This week began with the continuing focus on issues related to the aftermath of the military defeat of Tiger guerrillas.
All of them appeared to be a scene setter for tomorrow's 18th sessions of the United Nations Human Rights Council (UNHCR) in Geneva. Though there is no formal resolution against Sri Lanka and no indications of such a move have emerged, the government is taking no chances. In fact, the information the government has received, through its diplomatic channels, is that there would be no move at the UNHRC sessions this time. However, the instructions to the Sri Lanka delegation are not to relax.
Domestically, the much-awaited regulations under the Prevention of Terrorism Act (PTA) were published in a Gazette Extraordinary dated August 29, 2011.
That gave legality to the office of the Commissioner General of Rehabilitation until December 31, 2011. Before this date, legislation is to be introduced in Parliament to ensure permanency of the post. In another Gazette Extraordinary, also dated August 29, Major General Buweneka Bandara Rajaguru, has been appointed as the Commissioner General of Rehabilitation. He had held this post under the state of emergency. The two notifications were also presented in Parliament.
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| Former hedge fund founder Raj Rajaratnam leaves court after he was convicted on all counts of fraud and conspiracy, in New York. File photo |
However, some critical questions arising from the withdrawal of the state of emergency from August 30 remained. They were the proscription of the Liberation Tigers of Tamil Eelam (LTTE), its main funding arm the Tamil Refugees Rehabilitation Organisation (TRRO), the detention of more than 6,500 suspects for alleged involvement in terrorist activity and the functioning of the High Security Zones. The government has desisted from promulgating regulations under the PTA to give legal effect to these four important aspects.
The reason -- bringing them under the PTA would have placed the government in bad light. Since assuming office, the Rajapaksa administration has desisted from using provisions of this act for offences or other matters relating to terrorist activity and had only resorted to the emergency regulations. With the emergency now withdrawn to send a signal to the international community, particularly in the wake of tomorrow's sessions, that normalcy is returning to the country, the government does want to seek recourse to the PTA on such issues.
Several western countries have demanded the withdrawal of not only the state of emergency but also the repealing of the PTA. Two of the 11 demands placed by the European Union, which withdrew the attractive GSP plus tariff preferences for a variety of Sri Lankan exports to its member countries, were the repeal of the state of emergency and the repeal of several provisions of the Prevention of Terrorism Act (PTA). The controversial UN Panel of Experts that probed alleged war crimes in Sri Lanka noted that the Prevention of Terrorism (Temporary Provisions) Act of 1979, which was amended, became a permanent regime in 1982.
It noted; "This Act sets out a series of offences with severe penalties, as well as powers to prohibit certain publications. It also sets out wide powers of arrest, search, entry and seizure; provides for a regime of administratively ordered preventive detention up to 18 months, at three month intervals, and provides for restriction orders of movement or actions, in respect of any person the Minister has reason to believe or suspect is connected with or concerned in any unlawful activity. The far-reaching provisions of the PTA have also been widely employed before, during and after the final stages of the war."
Vacuum in proscription
of LTTE and TRRO
As a result, the Sunday Times has learnt that there is currently a vacuum in respect of the proscription of the LTTE and the TRRO and the imposition of the High Security Zones. No regulations have been issued so far to cover these aspects. As for those held for alleged involvement in terrorist activity, a senior government official explained that fresh detention orders could be issued under the PTA. The rest of the issues, the official said, were not regarded as "seriously endangering national security" and could wait the passage of legislation in Parliament in due course. This is on the grounds that armed forces and the police are geared to deal with any re-emergence of the LTTE or any attempts to infringe on High Security Zones. However, legal issues remain and the government suffered an embarrassing setback this week.
All this made clear that the withdrawal of the state of emergency was hurriedly done. This allowed no time to study some of the consequences.
