Columns

• State Department calls out Udayanga Weeratunga and Kapila Chandrasena for high-level corruption
• Probes lying dormant for years being revived; arrests likely soon
• More details about millions of dollars transferred to foreign accounts over fighter jet purchases emerge
• Strong case for government to seek the extradition of Chandrasena and wife from Australia

By Our Political Editor

For the first time in Sri Lanka’s history, a foreign government, the most powerful one in the world at that, has publicly acknowledged corruption by two Sri Lankan citizens.

On Thursday, the United States Department of State declared that Udayanga Weeratunga and Kapila Chandrasena have been “publicly designated” for “their involvement in significant corruption.”

Weeratunga, a cousin of former President Mahinda Rajapaksa, was Sri Lanka’s Ambassador to Russia from 2006 to 2015. Till then, he owned Club Lanka, a restaurant for rice and curry in Ukraine, and functioned as Consul. Kapila Chandrasena, was appointed Chief Executive Officer (CEO) of Srilankan Airlines in 2011 also by President Rajapaksa. He was later found to be unqualified and had no airline experience. Yet, he drew a monthly salary of Rs 1.5 million besides other allowances and benefits. Simultaneously he also functioned as CEO of Mobitel and thereafter as its consultant. In the two posts, he drew separate salaries and other emoluments. With the loot of an alleged fraudulent deal to procure Airbus 350 aircraft, he now lives in Australia.

President Anura Kumara Dissanayake at last Monday's event at the BMICH to mark the International Corruption Day.

The State Department declaration was preceded by a visit to Colombo by one of its Assistant Secretaries, Donald Lu. During talks with President Anura Kumara Disanayake, he assured US technical support for the recovery of assets amassed abroad by Sri Lankans. There are many significant aspects to this. The US whose different agencies are well-wired into the international banking and other related systems that have unearthed credible evidence to conclude there was corruption. Obviously, such information would have also been backed up by their intelligence sources. For Sri Lanka, that is a strong weapon when they make a case for the extradition of Kapila Chandrasena, who now lives in Australia. Thus, the task for Criminal Investigation Department (CID) investigators, once again on the job, has been made easy.

The State Department said its action was pursuant to Section 7031 (c) of the Foreign Operations and Related Programmes Appropriations Act. In terms of this, Secretary of State Anthony Blinken has rendered Weeratunga, Chandrasena and their families “ineligible for entry into the United States” by signing a decree. They have been dumped together with 12 other corrupt persons worldwide. This is what it said:

= The Department of State is publicly designating Udayanga Weeratunga for his involvement in significant corruption. Weeratunga orchestrated and personally benefited from a corrupt scheme involving the procurement of MiG aircraft for the Sri Lankan Air Force. As part of this action, his immediate family members are also designated.

= The Department of State is publicly designating Kapila Chandrasena for his involvement in significant corruption. Chandrasena accepted a bribe while serving in his capacity as SriLankan Airlines CEO in exchange for ensuring SriLankan purchased Airbus aircraft for over market value. As part of this action, his immediate family members are also designated.

The US move came in a week where there has been increased public attention over the growing incidence of bribery and corruption. This was due to the public perception that despite pledges during both the presidential and parliamentary election campaigns, the National People’s Power (NPP) government is yet to act. Whilst there is substance to their concern, procedural issues have caused greater delays, much to the embarrassment of government leaders. It has been made worse by their stoic silence. The Criminal Investigation Department (CID) had to be purged of inactive personnel and injected with new additions. Archived material, including recorded statements, had to be dusted and read before new orders were issued for probes.

A reminder of the issue came when President Anura Kumara Disanayake made some pertinent remarks in his address last Monday to mark the International Anti-Corruption Day in Colombo. He referred to the case of Imad Shah Zuberi, a onetime Pakistani national, and later US citizen. What he did not say is how, a Sri Lankan politician, who was widely regarded as a “fixer,” once had six million US dollars transferred to him in the US through the Central Bank with a mere handwritten note. The money, it was claimed, was to improve Sri Lanka’s image. He was lavishly entertained by an influential, young local politician during a visit to Colombo.

