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• SLFP youth convention next month ahead of big May Day rally in Kandy; other moves also to consolidate leadership
• Sirisena also widens his role in decision making; no more rubber-stamping of CCEM decisions; Cabinet reshuffle likely
• Minister Samarawickrema circulates note on Hambantota port deal; Ministers to discuss on Tuesday

By Our Political Editor

President Maithripala Sirisena is making a fresh bid to re-organise the Sri Lanka Freedom Party (SLFP).
The latest effort comes at a time when a faction continues to support former President Mahinda Rajapaksa, and it being at a significant juncture. Growing challenges and plunging popularity of the government have compelled the President, as the formal leader of the SLFP to consolidate his position and his own power base – more than two years after his election as the President of the country.

With this in mind, Sirisena will chair an SLFP youth convention on April 2. Young members from different electorates are to attend the event – the precursor to the party’s grand May Day rally in Kandy. The SLFP parliamentary group which took the decision last Tuesday for the events wants to ensure a large turnout. It estimates that 10,000 youth members will attend the convention at the Sugathadasa Indoor Stadium in North Colombo. Party organisers in every electorate have been told to send in youth-members. Huge turnouts would not only be a morale booster but also what Sirisena needs to demonstrate that a vast faction of the SLFP backed him as the undisputed leader, and endorsed his policies.

The move also comes at a time when Sirisena is widening his role in governance. He had previously allowed an almost free rein to the SLFP’s partner in alliance, the United National Party (UNP) and intervened only intermittently. Some of the more significant examples – his decision to appoint Dr. Indrajit Coomaraswamy as the Governor of the Central Bank when the UNP had insisted that former Governor Arjuna Mahendran continue in office amidst allegations of a massive financial scam. Then, more recently, he appointed a Commission of Inquiry to probe the allged financial (Treasury bonds) scam at the Central Bank of Sri Lanka (CBSL). This is when the UNP had insisted that there was no such scam.

The UNP even tried unsuccessfully to stymie the findings of the Committee on Public Enterprises (COPE). And now, embarrassing details of the bond issue are unfolding by the day before the Commission. Most of it has not been good news for former Governor Mahendran and ran counter to public statements he had made earlier. It is the UNP that is getting the negatives from this inquiry, not the SLFP. Efforts by the UNP to drag in the past; the pre-2015 happenings at the Central Bank stick more on Rajapaksa than Sirisena, even though the latter was a cabinet minister and party General Secretary at the time.

President Sirisena taking part in a ceremony in Hambantota to mark the opening of a Cultural Centre. With him is Fisheries Minister and UPFA General Secretary Mahinda Amaraweera who is expected to get a higher post in a possible Cabinet reshuffle. Pix by Rahul Samantha Hettiarachchi.

Another recent move by Sirisena is the workings of the Cabinet Committee on Economic Management (CCEM) which is chaired by Prime Minister Ranil Wickremesinghe. In an unprecedented move, matters relating to financial and economic issues were discussed and concluded by the CCEM and sent for virtual rubber-stamping by the Cabinet of Ministers. A copy of the minutes of the CCEM meetings, usually very brief, were placed before the Cabinet of Ministers for approval. Earlier, on occasions when deeper examination of an issue became necessary, a ministerial subcommittee was appointed to study and report back to the Cabinet. This practice still exists though most financial and economic issues have been excluded.

It came to light that there was a lack of transparency in the CCEM, a virtual parallel cabinet, process. One such instance was when a particularly influential UNP minister pushed through a deal for a project for the manufacture of radial tyres in Horana. Even before formal approval was granted by the Board of Investment (BOI), ‘permission’ had been given to the company involved to clear the land that was earmarked for the project. In fact, such land had been the venue of an inauguration ceremony and plaques were installed. Sirisena cancelled the move and the BOI found that the land was part of an area that was designated a development zone and could not be fragmented. President Sirisena assumed supervisory control of the CCEM by chairing an apex body every other week to study closely its discussions and approvals. Premier Wickremesinghe is a member.

