Sri Lanka: Defence deals under the Good Governance — Russian Ship Deal (Part One)

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 The cost of a ship intended to be bought from Russia > three ships in an open market


by Nilantha Ilangamuwa

( September 3, 2017, Colombo, Sri Lanka Guardian) A rancid and whiffy deal after deal; nothing small but all of them are multi million worth commission which are directly filling the pockets of third party agents. But the people in this country have to pay the actual cost. Not only had those already born but also yet to be born generations are under heavy debt just because of the corrupted unaccountable way of governance that has prevailed in last few decades. When are we going to be a nation where true hope and true happiness of the people would flourish?

The country’s administrative system was changed by the “people” in 2015 while expecting to establish the governing system based on ethics and principles which are responsible for transparency and accountability; so that people in this country will have the opportunity to enjoy true freedom of life. That’s why we name it as administration based on good governance, or true meaning of democracy, through which one governs oneself.

But unfortunately, what do we have to say about the government that is just little more than two years old? The fine dreams of people are shattering; flattering; blandishing and hammering while the true manipulators of the system are gathering to plunder the assets of the nation, yet again. Nothing different from the past; the country is driving into an abyss of the eclipse and it is promoting vulnerability to all forms of attack.

This is the country where top officials in the armed forces and the related administrative institutions are repeatedly bragging about the victory over terrorism. “We have defeated the most ruthless terrorist outfit on the planet”, they say. We all applauded and were proud to be a part of the nation which eliminated terrorism. Victory over terrorism undoubtedly, was what the people were expecting regardless of political viewpoints of each party involved.

But, since then what have we achieved? Do the ordinary folks have the liberty to do what they want to have in their life? A few that are manipulating the system are unfortunately bending the opportunity to improve the nation and are exercising the habit of impunity to gain personal advantages.

Let’s unmask the prevailing system and its cynical manipulators, as we are again falling into darkness.

Right from the beginning of this investigative series I would like to emphasize that, the events, personal names, and incidents are highlighted here because I strongly believe people in this country must know the truth. We have no personal issues with anyone; this is rather issue about policies and principles.

We can’t wait and see any longer when parasites are destroying this nation. Nothing we could genuinely do in this country would help if we cannot openly discuss the real chronic problems embedded in the system towards establishing the preventive mechanism.

Rainbow “Revolution” and MoD

The new government came into power in January 2015. President Maithripla Sirisena as the Minister of Defence ( MoD) has appointed Mr B.M.U.D Basnayake as his first Secretary of Defence. As the senior member of the Sri Lanka Administrative Service who knew nothing about defence he has servedas the administrative head of MoD a few months. As expected by many those who knew even little about defence, the first Secretary of the Defence has produced nothing but bad effects in the institution. He was a first failure of the new government.

Then, the president could do nothing, except replacing the Secretary with one of his most trusted friends. Mr Karunasena Hettiarachchi, an expert on irrigation engineering, therefore, was appointed as the second Defence Secretary under President Sirisena.

Mr Hettiarachchi has exercised power to enjoy his desires but earned no reputation among the colleagues and those who worked in the related institutions.

However, it was witnessed by many within the Ministry of Defence, that Mr Hettiarachchi was an easy going person driven by emotions and desires rather than the straight forward vision on the subject.

It was under his period that the Chief Accountant of the Ministry of Defence was replaced and one Ms Kamani Hettiarachchi was appointed. Both of them were long term friends, reliable sources indicated. Their friendship maybe the main reason the former secretary might have thought that she is the trusted person who can play one of the most important roles in the ministry.

However, as the saying goes, power corrupts; absolute power is absolute corruption. The MoD started suffering due to the managing methods of this duo. As the result, the Defence Secretary’s days were numbered.

Three Defence Secretaries under first two and half years

However, out of all bad deeds he did, former Secretary of Defence, Mr Karunasena Hettiarachchi must be credited for one single action where he straight forwardly said, No. That is the deal we are going to dig more information about in this part of the series. That is the Russian Ship deal about which Mr Hettiarachchi has clarified before his competent authority, the negative aspects of the Russian Ship deal and why the country should not buy the ship at this stage by spending such huge amount.

Nonetheless, Ms Kamani Hettiarachchi is still there enjoying the immunity to manipulate the entire system of the MoD.  What is achieved by her by staying on in the chair which the head of state also urged her to vacate?

Deals; Nothing else! Money talks, she may have well understood this old formula. Millions worth bad deals are in place.

“Out of all dreams, now the MoD, the country’s heart of national security is suffering from the actions by the Chief Accountant,” reliable sources said.

“Ms Hettiarachchi is still serving in the MoD based on the appeal she made against the replacement, though President has expressed displeasure many times about her actions,” sources added.

