Tuesday, 15 August 2017

Bond scams, Geneva process and RK’s resignation

SPECIAL REPORT : Part 179

 

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By Shamindra Ferdinando

The unprecedented political crisis caused in the wake of the alleged Central Bank-Perpetual Treasuries bond scams has threatened the continuation of the UNP-SLFP coalition.

Perpetrated in Feb. 2015’ and March 2016, the alleged scams, compelled President Maithripala Sirisena to appoint a three-member Presidential Commission of Inquiry (CoI) by January this year to probe the complicity of the then Governor, Singaporean Arjuna Mahendran, his son-in-law Arjun Aloysius, as well as the UNP, in the deceitful transactions.

Although the UNP put on a brave face and engaged in various damage control measures, the shocking revelation that Ravi Karunanayake, who had held the finance portfolio, at the time of the alleged scams, stayed at a luxury penthouse, at the Monarch apartment complex at Colombo 03, paid for by Arjun Aloysious, in 2016, before purchasing it at a staggering Rs 165 mn later the same year under controversial circumstances, sealed the top UNPer’s fate.

Karunanayake received the foreign affairs portfolio, on May 22, 2017, in President Sirisena’s first cabinet reshuffle. Newly appointed Finance Minister Karunanayake was named, by Premier Wickremesinghe, as a member of the ministerial committee to coordinate and implement recommendations, in accordance with Geneva Resolution 30/1 adopted on Oct 1, 2015. The committee comprised Karunanayake, Dr Wijeyadasa Rajapakse, PC, Mahinda Samarasinghe, Sagala Ratnayake, Tilak Marapana, Ruwan Wijewardene and Dr Harsha de Silva. Rajapakse is under fire, from a section of the government, for severely criticising the UN in respect of its human rights/accountability stand on Sri Lanka as well as over the leasing of the Hambantota harbour to a Chinese firm for 99 years.

Many an eyebrow was raised when Karunanayake’s predecessor Mangala Samaraweera, who had really worked hard to secure the Western backing for the new administration was unceremoniously dropped from the ministerial committee.

Karunanayake’s testimony before the CoI, comprising Supreme Court judges K.T. Chitrasiri (Chairman), Prasanna Sujeewa Jayawardena and retired senior deputy Auditor General Velupillai Kandasamy, on Aug. 2, 2017, really embarrassed the government.

State Minister Lakshman Yapa Abeywardena, on behalf of President Sirisena, on Aug. 8, delivered a two-week deadline for the UNP to decide on Karunanayake. State Minister Abeywardena warned that unless the UNP got Karunanayake to give up his foreign affairs portfolio, President Sirisena would remove him the way he replaced Arjun Mahendran with economist Dr. Indrajith Coomaraswamy, on July 2, 2016.

President Sirisena, in mid-July 2015, in the run-up to the parliamentary polls, the following month, revealed how he tried to convince Premier Wickremesinghe to get Mahendran to quit in the wake of allegations. "I have a personal opinion and there is an opinion among the people in the country that (Prime Minister) Wickremesinghe is not a corrupt person, a thief," President Sirisena told a group of journalists at the Presidential Secretariat. "In this background, I said the best thing was for the Central Bank Governor to resign."


Had President Sirisena allowed the first Special 13 member COPE (Committee on Public Enterprises) sub-committee, headed by the much respected Communist Party leader, Dew Gunasekera, to present its disputed report to parliament, in late June 2015, the second, much bigger scam wouldn’t have taken place, in March 2016. Unfortunately, President Sirisena had no option but to dissolve parliament to protect his 100-day administration until early general election could be held. The dissolution also thwarted JO attempts to move no faith motions against the Sirisena-Wickremesinghe administration.

Karunanayake quit the foreign ministry portfolio, on Aug. 10, 2017 (afternoon) to avoid the Joint Opposition (JO) no-faith motion handed over on Aug. 3. Karunanayake faced the risk of losing the no-faith motion much to the embarrassment of the UNP as well as President Sirisena, who secured the presidency at the January 2015 polls, thanks to the UNP.

President Sirisena is certainly beholden to the UNP. But, in spite of that, even at the risk of his alliance with Premier Ranil Wickremesinghe, he took brave action. The political alliance was meant primarily to achieve two objectives. One of the two objectives had been to check growing Chinese influence in Sri Lanka. Western powers and India wanted the Sirisena-Wickremesinghe alliance to halt Chinese projects. However, their tall order went awry due to cash strapped Sri Lanka having to re-launch the flagship Chinese project, the USD 1.4 bn Colombo Port City and lease the Hambantota harbor, to state-owned China Merchants Port Holdings (CMPH), to develop, manage and operate the facility which is on one of the world’s busiest shipping lanes.

Sri Lanka and China finalised the Hambantota deal on the morning of July 29, 2017, in spite of strong opposition from trade unions. The Sirisena-Wickremesinghe government earlier cleared the Colombo Port City Project. In addition to them, the Chinese remained engaged in a spate of major projects in Sri Lanka, including the Colombo Lotus Tower, funded by Exim Bank of China.

The second major Western/Indian objective had been to ensure post-war reconciliation process, based on Geneva Resolution 30/1, co-sponsored by Sri Lanka, on Oct. 1, 2015.

In the wake of their failure to thwart the Chinese projects here, those who had sponsored the new administration wanted to save the second operation, meant to implement the Geneva Resolution 30/1. The Central Bank-Perpetual Treasuries alleged bond scams threatened to undermine the UNP-SLFP coalition as the latter blamed the UNP for the highly questionable transactions. The fact that top UNPer Karunanayake’s family had rented a penthouse, courtesy Arjun Aloysious, threatened to unravel the partnership. The UNP-SLFP marriage of convenience, built on the 19th Amendment to the Constitution, that had been introduced in late April 2015, is meant to bring in the required constitutional changes.