Hambantota Port deal
Yet another issue, which is still lingering, is the Hambantota Port Project. Premier Wickremesinghe and Chinese Ambassador Yi Xinliang inaugurated a special industrial zone in Hambantota adjacent to the port there on January 7 this year. It came amidst protests forcing Police to fire tear gas and water cannon. Related work did not move forward in the light of strong reservations over the facilities to be given to a Chinese company. The move prompted President Sirisena to appoint ministerial subcommittees to study the matter. It delayed the formulation of a Concession Agreement. Though it was to be presented at the ministerial meeting last Tuesday, finality was not reached. The matter will now come up for study at ministerial meeting this coming Tuesday. For that purpose, Development Strategies and International Trade Minister Malik Samarawickrema circulated a note among his ministerial colleagues on the Hambanota Port Restructuring process.

A voluminous copy of the Concession Agreement was distributed among ministers yesterday, just three days ahead of the ministerial meeting. An accompanying note signed by Nishantha Muthuhettigama, acting Minister of Ports and Shipping expressed strong reservations over some provisions of the agreement. Minister Arjuna Ranatunga is on an overseas visit.
The note has observed that proper procedures have not been followed and alleged that the valuation is wrong. An annual fee of US 75 million was being levied for 500 hectares of land. However, an extent of 780 hectares that includes the port area and its environs has not been charged for. In the light of the volume of material, ministerial sources said, it was highly unlikely a decision would be made on Tuesday.

This is what Samarawickrema’s note said:
“Main features of the Hambantota
Port restructuring process
“1. Establishment and registration of a Company under the Companies Act by the government of Sri Lanka.
“2. The port properties and the areas that had been identified for further development – Stage- 1 and Stage II (Already constructed) and Stage III (proposed to be developed);

“a. The 780 hectares created (1,927 acres- to be confirmed from survey plans) with the island the break-water, inflows, diverted curved terminals, port platforms, anchor area, fuel tanks and all infrastructure.

“b. A five square kilometre area (500 Hectares or 1,235 acres) adjacent to the port to be used as a supplying zone; and
“c. All movable properties related to Hambantota Port will be given to the company without any encumbrance.
“All immovable properties will be leased for 99 years. Therefore the port, port properties or immovable properties that are related to the transaction will not be sold by any means.

“3. The agreement of the shareholders, land lease agreement and concessional agreement will be executed accordingly between the Ports Authority, the government of Sri Lanka, CM (Chairman) Port Company and public private partnership executor.

“4. Eighty per cent of the assets will be purchased by the CM port company and the rest 20% of the assets will belong to the Ports Authority under a public private partnership. The joint company established accordingly will act as the public private partnership executor of the Hambantota Port.

“a. CM (Chairman) Port Company has agreed to divest the 20 % of the assets to the Sri Lankan partner within 10 years at a fair value and to bring their assets up to 60%. Here the Sri Lankan partner must express the interest to purchase within 6 months from the effective date and the divestment will occur based on the US$ 1.4 billion value cited in the concessional agreement.

“b. In the event no Sri Lankan partners express their desire to buy the shares within 6 months the right of first refusal will be given to the rest of the shareholders and according to the terms and conditions in the agreement and on the basis of maintaining majority share ownership by the CM Port company, the CM Port company has the possibility to divest a portion of the shares owned by themselves to a third party.

“5. The concession period will be 99 years from the effective date. After the completion of 99 years all the properties and assets will be handed over to the government of Sri Lanka/Ports authority without any encumbrance under nominal value of US$ 1.

“6. According to the conditions pre identified by the government of Sri Lanka, Ports Authority and other relevant State authorities CM Port company or an affiliated company, for three stages invest US$ 1.12 billion (for 1,235 acres without the supply area) inclusive of taxes for the assets in the port and can acquire 80 per cent of the joint company. The CM Port Company will place a deposit of US $ five million as a security deposit in a joint account with the Sri Lankan government.

“a. The Valuation Department valuation for the 1,235 acre supply area is Rs 494 million tax to be paid annually or Rs 12.1 billion to be paid for a 99 year lease to be paid together, along with Rs 25,000 as a monthly tax. The investor (CM) Company shall pay 80 per cent of the above lease.

“b. For the purchase of containers, cranes and other equipment an investment of US$ 400 -600 million is expected.
“c. The total direct foreign investment expected for the project is US$ two billion.

“7. Under concessional agreement only the commercial activities of the Port will be entrusted to the Public-Private Partnership executor.

