GSP Plus comes back to haunt the govt.

Over 200,000 jobs at stake

Bailout package converted to a stake in companies

Take it or leave it policy pushed by Nivard

By Sonali Samarasinghe

While President Mahinda Rajapakse was to present his massive multi billion rupee war budget last Thursday, Sri Lanka's export industry is left reeling under the global financial crisis, as it braces to face its darkest times ahead.

The government now cash strapped and in an economic bind has resorted to excessive money printing, sovereign bonds and syndicated loans ostensibly for infrastructure projects but economic experts have warned the government is using these moneys borrowed at heavy interests rates to pay salaries and meet recurrent expenditure.

It was in this backdrop that the government said it would infuse US 150 million in the export industry as a bailout package on the lines of the US bailout of banks to buffer the jolt the industry would suffer if the GSP+ concessions are not renewed by the European Union.

Darkest hour

Certainly for Sri Lanka's garment industry there can be no worse time. Even as the global market diminishes and profit margins lie wafer thin Sri Lanka is poised to lose its GSP+ concessions in Europe by year's end at a time the EU market share has increased by 12.6 percent and the US market share has plummeted by some 11 percent.

The EU accounts for some 36% of Sri Lanka's total exports as at June 2008 valued at about US$2.5 billion. Garments account for 47% of exports to the EU while fisheries products, ornamental fish, fruits, vegetables, ceramics, bicycle components, leather and rubber products have also increased their exports to the EU.

Zero duty

Under the GSP+, 6421 products were eligible for the benefit of a zero rate of duty. The loss of the concession would mean an estimated loss of over 100,000 jobs only in the apparel sector with other sectors also experiencing significant job losses. The apparel industry is the largest contributor to Sri Lanka's economy, accounting for 10 percent of Gross Domestic Product (GDP) and employing 270,000 people. It is also a huge source of employment particularly in the impoverished rural areas. The government has estimated the loss of the GSP+ benefits to amount to around 107 million euro a year.

Shrinking markets

Moreover the loss of the duty waiver will make Sri Lanka's exports less competitive with the country losing its market share to Bangladesh, Cambodia, Vietnam and others who still enjoy the concession.

The GSP+ issue comes at an inopportune time when the US market is considerably shrinking as the hegamon looks inward in dealing with a recession of its own. Apparels account for 77% of total revenue from the US. With a drop of 11% in the apparel market and decline of 8.2 of business from the US as at June 2008 the garment industry is doubly vulnerable as serious cut backs in consumer spending hits retail markets as well.  

Nationalisation

Last week however the government revised its bailout package to a peculiar support scheme that envisaged an investment of US$100m in exchange for redeemable preference shares in garment firms. 

On October 15 Minister of Export Development and International Trade Professor G.L. Peiris presented a note to cabinet (The Sunday Leader published the note in full in its October 19 issue) on the envisaged investigation to determine if Sri Lanka is eligible for the GSP+ and the impact of its loss on the industry.

EU Investigation

The GSP Committee of the European Commission (EC) decided on September 22 this year that there were sufficient grounds for initiating an investigation to determine if Sri Lanka has effectively implemented three specific conventions - that is the International Convention on Civil and Political Rights (ICCPR), the Convention Against Torture and the Convention on the Rights of the Child.

Sri Lanka has already indicated it would not subject itself to an investigation on the grounds it violates the sovereignty and territorial integrity of the country. Peiris was to therefore suggest to cabinet that in order to provide predictability to buyers in Europe and ensure they do not shift their buying sources, the government should commit itself to a financial assistance package to the industry.

Committee

To this end a committee under the chairmanship of Central Bank Governor Nivard Cabraal and the Secretary, Ministry of Finance was to convene to workout the modalities of a financial package.

And it was this committee that was to meet last week. Those present at the meeting held at the Export Development Board office in Nawam Mawatha included CB Governor Nivard Cabraal, Prof. G.L. Peiris, Chairman Joint Apparel Association Forum Ajit Dias, and industry stakeholders Ashroff Omar, Mahesh Amalean, Hidramani, Malik Samarawickrema and many others.

Some industry sources were stunned at the outcome of the meeting. What they expected from the government was a bailout package in the form of a grant or an infusion of funds with reasonable conditions. What they got was a slap in the face.

Prodding the fallen

Explaining the government's course of action Cabraal said it would infuse US$150 million into the industry - US$100m for apparel and US$50m for other exports in exchange for redeemable preference shares in each company to the value of the investment. The amount of which would be individually assessed according to the number of exports to the EU.