Sri Lanka reached an understanding with the Geneva-based United Nations Human Rights Council, in March this year, to fully implement the Geneva Resolution within two years. The Central Bank-Perpetual Treasuries episode threatened the partnership. Obviously, the JO no-faith motion scared the daylights out of those sections of the government, as well as their foreign sponsors hell-bent on keeping the constitutional making process on track.

Karunanayake had to quit the foreign affairs portfolio as part of the overall damage control measures.

Karunanayake’s move, at the behest of President Sirisena and Premier Wickremesinghe, had taken the heat off the government, to some extent though the issue, at hand, remained to be exploited by the JO. The JO’s moves will be certainly influenced by ‘explosive’ testimonies of Arjun Mahendran and Arjun Aloysious.

However, Karunanayake’s resignation has cleared the way for the UNP and the SLFP to extend their post-Aug 2015 parliamentary polls agreement. State Minister Abeywardena had publicly speculated about the possibility of the SLFP having to quit the agreement depending on the CoI recommendations and subsequent judicial proceedings. Although, Karunanayake’s resignation had saved the coalition for the time being there is a school of thought that CoI recommendations can be devastating and place the government in an extremely embarrassing and difficult situation.

The Central Bank-Perpetual Treasuries transactions involving the Bank of Ceylon, Employees Provident Fund (EPF), Pan Asia Banking Corporation, DFCC Bank et al had become the biggest scandal to shatter the much touted claim to good governance and financial accountability. On the basis of the testimonies so far before the CoI and the forthcoming evidence of Arjuna Mahendran and Arjun Aloysius that can certainly cause quite a stir, recommendations in respect of future action are certain to be inimical to those in power.

It would be pertinent to mention that the failure to take tangible measures in the wake of the February 2015 bond scam, which Auditor General Gamini Wijesinghe estimated to have caused a staggering Rs 1.6 bn loss immediately, though the losses spread over 30-year period due to Perpetual Treasuries buying Rs 5 bn worth bonds at a sharply higher interest rates, can cause irreparable damage to the national economy.



TNA reiterates stand on Geneva Resolution

Tamil National Alliance (TNA) leader R. Sampanthan’s appeal to the US, in respect of the Geneva Resolution, a few hours before Karunanayake gave up the foreign affairs portfolio, on the afternoon of Aug 10, 2017, underscored the Tamil party’s concern over the current situation.

Sampanthan and Jaffna District MP and TNA spokesman M.A. Sumanthiran made representations to Representative Rodney Frelinghuysen (Republican New Jersey), Chairman, House Appropriations Committee and Rep. Henry Cuellar (Democrat – Texas) at the Opposition Leader’s Office at 11 am. The meeting lasted about an hour and was attended by US Ambassador Atul Keshap.

The TNA has told the US delegates that the Trump administration should hold the Sri Lankan Government responsible for the commitments it had made to the international community, particularly with regard to the Geneva Resolution.

The Geneva Resolution has proposed the setting up of a hybrid war crimes court, including foreign judges, among other things.

A statement issued by the Opposition Leader MP Sampanthan’s Office quoted the veteran politician as having said "Sri Lankan Government cannot shirk its responsibility of fulfilling its commitment to the international community."

Sampanthan faulted the UNP-SLFP coalition for delaying constitutional making process in accordance with the Geneva Resolution. Sampanthan called for a referendum, following the proposed draft constitution, received two-thirds approval in parliament.

However, there hadn’t been any reference to the Central Bank-Perpetual Treasuries bond scams in the statement issued by the Opposition Leader’s Office, following the talks. Sampanthan and the US delegates having failed to take up Sri Lanka’s biggest scam against the backdrop of much publicized US commitment to help Sri Lanka tackle corruption blamed on the previous administration, should be ashamed of themselves.

Sampanthan didn’t hesitate to lie as regards Tamils seeking ‘asylum’ abroad. The TNA statement quoted Sampanthan as having said: "Over fifty per cent of the Tamil population has left the country due to the unresolved national question, and if we don’t find a reasonable solution more people will leave, we don’t want that to happen."

Sampathan claim can be compared with unsubstantiated allegation that the Sri Lankan military killed 40,000 to 100,000 Tamil civilians during the last phase of the offensive, generally referred to the period between January-May 2009.

Having faulted the ruling coalition partners for not implementing the Geneva Resolution, Sampanthan rushed to parliament where he lavishly praised Karunanayake for giving up his ministerial portfolio that had direct bearing on the Geneva-led process.

The Central Bank-Perpetual Treasuries bind scams had placed the US, the UK and India in an extremely embarrassing position.

In the wake of the Rajapaksas defeat, in January 2915, both the US and India announced their readiness to help Sri Lanka’s new government to track down stolen wealth, stashed abroad,while US Secretary of State John Kerry also pledged help when he visited Colombo, in May 2015.

Kerry assured that any assets robbed from Sri Lanka and hidden in the US would be returned to the people of Sri Lanka.

Then Foreign Minister Mangala Samaraweera is on record as having said that Sri Lanka had secured support from four countries to locate and bring back an estimated $18 billion in assets stolen by former president Mahinda Rajapaksa and his family. The writer was among the journalists who covered the briefing given by Samaraweera at UNP headquarters, Sirikotha.

Addressing a large gathering at the Lakshman Kadirgamar Institute, Kerry said: "We are also ready to help with asset recovery and the enforcement of anti-corruption rules. Our investigators are prepared to work with your investigators. Our prosecutors are prepared to work with your prosecutors and we commit that any stolen assets in the United States will be returned to their rightful owners."

The US commitment should be examined against the backdrop of millions of USD spent on a high profile project to thwart twice President Mahinda Rajapaksa securing an unprecedented third term at the January 2015 presidential poll and also to sustain the new administration. The US recently admitted the release of millions of USD in support of project/projects in Sri Lanka, in response to a query raised by the US-based Hassina Leelarathna. According to information made available by the USAID on the basis of the Freedom of Information Act (FOIA), USD 3.4 mn had been released from Complex Crises Funds (CCF) which was meant to make available USD 40 mn in support of governance, rule of law and economic reform in Sri Lanka.