What can one say by the apparent megalomaniac situation in the MoD? No one seems to be careful of the blood that is sucked from our sons and daughters who fought in this country for all of us to enjoy the peace. Despicability of bad management is proven through that state of deterioration of the MoD as an institution.

After Karunasena Hettiarachchi, the President has appointed his third Defence Secretary, Mr Kapila Waidyaratne, a decorated legal mind of the country probably hoping that he will solve the very management crisis prevailing in the MoD.

Sri Lankan delegation at the ARMY 2017 Forum.
Kubinka, Moscow Region – August 2017 ( Image source: Sri Lankan Embassy in Moscow)

However, the sources in the MoD are revealing the exact opposite to the expectation. Newly appointed Defence Secretary is also losing the grip on management and therefore, the system is manipulated by allegedly corrupt additional secretaries and the above mentioned Chief Accountant of the MoD.

It is learned that the Defence Secretary has thrown a file on the face of an additional secretary a few days ago. More information on many similar incidents is spreading around the MoD. Nothing more than expected but a further deterioration of the defence setup in the nation. This is the bad news.

Who are the few and happy few? 

Alas; hard to find one who is committed to what the St. Crispin’s Day speech from William Shakespeare’s play attempted to enlighten.

“ … We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother; be he never so vile,
This day shall gentle his condition…”

Do we really think about the blood and tears of our men and women in the battlefield who fought day and night for all of us to have peaceful sleep? Do we seriously pay our respects of gratitude for what our men and women contributed by sacrificing their lives?

Well, what those corrupted and wicked bureaucrats in MoD and other institution are practising is informing the people that they just don’t damn care about anything but large commission out of the corrupted deals, which are expanding their personal wealth. These parasites along with their agents are mushrooming in the MoD.

What do they do? They are assassinating the opportunity to design, develop and implement the state policies on the most sensitive area of this nation, national security. As the island nation, Sri Lanka is vulnerable to various forms of attacks. That was the basic lesson learned during the decades-long of brutal conflict.

Despite political disagreements, many in the previous government were keen enough to maintain the strong managing principles in the MoD as it was the deep state of the nation.  It has established semi-government institutions and entities to oversight procedures. Lanka Logistics & Technologies Ltd (LLTL) was one among them which is established to facilitate defence procurement in the country. The fee of every procurement managed by the LLTL was 2.5% of the total cost relative to much higher percentage as commission individuals would have demanded.

There were many criticisms against the LLTL, by various parties but none of the criticizers introduced better alternative to the existing mechanism. Most of the dealers behind the screen attempted to dismantle the LLTL, as they knew that that to do so would be a major debacle for their profit. Since 2015, the goals of sidelining the LLTL and preventing similar kind of state owned agency to function have been promoted by individuals who have started taking control most of the procurements of MoD.

This is the beginning of a nightmare of this nation in the name of good governance. This is where the government started losing its grip on the opportunity to build up the secure and knowledgeable nation that people were asking for.

Private agents started involving in direct defence procurement, and LLTL was largely sidelined.  This gives a blank opportunity to alleged corrupt bureaucrats to deal with individuals in the industry under cover of decently and proceed with defence procurements. Transparency and accountability largely evaporated.

This opened an opportunity to manipulate the entire system and scheming to take control of the most sensitive and secretive areas of the nation. The government’s intention to buy the new ship from Russia is among others confirming the danger that we as a country are moving towards.

The Russian Ship: One out of many misdeeds in Good Governance  

This was the situation in the MoD that has led to one of the most corrupt defence deals ever the country has had. The deal is almost finalized, and this will eliminate the reputation of a nation which is repeatedly bragging about the vanquishing the most ruthless terrorist outfit on the planet.

Who are the dealers and partners; is the most important question in this shipping deal. It must be highlighted here that this is not the only deal and this is the beginning of a long term scheme. Therefore it is very important to identify the parties involved in this.

Sri Lankan ambassador to Moscow, Dr. Saman Kumara Ranjith Weerasinghe; Representatives of the Capital Maharaja Organisation Limited which is claimed to be one of the largest conglomerates in Sri Lanka; certain officials in MoD, Sri Lanka, and Rosoboronexport, ‘the sole state intermediary agency for Russia’s exports/imports of defense-related and dual use products, technologies and services;’ are the major parties involved in this shipping deal.

There is no second word that the private entity behind this deal, the Capital Maharaja has no records that the company has prior experience with the defence procurements in the history of Sri Lanka. Most of the defence experts were curious and afraid about the sudden involvement of this company, and this could be adversely affecting the future of the country they say.

This official procedure when it comes to defence procurements by involvements of private entities is very clear. The third party agency should be registered under the MoD, but the Capital Maharaja, according to the sources, has not registered. However, this private company is trying to become the local agent of Rosoboronexport, which was earlier, handled by one of most reputable private entities in Colombo for decades.

But the Capital Maharaja is scheming through its communications power and other ways and means to taking control of the defence industry. Buying the Russian ship is one of the major deals that the company is involved with at the moment.