Even though the government did not specify a pay back time period it did say there would be an interest component as well. 

Even as some industry sources called the so-called bailout package a complete washout others said it was akin to a 'gahing vatuna minihata gona anna wage' situation.

However some at the meeting according to sources were willing to take anything they could get. Certainly JAAF Chairman Ajit Dias speaking on Friday (7) to The Sunday Leader, was clear on this issue. "At this juncture a cash infusion of any kind is welcome," Dias said adding that many have missed the point on GSP Plus. He says the matter is not political; it is a national problem. The full impact of the global crisis is yet to be felt, he says, predicting even worse days ahead.

Dire straits

The package the government proposes is in effect this. The GSP duty waiver amounts to about 9.6-10%. Say for example if the landed cost of an item is US$100, if the GSP concession is not available the landed cost of the item would be US$110. Buyers who would now have to pay US$10 more per item on account of the duty would naturally look to other sources and countries to purchase the item, especially those like Vietnam and Bangladesh - most of them still enjoying the benefit of GSP.

What the government is proposing is for the industry to sell their products at for example US$90 so that the buyer would pay the 10% duty and still get the product at a cost of US$100. This loss of $10 incurred by the industry would then be met by the government in exchange for redeemable preference shares in the companies.

That in effect means the industry is not getting any bailout but a temporary loan which has to be met at a later stage while selling their product at a cost 10% lower than today.

Thin margins

For example the industry would be forced to sell its product at US$90 when earlier it was selling at US$100. The profit margin therefore would be so thinly sliced with many saying their profit margins are not more than 5-10% at most even when selling at US$100, that the scheme would be hardly sustainable.

In order to remain competitive and give the buyer the product at the same price of US$100 this is what the government proposes.

However at the meeting some industry stakeholders explained that companies would be able to ship an item at the landed duty paid cost of US$90-91 and the cost of the lost GSP could be absorbed by the industry on the condition that the lost GSP amount was given to them in the form of a rebate or grant.

WTO regulations

Some members present at the meeting had explained to the government officials that while WTO regulations prohibit subsidies for countervailing duties there are several ways of circumventing the problem. For instance sources say China and India both enjoy huge rebates with Chinese garment manufacturers enjoying a 14% rebate on textiles and several countries having in place a mechanism to weave in subsidies to the industry.

However the government stood firm on its support scheme stating it would get involved only if it was given redeemable preference shares and a stake in the export firms.

Interest component

While this in itself is a form of nationalisation of the garment industry, sources worry that while they would have to suffer the presence of either the Treasury or the World Bank representatives in their firms on account of the preference shares, they would also necessarily have to pay back the investment together with interest.

"How can we afford this when the industry is barely making 10% if not 5% profit margin?" one source said indicating also that it would lead to the closure of their factories at the cost of thousands of jobs.

The government's argument is that their bail out package is much like the US bail out to the banks but industry sources pooh pooh the idea as pish tosh.

"In the case of the US banks they are able to recover what they have lost by re-lending that money with interest to customers," they say. "We are merely using this money to pay a duty through no fault of ours. This is only to recoup the lost benefit, so how are we to pay back the government investment together with interest when we are not in any way able to make this money earn more for us?"

SMEs suffer

Certainly it is the small and medium scale industries that will suffer worst from this crisis. Unable to pay back the government investment they will be rendered uncompetitive not only in the international market but also in the domestic market as they are totally crushed by the larger firms able to absorb more of the decline. 

However the industry is bitterly divided over the issue with some feeling that something is better than nothing in the short term while others are looking for a more mature and lasting solution.

Farmers loans

A few industry stakeholders at the meeting it is learnt had expressed a view that like with the farmers loans they too will be able to ignore the financial obligation to the state and simply forget the investment. The government owning redeemable preference shares was a small price to pay perhaps.

Preference shares are not endowed with voting rights but it is a class of ownership that has ahigher claim on the assets and earnings than common stock. Preferred shareholders have priority over common stockholders on earnings and assets in the event of liquidation and they have a fixed dividend paid before common stockholders.

However some other industry players are livid at the suggestion that they could in effect take the money and run. "Respectable businesses don't do business that way," one said with indignation. "If we accept the investment from the state we must pay it back. That is implicit in the agreement, and in the fact that the shares are redeemable," she said.