In addition to that, Sri Lanka, Nigeria and Burma had been categorised as ‘democracy projects’ that received USD 585 mn during 2015. Although specific amount of funds, made available to Sri Lanka, through the US State Department, hadn’t been revealed, Sri Lanka received CCF amounting to USD 13,589,951 in 2015.

The British, too, had supported the new government high profile anti-corruption drive. The former deputy British High Commissioner in Colombo Laura Davies, in Dec 2015, declared the formation of an international coalition to help the Sirisena-Wickremesinghe government to stamp out corruption.

Davies said that the UK was working closely with the US, Australia and Switzerland to help the new administration.

Davies said that the UK was in the process of enhancing Sri Lanka’s capability to handle international cases.

In accordance with an understanding with the government of Sri Lanka, the UK provides legal advice, training as well as English language training.

She asserted that the training provided to Sri Lankan personnel by the British had enhanced their confidence as well as their skills.

The diplomat revealed that the UK had committed Rs. 15 million to support Sri Lanka’s anti-corruption project. The UK would continue to focus on capacity building and training for all the professional branches involved in anti-corruption work. Funding for anti-corruption project is in addition to the 6.6 mn pounds sterling made available for military reforms and post-war resettlement of the displaced families, etc.

Strangely, both the US and the UK remain silent on Sri Lanka’s largest financial crime in spite of independent experts and the media here pointing the finger at the government in power.

The UK headquartered Global Tamil Forum (GTF), that had been quite critical of waste, corruption and irregularities, allegedly taken place in Sri Lanka during the 2005-2015 period, remained silent on the massive bond scams. Those foreigners who had been used to preach good governance and accountability remained silent today as the government struggled to cope up with the deepening crisis caused by the UNP’s folly.

Perpetual Treasuries Limited has received the appointment as a primary dealer on Sept. 30, 2013, and commenced handling government securities on Feb 5, 2014. At the time of the first alleged scam, the enterprise had been fully owned by Perpetual Capital Holdings Pvt Limited (PCHCL). However, before the second much bigger allegedly corrupt transaction, the ownership of the controversial outfit changed to Perpetual Asset Management (Pvt) Limited.

It would be interesting to know whether the CoI had received a copy of an on-site examination of Perpetual Treasuries undertaken by the Public Debt Department (PDD) of the Central Bank on Sept 30, 2015. The PDD examination that had taken place during Mahendran’s tenure as the disputed Governor of the Central Bank of Sri Lanka exposed all those involved in the alleged bond scams. Against the backdrop of such shocking revelations, how the interested parties had manipulated the entire system, to their advantage, at the expense of the national economy, is no longer a secret. The CoI cannot turn a blind eye to the PPD’s findings even if it had not so far received a copy of the report headlined ‘Perpetual Treasuries Limited-Findings of the on-site examination.’

Tuesday, 8 August 2017

Bid to derail ‘One Belt, One Road’surmounted

SPECIAL REPORT : Part 178

 

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By Shamindra Ferdinando

Sri Lanka finalized an agreement with state-owned China Merchants Port Holdings (CMPH) to develop, manage and operate Hambantota port, which is on one of the world’s busiest shipping lanes.

The agreement was finalised on July 29, 2017, with the participation of senior members of the UNP-SLFP coalition. The signing of the agreement, between the Sri Lanka Ports Authority (SLPA) and Hongkong headquartered CMPH, took place consequent to UPFA/SLFP National List MP Mahinda Samarasinghe receiving Ports and Shipping portfolios in May, 2017.

Samarasinghe succeeded Arjuna Ranatunga, who had been elected to parliament at the August 2015 parliamentary polls, on the UNP ticket. Ranatunga succeeded in forcing some changes to the agreement before he was named Petroleum Resources Development Minister.

China will invest USS 1.2 bn in accordance with the 99-year lease agreement. The Chinese investment is part of its strategic ‘One Belt, One Road’ initiative, launched in 2013. India strongly opposes the Chinese project.

The port is situated within 10 nautical miles of the main shipping route from Asia to Europe.

Although, the Joint Opposition, comprising 52 members of parliament, loyal to former President Mahinda Rajapaksa, had strongly opposed the agreement on the basis of its being disadvantageous to Sri Lanka, it was the former leader who reached an understanding with China on building the Hambantota port, along with an international airport in the region at Mattala during the eelam war.

Sri Lanka brought the war to a successful conclusion, in May, 2009.

In fact, the former President, accompanied by post-war External Affairs Minister Prof. G.L. Peiris visited Beijing, after the change of government, on the invitation of China, to explore ways and means of reaching a consensus on the Hambantota port. Had they succeeded, there could have been an understanding among China, Sri Lanka and the JO.

Whatever the post-presidential polls rhetoric, the Rajapaksas couldn’t have deprived China of the Hambantota port after having built it with Chinese funds. It would be pertinent to mention that China accommodated Hambantota in its ‘One Belt, One Road’ imitative at a time Western powers believed the LTTE might couldn’t be militarily defeated. Port construction commenced in January, 2008, as the Army was struggling, on the Vanni front, with the liberation of LTTE - held Kilinochchi, seemed too a difficult task. China steadfastly backed Sri Lanka throughout the war. The Previous government received continued Chinese backing at the Geneva-based United Nations Human Rights Council (UNHRC) as the US-led coalition, including India, vigorously pursued Sri Lanka at the UNHRC. The project culminated with Sri Lanka co-sponsoring the US spearheaded Geneva Resolution 30/1 on Oct 1, 2015 to pave the way for a hybrid war crimes court, constitutional reforms et al.

