Plans for parliamentary elections go into high gear Premadasa and loyalists pick a new political party Basil Rajapaksa explains how state body heads were named Ranil will remain UNP leader   Prime Minister Mahinda Rajapaksa on Wednesday sounded out government parliamentarians on when the President should call for parliamentary elections. This is to determine whether [...]

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SLPP and allies may contest sans SLFP

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Plans for parliamentary elections go into high gear

Premadasa and loyalists pick a new political party

Basil Rajapaksa explains how state body heads were named

Ranil will remain UNP leader

 

Prime Minister Mahinda Rajapaksa on Wednesday sounded out government parliamentarians on when the President should call for parliamentary elections.

This is to determine whether there should be a ‘snap poll’ ahead of the national New Year or sometime thereafter. The occasion was a meeting of the government parliamentary group in the Parliament complex.

Premier Rajapaksa spoke on the prospects of dissolving Parliament at midnight on March 2, the earliest date by which a dissolution is possible. The earliest an election could be constitutionally held, he noted, was on or after April 25. The question was how the MPs would react if this were to be the final dates.

There was a lengthy discussion. Most parliamentarians noted that between April 10 and April 20, people would be engaged in national New Year festivities. There would be little or no appetite for politics during this period. They were of the view that there would be difficulties conducting a polls campaign during this period. There were yet others who were in favour of ‘snap’ polls if the dates mentioned could be avoided. Such a move would necessitate the support of opposition parties since a two thirds vote is required in Parliament to facilitate an early dissolution. This has, however, been ruled out in the light of the internecine crisis within the opposition itself.

In terms of Parliamentary Elections Act, (the President shall, in every Proclamation Nomination dissolving Parliament or in any Order requiring the holding date of an election, specify:

  • The period (referred to as the “nomination period”) during which nomination papers shall be received by the returning officer during normal office hours at his office; and the date on which the poll shall be taken.
  • The nomination period shall commence on the tenth day after the date of publication in the Gazette of the Proclamation or Order and expire at twelve noon on the seventeenth day after the date of publication of such Proclamation or Order; and
  •  The date fixed for elections shall be— a day not less than five weeks and not more than seven weeks from the closing day of the nomination period; and if, after the publication of the Proclamation or Order, the day specified in such Proclamation or Order is declared to be a public holiday, such declaration shall in no way affect the validity of anything done on such day for the purpose of taking the poll.

The move came as the ruling alliance led by the Sri Lanka Podujana Peramuna (SLPP) went into high gear to prepare for parliamentary elections. This is with the return to Sri Lanka from the United States of its principal architect and National Organiser, Basil Rajapaksa. He is billed to take over as the alliance’s General Secretary, a position under which he will exercise authority to sign nomination papers of its candidates.

Basil Rajapaksa spoke to a cross section of the SLPP membership at a meeting at the party headquarters in Battaramulla early this week. One of the main issues that he addressed was to allay fears in the rank and file over appointments to state institutions. This is after the perception that President Gotabaya Rajapaksa was only naming professionals and those qualified. There were claims that in the process some key supporters have been left out.

Basil Rajapaksa defended the course of action by President Rajapaksa and declared that it did not mean others in the party, who had merit and worked tirelessly, were being ignored. It was noteworthy that six members of the party’s Kantha Samithis have been named as chairpersons to state enterprises. “There is lot more time,” he said and added that “when one received an appointment, there were a few who always felt they needed it too. That was a time-consuming task and he urged those in the party to appreciate the position.

In the SLPP leadership circles, the current concern is the number of seats they could secure for their own party apart from that of their partners. They were of the view that securing a target to achieve a two thirds majority was out of the question in view of the existing proportional representation system. In the light of that, senior SLPP leaders say their aim was to obtain at least 120 seats. This, they point out, will just be above the 113-majority required in a 225 seat Parliament. The thinking here is to ensure that none of their allies could hold them to ransom when there is a working majority. This would mean that in the event of constitutional changes, it will require the support of other political parties.

In the past, there has been only two such occasions. One was under President Ranasinghe Premadasa when the United National Party (UNP) won 125 seats at the

1989 parliamentary elections. The other was at the 2010 parliamentary elections under President Mahinda Rajapaksa where the Sri Lanka Freedom Party (SLFP) won 144 seats.

