvious that this soldier who was probably injured during battle had no option but the accept with both hands the gift that was given by "the President's son." And no, it's not the one who got shipped away to England to train in Her Majesty's Navy.

A closer examination of the "gift' makes me wonder how much it cost anyways. It probably cost more to bring this kiddo there to begin with -- security, vehicles and backup vehicles, photographer, road closures (wasted time of others), etc combined. And to top it off, the gift was probably paid for by the State anyways.

What is sadder to note however, is the Commander of the Sri Lankan Army, General Sarath Fonseka smiling away and standing behind. It is indeed unfortunate that a person of his caliber, a professional solider, is put to play second-fiddle to the presidential kiddo. In what capacity is this podi hamu making these visits, accompanying the Commander in tours of inspection? Is this something open to everyone? Where can I sign up for inspection tours?

After everything's said and done, the picture taken, splashed across the newspapers and brownie points scored, does anyone stop to think about how humiliated the soldier might be feeling? There he was once, fighting bravely for his country. In the next instance he's being powdered-up for a charity event of podi hamu. A crying shame indeed.

Giving is always a good thing. When done properly and thoughtfully it is a blessed event for both parties. However, the greatest giving we can possibly make, is what all of us need most -- our dignity.

Sunday, July 1, 2007

PERC Pays the Price for Being Vigilant

Source: The Sunday Leader (paid subscription required)

Hot on the heels of The Sunday Leader revelations exposing the invidious Rajapakse hand in several controversial privatisation deals, which have also been severely criticised by the Public Enterprise Reform Commission (PERC), the government last week announced it would take immediate steps to scrap the commission.

Speculation is rife that PERC may have earned the wrath of the Rajapakse quartet as many of the deals it had criticised as detrimental to the country, have been spearheaded by none other than Presidential Advisor Basil Rajapakse, with the blessings of his elder brother President Mahinda Rajapakse.

PERC Considered Redundant
Last week on Wednesday, calling the work of the commission redundant, Media Minister Lakshman Yapa Abeywardena waived the PERC Act, stating the concept of privatisation embodied in the act was against the Mahinda Chinthana policies.

Twenty four hours later, Chief Government Whip Jeyaraj Fernandopulle also said PERC was to be shut down as it was against the Mahinda Chinthana policies. However a top PERC official dismissed Abeywardena's assertions stating PERC would in fact be the appropriate institution to implement the Mahinda Chinthana.

In fact the very spirit of the commission was to augment government revenues through better financial administration and reform contracts, and is a carefully established institution for any type of public enterprise reform, the official said.

Officials Counter Government Claim
PERC officials speaking on the grounds of anonymity told The Sunday Leader that nowhere in the act is the word 'privatisation' used. These sources also confirmed that no official communication had been made to PERC with regard to its imminent closure stating that since the commission was instituted by an act, the legislation would have to be repealed, and a resolution passed in parliament after cabinet approval.

PERC has been fiercely critical about recent controversial deals including the transfer of NTT shares in Telecom and the transfer of 49 percent shares of Hingurana Sugar Industries to a consortium, at absolutely no benefit or revenue to the government.

Contradictory Actions
The transfer of NTT shares in SLT is already before court, with Chief Justice Sarath Silva having issued a stay order against the transfer.

Ironically, while the government continues to hold that it is against privatisation as per the Mahinda Chinthana, it continues to set up private companies like Mihin Lanka Pvt. Ltd., Lanka Logistics and Technologies Ltd., and now even Weerawila International Airport Ltd. (see page 8) in order to siphon off government money into private companies, tightly controlled by the Rajapakse family and its henchmen.

PERC Brings in High Revenue
Far from dismantling PERC, the commission had earned over Rs.2000 million for the government on litigation and arbitration just last year, sources at PERC told The Sunday Leader. While there are 17 post privatisation litigation and arbitration matters currently being handled by PERC, the Pussellawa Plantation case and Lanka Marine Services Ltd. arbitration were won by PERC on behalf of the state in 2006, yielding over Rs. 2000 million.

In fact the Mahinda Chinthana waxes eloquent about the government acting as a custodian in the management of institutions and resources in order to protect the people's ownership and national assets. It also states that the management of national assets and public institutions will be done in a more professional and independent manner.

Mahinda Percival in his Chinthana also promises to manage public expenditure and subject government expenditure to constant review. However, it is constant review by the PERC of controversial share transfers instigated by his family that he now seems to dislike so much.

The Privatisation Saga
There have been 98 privatisations of government institutions of which some 45 have been privatised after the setting up of PERC in 1996. Before the formation of the Reform Commission it was the Commercialisation Unit of the Ministry of Finance that handled the subject.

At that time the Commercialisation Unit was headed by one Tissa Jayasinghe, and each privatisation was handled by the relevant ministry concerned in coordination with the commercialisation division of the Ministry of Finance. The secretary of the relevant ministry would be appointed chairman of the tender board and the head of the commercialisation unit would be a member along with others appointed by the cabinet.

In order to institutionalise and regularise these privatisations, PERC was mooted in 1994, and had the support of the World Bank and USAID as well. The Reform Commission was to be a window of communication with the government, and was to oversee under rigid supervision, the reform of state institutions.