The US and India, working closely to oust the Rajapaksa administration, is certainly not a secret. As the writer pointed out in last week’s column, former US President Barak Obama had publicly referred to the Indian role in Sri Lanka. The US, India, Japan and EU felt the Rajapaksas’ relationship with China gravely undermined their overall security, political and economic objectives, hence the regime change project.

Recent sensational revelation made by former Times of Ceylon journalist Hassina Leelarathna, in respect of USAID making available urgently required funds to the tune of US 3.4 mn, to the UNP-led 100-day administration, in the run-up to the August 2015 parliamentary polls, is the latest illustration of US intervention. The funds had been meant to provide, what the USAID called, visible support to the newly elected administration. US made fresh commitments though the USAID in spite of contemplating a lesser role for the agency here a few years ago.

The US-based Leelarathna, who co-edited with her husband Deeptha, the first Sri Lankan newspaper published in the US years ago made the disclosure on the basis of information she had obtained from USIA on the basis of the Freedom of Information Act (FOIA). Accordingly, USD 3.4 mn had been released from Complex Crises Funds (CCF) which was meant to make available USD 40 mn in support of governance, rule of law and economic reform in Sri Lanka.

In addition to that, Sri Lanka, Nigeria and Burma had been categorized as ‘democracy projects’ that received USD 585 mn during 2015. Although specific amount of funds, made available to Sri Lanka, through the US State Department, hadn’t been revealed, Sri Lanka received CCF amounting to USD 13,589,951 in 2015.

Who received such large amounts of US funding? Did political parties, NGOs/civil society organization, journalists and individual members of parliament benefit from US funding? Did any other country, or international organizations, provide funds required for regime change operation?

Those sponsors would never have anticipated The Central Bank-Perpetual Treasuries bond scams, in Feb 2015, and March 2016, that had jeopardized their well planned, well-funded project. The UNP-led administration, in spite of drawing support from the US-India coalition, to oust seemingly unbeatable Rajapaksas, ended up joining the ‘One Belt, One Road’ initiative.

Extremely serious allegations

Sports Minister and Co-Cabinet spokesman, Dayasiri Jayasekera on August 2, alleged that the JO had disrupted an adjournment debate on SLPA-CMPH on Aug 28, 2017. Jayasekera claimed that the decision to sabotage the adjournment debate had been taken by an embassy and was carried out by JO members. Both Jayasekera and his cabinet colleague, Dr Rajitha Senaratne, refrained from naming the country though it was clear government spokesmen targeted the Chinese embassy.

Subsequently, a section of the press reported Prime Minister Ranil Wickremesinghe’s directive to the Foreign Ministry to inquire into the alleged embassy intervention.

Jayasekera declared that the embassy had intervened through a top JO politician. Was he referring to former President and Kurunegala District MP Mahinda Rajapaksa?

Now that cabinet spokesmen had claimed of foreign intervention, the government should take it up with the Colombo-based diplomatic mission without further delay, if it hadn’t taken up the issue already.

Interestingly, on the day the JO had disrupted the adjournment debate, Parliament received a consignment of computers from the Chinese embassy in Colombo. In addition to 225 computers, for members of parliament, including the Speaker, there were 40 more computers for the use of parliamentary staff. China had gifted computers, each estimated to be worth Rs 140,000, on a request made by Speaker Karu Jayasuriya.

In the wake of government allegations in respect of China interfering in parliamentary proceedings, tough talking Chinese ambassador in Colombo Yi Xianliang visited parliament on Aug 4, 2017 to officially hand over the computers.

Did China direct JO to disrupt parliamentary proceedings? Will recently appointed Foreign Secretary, Prasad Kariyawasam, raise, the issue with Chinese Ambassador Xianliang?

JO MP Udaya Gammanpila is on record as having said that had government ministers really believed a Colombo-based diplomatic mission intervened, it would have had influenced Speaker Jayasuriya, who called off the day’s proceedings. Gammanpila pointed out that it was the Speaker who had adjourned parliament till August 4, 2017. Kariyawasam recently replaced Esala Weerakoon, who opted to leave the ministry. Career diplomat Weerakoon’s move seems to be timely. The former top envoy to Oslo and New Delhi now functions as Secretary to the Ministry of Tourism.

Xianliang sets the record straight

In Nov, 2016, Xianliang strongly disputed the then finance minister Karunanayake’s assertion that the previous government had obtained ‘expensive loans’ from China. Xianliang responded to Karunanayake, at a seminar organised at the Chinese embassy. The Chinese envoy wouldn’t have chided Karunanayake without consulting Beijing. Xianliang said some Sri Lankan ministers and the media had talked about ‘expensive loans’ from China. He added: "I talked with Ravi [Karunanayake], the Minister of Finance. I asked him, if you don’t like this one [loans from China] why have you spoken to me about getting another one?"

The ambassador explained that the interest rate for loans from China’s Exim Bank was 2 per cent for friendly countries. He asked why this was considered expensive, when the rate for commercial loans from Europe was 5 per cent.

Xianliang said claims that China’s loans were expensive were ‘really unfair.’ He added: "The Sri Lankan people, and the government, should have a more thankful attitude towards China. For a long time, we have supported and assisted Sri Lanka in international forums and bilateral business fields."

Yi also voiced his concerns over the slow progress of China-funded projects in Sri Lanka. Xianliang stated: "I do believe that political in-fighting should not be linked to Chinese assistance."

Immediately after the change of government in January 2015, Sri Lanka stopped the China’s flagship, the US 1.4 bn Colombo Port City Project, launched by Chinese President Xi Jinping and the then President Mahinda Rajapaksa, in September 2014.

 UNP leader Ranil Wickremesinghe declared, on Dec 16, 2014, that the Colombo Port City Project would be scrapped immediately after the change of government, in the following month. The government had no option but to renegotiate the Colombo Port City Project leading to resumption of the plan about one and half years later.

 The UNP propagated that corruption couldn’t be tackled as long as high profile Chinese investments continued. China was flayed for corrupt transactions here.