Changing ground realities

A far more significant political development where the SLPP will contest with its allies without the Sri Lanka Freedom Party (SLFP) is highly likely. This is particularly in the light of what the SLPP leadership at the highest level refer to as the “changing ground realities.” Ahead of the presidential election, a Memorandum of Understanding (MoU) was signed between the SLFP and the SLPP. In terms of this, then President Maithripala Sirisena was designated as a co-leader of the alliance. This was together with Mahinda Rajapaksa, who has since become Premier. It is pointed out that the joint level leadership was because Sirisena was then President of Sri Lanka. “Such an equation no longer exists,” said one leader who pointed out that like other allies, Sirisena also simply heads another political party. Therefore, his right to claim special status does not exist.”

That is not all. The SLPPers are insistent that every candidate under their umbrella should contest under their party’s ticket. In the case of the SLFP, senior leaders say, they would have no objections to SLFP candidates contesting under the Betel Leaf symbol. However, they are categoric that candidature would have to be from the SLPP.

In real terms, the SLPP wants to raise the bar and leave SLFP to clear it or go its own way. The reasons are many. The most important one revolves around Maithripala Sirisena over whom there is much more than an element of doubt. Firstly, it was his decision to back the candidature of Gotabaya Rajapaksa at the presidential election and later back out on the grounds that he wanted to remain “neutral.” During that period, SLPP leaders confessed, they have reason to believe he ‘flirted’ with the idea of backing Sajith Premadasa. “In fact, there was considerable interaction where the two sides exchanged views during meetings arranged by two key intermediaries,” said one source.

The SLPP leaders also want to avoid a scenario, though not likely, as a precautionary measure. That is the fear, should the SLFP win a certain number of seats, Sirisena could retain the possibility of crossing over to the opposition. Hence the demand of the SLPP to contest under its aegis is partly due to this. In reality, that means a mistrust on Sirisena due to his past performance. There are fears over his credibility.

During the presidential election campaign, an eleventh-hour development, however, forced Sirisena to put a halt to his trysts with Premadasa. It came immediately after the first rally of the UNP led New Democratic Front (NDF) at the Galle Face Green on October 10, last year. There, Premadasa announced that, if elected, Field Marshal Sarath Fonseka would be his Defence Minister. The move angered Sirisena. He had previously rejected calls by then Premier Ranil Wickremesinghe to place the Police Department under Fonseka. He declined. Nevertheless, SLPP leaders alleged that he tacitly backed Premadasa in “the belief he would win.”

The reality of the new line of SLPP thinking is clear. If Sirisena agrees, he would have to serve under Mahinda Rajapaksa, who is the leader. That is after the SLFP accepts that it would be part of the SLPP and contest the parliamentary elections under its name. Both are difficult demands for Sirisena and his party.

As reported in the Sunday Times (political commentary) last week, “in what appears to be a significant move, former President Maithripala Sirisena convened a meeting of the People’s Alliance (PA), a precursor to the United People’s Freedom Alliance (UPFA). The PA has among its members those who are now with the SLPP. At this meeting it was decided to re-name the People’s Alliance as the Sri Lanka Podujana Nidahas Sandhanaya (SLPNS).

“Nimal Siripala de Silva, senior Vice President of the SLFP, said “Thirteen political parties are in this alliance. In this Constitution, the power of the Executive Committee will be shared with 51 percent for the Sri Lanka Podujana Peramuna (SLPP), 31 percent to the Sri Lanka Freedom Party (SLFP) and the rest to the other parties. The Secretary, the Treasurer and the Vice President positions will be for the SLPP. There will be joint leaders Maithripala Sirisena and Mahinda Rajapaksa……”  This in fact was a repetition of the contents of their MoU.

Even the equations set out by Minister de Silva are expected to change. Once again, this is at a time when a handful of SLFP MPs are set in two different directions — some to join the SLPP and others to the New Democratic Front (NDF) or the new name it would assume soon. The political reality of these developments would mean that the SLFP would be further emaciated. An alliance with Premadasa under a new name is not possible. That would be anathema for them since Ranil Wickremesinghe will still remain the leader. Sirisena thus finds himself boxed in. On the other hand, for the United National Party (UNP), too, the crisis has taken a different turn.

