The Situation Report

15th March 1998
The Sunday Times world exclusive

New light on the murky story of missing mortars

By Iqbal Athas

Out of reach Sapir Ben Tsouk, Managing Director, LBG military supplies, Tel Aviv, Israel

The mystery of the missing mortars from Zimbabwe, revealed exclusively by The Sunday Times, since July 20, last year, has now become the subject of a top level inquiry.

A cool six months after a whole world learnt it had fallen into the hands of the LTTE, the Government wants to find out how it all happened and who was responsible. That is in late December, 1997.

On August 7, last year, Deputy Minister of Defence, General Anuruddha Ratwatte, declared in Parliament "We have been having dealings with Zimbabwe for arms and all what we have ordered have reached here…"

The task of unravelling the mystery has fallen in the hands of T.V. Sumanasekera, DIG (CID) and a team of his officials - O.K. Hemachandra, SSP, Director, Sisira Mendis, SP, Inspector Waidyasekera and Sub Inspector Indrajith Fernando.

After a week of preliminary inquiries, CID detectives swooped down on a luxury apartment at JAIC Hilton Towers, the high rise at Union Place, on January 3. There they arrested John Raj Mylvaganam.

Mr. Mylvaganam and his wife Michelle are described as partners of Kolon Lanka Company. They say they have had over a ten year business relationship with the Sri Lanka Army. They had supplied boots, helmets, water bottles, water purification equipment etc.

Mr. Mylvaganam's company had its registered office at Rooms 207 and 209 at Galadari Hotel. Since the World Trade Centre bomb blast in October that caused extensive damage to the hotel, the office was shifted to R.A. de Mel Mawatha.

CID detectives who questioned Mr. Mylvaganam have since detained him. His wife Michelle has filed a Fundamental Rights application in the Supreme Court over his arrest. Among other matters, she has complained that her husband, a chronic diabetic, had lost consciousness in his detention cell and woken up the next day in a hospital bed. The hospital bed-head ticket had declared he was suffering from hypoglycemia - abnormal drop in the sugar content of the blood, a condition that can turn out to be fatal if proper medical care is not given. Further hearing of the application before the Supreme Court will be on March 18.

Whether investigations so far have revealed any wrong doing on Mr. Mylvaganam's part is not known. But it was his Kolon Lanka Company that put through the deal for the Sri Lanka Army to procure 32,400 rounds of 81 mm mortars from Zimbabwe Defence Industries (ZDI). And the transaction was carried out through Kolon International Ltd., a Korean based company.

Hitherto unknown details unearthed by The Sunday Times not only shed new light on the mortar mystery but also bring out new facts not known earlier. They also bare glaring lapses in monitoring procurements until they reach Colombo and how the murky world of arms traders operate.

The Government of Sri Lanka had paid 85 per cent of the cost of the consignment of mortars. In terms of the deal, only a remaining 15 per cent had to be paid. That was to be made after the goods were delivered in Colombo. A sum of over 1.5 million US dollars of Sri Lanka Government money is lying in a South Korean bank whilst the debate on the missing mortars continues. This was on the basis of US $ 60 per mortar shell.

Angered by this move, Colombo has held over payments due to ZDI for shipping 17,000 rounds of 120 mm mortar shells in April, last year. ZDI has threatened to sue but no such action has yet been taken. Officials in Colombo are ready with details of funds blocked in the mortar deal as a counter measure.

Given the nature of the deal, the procurement of 32,400 rounds of 81 mm mortars by the Sri Lanka Army from state owned Zimbabwe Defence Industries should have been a Government to Government transaction. Why did it have to go through a South Korean intermediary and why were funds remitted to a South Korean Bank ? Was it to accommodate payment of commissions to interested parties, both in Colombo and in Harare ? Were there any other reasons too ? Answers to these questions will be known only when investigations are complete. But that is no easy task. They will have to cover a number of countries including South Korea, Israel, Zimbabwe, Madagascar, Mozambique, Croatia and Cyprus.

Needless to say that the exercise is both time consuming and expensive. Noted a retired senior CID official "Strangely no effort has been made to launch an investigation for over six months over a matter that concerns national security and national well being. But when a lady was caught at the Bandaranaike International Airport with clothes resembling Police uniforms and a DIG was sent on compulsory leave as a result, a team of detectives were despatched to the United States.''