In the wake of the latest allegations, directed at China, in respect of its intervention in parliament, it would be necessary to examine various perks and privileges received by members of parliament from various governments. Sri Lanka should decide on a policy, regarding receipt of benefits at the expense of taxpayers’ of various developed countries. Recently (July 2017), Speaker Jayasuriya’s Office announced that another group of parliamentarians toured China subsequent to a request made by Speaker Jayasuriya on their behalf.

The code-of-conduct for members of parliament should include specific instructions in respect of acceptance of foreign tours. Members of parliament certainly cannot be allowed to benefit at the expense of the country.

A high level parliamentary delegation, in late June, this year, toured Germany, on the invitation of Prof. Norbert Lammert, President of the German Bundestag. The visit followed Lammert visiting Colombo in April. Did Germany spend on the Sri Lankan delegation, comprising party leaders and senior parliamentary officials? If not, did those Sri Lankans struggling to make ends meet to pay for their visit. The country cannot squander money on members of parliament at a time ruling coalition leaders repeatedly say Sri Lanka lacked the wherewithal to service its massive debt.

Against the backdrop of the government attributing its decision to give controlling interests of the Hambantota port to China, due to difficulty in servicing annual loan repayment estimated at Rs 9.1 bn, Sri Lanka shouldn’t waste precious foreign exchange.

Xianliang has now said that a clarification was required from President Sirisena as to the changes Sri Lanka sought in the July 29 signed agreement. The statement was made on board Chinese military hospital vessel Ark Peace anchored at the port of Colombo on Aug 5.

Civil society campaign

 Civil society groups that had campaigned for President Rajapaksa’s defeat at the January, 2015 presidential polls are in the process of organizing a meeting in Colombo next Tuesday (August 15) to pressure the government to fulfil its promises. Purawesi Balaya co-convenor, Gamini Viyangoda, in a brief interview with The Island, emphasized the responsibility on the part of the government to take stock of the situation without further delay.

Declaring that the introduction of the 19th Amendment to the Constitution, the Right to Information Act and restoration of democracy had been major achievements, Viyangoda explained that the government couldn’t, under any circumstances, absolve itself of its responsibility for failing to address several key issues, including crucial constitutional changes.

 Viyangoda alleged that the government had pathetically failed to bring in investigations into massive corruption, perpetrated by the Rajapaksas and their henchmen, during the previous administration, to a successful conclusion. Viyangoda blamed Justice and Buddha Sasana Minister Dr Wijeyadasa Rajapakse, PC and Law and Order and Southern Development Minister Sagala Ratnayake for the extremely slow progress in investigations.

 The political columnist said that President Maithripala Sirisena should decide on the abolition of the executive presidency without further delay. "We’ll display a huge portrait of the former convenor of the Movement for Just Society, Ven. Maduluwawe Sobitha at the venue of the August 15 meeting with the government’s achievements and failures highlighted. President Sirisena and Prime Minister Wickremesinghe should resort to tangible measures to achieve much touted promised objectives," Viyangoda said. 

He said the Central Bank-Perpetual Treasuries bond scams should be examined against the backdrop of the failure to introduce the National Audit Act during President Sirisena’s 100-day programme. In addition to the non-accomplishment of bringing those high profile corruption cases to a successful conclusion, the government failed to intervene immediately after the first bond scam in February 2015, Viyangida said. Had that happened, the government wouldn’t have been in the current predicament over shocking revelations made before the on-going three-member Presidential Commission of Inquiry (CoI) probing the bond scams.

Asked whether the Central Bank-Perpetual Treasuries scams could undermine government objectives that could be only achieved through the ruling UNP-SLFP coalition, Viyangoda admitted that CoI probe and subsequent judicial process could cause irreparable damage to good governance project. 

 One of the strongest critics of the previous administration, Viyangoda flayed the incumbent political leadership for giving the Rajapaksas and their henchmen an opportunity to subvert them. Had the government acted decisively and swiftly to recoup losses caused by the first scam and took punitive measures against those responsible, the JO would have been in a much weaker position today. 

Viyangoda said the bond scams, and various blunders and lapses on the part of the government, had diverted attention away from what the activist called primary objectives. The government was weakening due to such factors as bond scams it would make it extremely difficult for them to push for constitutional reforms.

 "There is no one to blame but itself for the current crisis."

Responding to several queries by the writer, Viyangoda emphasized that the government’s failure to bring high profile investigations against the Rajapaksa clan, and those near and dear to them, to a successful conclusion, shouldn’t be wrongly construed as they were found innocent and the allegations baseless.

Viyangoda explaining the recent talks civil society representatives had with Prime Minister Wickremesinghe and President Sirisena pointed out that the JO and various other disruptive elements, always exploited reluctance on the part of the government to promptly take decisions on critical issues. The NGO activist faulted the government over its strategies, while appreciating the recent deployment of the military to neutralize petroleum workers who resorted to trade union action.

 He emphasized that the Government Medical Officers’ Association (GMOA), students and the JO shouldn’t be allowed to influence the people to such an extent it would undermine the country. "We are opposed to the widespread use of trade union action as a political tool", the anti-Rajapaksa activist said

India funds Ven Sobitha project

 If not for Ven. Sobitha’s intervention, perhaps, twice President Rajapaksa could have succeeded in securing a third term, thanks to 18th Amendment to the Constitution that did away with restrictions placed on him to contest presidential polls a third time. In fact, National Freedom Front (NFF) leader Wimal Weerawansa, too, accepted Ven. Sobitha’s leadership, in July 2014, in the run-up to the Uva Provincial Council polls later that year. Whatever Weerawansa said today, the one-time JVP firebrand, too, contributed to a campaign that ultimately brought down the Rajapaksas, in January 2015.

Many an eyebrow was raised when the Ven Sobitha Commemoration Foundation received a staggering Rs 300 mn from the government of India to build a new village at Elapathagama, Mahavilachchiya, in the Anuradhapura district, in memory of the late prelate. Ven. Sobitha had run a special project in support of the village during the war.