The photographs of Udayanga Weeratunga and Kapila Chandrasena released by the US Department of State.

Zuberi’s roles were revealed exclusively in a series of disclosures in the Sunday Times. He is now serving a 12-year sentence in federal prison for falsifying records to conceal his work as a foreign agent while lobbying high-level US government officials, evading the payment of millions of dollars in taxes, making illegal campaign contributions, and obstructing a federal investigation into the source of donations to a presidential inauguration committee. President Disanayake described Zuberi as “a CIA agent,” a hitherto unknown disclosure. The foreign agent charge against him is in keeping with the US Foreign Agents Registration Act which requires all agents representing foreign persons engaging in political activities on behalf of foreign governments, foreign political parties and other foreign principals to register so that their activities can be evaluated considering their associations.

During his address, President Disanayake made an interesting observation. He said that in 2021, 69 cases relating to bribery and corruption had been concluded, and of these 40 were withdrawn. In 2022, 89 cases were filed, and 45 of them were withdrawn. “If we are accountable to the citizens of our country, shouldn’t we provide a clear explanation?” he asked.

The Sunday Times learnt that President Disanayake discussed the issues he raised with the Chairman of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), retired Justice Noel Iddawela. He was earlier a Deputy Secretary General of Parliament and later served as a Judge of the Court of Appeal. The CIABOC will soon place on its official website the number of cases it has filed and provide reasons why some of them came to be withdrawn. Six more new cases are also to be filed in courts. Another matter of importance is the expansion of CIABOC’s team of investigators as they buckle down to an aggressive approach towards complaints. This is in keeping with government policy. More Police officers are now being interviewed for this purpose.

The investigations into the cases involving Udayanga Weeratunga and Kapila Chandrasena saw no outcome. There was heavy political pressure to suppress related parties from being questioned or relevant documents obtained to back up evidence. Yet, in both cases, the findings, as later revealed in these columns, brought forth disclosures that were damning and demonstrated how unbridled corruption had taken root. Though the yahapalana government set up an Assets Recovery Task Force, it was unable to trace any illegally parked funds abroad belonging to Sri Lankans—politicians, bureaucrats and a few who were in uniform, among others.

the Sunday Times of December 3, 2006

A widespread allegation against Weeratunga is over the procurement of MiG-27 fighter jets for the Sri Lanka Air Force (SLAF). Despite significant breakthroughs in the investigations by the now disgraced Financial Crimes Investigation Division (FCID), for 18 long years, it has not been possible to obtain any conviction in courts. This was why the cabinet of ministers of the yahapalana government decided on February 22, 2019, to shut down the FCID and bring its operations under the purview of the Criminal Investigation Division (CID). It thus came under the charge of Ravi Seneviratne, Senior DIG, who headed the CID at that time. The closure came on a cabinet paper presented by then President, Maithripala Sirisena. This was after a lengthy discussion of a visit by an FCID official to Singapore and the alleged passing down of vital information he had collected to an interested party there. Then Police Chief Pujith Jayasundera assigned a CID team to investigate the matter, but its findings are not known. Interesting enough, the Anti-Corruption Committee which directed public complaints for probe by the FCID was headed by Ananda Wijepala, now the Minister of Public Security and Chief of Staff of the President. He had to hand over the keys of the FCID offices to the Kollupitiya Police Station.

The probe into the MiG-27 procurement was one of the many outstanding cases revived by President Disanayake after he was elected. A special team of CID detectives has now resumed further investigations. Among the other cases that have been revived are the murders of ruggerite Wasim Thajudeen and Lasantha Wickremetunga, editor of the now defunct The Sunday Leader, the 2019 Easter Sunday massacres, and the Central Bank bond scam.