“8. The concessional agreement includes directives to prevent the involvement of the public-private operator in military activities. The Sri Lankan government holds full responsibility on matters of national security and protection of the property of the Port.

“a. The Sri Lankan government reserves the right and authority on granting approval to any warship, submarine or any naval craft entering the port.

“b. Anchoring facilities for such craft will be granted by the Sri Lankan government on payments agreed upon consensually.
“c. The Sri Lankan Government will establish a supervisory committee comprising representatives of the Sri Lanka Navy, Sri Lanka Police, Sri Lanka “Ports Authority and Ministry International Trade and Strategic Development to manage security within and outside the port.

Hambantota Port is seeing tourist arrivals since of late

“d. Under the Supervision of the supervisory committee the Public-Private joint executor will be able manage internal security of the property of the port and ships and security of personnel.

“e. All persons deployed by the public-private joint operator for security should be Sri Lankan citizens.
“9. The Public-Private joint operator will be given a 100 km radius from the centre of port as a special area, from the effective date or the day the company reaches 50 per cent of the capacity for a 15 year period. During this special designated period, within this circumference, there will be limitations on the development of the container terminal and the surrounding premises.

The limitation will not apply to the Oluvil and Galle ports holiday homes , the fisheries harbours, tourists, shipping dockyard, facilities for unloading of ordinary goods, etc. This will not cover any of the development work at the Colombo, Trincomalee and Kankesanthurai ports.

“According to the relevant laws, and in keeping with the bi lateral agreements with the Sri Lankan government, entering of ships and anchoring, fuel storage facilities, will be entrusted to the public-private joint executor as part of the project.

“10. The Sri Lankan Government will appoint an independent port regulator to ensure that all ports in the country operate up to standards in a competitive manner to break monopolies. To implement this agreement fully, the relevant laws mainly, the Ports Authority Act, Pilots Ordinance, Master Attendant Act will be amended.

“11. In calculation of fee payments for re-shipment and international fees the concessions to the public–private joint executor will be the same as those offered at the Colombo International Container Terminals (CICT) while for local unloading of goods, the SLPA charges will apply.

“12. The government will give the following concessions for priority investments.
“Income Tax
Corporate Income Tax concessions
“Tax exemption of corporate income tax from the day of commencement of commercial activities for a maximum of 25 years until the investment is regained.
“For the next 15 years a 7 per cent concessionary corporate income tax will apply.
“Thereafter the normal corporate income tax will apply.

“ b. Tax on dividends
“Dividends distributed to the shareholders out of the exempted profit shall be exempted from the income tax.
“c. Capital invested on goods for the project will be exempted from government taxes (This includes Duty, PAL, NBT, VAT, Excise and Cess etc).

“d. A maximum of 20 foreign experts directly involved in the project will be exempted from PAYE Tax.”

Cabinet reshuffle
Last Thursday, Sirisena re-ignited widespread speculation, which has receded in the past weeks, of a re-shuffle of the Cabinet of Ministers. He told a meeting in Hambantota he hoped to give Fisheries Minister and UPFA General Secretary Mahinda Amaraweera greater Cabinet responsibility. He noted that in the Tangalle electorate there were three different persons who were dealing with the subject of fisheries, Besides Amaraweera, they were his deputy Dileep Wedarachchi and Provincial Fisheries Minister H.W. Gunasena. Weeks earlier, at least two ministers sought separate meetings with Sirisena to determine whether they were to be removed. He laughed off the questions by saying there was no such move at that moment and to continue their work.

Disclosures by these ministers to their colleagues had then laid to rest speculation of a cabinet re-shuffle until Sirisena revived it on Thursday. This week, Sirisena told some senior ministers, his confidantes, that a re-shuffle indeed was round the corner. One of them speculated that “there would be upsets.”

Any re-shuffle by Sirisena will no doubt involve both SLFP and UNP ministers. Such a move is not expected until Sirisena concludes his upcoming visit to Moscow and Dhaka. He is set to leave for the Russian capital on Thursday (March 22) for a three-day visit at the invitation of President Vladmir Putin. He will return to Colombo on March 24. Though he was earlier expected to be the chief guest at the Bangladesh Republic Day ceremonies in Dhaka on March 26 the trip is not likely. However, a source said he will make the final decision upon his return to Colombo.