The Objectives of PERC
The function of the commission was, according to the Public Enterprise Reform Commission of Sri Lanka Act No. 1 of 1996, to advise and assist the government on the reform of public enterprises.

The objects included fostering and accelerating economic development, improving efficiency and competitiveness of the economy, upgrading production and services with access to international markets, developing and broadbasing the capital market, motivating the private sector and augmenting the revenues of government so as to enable it to better address the social agenda.
While these objectives are enumerated in imperative and mandatory language the act also states that PERC "may make recommendations to the government on the continuation and efficiency of public enterprises which are profit making and are of national importance."

The act also states that PERC may make recommendations to the government on the selection of public enterprises for conversion into public companies under the Conversion of Public Corporations or Government Owned Business Undertakings into Public Companies Act No. 23 of 1987.

A perusal of the act will demonstrate that PERC was not set up in order to promote and implement privatisation but rather to act as an advisor and rigid supervisor to economic reforms envisaged by the government.

If Rajapakse and his two ministers had only read the Mahinda Chinthana and the PERC Act they would well know that there are no jarring provisions that do not complement each other. Rajapakse, if he bothered to read his own Chinthanaya, would find that he too advocates a national economic policy that integrates a free market economy with domestic aspirations where domestic enterprise can be supported while encouraging foreign investment.

It is to this end and working well within the ambit of its powers and functions which included augmenting government revenues that PERC roundly condemned the controversial transfer of both SLT and Hingurana Sugar Industries shares.

Orchestrated by the Rajapakses
Mind you, these two controversial deals were personally orchestrated by the Rajapakse brothers and were deals which would bring absolutely no revenue to the state despite enjoying the blessings of the Chief Executive. The transfer of 25.3 percent of NTT shares in SLT to Global Telecommunications Holdings incorporated in the Netherlands, specifically for the purpose, was to be of no benefit to Sri Lanka.

Neither was the transfer of 49 percent shares for free of Hingurana Sugar Industries with a Rs. 200 million worth distilleries licence to boot, to Lanka Orix Leasing and Brown & Company, both controlled by Ishara Nanayakkara.

That President Percival's government does not regard the rule of law is now obvious. PERC, to the Rajapakses, being determined to carry out a system of privatisation that would ensure they control through private companies, over 70 percent of state funds, has perhaps become of nuisance value. An irritable thorn in the flesh that needs to be rooted out and discarded.

What PERC said about Sri Lanka Telecom
  • GTH is an unlisted company incorporated recently in the Netherlands Antilles with the purpose to acquire NTT shares in SLT.
  • GTH shall not have any employees or CEO until the proposed transaction is completed.
  • GTH is an indirect wholly-owned subsidiary of Usaha Tegas Sdn Bhd (UTSB).
  • Question arises why GTH is incorporated recently in the Netherlands and not in Malaysia when UTSB undertook to fund GTH.
  • Two of the requirements for the 1997 bids were that the age of the company should be more than 25 years and should be in telecom operations for more than 15 years.
  • GTH is a recently incorporated company with no business operations and not even a website address is available.
  • That the proposed parent company UTSB posted total revenues of US$186 million and US$19 million for the fiscal year 2006 whereas the unqualified bidders in 1997 posted such revenues as high as US$4,525 million and US$ 2,118 million.
  • Neither is a website available for the parent company UTSB.
  • Though it is stated by NTT that GTH has a solid track record as a telecommunications operator with a leading position in Malaysia given that it was recently incorporated and has no employees or a CEO it is questionable to what extent NTT's assessment and recommendations are reliable.
  • Even though the SLT deals in fixed lines, the fixed line operation of Maxies (a part of the UTSB) is very marginal and it is strong only on mobile services.
  • PERC itself states in its report that even though NTT says UTSB has control equity positions in entities operating in various sectors, they have not stated whether Maxis is a direct subsidiary of UTSB.
  • According to NTT, the GTH claim to fame is its link to Maxis. PERC states even if this were so, Maxis itself is more a mobile operator and not a fixed line operator and therefore unsuitable to the needs of SLT.

Hingurana Sugar Industries

  • The government granted a 49 percent stake of Hingurana Sugar Industries Ltd. (HSIL), full management control and a distilleries licence currently worth over Rs. 200 million, to a consortium based on an unsolicited proposal that would bring absolutely no revenue to the state.
  • The government put forward and approved a memorandum in this regard completely disregarding earlier cabinet decisions. PERC at the time in writing stated:
  • They were of the opinion a fresh cabinet memorandum should be submitted as approval had been obtained for a solicited proposal pursuant to a "transparent tender procedure in this case 'on all or nothing window' of the Colombo Stock Exchange."
  • The concept adopted in the said cabinet memorandum is different to what is to be implemented now, which is divesting 49 percent shares of the new company to an unsolicited proposal.
  • Under the circumstances, a fresh Cabinet Memorandum should be submitted by you for the new restructure process.
  • The cabinet memo should specifically request approval to supercede the earlier cabinet decisions since there are several decisions obtained by PERC in relation to restructure of HSIL which are not yet cancelled, hence, still operative.
  • PERC also states it is not in a position to submit a cabinet memorandum for an unsolicited proposal.
  • Warns that submitting a Cabinet Memorandum for an unsolicited proposal as initiated by PERC will open up the government to litigation at a future date.