It tabled regulations under the Criminal Procedure Code (Special Provisions) Act to provide for the Police to detain a suspect for 48 hours instead of the present 24 hours before being produced before a Magistrate. Opposition Leader Ranil Wickremesinghe, who is thorough on parliamentary procedures, was to point out that these regulations first introduced in 2007 for two years had not been tabled in Parliament in 2009 for an extension.
The Justice Minister at the time was Milinda Moragoda, and therefore, the regulations had lapsed. He argued that the government could not "give life to a dead Act."
He said a Gazette Extraordinary (1603/52) was published on May 30, 2009 seeking to extend the operation of the regulations by another two years but it was never placed before Parliament for approval.
President's Counsel Wijedasa Rajapaksha was to point out that the government should have issued a Gazette notification a month before the lapse of the provision on May 30, 2009. In the face of the Opposition's clinical arguments, a ruffled Justice Minister Rauff Hakeem sought an adjournment of sittings.
Though Deputy Speaker Chandima Weerakkody insisted that the debate could go on, continued protests forced him to yield. That paved the way for a party leaders' meeting where it was decided to put off the debate in the light of the serious blunder on the part of the Justice Ministry in trying to introduce this law. In other democratic countries, such a debacle would have led to far reaching consequences for the Minister in charge and the government in power.
Even if the vacuum caused by the lapse of some provisions in the state of emergency not being renewed under the PTA or in the form of any other regulations so far, a serious question arises over the Tamil Refugees Rehabilitation Organisation (TRRO). The government had frozen millions of dollars/rupees of its funds and proscribed the organisation. This organisation was under investigation both by the US and British governments too. The legal position of the TRRO and its blocked funds with the withdrawal of the state of emergency is not clear and raises important questions.
TRRO operations
The enormity of the TRRO operations, hitherto unknown, came to light this week through an unexpected quarter, a WikiLeaks cable from the US Embassy in Colombo to the Department of State in Washington D.C. It highlights the "top secret" (eyes only) report given to the Embassy by the government on LTTE financing. It names one time New York millionaire and stock broker Raj Rajaratnam, now serving a jail sentence after being found guilty of insider trading, as a main contributor. The reports give one an idea how and why the Tiger guerrillas were able to operate like a "state within a state" until they were militarily defeated in May 2009. Here are edited excerpts.
"Two additional reports, marked "TOP SECRET (EYES ONLY)" by the GSL, addressed LTTE fundraising and procurement and LTTE shipping networks……
"The Tamil Rehabilitation Organization (TRO)
"The TRO is a registered non-governmental organization in terms of the Certificate of Registration of Voluntary Social Services-Non Governmental Organization under Voluntary Social Services Organizations (Registration and Supervision) Act No.31 of 1980 as amended by Act No.8 of 1998 bearing
registration No.50706. Its registered office is at 410/112 Bullers Road, Colombo 7.
"Since 2003, the TRO has maintained bank accounts at 7 systematically important banks in the country, namely, People's Bank, the Bank of Ceylon, HNB, Commercial Bank, Seylan Bank, PABC Bank and the Standard Chartered Bank, through which banking network it has been in receipt of large foreign remittances from across the world. To date it has a network of 153 accounts at the above-named banks, 139 of which are in the North and East. The breakdown of bank accounts per Bank is given bellow:-
"Bank of Ceylon, 10 accounts in Killinochchi, Vavuniya, Mannar, Trincomalee, Mutur and Mullaitivu; etc
"People's Bank, 22 accounts in Killinochchi, Mullaitivu, Akkaipattu, Karaitivu, etc.
"Hatton National Bank 26 accounts in Vavuniya, Mannar, Trincomalee, Jaffna, Batticaola, Wellawatte, etc.
"Seylan Bank 82 accounts in Vavuniya, Trincomalee, Batticaloa, Jaffna, First City Office, and Free Trade Zone;
"PABC Bank 6 accounts in Old Motor Street and in the Colombo metropolitan Area;
"Commercial Bank 7 accounts in Batticaloa, Kotahena and in the North and East.