Election pledges
Adding to Sirisena’s woes are some unfulfilled election pledges and issues that have surfaced in the past months. Most important among the pledges is one relating to bribery, corruption and involvement in criminal acts by the then political leaders. In “My Vision,” the colour brochure he distributed during the January 8, 2015 presidential election campaign, Sirisena noted, “It is true that there was always corruption and fraud. But the extent of corruption in Sri Lanka in the last few years is utterly unprecedented…”

Upon being elected President, Sirisena who chairs the Cabinet of Ministers agreed to the setting up of the Financial Crimes Investigation Division (FCID).

Whilst some cases were probed by the Criminal Investigation Division (CID), others went to the FCID. With more than two years gone, only a handful of investigations have ended up in Courts. Those include ones where foreign investigative agencies have been helpful. Yet, a Presidential Task Force which was vested with the responsibility of recovering the assets of leaders of the previous administration has virtually drawn a blank.

It has now come to light that in one instance, a Task Force member who was in Dubai in search of alleged assets of Mahinda Rajapaksa and members of his family drew flak. This was after the member threatened the Dubai authorities with legal action if their request was not heeded. Talks since then have stalled due to a lack of goodwill. Some SLFP ministers have also accused their UNP counterparts of a bizarre relationship with some of those in the highest levels of the previous administration facing bribery and corruption charges, passing them vital information on the status of investigations. However, the UNP has strongly denied those charges.

Paradoxical enough, Sirisena admitted just weeks earlier that there was corruption within his own Government. However, he did not identify those responsible or say what action he was taking. His observation came at a time when the people have been forced to face hardships over the mounting cost of living. Adding to that are fears of further hardships as Finance Minister Ravi Karunanayake is to hold talks with the International Monetary Fund (IMF) in Washington DC over a deepening debt crisis, both foreign and domestic. As revealed last week, an IMF mission on a two-week long visit to Colombo was told of Government’s plan to sell at least sell six “non-strategic” assets to raise a billion US dollars. On the other hand, the mission has also made a close study of the country’s energy sector, particularly electricity and fuel. Last Wednesday’s raise of interest rates by the US Federal Reserve, it is feared, would also add to the debt crisis.

Geneva process
At least for the moment, there appears to be some relief for Sirisena over the Government receiving the backing of the international community to delay any action for two years (erroneously reported as one year last week), over the 2015 Human Rights Council resolution. This October 2015 (referred to as 30/1 in UNHRC terminology) resolution was moved by the United States, Albania, Australia, Germany, Greece, Latvia, Montenegro, Poland, Romania, the former Republic of Macedonia and Britain. The resolution was co-sponsored by Sri Lanka.

In the coming week, the United States, Britain and a number of countries will move a resolution, which in effect will give Sri Lanka a two-year time period to implement the 2015 resolution (30/1). Foreign Minister Samaraweera has asked his deputy, Harsha de Silva, to lead the Sri Lanka delegation. It is important to note that other than a two-year reprieve, the new resolution does not in any way change or alter the provisions of the 2015 resolution. The Sunday Times learnt soundings were made by Colombo to ascertain whether references to foreign judges could be amended or deleted from the 2015 resolution but the effort was not successful. This was both in Geneva and in Colombo. However, such consultations as well as the informal meeting Sri Lanka arranged on March 7 at the Palais de Naciones in Geneva demonstrated goodwill for Sri Lanka among countries represented.

This has heightened confidence among some Government leaders that the two-year extension could see other events overtaking the local issue. Bolstering this confidence is the belief that the Trump administration’s foreign policy approaches would be clearer and things could change. However, US Secretary of State Rex Tillerson is known to have delegated full authority to Principal Deputy Assistant Secretary for South and Central Asian Affairs, William E. Todd to deal with the Sri Lankan issue. Prasad Kariyawasam, Sri Lanka’s Ambassador to the United States, met Todd in Washington. Later, he sent a confidential note to the Foreign Ministry where he said it is still the early days of the Trump administration to take note of any significant shift in policy.