Take it or leave it

Sources allege there are some who are lobbying for this peculiar bailout package moulded by the state as they have no intention of paying it back while others with a conscience are wary and encouraging more fiscal prudence in the matter. The government meanwhile is adopting a take it or leave it attitude.

Prof. G.L. Peiris at last week's meeting was to however attempt to explain to the industry the politics of the GSP. He pointed out that any investigation into Sri Lanka's human rights record would be a violation of its sovereignty and territorial integrity. However it was not too long ago that Peiris himself was to visit Brussels to renegotiate the concession.

Blaming Peter

It is also at one of these meetings that EU Trade Commissioner Peter Mendelson was to berate Professor Peiris, a man who had walked every step of the peace process under the UNP government, for the government's scant regard for human rights and its dismissal of any form of inquiry or investigations into human rights abuse. 

Be that as it may, sources said some company owners were in no mood for politics. 'It is the government that has compromised sovereignty by its actions. Why should we pay for it?' one has shot back.

But the slighted Professor having earlier got an earful from the EU Trade Commissioner was to blame Peter Mendelson rather than the government itself for the current situation in which Sri Lanka found itself. 

Big deal

The GSP Plus is a big deal. When Pakistan was stripped of its GSP benefits in 2005 its garment industry suffered heavily.  After the withdrawal of these preferences at the end of 2004, Pakistan's exports to the EU declined by 11.7 percent in one year. In the same period India's exports increased by 33 percent.

While the economy is crumbling around him Rajapakse however remains defiant. In his budget speech last Thursday he said, "The European Union has adopted a new trend, wherein conditions are being attached to concessions granted by them such as GSP+. It is unfair to engage in international trade and investment within a framework through which political objectives are tried to be achieved. As much as we do not permit terrorists to operate in the north at the cost of innocent people, we will also not permit other countries to accomplish their political agendas through our export industry. We are a proud nation that is not second to any developed country which respects fundamental rights, human rights, rights of women, respect for labour laws, laws preventing the use of child labour, environmental laws, gender equality, election and civil rights."

Bravado

Despite Rajapakse's bravado and his huge military spending sprees it is not only the apparel industry that is in dire straits. Sri Lanka's billion-dollar tea industry is sliding downhill fast.

That's another story which will be dealt with next week as Sri Lanka's economic woes mount to unprecedented levels.

The security threat over NIC tender bender

Billions of tax payer rupees and country's
security at stake

TEC chairman refuses to sign report

TEC member a paid consultant of
shortlisted company

Criteria adjusted to suit bidders

By Ruan Pethiyagoda

A controversy of spectacular proportions has engulfed the ongoing government tender for a new National Identity Card -  an electronic National Identity Card (eNIC).

In the latest development in the dubious evaluation process, several members of the Technical Evaluation Committee (TEC) including its chairman have refused to sign the report citing not only a partial system of evaluating the bidders but also that they were not privy to the draft of the report before being asked to sign it

With every imaginable political power at play pulling strings in different directions, the resulting TEC bid evaluation report, a copy of which The Sunday Leader has in its possession, is more an exercise in engineering a victory for one if not one other particular party.

Information collected from several TEC members as well as ministry officials has shown that the evaluation process is in a tailspin of epic proportions.

TEC Chairman, Deputy Government Printer, Sriyantha Pigera has pointed out in a letter to the Cabinet Tender Board that the two parties being backed by a group of TEC members should have been removed at the earliest stages of bidding for not meeting the simple evaluation criteria of having sufficient experience in card printing.

Prevent crime and terrorist attacks

Sri Lanka is no playing ground for Identity Card technologies. The country needs this card not so much for social security schemes and essential services, but to prevent crime and terrorist attacks, both of which thrive in abundance given the ease with which our existing NIC can be forged.

Thus it was that under the original specifications of the tender, the technologies that could be used were limited to a material called polycarbonate (essentially secure multi-layered plastic) which is difficult to acquire.

Several potential bidders however managed to successfully lobby the TEC to open up the tender to other card materials and technologies, citing the fact that several secure identity card technologies have been deployed around the world with these technologies. The requirement for a smart-card and high resolution black and white image were also relaxed, opening up the tender to several parties in the name of competition.

It could not have hurt to open up the tender to bidders with other materials if the evaluation of all of them was to be fair and just, but it was not so, as evidence surfaced at the earliest stages that almost everyone in the TEC was either clueless or had his or her favourites.