It is notable that the former Russian Ambassador and the Russian Defence Attaché to Colombo were maintaining an extraordinary relationship with the Capital Maharaja, where they even went to play golf together with one of the directors of this private company. The most important principles in defence are accountability, transparency and records that can prove the understanding of the subject. The Capital Mahajara has, unfortunately, shown nothing on defence procurements and they have not proved that the company is capable of proceeding with the defence procurements on behalf of the nation.

This shipping deal is indicating possible corruption and negative deal from the country’s perspectives. It is not only that the private entity and their agents behind this deal have no reputation over defence procurement, but also the real cost of the ship is far lower than the apparent cost.

The MoD sought advice from Sri Lanka Navy, when this defence superabundance came into process leading to the reporting of most interesting events.

According to a reliable source, one of the most senior officers serving at that time in Navy Headquarters, Rear Admiral Wettawa has rejected the proposal and states that this defence deal is worthless and was only a burden to the nation.

Following his statement, former Navy Commander who is now Chief of Defence Staff, Admiral Ravindra Wijegunaratane wrote a letter to the JSC Rosoboronexport via LLTL stating that the price of the ship was beyond the general price, reliable sources said.

Gepard 5.1
Ocean-going patrol ship (on the base of project 11661) –Image source: Rosoboronexport

The amended contract intended to be signed by the involved parties described the Ship and outlined the pact. Here is an excerpt;

“The seller ( Rosoboronexport) shall build and deliver to the buyer ( Ministry of Defence, Sri Lanka)   one Gepard – 5.1 ocean-going patrol ship hereinafter referred to as the “Ship”, and render services in training of customer’s specialises in operation of the ship, hereafter referred to as “Training”, and the buyer shall accept and pay for the ship and training”

….. 

“ 1.3. payment of the value of the Ship, Ammunition and Training supplied under this Contract shall be effected in accordance with the Agreement between the Government of the Russian Federation and the Government of the Democratic Socialist Republic of Sri Lanka on granting a state loan to the Government of the Democratic Socialist Republic of Sri Lanka.”

….. 

“2.1. The price for the Ship to be supplied under the present Contract is fixed in US Dollars and understood as “CIF – port of Colombo” in accordance with “ Incoterms 2010” ( Publications No 715 of International Chamber of Commerce, 2010, Paris, France.) 

2.2. The price of the Ship shall be fixed and firm during the overall period of the Contract and shall be valid for this contract only. 

2.3. The unit price of the Ship amounts to 179 410 000. 00 (one hundred seventy-nine million four hundred and ten thousand) US dollar only. 

2.4. The price of the ammunition amounts to 578 875.77 (five hundred seventy-eight thousand eight hundred seventy-five and 77/100) US dollars. 

2.5. The cost of Training amounts to 179 100 00.00 (Seventeen million nine hundred and ten thousand) US Dollars. 

2.6. The price of the Ship, Ammunition and Training amounts to 197 898 875 .77 ( one hundred ninety-seven million eight hundred ninety-eight thousand eight hundred seventy-five and 77/100) US Dollars.

These amounts are not going to be paid from the Capital Maharaja or his collaborators’ pockets, but by the innocent laymen and laywomen who have to pay these amounts as debt to Russia for a long period.

The tragic part is that within the said amount over three ships with same configurations could be bought. What these dealers do is to pay the real cost to one ship and rest of the amount will go into their account; that’s what they are eager to grab. That is why the Sri Lanka Navy senior officials and the former Commander refused to buy this ship as they are experts on the subject.

However, for some reason, the then the former Commander of the Navy revoked his earlier statement and re-sent the letter stating that he wishes to continue to support the buying of the proposed ship, according to reliable sources.

Meanwhile, his service was extended for another six months and many events occurred under the name of “Defence in Diplomacy”, including the event of President Maithripala Sirisena flying to Moscow on an official visit.

President’s visit was most remarkable in the history of Sri Lanka and it has given an opportunity to those individual agents to visit Moscow as part of group of state delegates. Recently the newly appointed Defence Sectary Mr Waidyaratne along with his Additional Secretary and selected armed forces officers to go to Moscow. The person who is portraying himself as a man who is supporting the rural areas and people in Sri Lanka is frequently flying between Moscow and Colombo to accomplish the mission on behalf of the Capital Maharaja.

The adverse deal has already reached the edge, and now the interesting parties are yawning for their share. Negative effects of this deal will be much more than the bond scam!


How was this deal opened? How are they going to pay the amount? Why did the government of Sri Lanka that claims to be following the principles of Good Governance not be stopped from this corrupted deal? Let’s unmask them in next part of this series.


To Be Continued

Author: Sri Lanka Guardian

Sri Lanka Guardian has been providing breaking news & views for the progressive community since 2007. We are independent and non-profit.

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