"During the period January 2003 to March, 2006 the TRO has received direct foreign remittances amounting to the Sri Lanka rupee equivalent of Rs.2.2 Billion. These remittances have been received from the TRO offices in 9 countries consisting of 6 major European countries, Australia, Canada and the U.S.A. and from affiliated organizations and individuals abroad and international NGOs.
"Up to the last quarter 2005, 50 percent of these remittances were received through TRO Accounts maintained by the Standard Chartered Bank. However, in view of stringent anti money-laundering requirements and know-your-customer rules imposed by the Central Bank of Sri Lanka with regard to concerns on the conduct of the account, the TRO account was closed by SCB. The account was transferred from the SCB to the Seylan Bank, Vavuniya on September, 2, 2005. The largest number of TRO accounts are maintained at the Seylan Bank which operates 66 accounts for the TRO. On inquiries made about the need for such large number of accounts for a single organization, the Bank said that each account was in respect of identified projects. The Bank was, however, able to submit only 10 project reports.
Post - tsunami funds received by TRO
"Of total post-tsunami funds received through the banking system, the TRO received the largest sum of a total of Rs.4 Billion or 10 per cent of all tsunami funds received through the banking system in Sri Lanka, for the period January 2005 to June 2006. This figure includes domestic transfers-credits to the TRO accounts from NGOs and other banks amounting to Rs.2.6 billion. 50 per cent of foreign remittances were received from the U.S.A. of which the TRO U.S.A. accounted for 50 per cent.
"All these funds have been withdrawn for use in projects purporting to be for tsunami purposes. In effect 106 per cent of bank funds have been withdrawn. It is evident that these funds have been utilized for whatever post-tsunami humanitarian work they were meant for which is deemed to have been undertaken by the TRO and should have been completed during a period of over one and a half years. The balances reported by 6 banks as at the date of the freezing order, viz. Rs. 113.8 million, are only a mere fraction of the funds received by the TRO, particularly during the post-tsunami period. It is therefore deemed that the funds coming through the banking system in the hands of the TRO.
"Several international NGOs are carrying out humanitarian projects in the LTTE controlled areas purporting to be for Tsunami purposes with funds received for this purpose through the banking system. INGOs such as UNDP, UNICEF, Save the Children, Actionaid, ILO have transferred funds directly to the TRO for humanitarian projects. These INGOs may be requested to account for these funds.
The TRO/USA connection
"The TRO Sri Lanka has received almost 10 million U.S. dollars in foreign currency remittances from the USA during the period January 2003 to March 2006 through the commercial banks in Sri Lanka. This represents the largest component of foreign currency remittances received by the TRO accounting for 41 per cent. The TRO-USA is the largest contributor to the TRO Sri Lanka. In August alone this year, a total of U.S.566,000, or LKR 60 Million, was remitted by the TRO USA to the TRO and various affiliated organizations in North and East. These funds have been received from TRO office registered in Cumberland in State of Maryland in the U.S.A. which is the entity that is presently being investigated by the U.S. authorities with regard to arms purchases for LTTE.
TRO Front organizations and transfers from International NGOs INGOs)
"Several front organizations of the TRO purporting to be NGOs in their own right have been identified. The following are some of them:-
"-White Pigeon-registered as a Charity in the UK but now delisted by the Charity Commissioner.
- The Ghandi Seva Sangam - in receipt of funds from TRO
- Social Economic Development Organization for Tamils (SEDOT)
- The Bank of Tamil Eelam, in Killinochchi with branches in the North and East.
- The Economic Consultancy House
- The Dry Zone Development Foundation.