One of the main general conditions of the tender was that a member of the bidder's consortium have at least five years of experience in producing or personalising identity cards with similar technology and security features required for Sri Lanka's eNIC project.

Lack experience

A chart circulated amongst the Cabinet Appointed Procurement Committee (CAPC), possibly originating from the TEC Chairman, has pointed out that the two current front runners for the tender, Access-backed Sagem, and Heitech Padu of Malaysia, lack the requisite five years of experience.

According to the document now in the hands of the Cabinet Tender Board, Sagem claimed their experience of five years from the work done by one of their subcontractors on the data page of a passport. "Passport pages are protected inside a passport and not exposed to the rough use of an ID card, and are of a different size and shape," says the document, stressing that Sagem should have been disqualified at the very start due to lack of experience.

Heitech Padu claimed experience of one of their consortium members in the Mexican Consular ID Card, work for the US Military, an identity card for the Argentine police and the Mexican government's voter ID. Every single one of these references however was flawed.

Heitech's partner OpSec is the one claiming experience of five years with all these projects, however they are just a component manufacturer and do not make cards. The comparison is like buying a brand new car from a tyre manufacturer with five year's experience in making tyres and taking his word that this lets him make a perfect car.

In any case the document points out that OpSec was a subcontractor in the Mexican Voter ID. Ironically, the prime contractor for that job is American company Digimarc, which was disqualified by the TEC on the grounds of missing information in their technical specifications table. The Sunday Leader was able to obtain a copy of the contract between the Mexican Government and Digimarc through diplomatic channels, and there is not even a mention of subcontractor OpSec in this contract.

We are also privy to internal correspondence of Digimarc officials, where it was revealed that the company has dropped OpSec from their most recent work with the Mexican government due to the inferior quality of some of their components.

It would be excusable for the TEC to have glanced over the failings of Heitech Padu and Sagem in their initial evaluation if it had glanced through all bidders with the same comb. But some were discriminated against from the earliest stages.

One bidder, was the Pakistani government's National Database and Registration Authority (NADRA), which submitted a bid via the Pakistani Embassy. This arm of the Pakistani government provided the cheapest bid out of those evaluated, priced at just US$ 16 million for their entire solution. Other bids range from US$ 30 million to over US$ 100 million.

NADRA has also deployed the world's largest National Identity Card system in Pakistan, over 60 million cards, with the assistance of the US government, in an effort to combat infiltration into that country by al Qaeda and the Taleban. That project started after the September 11 attacks, and has been running successfully for well over five years.

Knocked out

The company was however knocked out by stage two of the technical evaluation, on the grounds that some information was not available in their technical specifications table. The funny thing is that also in the same breath, the TEC said that similar information was not available in the proposal from the local Metropolitan Group, in their bid.

Metropolitan won the tender for the new driver's license, which itself has been fraught with delays and issues and is well behind schedule in its implementation. In the case of the missing information in Metropolitan's table however, the TEC report states that members managed to find the necessary information in other parts of the proposal and therefore refrained from disqualifying that company.

One TEC member who spoke on conditions of anonymity said that he knew the moment that the decision was made, that a game was afoot. "NADRA and Metropolitan both made the same mistake. But NADRA was a price competitor to the favourites, and Metropolitan's bid was high, over US$ 32 million. So a different set of rules was applied to one and not the other."

The disqualification of NADRA was the first in a series of moves that looks engineered to eliminate all serious competition to Heitech Padu and Sagem at the early stages, according to bidders and TEC members alike. It is unlikely that the NADRA bid had any political or official backing despite being proposed by one of Sri Lanka's closest ally governments, which is why its rejection on a technicality amidst double standards, met with little opposition from any member of the TEC. They were no one's favourite.

Their business

A similarly disqualified party was American company Digimarc, who produce the driving licences for nearly every state in the US. The company also produces the National Identity Card of the Philippines. Their business is simply plastic identity cards. Not components, but cards. "They were worried about this one," said one of our TEC sources. "The company's price was in the $30 million range, and they had also foreseen the government's bankruptcy and had thrown in an offer of financing."

This was not to be relevant as the TEC, again with little objection, threw out Digimarc on the grounds of missing information. A member was able to show us some documentation to do with the evaluation of Digimarc's proposal although most material was under lock and key in the eNIC project office.

What we were shown demonstrated that most of the grounds for removing Digimarc were simply invalid and untrue. The member had assembled a table, which he plans to present along with other discrepancies should he choose to resign from the TEC - as many members are now considering - given the political turmoil within.