Premadasa’s broader alliance

Though Premadasa and his loyalists boycotted the last Working Committee meeting, they have veered around to accepting Wickremesinghe’s leadership. The terms have been spelt out. Ranil Wickremesinghe will remain the leader of the UNP. He will allow the UNP to join hands with former New Democratic Front (NDF) and other parties to form a “broader alliance.” That has been agreed upon and will be endorsed by the party’s Working Committee at its meeting tomorrow (Monday). The opposition parliamentary group this week endorsed the appointment of Moneragala District parliamentarian and former minister Ranjith Madduma Bandara as the General Secretary of the new alliance.

Interesting enough, such an alliance would function under a different name. Premadasa and his close supporters have had offers from three different persons holding registered political parties. They have picked one of them and are holding it a closely guarded secret. There are discussions on how the name and symbol of the one they acquire should be changed. It is under such a new party and symbol that the “broader alliance” will contest the upcoming parliamentary elections.

There are both pluses and minuses in the arrangement. The pluses for Premadasa and his loyalists are somewhat substantial. With no UNP candidate in the fray on their ticket, it is the new party that will campaign during the polls. Hence, from now onwards till the parliamentary polls are over, it is that new party and not the UNP that will be consolidated. Therefore, the question is how much of a strong footprint could Premadasa and his loyalists make on the country’s political firmament. If the new party is successful and ends up with the backing of its allies, it is not the number of seats it wins that would count. It is the degree of grassroots level support it receives to emerge as a new political entity and the popularity base it would develop.

Conversely, that would impact not only on the image of the UNP but also on its existence as a major political party. Though Wickremesinghe has won by resisting moves to oust him as the UNP leader, a new political party and a new political alliance would come as a tremendous challenge for him. The more the latter grows, the more such a challenge would grow. The name UNP will not be known for five years, until the next parliamentary elections. Contesting local and provincial polls also becomes an issue. That is notwithstanding the close support many Wickremesinghe loyalists are extending him. There is already some unease. One of them, a former controversial Minister and arch-rival of Premadasa asked leader Wickremesinghe to name him as Deputy Leader of the new “broader alliance.” However, his request did not meet with success.

Thus, the country’s two major political parties – the SLFP and the UNP – are both at crossroads. Their future journey will no doubt be dictated to by the outcome of the upcoming parliamentary elections. It could also see a polarisation of ethnic groups though not on party lines.

The story behind the airbus deal

The news came many months after a Criminal Investigation Department (CID) probe into the procurement of Airbus A-350 aircraft by SriLankan Airlines and its findings remained in limbo.

All of a sudden, the Attorney General’s Department directed the Police this week to obtain a warrant from the Magistrate’s Court and arrest Kapila Chandrasena, a onetime Chief Executive Officer of SriLankan Airlines and his wife Niyomali Wijenayaka for alleged bribery. The CID could not locate them and a government minister said they were not in the country. The couple surrendered to their office on Wednesday. Their statements were recorded, and they were produced before Chief Magistrate Ranga Dissanayake and remanded till February 19.

This unexpected development came after it transpired in a British Court that the wife of SriLankan Airlines (“SLA”) Executive, through a straw company” registered in Brunei, was offered up to US$ 16.84 million by Airbus to “influence SLA’s purchase of ten Airbus aircraft and the lease of an additional four aircraft. The Court heard that the Special Frauds Office (SFO) in London had discovered that only two million dollars of the US$ 16.84 million had so far been paid. Of the ten aircraft to be procured, four were related to the purchase of the new A 350-900 and sparked the CID investigation. The CID’s findings had remained pigeonholed until matters surfaced in a British court. At least one director of SriLankan Airlines knew five years ago that all was not well. He raised issue but did not succeed.

Here is an abridged account of how it played out: SriLankan Airlines entered into a purchase agreement on June 28, 2013 with Airbus S.A.S. in France for the manufacture and delivery of four A 350-900 aircraft. The delivery dates were from the second quarter of 2020 with the last aircraft being delivered in the first quarter of 2021. The total cost of the four aircraft was US$ 222,356,600.85. That is over 2.2 billion US dollars or more than Rs 28.2 billion, according to then prevailing exchange rates. Financial information provided to the Cabinet at that time (2012-2013) showed that SriLankan recorded a revenue of only just US$ 948 million for ferrying 4,140,305 passengers. Its overall performance for 2015-2016 was US$ 1251 million for ferrying 4,789,902 passengers. Thus, the order with Airbus even exceeded SriLankan operating costs.