"The following INGOs have direct dealings with TRO and regular transfers from the following INGO accounts have taken place purporting to be for projects handled by the TRO, many of which are in the uncleared areas under the LTTE administration:-
- The ILO
- Save the Children
- Actionaid International Sri Lanka which has signed an MOU with the TRO
- UNICEF
Text of Ministry of Foreign Affairs report
"Remittances received by Tamil Rehabilitation Organization (TRO) Sri Lanka from United States of America - 2003 - March 2006.
"TRO Sri Lanka (TROSL) has received USD 9.09 Mn of foreign currency remittances from the United States of America (USA) during the period January 2003 to March 2006 through the commercial banking system in Sri Lanka. Of total remittances received by the TROSL, remittances from the USA represent the largest at around 40.72 per cent of total foreign currency remittances received by the TROSL. 2004 recorded the highest inflow with 38 per cent of total remittances from the USA received amounting to USD 3.48 Mn., with USD 3.16 Mn or 35 per cent and 2.06 Mn. or 23 per cent in 2003 and 2005, respectively. USD 0.39Mn has been received in the first quarter of 2006 representing a significant decline.
"According to data available, TRO-USA is the largest contributor to the TROSL, remitting USD 5.01 Mn or 55.15 per cent of total remittances from the USA to Sri Lanka. Of these remittances from the US, the Raj Rajaratnam Family represent 3.3 Mn or 36.31 per cent. These two remitting parties together have remitted USD 8.31 Mn to the TROSL, representing 91.5 per cent of total remittances from the USA."
The Sunday Times reported exclusively last week that President Mahinda Rajapaksa has signed an Order under Public Security Ordinance (Chapter 40) to deploy the Army, Navy and Air Force in the country's 25 districts. This was with the end of the state of emergency. It was first issued in a Gazette Extraordinary published on August 6. The same order was renewed in a Gazette Extraordinary published on September 6 and later presented to Parliament.
In an unexpected move, the regulations which President Rajapaksa signed as Minister of Defence under (section 27) of the PTA, published in a Gazette Extraordinary dated August 29, 2011, also contains two other matters. One is the promulgation of Emergency (Administration of Local Authorities) Regulation No 6 of 2011. Another is Emergency (Administration of Local Authorities) Regulation No 7 of 2011. Though unusual and for the first time the PTA has been used for matters relating to the local authorities, these regulations were earlier promulgated under the emergency. These regulations rescind the terms of office of 15 Municipal Councils, two Urban Councils and five Pradeshiya Sabhas from August 10 to facilitate polls on October 8. Yet another Gazette notification dated August 8, 2011 has named officials who will run the affairs of the Councils in question from the time of nominations until elections are held. Thus, five different Gazette notifications have been tabled in Parliament.
Government lobbying UNHRC
countries
On the overseas front, the government has begun lobbying member countries of the UNHRC (United Nations Human Rights Council). Rural Affairs Minister Athauda Seneviratne has travelled to Nigeria and Senegal to seek the support of those two countries. Sri Lanka's Ambassador to Pakistan, Air Chief Marshal Jayalath Weerakkody, recently flew to Kyrgyzstan to canvas support of the government there. He is concurrently accredited to that country. Ministers Rauf Hakeem and Rishard Bathiuddin flew to the West Asian countries on the UNHRC whilst Deputy Foreign Minister Neomal Perera has gone to far flung Latin America in search of support and Minister John Seneviratne assigned to seek the support of some others. In Colombo, diplomats of UNHRC member countries were entertained to dinner by Ministers Mahinda Samarasinghe and Nimal Siripala de Silva. Sri Lanka's delegation of 15 members headed by Samarasinghe is already camped in Geneva.
Tomorrow, Robert Blake, Assistant Secretary in the State Department for Central and South Asian Affairs, will meet President Mahinda Rajapaksa. He is in Colombo on a three-day visit, postponed once when Blake had to stay back at a time when Hurricane Irene hit the US last month.