The table shows again that not only was the correct information in the correct place, but substantial backup documentation was referred to in the bid document.

He pointed out that many TEC members, although sitting on a 'technical' evaluation committee, do not have an iota of technical background, and thus follow the lead of those few members who have any technical background at all. Our own technical background was sufficient to see that the grounds for rejection of Digimarc were ludicrous, considering the allowances given to other bidders.

Divisions among the TEC

Shortly after this stage of evaluation is where the divisions among the TEC surfaced. This stage of the evaluation was done without the approval of the TEC Chairman, who is also the Deputy Government Printer.

In a letter written to the Cabinet Tender Board on October 9, Pigera warned that there were irregularities in the evaluation process and that individual members were taking matters into their own hands without consulting him. He said there are some members "biased towards certain technologies." He proposed that three bidders be shortlisted out of the six remaining, and that the TEC release a full report on that basis.

Pigera and several other members refused to sign the report presented to the TEC that day on principle, as they had reservations and objections on what may be inside the report. Pigera himself had not even had a chance to read the report. In a covering letter he noted that "individual members would submit separate explanatory notes in due course."

He warned that "as the chairman of the TEC," he was about to express his personal views on the "process taken place," pledging to do so within seven days of October 8.

Refusal of several members to sign 'report'

Despite this controversy, and the refusal of several members to sign the 'report,' the Cabinet Tender Board wrote to all TEC members on October 13, asking them to hold a meeting - remarkably enough in the past - on October 10, to evaluate the two bidders shortlisted by the controversial TEC report.

Surprise, surprise, the two bidders shortlisted by Dr. De Silva's report were Heitech Padu and Sagem, the two who should have been disqualified on day one for not having the required experience on card manufacturing.

The Cabinet Tender Board also asked that samples of the cards by these bidders be analysed by "an independent laboratory such as ITI," without questioning whether such laboratories would have the necessary facilities to put Sri Lanka's new National Identity Card to the test.

Possibly in order to outfox Heitech Padu and Sagem for not having an iota of experience in card manufacturing and personalisation, TEC Chairman Pigera proposed in his October 9 letter that site visits of the bidder's existing facilities be carried out before a decision is made, to ensure that the bidder had experience with the correct infrastructure.

The reasons are obvious. You might buy a car from a tyre manufacturer under the strangest of circumstances, but only a buffoon would do so without actually going to see the car, others like it, or the place where it was made.

Site visits not required

The Cabinet Tender Board however, appears to think otherwise. In its October 13 letter to the CAPC,  they "decided that site visits are not required," essentially letting the two front runners get away with having no experience in doing what they may be paid over US$ 30 million in taxpayer's foreign exchange to do.

In the meantime, Pigera's observations on the report arrived with the CAPC, and were a bombshell to say the least. His letter stated that when he was "randomly" checking some scoring, he "uncovered major errors" in the report "done by TEC members."

"Before I could act to correct these errors the TEC report was written by other TEC members and circulated for signing without my approval," he said. He accused one TEC member of withholding from him the "scoring calculations" despite his "repeated requests" asking why the Cabinet Tender Board was asking him to "sign the TEC report without even seeing the scoring calculations."

He accused some TEC members of making arbitrary decisions "without the chairman's review, putting the security of our country at risk and wasting billions of rupees."

Communication ignored

"My repeated communication of these issues has been either ignored or overlooked, hence I declined to sign the report," Pigera wrote. He said that clarifications were not sought from bidders, implying also that TEC members had chosen instead to label certain deviations as "undecided" in a way that they did not affect the bidder's score.

"These should either be rejected or their pricing should be loaded to bring them to the same level as other bidders. For some of these we may need to seek clarifications from the bidders," he said, pointing out that a lot of these glossed-over problems were "substantive and material deviations" of the tender requirement.

The TEC Chairman had also provided his list of discrepancies with the TEC Report, but this was not available as a part of the documents we were able to obtain. It transpired on reading the report that another key bidder who was given short shrift by the report was the single largest card manufacturer in the world, the Dutch company Gemalto, who bid with the local Just in Time Group.

Gemalto's credentials stretch far and wide. They produce the new biometric US Passport, the Singaporean Identity Card, US Defence Department Identity Cards (not just the parts like Heitech's partner), and several other speciality secure identity cards.