SriLankan paid pre-delivery payments since November 2016 totalling US$ 19,214,638.45. This is besides a further US$ 7.5 million made as “pre delivery payment.” However, in that month (November), the board of directors of SriLankan decided to stop any further payments. By then the UPFA government, under whom the deals took place, was out of office. The Yahapalana or ‘good

governance coalition’ had come to power. There were more payments made for different reasons as time went by.

It is during 2016 when the Yahapalana coalition was taking stock of the previous regime’s financial commitments that details began to emerge. Kabir Hashim, Minister of Public Enterprises and Development, under whom SriLankan Airlines was a subject, told Cabinet that there was an approximate cost of US$ 1.45 million per month per aircraft. It was to be spread over a 12-year period, he said

In a memorandum dated April 19, 2017. He said the “total cost of this arrangement was to be US$ 835.2 million.” The leasing deal was with AerCap, an aircraft leasing company. Since 2014, this company had acquired International Lease Finance Corporation (ILFC). The previous payments had in fact been made to AerCap.

It is important to note that the Purchase Agreement with Airbus deals only with the procurement of the “airframe” and “propulsion system.” Agreements have been entered into for other essential components of the aircraft with several other concerns including engines. Examples: Product Agreement and Total Care Service agreement with Rolls Royce PLC. Zodiac Seat France – an agreement to purchase new seats. Thales Avionics Inc. Supply of flight entertainment. Lukedesign of France for cabin design. Three different agreements with Airbus relating to A-350-900 aircraft. Payments for these had to be made separately.

Cabinet memoranda, SriLankan board papers, other documents and agreements seen by the Sunday Times lay bare a sordid tale of how the Airbus deal had been handled. There was no recourse to the Cabinet of Ministers, or the agreement being subjected to scrutiny by the Attorney General. The argument brought out was that SriLankan Airlines was a corporate entity and not a part of the government. Yet, it needed the taxpayers’ money to function and the Treasury was dumping money into a veritable bottomless pit.

A re-structuring plan, “to transform SriLankan into a profitable public enterprise,” was decided by the Cabinet of Ministers on June 24, 2015. Two consultant firms, Nyras and Skyworks, consulted by the government, had advised that operation of the A 350–900 aircraft would cost an additional US$ 30 million per year and they were not recommending them. The government decided to cancel the contract, but Airbus declared, according to Kabir Hashim, Minister of Public Enterprise Development that “cancellation is not an option, neither can the order be changed completely to a narrow body, four wide body would be given with perhaps an additional narrow body.” Airbus also insisted that failure to pay the pre-delivery payments would amount to a “breach of the purchase agreement between SriLankan and Airbus. In the event of a breach, Airbus will have an opportunity to make claims against SLA.” The agreement was heavily loaded in Airbus’ favour.

This is when the government decided to terminate the Airbus deal. The CID was first called to investigate. Airbus in the meanwhile refused to continue further discussions on the purchase agreement until the findings of the CID investigations were made known to it. That led to a deadlock whilst the government was seeking various avenues to find out details.

The Sunday Times has seen the minutes of a meeting of the Board of Directors of SriLankan held on October 27, 2015 presided over by then Chairman, Ajit Dias. This is what it says:

 7.3 Airbus being investigated by European Union on Bribery Charges:

“Mr Joseph M.S. Brito/Director informed the Board that the EU (European Union) was carrying out an investigation on Airbus on bribery charges on aircrafts delivered to UK and Switzerland. He added that he would appreciate if a letter is written to Airbus stating that the acquisitions of the Aircrafts were not done in the best interest of the Company and not carried out purely on commercial terms but also on various other monetary considerations and for Airbus to confirm if there were any facilitators in securing the deal. Mr Brito/Director pointed out that whilst the Aircraft leases for A 350s were obtained at USD 1.4 million, the market price was USD 1.2 million at the time the agreement was signed.

“Mr Brito/Director tabled draft of the letters to be written to (1) Airbus on the purchase of the Aircrafts, (2) Rolls Royce on the purchase of engines and (3) AerCap on the Lease of Aircraft. CEO (present on invitation) agreed to forward these letters to the relevant parties. Mr N. de Silva Deva Aditya/Director volunteered to forward the address of the President of the European Commission, to whom these letters were copied to. The draft letters form part of these minutes.”