One of those at the centre of the procurement of MiG-27 fighter jets is Weeratunga. Since his Club Lanka days in the Ukrainian capital of Kyiv, long before the war with Russia broke out, he had been winning friends and had influenced many in the military, particularly the SLAF. This was when they flew there for training programmes or on procurement missions. A larger part of the manufacture of air assets of the former Soviet Union, before the breakup, was in the Ukraine region. That included plants that manufactured transport planes, fighter jets, helicopters and different defence equipment. He is known to speak fluent Russian, which some said, was with an Ukranian accent.

The Mikoyan MiG-27 (NATO reporting name: Flogger-D/J) is a variable-sweep twin-engine ground-attack aircraft. It was put to use in 1970 and has speeds ranging from Mach 2.7 to 2.8 (i.e. the speed of sound).

It was the Sunday Times that revealed exclusively the alleged malpractices in the MiG-27 deal. Weeks and months later, other media outlets followed suit. In addition, Iqbal Athas, then Defence Correspondent, gave details of the controversial deal in a statement to the FCID then. It was these investigations that unravelled a string of alleged malpractices and irregularities. CID detectives have now resumed from that point.

The first exclusive disclosure came in the Sunday Times of December 3, 2006. The procurement of four MiG-27 ground attack aircraft and the overhaul to seven already with the SLAF were dubbed as a government-to-government (or G-to-G) deal. That was with the Ukrainian government-owned firm Ukrinmarsh. Such deals, at the height of the separatist war, were made to obviate the role of middlemen who made unconscionable commissions. However, the contract signed on July 26, 2006, identified an offshore company, Bellimissa Holdings Limited, registered in the United Kingdom, as a so-called “Designated Party.” The cost of the four fighter jets and other freight charges went directly to this company.

The fighter jets were left over from a fleet from which the SLAF carefully selected and purchased seven units first. This was on two different occasions. On May 25, 2000, the prices were much lower. Four MiG-27 aircraft were purchased for US$ 1.75 million each. They were manufactured between 1982 and 1985. The second purchase, on October 24, 2000, the fighter jets cost US$ 1.6 million each. One was manufactured in 1981 and the other in 1984. A MiG-22 trainer was purchased for US$ 900,000. This unit was manufactured in 1984. These deals were pure commercial transactions.

Yet, the purchase price for the four controversial MiG-27s is US$ 2,462,000 each. The total cost with freight was US$ 9,848,000. These were four aircraft manufactured in 1980 and 1983 in terms of the contract. Ironically enough, two of the fighter jets were offered by a previous supplier in May 2000 for US$ 1.75 each. The fee for the overhaul of the MiG-23 UB trainer was US$ 1.1 million in terms of the contract. The Air Force purchased this trainer in October 2000 for US$ 900,000.

This purchase, however, involved Bellimissa Holdings, a Singapore-registered private company which used a London address as a front. It was a third party though the contract was touted as a government-to-government transaction. Moreover, an influential Sri Lankan obtained the signature of an SLAF official in Colombo and hand-carried the contract for signature in Kyiv, Ukraine on July 26, 2006. The address given in the contract of the firm is second floor, 145-157 St John Street, London EC 1V4PY. However, there was no such office there and the telephone number given also turned out to be a fake.

The Corporate Banking Division of the People’s Bank effected telegraphic transfer of funds in instalments in keeping with the contract. It opened Documentary Credit (or LC) to the beneficiary (Bellimissa Holdings Ltd., at the London address) through JP Morgan Chase Bank NA in the United States. The latter in turn had advised Documentary Credit (DC) to the DBS Bank in Hong Kong. Most DCs for capital equipment are deferred for five years, but the DC for the MiG-27 fighter jet deal had a shorter period. Was the period restricted for two years to enable quick disbursement of commissions and minimise “discounting” costs to the bogus company? Questions were also raised whether the Documentary Credit structure meant Bellimissa Holdings Ltd., though touted as the “financier,” had in fact no finance to provide in real terms.