 The signing of the agreement between India and Sri Lanka took place at the official residence of the Speaker, in July this year.

The shocking decision to seek Indian funds for a project launched in memory of the good governance architect proved the ordinary people shouldn’t expect the government to be sensitive to their feelings. Had the government really respected Ven. Sobitha, it would have undertaken the project with Sri Lankan taxpayers’ money. Instead, massive amounts of funds had been allocated to acquire brand new super luxury vehicles for Ministers, State Ministers and Deputy Ministers, foreign jaunts, renovation of official bungalows belonging to members of parliament. In addition, the state had been deprived of much needed revenue by allowing members of political parties to sell their duty free super luxury vehicles. Some JO members, too, had sold their duty free vehicles at the expense of the national economy. 

Public litigation activist and attorney-at-law Nagananda Kodituwakku’s efforts to move the judiciary against corrupt members of parliament over the duty free vehicle scam, have been thwarted by political parties taking a common stand on the issue.

Friday, 4 August 2017

China makes headway as Lanka walks tightrope

SPECIAL REPORT : Part 177

 

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By Shamindra Ferdinando

Sri Lanka Navy (SLN) on July 22, 2017, took delivery of an Advanced Offshore Patrol Vessel (AOPV) built by the Government of India owned Goa Shipyard Limited (GSL).

On the invitation of Navy Chief Vice Admiral Ravi Wijegunaratne, President Maithripala Sirisena will commission the vessel as SLNS Sayurala (P 623) today (August 2) at the Eastern Container Terminal, Colombo harbour. It’ll be the first occasion a President participates in such a ceremony, in wartime or peacetime Sri Lanka. The AOPV is fitted for 76 mm main weapon though the SLN is exploring the possibility of mounting MBRL with stabilized platform developed by Research and Development. Prime Minister Ranil Wickremesinghe will be among the invitees.

A second AOPV is being built, for SLN, by the same enterprise. SLN will take delivery of the second vessel next year.

The first brand new ship, ever acquired by Sri Lanka, at a cost of over USD 66 mn, arrived at the Colombo harbor, on Friday (July 28), amidst political turmoil over the finalisation of a deal with China, on the Hambantota port, and the proposed Sri Lanka-India deal, on the Trincomalee oil tank farm, as well as several other projects. Sri Lanka and China signed the agreement on July 29, in spite of President Maithripala Sirisena suggesting the signing should be delayed, at least by few days, pending consensus on the agreement.

Ports and Shipping Minister Mahinda Samarasinghe has compared the Hambantota deal (with China Merchant Port) with South Asia Gateway Terminals (SAGT) and the Colombo International Container Terminals (CICT), though trade unions, opposed to the Hambantota project, think otherwise. India is widely believed to be interested in the East Container Terminal, still under construction, in accordance with the overall Colombo port expansion project.

During the previous Rajapaksa administration, India sought US help to ascertain the status of Chinese involvement in the Hambantota port project, even before actual construction commenced in January 2008. It would be important to mention that at the time China pledged funds for the project the armed forces had been struggling on the Vanni front. The India-US talks, on the Hambantota port, came to light when WikiLeaks released classified US diplomatic cable, dated April 26, 2007, originating from New Delhi, based on views expressed by the then Joint Secretary, at the External Affairs Ministry, Mohan Kumar.

Against the backdrop of simmering controversy over Chinese and Indian projects here, it would be pertinent to examine an unprecedented post-war bilateral agreement between Sri Lanka and India for the building of two AOPVs, at the GSL, located on the west coast of India.

Sri Lanka and India finalized the agreement on February 17, 2014, several years after the conclusion of the war. The then Navy Chief Vice Admiral Jayanath Colombage told the writer that AOPVs were offered through a credit line and they certainly met Sri Lanka’s requirement for offshore patrolling capacity. According to Colombage, they are slightly bigger than Sri Lanka’s largest OPV, also acquired from India years ago.

Gotabhaya Rajapaksa had received an assurance from former Indian National Security Advisor, M. K. Narayan (January 2005-January 2010), in respect of their readiness to sell two OPVs during the administration of Manmohan Singh. However, the actual signing of the agreement had taken place on February 17, 2014, during the tenure of Narayan’s successor, Shivshankar Menon (January 2010-May 2014). But, Menon’s successor, incumbent Ajit Doval, on behalf of India, demanded from Gotabhaya Rajapaksa to cancel the USD 1.4 bn Chinese flagship project - Colombo Port City. India also demanded that Sri Lanka take over Colombo International Container Terminals Limited (CICT), a joint venture between China Merchants Port Holdings Company Limited (CMPH) and the Sri Lanka Ports Authority (SLPA). CMPH holds 85% of the partnership whilst the balance 15% is being held by SLPA. India wanted all major Chinese funded infrastructure projects stopped and for Sri Lanka to have full control of the Hambantota port. Gotabhaya Rajapaksa told the writer that Doval once told him: "Sri Lanka is a small country, you don’t need such development projects."

Menon on Rajapaksa brothers

The war-winning Rajapaksa government had been under heavy Indian pressure to acquire Sri Lanka’s defence ‘needs’, including training and intelligence from India - though years ago New Delhi worked overtime to deprive successive Sri Lankan governments of the wherewithal to fight the LTTE. India seriously feared former President Mahinda Rajapaksa’s relationship with China. India believed the war-winning president pursued foreign policy strategy severely inimical to its interests, though wartime Defence Secretary Gotabhaya Rajapaksa responded positively to India’s concerns.

Former Indian National Security Advisor Shivshankar Menon (January 2010-May 2014), in his memoirs, titled ‘Choices: Inside the Making of India’s Foreign Policy,’ alleged that the Rajapaksas in May 2014, had violated repeated assurances given in respect that there wouldn’t be a permanent Chinese military presence in Sri Lanka and the country would look to India for most of its military training and intelligence needs. "At no stage was exclusivity sought or promised. And, realistically speaking, it would be unreasonable to expect exclusivity," Menon, who had been India’s High Commissioner, in Colombo, years ago, revealed.

