Sri Lanka: Defence deals under the Good

Governance Russian Ship Deal (Part One)

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

by Nilantha Ilangamuwa-Sep 3, 2017

( September 3, 2017, Colombo, Sri Lanka Guardian) A maverick 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 countrys 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. Thats 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.
Lets 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 cant 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 Secretarys days were numbered.
Three Defence Secretaries under first two and half years
However, out of all bad deeds he did, former Secretary of the 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 countrys 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. Crispins Day speech from
William Shakespeares 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 dont damn care about
anything but large commission out of the corrupt 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 long decades 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
seat 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
governments 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 Russias
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
Attach 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
countrys 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 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 customers
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; thats 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.
Presidents 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? Lets unmask them in next
part of this series.
To Be Continued
Posted by Thavam