An individual whose name transpired in the Sri Lanka Air Force-Ukrinmash contract M.I. Kuldyrkaev (Pronounced Kul dir Kah Yev) who has signed as “Director, for and on behalf of Bellimissa Holdings Ltd.” He was a wanted man in Ukraine. Other signatories to the Contract were Kulasena Thantrige, Counsellor/Head of Chancery, Embassy of Sri Lanka, Moscow (on behalf of Air Marshal W.D.R.M.J. (Roshan) Goonetileke, Commander of the Air Force) and D.A. Peregudov, Director, on behalf of Ukrinmash. In addition, Thantrige has also signed as the only witness to the Contract.

Investigations so far have revealed that not all the money that was paid out from Sri Lanka had gone out to the so-called suppliers. At least eight million US dollars have found their way into the offshore account of a Sri Lankan. Proof of this has been obtained. How the figures have been inflated is not clear. Since further investigations are underway, baring more details could be prejudicial to the investigation. The above facts are being recalled laying bare the enormity of corruption.

The Sunday Times (Situation Report) of August 12, 2007, noted, it was practice that all military deals went through the Ministry of Defence. The last MiG-27 fighter jets were procured just a day before Lanka Logistics Limited, the state arm for military procurements, was established. The account in the situation report noted, “Sri Lanka Ambassador in Russia (Udayanga Weeeratunga) took personal control of all military procurements from Ukraine. Thus, the MiG-27 fighter jet transaction also went through with him playing a key role.” However, in his conversations with media outlets in Colombo, Weeratunga has denied any wrongdoing.

Airbus bribery scandal

Now to Kapila Chandrasena. He came to the public limelight after a five-member “Board of Inquiry” brought forth a 136-page report which highlighted several malpractices and irregularities in SriLankan Airlines. The report was released in March 2015 by the Board of Inquiry headed by J. C. Weliamuna, Attorney-at-Law. It noted that Chandrasena assumed duties as CEO in August 2011 on a three-year contract which had thereafter been renewed. It said he had been appointed despite a purported claim by SriLankan Chairman Nishantha Wickremesinghe that he did not want him. He had in fact stated this position to “his brother-in-law (former President Mahinda Rajapaksa)….

The report said, “Chandrasena admitted that he is an employee of SriLankan Airlines and that his function as Director while being the CEO is a violation of the Articles of Association. Former Chairman Wickremesinghe too agrees that this twin appointment is not in order but was made on a directive of P.B. Jayasundera.” The latter was Secretary to the Ministry of Finance. No probes were conducted on the findings of the Board report at that time.

Things came to a climax when a transaction (later cancelled at great cost to the government) between SriLankan Airlines and Airbus transpired in a case between UK’s Serious Frauds Office and the aircraft manufacturer. It was at the Royal Courts of Justice Strand, London in January 2020. The judgement, delivered by Rt. Hon. Dame Victoria Sharp, President of the Queen’s Bench Division, with reference to Sri Lanka, said: “The second count alleges that contrary to section 7 of the Bribery Act 2010, between 1 July 2011 and 1 June 2015, Airbus SE failed to prevent persons associated with Airbus SE from bribing others concerned with the purchase of aircraft by SriLankan Airlines from Airbus, namely directors and/or employees of SriLankan Airlines, where the said bribery was intended to obtain or retain business or advantage in the conduct of business for Airbus SE.

“Sri Lankan Airlines (SLA) is the national carrier of Sri Lanka. At the material time, the Government of Sri Lanka owned 99.1 percent of SLA. In 2013, Airbus engaged the wife of a person concerned with the purchase of aircraft from SLA through a straw company (the Company of Intermediary 1). Pursuant to the engagement, Airbus employees offered up to $16.84 million to the Company of Intermediary 1 to influence SLA’s purchase of 10 Airbus aircraft and the lease of an additional 4 aircraft. In fact, only $2 million of the $16.84 million was paid. The Company of Intermediary 1 was approved by Airbus employees as a BP.