There was no action taken on Brito’s request. He raised issue at a meeting of the Board of Directors on November 24, 2015. This is what the minutes of that meeting said: “Mr Brito reminded the Board that a request was made by him to write letters to both Airbus and Rolls Royce. Chairman stated that presently the company was in negotiation with both Airbus and Rolls Royce regarding the engine for A 350s which the company had committed to take and the other was regarding the A 330 due in 2020. Chairman informed that the Chief Officers namely the CEO, CTO and Manique Gunasekera/CCAO were of the view that by writing the said letters would sour the relationship with both Rolls Royce and Airbus, with whom the Company had binding contracts. Mayuka Ranasinghe/HGLA’s views were also obtained in this connection.

“Ms. Gunasekera explained that because of the fact that presently negotiations are under way with Rolls Royce and Airbus 2020 aircraft, it was not advisable now to write the said letters. This was agreed by the Board.

“Chairman stated that the investigations have taken a serious turn at the FCID and CID on the re-fleeting.”

Brito’s draft letter, incorporated in the board meeting minutes but not sent out, is revealing. It said:

“Dear Sirs,

“We refer to the purchase of eight A 350-900 due to be delivered to Sri Lankan Airlines from October 2016 to 2020.

“Two internationally renowned independent Airline Consultants have advised us that it is not in the best interest of the airline to act as the aircrafts, (sic) as vital decisions appear to have been made not only on purely commercial grounds, but also on various other monetary considerations. We have also been advised that the prices paid for these aircraft have been well above the market prices at that time.

“In connection with the above, we wish to know whether you dealt/transacted with any third-party Agent and/or consultants who have facilitated your company to sell any of these aircraft to SriLankan Airlines. If so, could we please have the full details of their names and addresses and what fees/commission/remuneration were paid or repayable to them as a result of SriLankan Airlines committing to purchase any of these aircraft. In case these facilitators/Agents have transacted in the name of a Corporate or Limited Company, the specific names of all individuals representing the Corporate whom you dealt with for the sale of any of these aircraft purchases.

“As we are not at all satisfied at the manner these purchases were carried out, and as we have been informed that the European Commission has commenced an international probe on allegedly corrupt deals on Airbus’ aircraft sales, we are copying this to the President of the European Commission to follow up on this matter.

“We thank you for your assistance and look forward to your co-operation.

“Yours faithfully

“Chairman”

Minister Kabir Hashim said in a memorandum to the Cabinet on April 19, 2017 that the Termination Agreement in line with the terms agreed by the Ministry of Finance was as follows:

  • Termination Fee for Airbus a 350–900 aircraft–US$ 154.00 m
  • Reduced Termination Fee for three Airbus A 350-900 –US$ 98.00 m
  • Forfeit Security deposit (already paid) — US$ 7.5 m
  • Cash payment from SriLankan Airlines—US$ 90.5 m

The arrangement was subject to SriLankan Airlines taking over the leases of two narrow bodied aircraft owned by AerCap and leased to Mihin Lanka.

According to an extract of the minutes of the Cabinet Committee on Economic Development (which gave approval) dated September 9, 2016 “after a detailed discussion SriLankan Airlines was authorised to negotiate a termination cost for the three aircraft within the range of USD 75-85 million in order to close the issue.”

However, a copy of the Agreement between SriLankan Airlines with International Finance Lease Corporation titled “Termination and Amendment Agreement” dated October 4, 2016 seen by the Sunday Times tells a different story. That agreement says “….Lessee hereby agrees to pay lessor an amount of US$ 146,500 payable in eight months.” Signing on behalf of SriLankn Airlines was Suren Ratwatte, then Chief Executive Officer. Sean Sullivan, CEO of International Lease Finance Corporation signed for his company.

How much exactly was paid as termination fee therefore remains a mystery like so many other issues that have clouded the Airbus deal.

All the money spent on the four Airbus A 350-900 vanished into thin air and neither Sri Lanka nor SriLankan Airlines received any benefit. It is deeply in contrast with a hospital watcher who is arrested for taking five rupees as a bribe to allow a visitor to see a patient outside visiting hours. He is first remanded for two weeks. The paradise service from SriLankan had been enjoyed only by a handful. The question is whether all of them will be known.

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