The TEC report did not just penalise Gemalto on minor technicalities as it did with NADRA and Digimarc, but it went as far as making their bid for a colour-photo identity card 'disappear', citing them instead for having sent two bids for black and white photograph cards.

Out of the running

This effectively took Gemalto out of the running for colour-photo cards, even though their scoring was higher than other bidders for colour photo options. The scoring of Gemalto, just like that of Digimarc, was amazingly biased against them. In simple areas where a score is based on whether the bidder answered yes or no to questions, Gemalto has been scored as if they had answered 'No' where they had answered 'Yes.' This is the same phenomenon that led to the Digimarc bid being rejected.

Also in the report, which recommended award to Heitech Padu, the signing TEC members "recommended" that some options quoted by that company be reduced from their price since they had not been "requested in the bidding document." There is a rule for handling bids in tenders where a bidder throws in unnecessary items which affect their price. That rule is "tough cheese."

The TEC is clearly stepping over its mandate by tweaking one bid for the benefit of reducing their price, without consulting the bidder to see if these features can be removed without compromising their system. The Defence Ministry should raise an eyebrow about this now. These are security features that are being played with.

Pigera's technical background was also not sufficient for him to highlight the risks in going with proprietary technologies from the companies now being considered, under an arrangement where the Sri Lankan government would not own the exclusive rights to the bulk of the software being supplied.

At the mercy of the rights holder

This will not only leave Sri Lanka at the mercy of the rights holder (the bidder) but also present possible risks to national security depending on our country's relationship with each bidder's home country. Our foreign relations over the last three years have been dicey to say the least, and thus these risks should be taken into account.

Even after receiving Pigera's scathing criticism of the TEC report, business went about as usual at the Cabinet Tender Board. The board dispatched letters on October 17 to the referees of SAGEM and Hitech Padu asking that their references be verified. At this time, the bids of other ID card titans such as the rejected NADRA and Digimarc, and the sidelined Gemalto, were all but forgotten.

Ironically, NADRA was sent a letter by the Cabinet Tender Board, but not regarding their bid. They had been asked to verify a reference given by SAGEM that they had supplied fingerprint scanners for NADRA's Pakistani NIC project that has to date supplied over 70 million people.

The NADRA reply, although sent to the CAPC on November 3, strangely found its way into the Ministry's eNIC file only as late as last Friday, November 7. Our sources close to the Ministry provided us with the reply.

NADRA has asked why they are being asked to verify SAGEM's US$ 32 million bid, when they have not received an ounce of correspondence on their US$ 16 million bid, which is less than half the price.

Request to extend bid bonds

"We are therefore surprised that we have not received a single request for clarification or any correspondence regarding our offer," NADRA wrote. They also stated that their bid and bid bond were valid only until November 17 and November 27 respectively, and asked whether there was a need to have these extended. There was no mention of SAGEM's reference being verified.

What NADRA did not know is that on the very date of their reply, November 3, the CAPC wrote to several bidders requesting that they extend their bid bonds and bid validity until late December. It is learnt that the previously disqualified Digimarc and the sidelined Gemalto are among those who have received letters. Yet files pertaining to NADRA are difficult to come across from the Ministry of Internal Administration. It is telling that we were only able to acquire their November 3 letter on Friday.

The level of controversy inside the TEC is a key contributor to the controversy within. The most technically proficient member of the committee, Dr. Chathura de Silva, is a paid consultant to PC House, a company that is part of the Heitech Padu consortium. Some TEC members have alleged that it was Dr. De Silva who withheld the scoring criteria from the TEC Chairman.

Dr. De Silva was also previously made to resign from a TEC which evaluated a bid from PC House, on the basis of discrepancies to do with his and PC House's performance. If this is not sufficient grounds to establish conflict of interest, another TEC Member, Achala Weerasooriya of the Elections Department was a student of Dr. De Silva at the Moratuwa University.

"She even calls him 'sir' in some of our TEC meetings," a member chuckled. Many bidders who we were able to contact were enraged at the blatant malpractice going on in this TEC. "In Sri Lanka you expect corruption in tenders all the time," said one bidder's local representative. "But especially with this government and the Rajapakses who are all about security, you don't expect them to allow something like this to happen and jeopardise national security. This is the main reason we are so surprised."

It will be interesting to see how this entire saga transpires, and it will be even more interesting to see whether the government is going to allow this tender, and all its clear risks to the country's national security to go unchecked as they have thus far.