The Situation Report

12th April 1998

Defence procurements: a hard look at lapses

By Iqbal Athas

President Chandrika Bandaranaike Kumaratunga, Commander-in-Chief of the armed forces, made clear last Sunday that her Government will further probe alleged irregularities in the procurement of military aircraft, weapons and other equipment -matters repeatedly highlighted in these columns during the past ten months.

Though a holiday, the Presidential Secretariat last Sunday issued a Press Release to announce the decision. It said:

PRESS RELEASE ISSUED BY THE PRESIDENTIAL SECRETARIAT

"Consequent to a report submitted to H.E. the President and Commander in Chief of the Armed Forces by a Committee headed by Secretary Defence on matters relating to recent air crashes, it has now become necessary to further investigate into certain alleged irregularities in the procurement of military aircraft, weapons and other equipment for Sri Lanka Air Force. H.E. the President has therefore appointed a Committee of Inquiry to commence inquiries immediately on specified terms of reference and submit a report to H. E. the President within a period of eight weeks from today (05.04.98)

The Committee of Inquiry consists of three members headed by Mr. Christie Silva, former Secretary, Ministry of Health and two others namely Mr. I. M. Liyanage, former Judge of the High Court and Vice Admiral A.H. Asoka de Silva, one time Commander of the Sri Lanka Navy and a former Ambassador."

Though the Committee has been required to forward its report within eight weeks from April 5, that is before May 30, the Committee members received their letters of appointment only mid last week. They were awaiting the terms of reference from the Ministry of Defence. Their formal sittings are expected only next week after the Sinhala-Hindu New Year holidays.

In addition to serving in the Committee, President Kumaratunga has also appointed former High Court Judge, Mr. I. M. Liyanage to conduct a disciplinary inquiry into the case of Air Vice Marshal K. St. E. Perera, Director, Logistics, Sri Lanka Air Force.

AVM Perera was sent on compulsory leave in August, last year, on the orders of the Ministry of Defence after the Criminal Investigation Department (CID) began inquiries into a case involving the import of MI 24 helicopters. CID detectives arrested Ranjit Dahanayake, a businessman and Farouk Sally, a former SLAF employee and one time hotelier. They were remanded and later enlarged on bail. Mr. Dahanayake has filed a fundamental rights application in the Supreme Court challenging his arrest.

Mr. Liyanage has been called upon to complete his inquiry within six weeks from April 5, that is before May 9. By the first week of June, President Kumaratunga, will have on her hands the findings of both inquiries relating to the Sri Lanka Air Force. The fact that she has placed a time frame for the teams to conduct their probe shows the priority she is affording to these matters. More significantly, the fact that she wants to probe deeply into alleged irregularities in procurements in the Air Force, highly placed Government sources explained, not only asserts firmly the fact that she is holding the reins as the Minister of Defence but also her commitment to take to task those who are milking off millions of public money from military procurements.

This is in marked contrast to a small but influential section of the Government, including senior security forces personnel, trying to deflect the issue under various pretexts. They even included mounting surveillance outside the homes of journalists who were exposing corrupt deals or coaching so called LTTE translators to brand them as LTTE acolytes.

President Kumaratunga's efforts in this regard have not been confined only to procurements relating to the Sri Lanka Air Force, though this has remained a subject of considerable public attention.

Late last year, she ordered the CID to conduct a full probe on how a consignment of 32,400 rounds of 81 mm mortar bombs, ordered by the Sri Lanka Army from the state owned Zimbabwe Defence Industries (ZDI) went missing. This was despite an official claims made earlier that the Government has taken delivery of all orders placed with ZDI.

During three months of investigations, CID detectives has unravelled startling details. It has now come to light that the consignment of mortars were part of a larger transaction of military hardware worth over US $ 6.9 million (or over Rs 427.8 million). Though it was a direct Government to Government deal, arrangements had been made to effect payments through a South Korean Bank.

Missing mortars

As exclusively revealed in these columns (SITUATION REPORT - March 15), the Government of Sri Lanka has 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 US $ 1.5 million 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.

CID detectives have already unravelled details of how the Zimbabwe mortar deal originated and are now out to find answers to a number of other questions. As I said earlier, one is to ascertain whether the moneys were sent through the South Korean bank to facilitate the payment of commissions to interested parties, both in Colombo as well as in Harare. It now transpires that such a commission would be not only in respect of the mortar deal alone but encompasses the entire transaction involving US dollars 6.9 million.