During its revelations last year, The Sunday Times was told by officials, both in Colombo and Harare, that according to LC terms, payments for the shipment of mortars were to be made only after the goods arrived in Colombo. ZDI Chief Executive, Col Tshinga Dube himself told The Sunday Times that the Government of Sri Lanka did not pay any money in advance for the mortars (Situation Report - Special Assignment October 5, 1997).

The Sunday Times (Situation Report - July 20, 1997) revealed exclusively the news of the missing ship, stacked with 12 containers of 32,400 rounds of 81 mm mortars. This was after the United States Embassy in Colombo received an anonymous fax.

This report was the first intimation Mr. Mylvaganam received that the deal he had put through had run into trouble. After reading The Sunday Times, he boarded a flight to Singapore. From there he made phone calls to ZDI officials to ascertain what happened to the shipment. He wanted them to take prompt action and ensure the cargo arrives. The flight became necessary since there is no international direct dial telephone facilities from Colombo to Harare.

The mortar deal with ZDI was finalised after Col. Dube visited Colombo. During a short stay at Galadari Hotel, he negotiated the contract. At first a Letter of Credit had been opened with ZDI in February and extended thereafter on three separate occasions by the Army.

Weeks before his arrival, The Sunday Times has learnt, a two member Sri Lanka Army team flew to Harare to check on facilities available at the ZDI factory and its ability to undertake orders. The team comprised Brigadier D.S.G. Kempitiya and Brigadier M.B. Tibbotumunuwe. After a first hand study, the team was satisfied. However, they were totally unaware of the mysterious mortar deal.

Even before the team flew out, world-wide tenders had already been called for the supply of 77,000 rounds of 81 mm mortar bombs for the Sri Lanka Army. Among those who tendered then were an Iranian supplier (FOB price US $ 60 each), a Portuguese supplier (FOB price US $ 65 each), a Pakistani supplier (FOB price US $ 80 each) and a Romanian supplier (FOB price US $ 64.40 each).

Defence Ministry sources said that this tender did not materialise. It is only thereafter that the required quantity was pruned down and a deal made with ZDI. It is not clear whether this order was placed after tenders were called, and if so, it was from the Ministry of Defence or the Sri Lanka Army.

After The Sunday Times began its disclosures on the missing mortar ship, ZDI's Colonel Dube and Mr. Sapir Ben Tsouk (who earlier identified himself as Ben Tsuoi), Managing Director of Israel based LBG Military Supplies have been trading allegations against each other. A world exclusive in The Sunday Times of October 5, 1997, gave their versions.

In this, Col. Dube said that he had entrusted the shipment of the mortar cargo "entirely in the hands of" Mr. Tsouk and LBG Military Supplies. He said "it was Mr. Tsouk who did everything. He knows the Captain of the ship. He knows the company the ship belonged to. All we had was his word….."

In the same interview, Mr. Tsouk vehemently denied the charge. He declared "our company never engaged in shipping and has never transported, chartered or used any ship for transport of military equipment from Beira, Mozambique to Colombo. Our company was never connected by any contractual arrangement with the Government of Sri Lanka for the supply of mortars."

Who was right ? Was it Col Dube, Mr. Tsouk or Mr. Douglas Mrewa, Secretary of ZDI, who flew down to Colombo for a meeting with Army Commander, Lt. Gen. Rohan de S. Daluwatte on August 2, last year. This was after queries were raised by the Army after the ship load of mortars did not arrive. He produced the copy of a Liner Bill of Lading and insisted that the mortar shipment had been despatched aboard "Stillus Limmasul."

He had explained that On May 23, last year, it was loaded from the Mozambican port of Beira. He had said that the ship had been part chartered by the ZDI with an Israeli company. It had first carried cargo to Windhoek (Namibia), returned to the Madagascar port of Malagasy and left there for Colombo on July 2. He gave the part charterer as LBG Military supplies in Tel Aviv. What happened to the vessel between May 24 and July 2 had remained a mystery. It was only in the second week of July that the fax, purportedly from the LTTE, arrived at the US Embassy in Colombo.