The international scene continues to preoccupy the government as the UNHRC's 18th session begina tomorrow. President Rajapaksa, who will address the UN General Assembly, on September 23 is expected to explain Sri Lanka's position vis-à-vis some of the issues confronting his government. Having militarily defeated the Tiger guerrillas just two years ago, he faces one of his biggest challenges on the diplomatic front in the coming weeks.
Consumers paying for CPC's frauds and blunders
The lives of virtually all Sri Lankans are linked in some form or the other to the services provided by the state-owned Ceylon Petroleum Corporation (CPC).
It provides the fuel that turns the wheels of the transport sector including the railways. In the absence of adequate hydropower generation to meet the needs countrywide, the CPC fuel runs the engines that provide thermal power. The Road Development Authority and the Maganeguma, which are paving or building new roads, the armed forces and the Police all, need the CPC fuel. So do the national carrier, Srilankan Airlines and Mihinair.
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| Vehicle damaged due to low quality petrol being repaired at a garage in Nawala: File photo |
Established in 1961, after fuel import and supply was nationalised, prompting a stoppage of US aid then, the CPC's main objective are twofold. One is to carry on business as an importer, exporter, seller, supplier and distributor of petroleum products. The other is to carry on business of exploring for the exploiting, and refining of petroleum and to carry on any such business. With petroleum deposits still to be found, the CPC's main task has been the former -- mainly import crude or refined petroleum products and distribute them.
For the first time in its half a century of existence, the CPC was in the eye of a storm when it distributed 20,000 tons of contaminated fuel. Official estimates claimed that more than 2,000 motor vehicles pumped with this inferior fuel developed engine and carburettor problems in June this year. There were thousands of other motorists who did not think it worthwhile to complain. They suffered losses in the form of repairs that ranged from Rs 25,000 to Rs 350,000. At first, Petroleum Industries Minister Susil Premajayantha blamed it on errant fuel station owners who had water in the underground storage tanks. Later, when the embarrassing saga began to unfold, he had to own up and save face.
An official Committee headed by Power and Energy Ministry Secretary M.M.C. Ferdinando was appointed to probe the matter. If detectives of the Criminal Investigation Department (CID) are assigned to probe suspected fraudulent activity involving a few million rupees in state institutions, it was not to be in this case which involved more than a billion rupees. After weeks of deliberations, the Committee brought out a report running into more than 830 pages.
In a one page media statement, the Committee noted that some of the tender requirements had not been fulfilled. During May 25 to 31, three tenders had been rejected. Due to this rejection, by June there was the danger of fuel stocks running low. The new stocks (15,000 metric tonnes) had been imported. Later, 20,000 metric tonnes had been released to the market. The Committee's statement does not explain how an imported quantity of 15,000 tons became 20,000. One could only presume an additional stock of 5,000 metric tonnes was added to the imported quantity of contaminated fuel. The Committee recommended that action should be taken against the supplier as well as the officials responsible.
The government named Harry Jayawardena, a private sector entrepreneur, to be the Chairman of the CPC in May 2010. Jayawardena, a one-time Chairman of Srilankan Airlines during the tenure of former President Chandrika Kumaratunga was not coy in taking up another government appointment. Among the richest men in Sri Lanka, he was expected to bring his private sector experience to cut losses and turn the CPC into a viable commercial enterprise. However, not much seems to have changed from the time he inherited office. Given the fact that he turns up at the office so rarely due to his preoccupation with his far flung private sector empire, it is not surprising that the solemn pledges he made when he assumed office remain mostly unfulfilled. After the contaminated fuel scandal, Jayawardena was also named head of the Fuel Stocks Committee which meets every Thursday. This was a position held earlier by Titus Jayawardena, then Secretary to the Ministry of Petroleum Industries. He was moved out to the Treasury when the scandal broke.
At their meeting on 23 August, parliamentarians who are members of the Committee on Public Enterprises (COPE) discussed the CPC. One of the documents before them was a note by the Auditor General for 2007, 2008, 2009 and "the current position."