Fuller details of the scandal will be known when the CID investigations are complete. But what has already come to be known is the fact that the mortars not only fell into the hands of the LTTE but had also become the most lethal weapon to stall the security forces advance during "Operation Jaya Sikurui" (or Victory Assured) which will be eleven months old tomorrow. It is relevant to point out here, as the nation marks another Sinhala - Hindu New Year, that more than 1,300 security forces personnel have paid with their lives during this operation, the longest ever in Sri Lanka's military history.

It is no secret that the mortar deal scandal stinks of irregularities and improprieties. But worse enough, the fact that the mortars fell into LTTE hands has changed the course of military history during "Operation Jaya Sikurui." Even if the ongoing CID investigations have bared corruption and will reveal the identities of those involved, a more serious implication it will have is the repercussion on the country's national security. The enemy has not only benefited from it but is continuing to use its full thrust to stall the march of a conventional Army.

If that is the situation in respect of an Army procurement, in the case of the Sri Lanka Air Force circumstances leading to the purchase of aircraft were highlighted by a Presidential Committee of Inquiry. Headed by Chandrananda de Silva, Secretary, Ministry of Defence, the Committee also held that the loss of two AVRO aircraft following LTTE missile attacks in April, 1995, killing over 100 soldiers may have been averted if the (then) Commander of the Sri Lanka Air Force had taken intelligence reports seriously.

An SLAF AVRO (Charlie Romeo 835) was destroyed by suspected LTTE missile attack April 29, 1995 killing 51 persons onboard. The next day, another AVRO (Charlie Romeo 834) was also destroyed in similar fashion killing 54 persons on board.

The Committee said that the (former) Air Force Commander, Air Marshal Oliver Ranasinghe, during his evidence admitted that the Directorate of Military Intelligence gives various intelligence reports. He has declared "if he were to accept all such reports there would be no Air Force flying."

The Committee said "this answer epitomises a complete lack of responsibility by the Commander and had he taken the intelligence reports seriously, the loss of AVRO aircraft (CR 864 and CR 865) may have been averted. It also appears from the Commander's statement that he did not believe the LTTE to possess Stinger missiles…."

When The Sunday Times exclusively reported the findings of the Presidential Committee on October 26, last year, senior SLAF officials denied the existence of such a report.

Since it was officially handed over on August 27, last year, the Presidential Secretariat officially confirmed that the second Presidential Committee of Inquiry was being appointed "consequent to a report submitted to H.E. the President and Commander in Chief of the Armed Forces by a Committee headed by Secretary Defence on matters relating to air crashes…"

That is not all. The Presidential Secretariat also said that "alleged irregularities in the procurement of military aircraft, weapons and other equipment for Sri Lanka Air Force," was to be investigated further on "specified terms of reference."

The first Presidential Committee of Inquiry was specifically called upon to conduct investigations and report on sixteen air crashes which occurred between April, 1995 and May, 1997. But one of the terms of reference gave it a limited mandate to probe procurements. It said:

"The suitability, as compared to the specific situation and needs, the condition, the cost of acquisition of the aircraft, and the procedures adopted for such acquisition, and condition upto the time of destruction/loss."

Acting on this, the first Presidential Committee of Inquiry observed that "certain purchases of aircraft have been made without adhering to accepted tender procedures." It added: "whilst agreeing that for reasons of operational urgency, deviation from tender procedure may be necessary, the Committee is of the view that in such instances, adequate safeguards should be maintained to ensure that the most suitable item of equipment is purchased at the most economical price." It recommended that "such recommendations should not be left to the Commander of the Air Force, but to a Committee…."

Committee observations

As exclusively reported in The Sunday Times, the Presidential Committee listed the type of aircraft and made its observations. Here are some highlights:

IA-58 PUCARA - The original specifications were drawn up to meet the Tucano aircraft. However, during the evaluation procedure, the specifications were changed to meet the Pucara aircraft. It is regrettable that no proper evaluation and consideration of the very valid dissenting report (by a Treasury Official who served in the Cabinet appointed Tender Board) had been made.

MI-24 HELICOPTERS - Three purchased helicopters which were delivered to Colombo were unsuitable and not accepted resulting in the need to lease out similar aircraft.