As western intelligence agencies snooped around to find out what had gone wrong, the feuding between ZDI in Harare and LBG Military Supplies in Tel Aviv had reached a high pitch.

Responding to pressure from Army Headquarters for details on the fate of the ship, ZDI released to AHQ the copy of a letter purportedly written to them by LBG Military Supplies on July 21, last year. It was addressed to Mr. D. Mrewa, Company Secretary by Mr. Ben Tsouk, Managing Director, LBG Military Supplies.

Titled "Unloading of goods in Sri Lanka," the letter in faulty English states:

"1. According to our commitment, the goods have arrived to Sri Lanka by the vessel Stillus and have been unloaded on the 11.7. 1997.

2. The vessel Stillus, together with a supplementary vessel named Morang Bong from North Korea, were caught by Sri Lankan Army Force north of Mullaitivu and were taken to port for unloading of goods.

3. The crew members of Stillus were arrested by the Sri Lankan forces and after the goods were unloaded, the Captain and the crew were warned not to transport any more goods to Sri Lanka, and were released on the 12.7.97. Since the vessel is sailing back to Europe.

4. The vessel left the goods as ordered by the Sri Lankan forces.

5. The Ministry of Defence of Sri Lanka received the goods and knows exactly where these are located.

6. The Captain of the vessel transmitted to the owners of the vessel the names of the vessels that were caught together with him and were ordered to enter the port for unloading of the goods and these are: Stillus, Morang Bong and Missen.

7. The Captain reported that the action against him is suspect and he is not sure about the identity of the persons who unloaded the goods and who presented themselves as persons of M.O.D. of Sri Lanka, but the Captain suspects that they were forces of the Tamils.

8. Also the Captain reported that from the vessel's safe were taken the documents of the vessel as well as US $ 22,000. This is the report that we report, from our standpoint this deal is closed and we do not want anymore to be involved in any transactions of this type together with your company. Also, according to information in our possession from Israeli factors, all this information is known to you."

During a telephone conversation with me in September, last year, Mr. Ben Tsouk, claimed he did not send the above letter to ZDI. He charged it may be a forgery.

And now ZDI has released another letter which it says was received by Mr. Mrewa from Mr. Sapir Ben Tsouk. It is dated July 23, 1997. This is the letter that throws significantly different new light to the entire mortar deal.

This is what the letter, again in faulty English, says: "Further to your fax of yesterday hereunder our comments:

"1. Regarding your question if the vessel left at all with the cargo, I hereby confirm that the goods left on 28.5.1997 from Rijeka, Croatia. I've been present at the site and I have seen the vessel. I've seen the containers, I have checked personally part of the containers in which there were what it was concluded between us.

2.The next notice on the vessel was from south of Port Elisabeth while on her way to Madagascar. From here and until Sri Lanka, there was no communication whatsoever on the vessel.

3. According to open current information from Sri Lankan sources, they have been in contact with the vessel on the 2nd of July, when she was at anchor, apparently at Madagascar, so it was published in the local newspapers in Sri Lanka and in the internet.

4.As far as I know, the vessel sailed under Liberian flag, and she is registered in Liberia, and according to the fax you sent me yesterday, I understand you have checked and it is indeed registered in Liberia, although according to the information in the Internet, the Army Headquarters of Sri Lanka claim that the vessel is registered in Greece.

5. Regarding the speed of the vessel, I was informed that the sailing speed of the vessel is approx. 15 knots (by my personal experience, as officer from the Israeli Navy, this speed can change according to the condition of the sea).

6. Regarding the name of the Captain, I don't know his name, despite the fact that I've met him and I've talked to him several minutes., when in Croatia. I know he is Indian. I have also seen that the crew of the vessel was Philippine origin.

7.Regarding the registration number of the vessel at Lloyds and the number of the vessel, I have no information in this matter and also checked it through my offices.

8.I understand that several security organisations in the world check this matter, it is also appeared in the Internet. I don't know how to react to this matter, although I suggest that we together will keep to the version as you have directed me to be on the B/L (Bill of Lading) that the goods left from Beira Mozambique through Madagascar to Sri Lanka "probably there was a failure on the ship and consequently it remained a long time in Madagascar for repairs…."), from there probably either the Ministry of Defence of Sri Lanka caught the vessel and brought it to where it brought it, or , in Madagascar the vessel was caught by the Tamil organisation.