Interestingly, the production of the first AOPV had commenced on May 15, 2014, soon after Narendra Modi swept into power in the April 7 - May 12, 2014, general election held on a staggered basis. The keel of the vessel had been laid on September 10, 2014, and was ceremonially launched on June 10, 2016.

Sri Lanka and India reached an agreement on AOPVs in spite of the latter throwing its weight behind US-led efforts to haul Sri Lanka before a hybrid war crimes court. Sri Lanka had no option but to accept the Indian offer to build two AOPVs, similar to those currently in service with the Indian Coast Guard. In fact, the then Defence Secretary Rajapaksa had signed the agreement on behalf of Sri Lanka and it was part of the overall project meant to enhance Sri Lanka -India relationship.

With the acquisition of AOPV, the SLN now has four vessels, of similar type, namely SLNS Sayura (Sukanya class P 620), SLNS Samudura (formerly of the US Coast Guard P 621), SLNS Sagara (Vikram class P622) and the latest addition SLNS Sayurala (P 623). All three OPVs had been involved in successful daredevil operations on the high seas to hunt down LTTE floating arsenals during 2007. In addition to the above mentioned vessels, locally built SLNS Jayasagara is also categorized as an OPV, though being comparatively smaller than other OPVs in service. The LTTE sank the other Jayasagara class vessel, SLNS Sagarawardena, on the night of September 19, 1994, off Mannar, during an unofficial truce between the Kumaratunga administration and the LTTE.

An ambitious SLN project

Sri Lanka Navy’s Maritime Strategy 2025 comprehensively dealt with the country’s requirement, in respect of offshore patrolling capacity, to ensure protection of seas coming under its purview, and a range of other issues. Prepared and developed during the current Navy Chief Vice Admiral Wijegunaratne’s tenure, the document asserted Sri Lanka’s requirement for 20 ships (OPVs and other types) by 2025, a daunting task. The proposed 20 vessel navy included eight currently in services. The eight included four OPVs (SLNS Sayura, SLNS Samudura, SLNS Sagara and SLNS Jayasagara) two Fast Missile Vessels (SLNS Suranimala and SLNS Nandimitra) and two Fast Patrol Boats received from Australia. The remaining 12 expected to be acquired over the next couple of years comprises four OPVs, including the AOPV commissioned today, two Fast Missile Vessels, two Frigates, two Fast Patrol Boats and two Corvettes.

It would be interesting to know how Sri Lanka intended to acquire 12 more ships, of different categories, over a period of eight years. Would SLN look for only Indian built ships or examine the possibility of acquiring vessels from different suppliers. Speculation is rife that Sri Lanka may get an opportunity to secure two more vessels from the US. The possibility of Sri Lanka receiving Japanese, Russia, Chinese vessels in addition to another one from India cannot be ruled out.

Had Sri Lanka built up the required naval capability, and adopted a result oriented strategy at a much earlier phase of the conflict, the LTTE wouldn’t have survived so long.

In fact, the SLN document acknowledged how its failure to take tangible measures, at a much earlier stage, after having recognized the LTTE threat, resulted in the three decades long war.

Twice president Chandrika Bandaranaike Kumaratunga is on record as having told The Jane’s Fighting Ships that the war wouldn’t have lasted so long if the SLN succeeded in blocking LTTE supplies. However, over eight years after the conclusion of the war, Sri Lanka’s defence as well as foreign policy needs, should be examined with the US-India-Japan combine seeking stronger ties with Sri Lanka against the backdrop of growing Chinese presence here.

The growing US-India-Japan maritime cooperation, and their common stand on the South China Sea situation, will certainly have a bearing on Sri Lanka. In June, this year, Sri Lankan military personnel received training in two Dornier aircraft, belonging to the Indian Navy. The training exercises were carried out in the West and Southwest Coast of the Sri Lankan Exclusive Economic Zone (EEZ) from 19th to 22nd June. US-India military cooperation today is undoubtedly at its zenith with Modi - once refused entry into the US over his alleged role in the massacre of about 1,000 Muslims in Hindu riots in 2002. The US, in 2005, turned down a request for a US visa by Modi, the leader of India’s nationalist Bharatiya Janata party (BJP) and then chief minister of Gujarat. Modi was not welcome. In a complete turnaround by US, Modi was subsequently feted at the White House by Obama during a two-day official visit to Washington. He also addressed a joint session of Congress - a sign of high favour.

Chinese projects seem to be on track much to the disappointment of India and Western powers.

Recent finalisation of the agreement on Hambantota port meant that the change of government, in January 2015, hadn’t thwarted Beijing’s project in Sri Lanka.

Although, the Sirisena-Wickremesinghe administration had suspended the China-funded USD 1.4 bn Colombo Port City project, immediately after the January 2015 presidential polls, intense Chinese pressure compelled Colombo to eat humble pie. The project resumed in January 2016.

The mega project commenced in September of 2014 with the participation of Chinese president Xi Jinping on the invitation of the then President Mahinda Rajapaksa. The Chinese leader’s presence underscored just how important the project is to China.

The Port City agreement had been initially signed between Sri Lanka and China Communications Construction Company, in Nov 2013.

Now, China has secured agreement on the Hambantota port on a 99-year lease thereby seriously undermining the efforts of those who had been seeking to restrain China.

Last November, China invited former President Rajapaksa for talks in a bid to prevent the Joint Opposition from spearheading protests against the Hambantota project. Having accompanied the former President, ex-External Affairs Minister Prof. G.L. Peiris explained that the Rajapaksa-led JO wouldn’t oppose the project if China and Sri Lanka stick to the original plan worked out during the previous administration.