“To disguise the identity of the person behind the BP, Airbus employees misled UKEF. (UK Export Finance) . UKEF expressed dissatisfaction with an application made by Airbus in November 2014 for export credit financing, and then with the details about the BP (the relevant agent) which Airbus subsequently submitted. UKEF asked a series of questions about the BP, including why they had been employed as such, when their CV suggested they had little aviation experience and that they were domiciled and paid outside Sri Lanka. During the course of February 2015, Airbus provided misleading and untrue answers to the questions that had been asked.

“In late February UKEF personnel spoke to Airbus employee 10 and Airbus employee 8 [senior]. This call did not alleviate UKEF’s concerns. Airbus employee 10 then reported to Airbus employee 12 and Airbus employee 4 [very senior]. On about 12 March 2015, Airbus withdrew the application to UKEF. On 1 April 2016, UKEF reported this, and other matters disclosed to it by Airbus to the SFO.“

Wide publicity of the court findings forced the government to order an immediate inquiry. A team of Criminal Investigation Department (CID) detectives were assigned to probe. Investigations revealed that Chandrasena and his wife Priyanka Wijenayake (he used that name to suggest they were two different parties) had floated their own company—B Solutions. It has been registered in the Sultanate of Brunei and had operated a bank account in Singapore. Deposited into this account was two million US dollars from the parent company of Airbus, the European Aeronautic Defence and Space Company. There was a change of government in 2020 and that saw the end to investigations. Chandrasena, who has enjoyed permanent resident status before he came to Sri Lanka and his wife are now known to be living in Australia. The Sri Lankan government was compelled to pay Airbus millions of US dollars as compensation for cancelling the aircraft deal he surreptitiously negotiated.

Controversy over Speaker’s doctorate

Another noteworthy political development this week is the mounting controversy over the qualifications of Speaker Asoka Sapumal Ranawala. It is exactly one month today since the parliamentary elections and the ruling NPP government took office. They suffered their first major political setback just a day before that. Conceding that he had erred in disclosing his qualifications, an act of dishonesty, Ranawala has been forced to quit his office. The bigger embarrassment is not on him but on the NPP leadership who nominated him to such an elevated office. He is the third citizen in terms of the Constitution. Besides chairing Parliament sittings, the Speaker had other responsibilities. He was the head of the Constitutional Council which determines the suitability including qualifications of judges. Then there was the High Posts Committee in Parliament that determined the suitability of those posted as heads of Sri Lanka missions abroad. How could he have sat on them when his own integrity was in question? More so after the Janatha Vimukthi Peramuna (JVP) was rebranded and broadened as the National People’s Power (NPP). Projected in the composition of their government is a team made up of doctors, professors, university lecturers, among them to demonstrate governance by a learned entity. Ranawala  shattered this aura.

After chairing just one sitting of Parliament, Speaker Ranawala was forced to resign. He was asked to do so by President Anura Kumara Disanayake. The credit for forcing him out of office belongs to the Samagi Jana  Balavegaya (SJB) which on Friday launched a signature campaign for a vote of no confidence on the Speaker. The news shook government leaders. Until then, despite social media exposure first and the subsequent enlarged coverage in the national media, the NPP leadership was not moved. They allowed the damage to their credibility to continue. Speaker Ranwala himself declared he would clarify matters “in due course.” That was to take place on Tuesday when Parliament met. Though delayed, it is commendable that President Disanayake upheld the principle of accountability and asked Ranawala to quit – something which previous governments have ignored despite serious misdemeanors by their cabinet ministers. Howevever, sadly, some of his own ministers lack humility, unlike their leader, and have been arrogantly dismissing the Ranawala issue early this week. Some of them have already become unapproachable. President Disanayake declared on Thursday that he would deal with wrongdoers, however high they are. That included those in his own government, he said. He waited too long and thus allowed damage to his and his government’s image. That is the message delivered by the Ranwala saga. As the nation gears to enter a new year, two key areas that have become certain are changes in some establishments and arrests arising from the investigations.