UAV SPY PLANES - This is a spy aircraft obtained outside tender procedure. Committee is made to understand that the SLAF had not examined the availability of any other spy aircraft. Committee is made to understand that this spy plane was introduced by an Agent of the Israel Air Industries.

There had been a difference of opinion over the purchase of these aircraft for three main reasons, as to whether the level of ground intelligence was adequate or ineffective, or whether there are more efficient other spy planes, or the most important issue, as to whether the remote control system of this spy plane could fall into the hands of the enemy and in itself become a serious threat. Sometime later, in spite of these observations, a decision had been taken to purchase three sets of these spy planes.

KFIR AIRCRAFT - The committee feels that a proper evaluation had not been done between the Kfir and the Chinese A - 5 Ground Attack Craft which was also suitable and available at the time of purchase.

The (then) Commander informed the Committee that these aircraft were purchased on the grounds that no other country would offer us Ground Attack aircraft as India would object. The Committee finds that the Chinese Government had sold F-7 Fighter Aircraft to the SLAF and had offered A - 5 Ground Attack Aircraft at the time of the Tucano/Pucara tender. This offer had been rejected as it did not conform to the tender specifications as it was a "Jet" aircraft, but two years later, Kfir aircraft (also Jet) was purchased. This Committee observes that China had offered six brand new aircraft in 1993 for a price of US $ 28.5 million whereas we paid US $ 28.9 million for six second had Kfir aircraft in 1995.

MI 17 - Tenders were called in 1993 and the lowest tenderer was Solaris Corporation of Russia. A contract was entered into with Solaris. However, the Soviet Ambassador had spoken to Secretary Defence and later the Commander and had informed that Solaris Corporation was not a reputed Company and that neither the factory nor the Soviet Government would be responsible in the event of a purchase from Solaris Corporation. It was later purchased from Avia Export/Kazan.

The first Presidential Committee of Inquiry only made references to aircraft procurements. But the terms of reference of the new Committee of Inquiry will cover procurements of weapons and other equipment. They include some of the weapons and equipment reported in these columns periodically.

I reported in these columns (SITUATION REPORT October 26, 1997) that "in the Sri Lanka Air Force, some of the crisis purchases have not only run into millions of rupees but the items have either been lying idle or hardly used. Though the top level Committee only probed the air crashes, it has recommended on the need to democratise the aircraft/equipment purchasing procedures by well established consultative procedures.

My report added: "details of some of these procurements have been revealed on this page. One was the purchase of a Laser Designator with guided bombs at a cost of US dollars 3,761,000 (or over Rs 200.8 million). This piece of sophisticated equipment has been lying idle in an SLAF warehouse. Soon after it was revealed in these columns, top brass were ordered to return it to the supplier.."

Reports in The Sunday Times angered the then Air Force Commander, Air Marshal Oliver Ranasinghe. A set of ready made questions and answers were handed over to representatives of a section of the media who met Air Marshal Ranasinghe at the Air Force Headquarters on October 31.

One of the questions asked by Air Marshal Ranasinghe was "Has the Air Force purchased Laser Guided Designators with guided bombs and are they lying in an SLAF warehouse ?"

Air Marshal Ranasinghe answered his own question. This is what he said:

"It is incorrect. I don't think that any Commander would comment on this time of a top secret project. Thinking for myself, I have got to live with my conscience because this type of information will only help the enemy. If this type of information is published by anyone, that is with ulterior motives."

Exactly two weeks before Air Marshal Ranasinghe made this statement, he presided over at a top level conference at Air Force Headquarters (on August 14, 1997). Taking part in this meeting were Air Vice Marshal Jayalath Weerakkody (then Director, Operations), Air Vice Marshal K. St E. Perera, (then Director Logistics), Air Commodore G.Y. de Silva (Director, General Engineering), Zvi Joseph (Director, Oak Enterprises) and Chaim Burstein (Manager, International Marketing, Asia and Oceania, Israeli Aircraft Industries).

Zvi Joseph, an Israeli dealing in military hardware has been closely associated with Sri Lanka's defence establishment from the time of the previous UNP regime. He had put through a considerable volume of military deals over the years.