The resolution to extend time for Sri Lanka (HRC 34/1), among other matters, says “Welcoming the steps taken by the Government of Sri Lanka to implement the Human Rights Council resolution 30/1 of I October 2015, and recognizing in this context, the need for further significant progress,

“1. Takes note with appreciation the comprehensive report presented by the United Nations High Commissioner to the Human Rights Council at its thirty-fourth session, as requested by the Human Rights Council in resolution 30/1, and requests the Government of Sri Lanka to fully implement the measures identified in Human Rights Council resolution 30/1 that are outstanding.”

The October 2015 resolution (30/1), among other matters declared that it “Welcomes the recognition by the Government of Sri Lanka that accountability is essential to uphold the rule of law and to build confidence in the people of all communities of Sri Lanka in the justice system, notes with appreciation the proposal of the Government of Sri Lanka to establish a judicial mechanism with a special counsel to investigate allegations of violations and abuses of human rights and violations of international humanitarian law, as applicable; affirms that a credible judicial process should include independent judicial and prosecutorial institutions led by individuals known for their integrity and impartiality; and also affirms in this regard the importance of participation in a Sri Lankan judicial mechanism, including special counsel’s office, of Commonwealth and other foreign judges, defence lawyers and authorised prosecutors and investigators.”

President Sirisena has repeatedly asserted that he will not allow foreign judges to probe alleged war crimes by troops. He went even further just two weeks ago. Addressing a meeting of security forces personnel and the police from the Sri Lanka Air Force (SLAF) hangar on March 4 in Palaly, Jaffna, he declared, “As the President and the head of the armed forces I wish to say that I will protect all members of the armed forces and police with great responsibility.” An English translation from his speech posted on the President’s website said; “Whatever allegations are made, we will reject them. There was a proposal made demanding that Sri Lanka must have foreign judges to investigate allegations against the war heroes. I clearly said that I am not ready to accept that. There are some Sri Lankans who work through NGOs and reach wrong conclusions for the sake of money. They carry out wrong campaigns against the armed forces. I am not ready to govern the country in accordance with their wishes. I am not prepared to bring allegations against the armed forces in accordance with their wishes. I am not willing to hear cases according to their wishes.”

Premier Wickremesinghe, who earlier endorsed Foreign Minister Samaraweera co-sponsoring the October 2015 resolution in Geneva, has also now fallen in line with Sirisena’s thinking. He said that a hybrid war crimes tribunal, as recommended by the UNHRC, was not politically feasible in Sri Lanka. He was speaking at the inauguration of the National Law Week of the Bar Association of Sri Lanka on March 4. He opined that the setting up of such Courts would necessitate a referendum.

On Thursday, Foreign Minister Mangala Samaraweera also veered around. He told a news conference at his Ministry that the UN Human Rights Council had not insisted on foreign judges. He contended that they had in fact accepted Sri Lanka’s road map. “Nowhere is it said that there should be foreign judges in a war crimes tribunal,” he argued.

After the UN Human Rights High Commissioner Zaid Ra’ad Al Hussein formally presents his report on Wednesday (March 22), there will be interventions by delegates of member countries and NGOs. Diplomats in Geneva say Australia and Switzerland are to demand a time bound road map for the implementation of the October 2015 (30/1) resolution. These two countries have openly expressed the need for hybrid courts. According to these diplomats, even Britain is to insist on the full implementation of the October 2015 resolution.

When the two-year reprieve for Sri Lanka ends, for the Government, it would be time to prepare for elections. The first would be the presidential followed by parliamentary elections. In that environment, it would be near impossible for the government to fully implement the October 2015 resolution. This is notwithstanding renewed assurances in the latest (34/1) resolution. Thus, the government is pinning its hopes on a turn in events. Whether it would come in two years or the pressures would exacerbate will be a critical question.

Thus, for President Sirisena, challenges in the current year are many. He has embarked on a programme ahead of the national New Year holidays in April, to demonstrate that both he and the SLFP retain the widest support. With that, he will forge ahead taking a much bigger role in governance than before.

This year will also see the renewal of the agreement between the SLFP and the UNP. Naturally, one of the key elements in the existing agreement will rekindle a lot of thinking. It says, “It agrees to establish an independent commission to crack down on corruption in accordance to the internationally accepted, anti-corruption norms ….” When the stock taking starts, it will become clear that some things have been done and others still remain as promises.