9.It is to be emphasised especially that on 12.7.1997 the newspaper of the Tamils in London published a news release saying that "SHIPS SUPPLYING THE MILITARY IN JAFFNA WILL BE TARGETTED- LTTE." It is important to emphasise that this notice in the newspapers of the Tamils was at a difference of one day after the fax. See publication in Internet, my conclusion is that apparently the Tamils are those who had taken over the vessel.

10. We see ourselves on the same side of the table with you, we will co-operate with you any way and in this matter we ask for your instructions."

Mr. Sapir Ben Tsouk, Managing Director of LBG Military Supplies, who has responded to my calls and messages in the past was not available for comment. Hence it is not possible to obtain confirmation about the above letter.

However, this has thrown completely new light to the mortar mystery. The Sunday Times has learnt that the Liner Bill of Lading involving the consignment of mortars is a forgery. It contains the name of a Cypriot shipping company - Limmasul Shipping Company Limited and bears the name of the vessel"Stillus Limmasul."

According to the Bill of Lading, the ship is said to flying a Cypriot flag.

Neither the shipping company nor the vessel "Stillus Limmasul" is registered with the Lloyds Register, The Sunday Times has learnt. This has led to doubts whether Bill of Lading was forged deliberately to show the mortars were in fact arriving from Harare (via Beira) when as a matter of fact, it had been purchased in Croatia for a much lower price and loaded in Rijeka.

Had it not been for the fact that the cargo was loaded on to an LTTE vessel (fronting as Stillus Limmasul), the goods would have arrived in Colombo and payments would have gone through. The fact that the cargo fell into LTTE hands caused all the confusion and the feuding between two partners who wanted to execute a profitable business deal.

There are still several grey areas in the deal with ZDI. Since the Letter of Credit was opened in favour of the supplier, it is confusing why payment had to be made to a bank in South Korea. A figure as large as 85 per cent was paid in advance. What was the guarantee of delivery of the consignment unless it was on a Government to Government basis. This further adds to the mystery of how the money found its way to the South Korean bank.

In as much as the Government should focus on the mystery of the ship and the missing cargo as valuable intelligence on LTTE international operations, it is as vital and perhaps more so, to probe how the transaction and the transfers of moneys were initiated at this end. Whilst the Government probe would pose difficulties as it concerns many international agencies from many countries, the latter should pose no difficulty at all since all documents pertaining to the deal should be available with the Army, Ministry of Defence and the bank in Sri Lanka.

Weeks after the mystery of the missing mortars came to light, intelligence authorities in Colombo received confirmation from their foreign channels that the LTTE had succeeded in seizing the 32,400 rounds of 81 mm mortars. It had been brought in one of their own vessels to a South Asian country. Later the LTTE had smuggled in small quantities via the international shipping lanes through the north eastern coast. Intelligence channels also confirmed that the LTTE used 81 mm mortars extensively to counter the thrust of "Operation Jaya Sikurui" Over 65 per cent of the injuries and deaths were attributed to mortars.

And now intelligence authorities have learnt what appears to be the finale to the mortar mystery vessel. The ship destroyed by Sri Lanka Air Force on November 2, last year, some 400 metres off the shores of Mullaitivu was none other than "Stillus Limmasul."

After unloading a heavy stock of medical supplies, the LTTE had positioned the ship close to the shore. A captured main battle tank and an artillery gun were placed on shore in the direction of the ship in an apparent move to strike Naval craft that may approach to attack the ship. Instead the SLAF bombed it. The next day, the LTTE in a press release from London admitted that a ship belonging to Sea Tigers had been destroyed but did not divulge its name.

With an international hunt on for the fictitious "Stillus Limmasul", the LTTE managed to have the Sri Lankan security forces destroy it. That way the LTTE prevented the capture of the vessel which would have earned for it the wrath of the world community for international piracy. A week later, a Navy Dvora patrol picked up two life vests suspected to be from the same vessel. They bore the original paint orange but had been painted again with green. It is still not clear whether Navy authorities who sought the help of the National Intelligence Bureau were able to establish it was part of the same vessel.

New light on the murky story of missing mortars

The Sunday Times world exclusive