US on Indian role

A few weeks after President Rajapaksa’s ouster, the then US president Barack Obama revealed existence of a common US-India stand on Sri Lanka. Obama’s statement should be studied against the backdrop of US interference in the Sri Lankan presidential polls. The US intervention, in the run up to the January 2010 presidential polls was meant to help the then retired General Sarath Fonseka to beat President Rajapaksa. Thanks to Wiki Leaks, the entire world know how US brought pressure on the Illankai Thamil Arasu Kadchi-led Tamil National Alliance (TNA) to throw its weight behind General Fonseka, in spite of the outfit accusing his forces of killing over 40,000 Tamil civilians. The US also put pressure on the SLMC to join a coalition, comprising the UNP, JVP, TNA. The US plan proved unsuccessful in 2010. However, a similar strategy succeeded in January 2015.

Today, the US media is preoccupied with Russian intervention in last presidential polls.

Addressing a distinguished gathering at the Siri Fort Auditorium, New Delhi, on 27 January 2015, Obama declared India could play a "positive" role in the region, from Burma to Sri Lanka, reiterating "that with power comes responsibility. Obviously, Obama had conveniently forgotten how India sponsored terrorism in Sri Lanka, in the ‘80s, in accordance with its overall foreign policy response to Cold War era US threat, as well as domestic political reasons. Today, India and the US are best of friends, with India developing an extremely close relationship with Israel, as well as Japan.

US President Obama said there was a new hope for democracy in Sri Lanka. Obama wouldn’t have anticipated the administration, which the US and India helped to install, in Colombo, would be so unpopular it put off local government polls by over two years and is now exploring ways and means of postponing Sabaragamuwa, Eastern and North Central Provincial Councils polls.

Let me reproduce verbatim the relevant section released by the US State Department: "I believe that if we’re going to be true global partners, then our two nations must do more around the world together. So, to ensure international security and peace, multilateral institutions created in the 20th century have to be updated for the 21st. And that’s why I support a reformed United Nations Security Council that includes India as a permanent member. (Applause.) Of course, as I’ve said before, with power comes responsibility. In this region, India can play a positive role in helping countries forge a better future, from Burma to Sri Lanka, where today there’s new hope for democracy. With your experience in elections, you can help other countries with theirs. With your expertise in science and medicine, India can do more around the world to fight disease and develop new vaccines, and help us end the moral outrage of even a single child dying from a preventable disease. Together, we can stand up against human trafficking and work to end the scourge of modern day slavery. (Applause.)"

India always opposed Chinese role in Sri Lanka. Sri Lanka experienced severe difficulties due to Indian policy. During Kumaratunga’s presidency, India thwarted a bid to secure state-of-the-art Chinese radar to counter possible threat posed by ‘Air Tigers.’ Rajapaksa brothers, Mahinda and Gotabhaya, acquired Chinese 3 D radar only after ‘Air Tigers’ mounted attacks at the height of eelam War IV.

India also opposed Sri Lanka setting up a China-managed Aircraft Overhaul Wing at the China Bay SLAF base, Trincomalee, years ago. Subsequently, the SLAF established the facility at the Katunayake air base where the Chinese were engaged in overhauling jets and trainer aircraft.

Importance of ACSA

Whether Sri Lanka likes it or not and regardless who held power, the government cannot ignore US concerns and sustain relationship. Remember, Sri Lanka and the United States, in May 2007, signed the Acquisition and Cross-Servicing Agreement (ACSA), valid for 10 years, to facilitate transfer and exchange of logistics supplies, support and re-fuelling services.

Gotabhaya Rajapaksa and the then American Ambassador to Sri Lanka Robert Blake signed the agreement. The pact paved the way for interoperability.

A statement by the U.S. embassy said the Acquisition and Cross-Servicing Agreement (ACSA) would allow the U.S. and Sri Lanka to transfer and exchange logistics supplies, support, and re-fuelling services during peacekeeping missions, humanitarian operations and joint exercises.

The Sirisena-Wickremesinghe government recently declared its intention to extend the agreement. The writer feels Sri Lanka should extend ACSA in spite of some parties opposing it. Recently, JO MP Vasudeva Nanayakkara claimed that those who had been opposed to ACSA received an assurance from President Rajapaksa soon after the signing of the agreement that the agreement is irrelevant. MP Nanayakkara flayed the Sirisena-Wickremesinghe government’s decision to extend ACSA, which the writer believes is certainly a move in the right direction. The US giving leadership to anti-Sri Lanka Geneva Resolution30/1 adopted on Oct 1, 2015 shouldn’t have bearing on US-Sri Lanka relations. But, Sri Lanka’s policy shouldn’t be at the expense of any other country, particularly China, an all-weather friend like Pakistan.

A visit undertaken by the US Pacific Fleet transport ship USNS Fall River, in early March, this year, underscored the pivotal importance of Sri Lanka adopting a sensible policy towards foreign powers. The vessel participated in Pacific Partnership goodwill mission to Hambantota, and its environs, from March 6 to 18. Military and civil personnel from Japan, Australia and Sri Lanka held joint exercises through the 12-day mission.

Since the conclusion of the war, in May 2009, Western powers had been working overtime to undermine the Rajapaksa administration. India, too, felt that President Rajapaksa pursued China friendly policy. No less a person than Shivshankar Menon has alleged that the former President was the direct beneficiary of Chinese money - a very serious accusation which the former president, or his advisors, should have responded to immediately. They haven’t done so yet. Menon said in his memoirs: "I found that as the Defence Secretary, Gotabhaya, had a clear view of Sri Lanka’s interests, one that was compatible with ours. Immediately after the war, he reassured Indian troika about the nature of Sri Lanka’s defence relationship with China, and helped Indian companies reenter the reconstruction of Colombo. Security was Gotabhaya’s preoccupation, which made him sensitive to India’s concerns, while his brother Mahinda was much more compliant with Chinese demands, having built a political machine on Chinese money (emphasis mine)