According to the note, it is not only motorists who have been affected by the contaminated fuel. Even independent power producers (who provide electricity to the national grid) were hit. This is what the note says: "20,000 tons of High Sulphur fuel oil 1500 valued at Rs 1,140 million imported by the Corporation has been contaminated and it has affected the independent power producers in the country and the CPC has consulted the Attorney General."
Now comes the crunch. If the official Committee had recommended that action be taken against the firm that supplied contaminated fuel, the Auditor General's note has this to say in their own English, "Whose opinion was that the fuel specifications and the tender conditions laid down for the import of High Sulphur fuel oil 1500 are not in favour of the Corporation in case of the above situation, and therefore taking legal action against the supplier could be a waste of money." A possible interpretation of this statement would mean that there is no purpose in suing the suppliers since they had only met CPC's specifications and the tender conditions. The question that begs answer is whether those benchmarks were placed with the prior consent of the supplier?
According to the Auditor General's note, the most basic rules of commerce -- demanding bank guarantees from large scale recipients of CPC suppliers - have not been followed. As a result, many owed vast sums of money. In the aviation sector, the amount owed to the CPC for 2010 is Rs 52.8 million, 2009 Rs 20.4 million, 2008 Rs 87 million and 2007 Rs 207 million. In the private sector, the amounts are even more staggering. For 2010 it was 3,443.6 million (or over Rs 3.4 billion), 2009 Rs 1,544.9 million (or over Rs 1.5 billion) and 2008 Rs 5,566 (or over Rs 5.5 billion). Fuel dealers owed the CPC Rs 26.3 million in 2010 and Rs 20.8 million in 2009.
Another unsound commercial practice, the Auditor General has pointed out, is the agreement entered into between the Laugfs Gas (Pvt). Ltd. and the CPC in respect of LP gas sales. It has expired on October 20, 2006. "However, the Corporation has supplied LP gas to Laugfs (Pvt) Ltd., continuously without entering into an agreement. The Supreme Court directed the Corporation to continue gas supply to Laugfs Gas (Pvt.) Ltd., as agreed on March 2009."
The CPC is also locked in a dispute with the Ceylon Electricity Board over monies due to it for the past three years. In 2010, 2009 and 2008 the CPC says that the CEB had an outstanding amount of more than Rs 145 million whilst the disputed amount is Rs 3037 million (over Rs 3 billion).
The Auditor General has said that the CPC had entered into bunkering business through a private company in April 2008 and had to "adopt different strategies to compete with other competitors in the market."
The CPC had sold fuel at a reduced price to a private company and as a result, the Corporation had incurred an approximate loss of Rs 353 million and Rs 125 million during 2008 and 2009 respectively.
With wanton losses, wastage, alleged corruption and other irregularities at the CPC, consumers of fuel continue to pay high prices. But this has not helped the Corporation recover its losses. The reason is given in a study of the CPC by the Department of Public Enterprises of the General Treasury. It notes:
"Despite an increase in petroleum prices in line with the increase in oil prices with effect from April 2, 2011, CPC continue to incurred (sic) a loss of Rs 27,213 million (or over Rs 2.7 billion). This is mainly due to sale of fuel to the following sectors are a loss - Power sector (heavy fuel) Rs 9,322 million, transport Rs 12,811 million, aviation 1,165 million and other Rs 6,257 million.
One of the major issues, the Public Enterprises Department notes, is "the lack of clear strategy to operate in the market, low productive use of employees, weak financial and operational management and non-optimal Utilisation of resources have contributed significantly to the deterioration of the performance of CPC negating the effect of government assistance. This is evident as there is only a marginal difference between the cost of fuel produced at the CPC refinery and the cost of refined products imported."
The next time there is a fuel price hike; most consumers will pay not only to make up for the price difference in the price of oil in the world market but also to cover up for the continued losses the CPC is suffering due to mismanagement and maladministration.
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