Project dropped

Air Vice Marshal Ranasinghe told this meeting that the Cockpit Laser Designator System (CLDS) has not measured upto the expectations of the SLAF and that the entire project was being dropped.

Documents available with The Sunday Times show that the CLDS system purchased at a cost of US dollars 3,671,000.00 (in terms of a contract entered into with Israeli Aircraft Industries on August 17, 1995) did not function upto expected Air Force standards. Though the system was said to have pin point accuracy, it was found to be not so.

Hence the Ministry of Defence directed the SLAF to recover all dues under the letter of credit for the purchase of the CLDS system. The Sunday Times learns that to date the SLAF has not been able to recover the money and the CLDS system is lying idle at an SLAF base.

In a letter to the Ministry of Defence, former SLAF Commander, Air Marshal Oliver Ranasinghe, has said that Israeli Aircraft Industries representative "reluctantly agreed on persuasion, provided that SLAF purchase items from them in lieu of the quantum of money allotted" to the CLDS project.

Three options have been suggested, all three involving further purchases of Kfir jets and UAV spy planes.

Total value of the amount paid so far to Israel Aircraft Industries for the CLDS project is US $ 2,454,575.

Interestingly, in order to recover this sum, the alternative proposals to purchase aircraft (Kfirs/UAV) will total well over US dollars 15 million.

In other words, purely to recover a sum of US dollars 2,454,575 million US dollars, the SLAF would have to commit US dollars 15 million or more. The Israeli Aircraft Industries invited two SLAF officers to visit Israel to discuss the aircraft/spy plane package at their own expense.

There is no doubt the new Committee will go into greater detail when it probes the CLDS project which the former Air Force Commander, Air Marshal Ranasinghe said did not exist.

Judging from the questions and issues that have arisen regarding procurements to the forces, the impression one gets is that the demand for weapons or equipment has been more or less evaluated, and requirements assessed, with a single Service bias rather than, or without regard, to a joint service approach in choosing equipment which have inter-service applications.

Undoubtedly, there are a number of equipment requirements that are special to user Service. On the other hand, the general need for military equipment emanate from the demands of a national defence policy which determines the collective and individual strategic roles of the Services.

From that would flow equipment requirements for their designed strategic and tactical roles. Such a policy naturally demands that the performance of equipment required for inter- service operational applications should be acceptable in design and specification to both the user Service and supported Service. This call for Joint Services evaluation of equipment, as is necessary to support inter service operations.

That function is not served by Tender Boards. Rather it is a pre-procurement function to evaluate the best equipment desired to implement defence policy. The question is, whether provision for such evaluation exists or has ever existed?

Take for instance, the question of the acquisition of intelligence, it clearly is a multi-service function. Not only so, but the capability to make use of that intelligence is equally important. In this regard it would appear from the Presidential Committee report that the procurement of UAV spy plane was more or less a decision by the top brass in the SLAF.

Similarly in regard to the selection of the type of aircraft, should the need be for ground attack, the designed equipment should be obviously in harmony with the needs of both the Army and the Navy.

To isolate it as an Air Force choice just because it is an aircraft is to ignore the end use of the equipment and its tactical application. Recently, the intention of the Navy to procure a sophisticated vessel for shore bombardment has been focused on.

This begs the question as to the other two services cannot provide this support, never mind any question of the usefulness or need for that design of ship to meet the strategic role of the Navy.

Procedures need revision

It is increasingly evident that the entire question of procedures for the selection of procurement of equipment to the forces need to be revised. Part of the reason, in fact much of it, for alleged malpractice and corruption in regard to procurements is due to the unregulated systems and procedures. Tender Boards and Technical Evaluation Committees are part of the process. Equally important is a planned equipment policy for the Services that is task oriented, cost effective, technologically appropriate and compatible inventory-wise in common user terms.

Even if there is an ongoing war, ad - hoc equipment planning and unregulated procurement has to be avoided. Not to do so not only attracts arms merchants and in their wake corruption, but also complicates and severely burdens both operational logistics and military expenditure.

President Chandrika Bandaranaike Kumaratunga's call to probe irregularities should be taken to its logical conclusion. That includes adopting measures to prevent such occurrence and this requires a hard look at the lapses that have made these irregularities possible. In the context of the Armed forces, the country owes this to the men who are risking life and limb for Sri Lanka's sovereignty and territorial integrity.

Taraki's Column

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