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  Running circles around Kilinochchi


Judicial intervention notwithstanding


Sumal Perera and Chandrika Kumarathunge

Access Chief continues to celeb rate jackpot win

Sumal's underhand dealings in land grab revealed despite songs of innocence

Jayawewa company party held for Sumal's business associates and friends days after judgment

UNP and SLFP governments both culpable as influence peddling takes centre stage

Sumal pays a mere Rs. 500,000 to UDA for land he hawks at Rs. 12 million

UDA as joint vendor well aware Sumal raking in Rs.11.5 million per 20 perch block

By Sonali Samarasinghe

Documents in our possession now show Access Group mogul Sumal Perera was well aware of the spurious nature of the Kotte Golf Course land deal and no innocent victim when he decided to sell off blocks of land for luxury holiday homes by public advertisement.

Despite the fact the October 8 judgment stripped him of title, Sumal Perera continues to profit from the premises he is due to hand over to the UDA free of all encumbrances on or before February 8, 2009.

Buyers livid

However some buyers of the 94 blocks of land he sold to them at Rs. 12 million are livid. "We cannot even visit the lands we have paid for as bona fide buyers but he is still making a killing," one said. Quipping that for Sumal, Christmas, now just around the corner, is never over.

Going berserk with advertising, promotional cocktails and smart brochures, Sumal Perera was to sell these 94 blocks of land set aside to build luxury holiday homes on stilts to unsuspecting buyers lured by promises of dreams fulfilled, and fortified in their ventures by the presence of the Urban Development Authority and the knowledge of a BOI approved project on the one hand and the presence of a duly incorporated and well known Access Group on the other.

Sumal plays victim

Of the 94 blocks sold out of 105 blocks depicted in the plan, Sumal Perera and the Access family other buyers claim have purchased over 40 blocks. Indeed as we revealed last week many had undervalued their blocks on the Registered Deed while depositing the rest of the moneys making up Rs 12 million in an offshore account owned by Transcontinental Investments, a company owned by Sumal Perera. Perera last week refused to speak to the media citing legal advise.

The irony of this is supreme. Sumal and his family including his daughter Swasha, son Shamal, and his extended Access family such as its Directors J.C. Joshua and R.J.S. Gomez and others buying up plots simply means that he can play it both ways.

He is allegedly the perpetrator but he can assume the role of the victim. If redress is granted to the other buyers he and his Access family too will be afforded the same redress.

This is despite the fact it was allegedly Sumal Perera who was instrumental in pushing for changing the face of the project from one that may have benefited the people to one that ultimately would become a greedy commercial transaction from which he allegedly derived and continues to derive unconscionable profit.

Influence peddling If it has been alleged that Ronnie Peiris played the role of an influence peddler, that is the illegal practice of using one's influence in government or connections with persons in authority to obtain favours or preferential treatment for another, usually in return for payment - then Sumal Perera may perhaps be tarred with the same brush.

Certainly the load of muck first set in motion by the Chandrika Kumaratunga regime was to receive momentum during the short UNP government from 2002-2004 as Sumal Perera sweet talked his way into the mega bucks deal.

Kumaratunga meanwhile maintains she attempted to submit a Cabinet Memorandum and initiate an inquiry into the land transaction no sooner than she realised the deal had taken on a different hue. (Please see box for letter by Kumaratunga sent to The Sunday Leader following last week's article.)

UNP involved MP Ravi Karunanayake who on June 19, 2002 submitted a Cabinet Memorandum to cancel the allocation of land to Asia Pacific Golf Course Ltd. was to withdraw this proposal just seven days later according to the Supreme Court. Karunanayake told The Sunday Leader however he did not withdraw the memo and it was simply laid by for no fault of his. Same difference we think.

It was just three days after he submitted the Memorandum calling for a cancellation that Sumal Perera became beneficial owner of 50 % of Asia Pacific Golf Course Ltd.

Ironically meanwhile, Sumal Perera was doing what he did best. Even at that time meeting with the highest members of the new UNP regime, discussing plans and negotiating a future course of action that would leave him sitting pretty while the public and not to mention the forlorn fishing cat of Battaramulla was left wondering what had happened to the habitat.

Seduction Mind you Perera by seducing the politicians over the transaction was merely setting the stage and preparing the land for a harvest like no other. Not 12 months after he acquired 50% shares of APGC he was to acquire 100% ownership on June 17, 2003.

But over three months before he acquired 100 % ownership of the land, that is on March 3, 2003 he executed an Agreement to Sell No 473 between the UDA and the APGC Ltd.

By Deed No 473 the UDA agreed, for a payment of the purchase price of Rs.62.48 million by Sumal Perera and the APGC, to sell, transfer and convey on or before February 25, 2008 to APGC or to its nominees the 105 lots of land demarcated for luxury villas including road reservations free from all charges and encumbrances. 

This deed was signed by two members of the UDA -  Sirisena Amarasekera and J.M.L. Jayasekara, and by Sumal Joseph Sanujeewa Perera and Ranjan John Suriyakumar Gomez both as directors of APGC Ltd.

Sumal is chairman and Gomez a director of the Access Group as well. Therefore even though Sumal and Access only owned 50% of the shares of APGC at this time while the original six owners continued to hold the other 50% shares, it was the Access Group directors that now conducted business with the UDA.

Cock sure So cock sure was Sumal due to his close affiliation with politicians of every hue that his ship would sail that he even started publicly advertising these blocks of luxury villas even before he set his hand to Deed No. 473 or indeed had acquired full ownership of Asia Pacific Golf Courses Ltd.

Promising dreams of every indulgence at the edge of the lake he widely distributed brochures, held promotional cocktail functions and ran advertisements designed to lure those among the chinks to part with their cash.

And Deed 473 is key to Sumal's manipulation which would give him the right to alienate free hold land to buyers at the purchase price of some 600,000 a perch. Land that had been purchased from the original owners by the UDA at a sum of Rs. 312 per perch.

However it was not always so. The Indenture of Lease signed between the UDA and the original shareholders of Asia Pacific Gold Courses Limited on September 4, 2000 stated that the land would be leased for a period of 99 years to set up a golf course of international standard and a leisure centre for the consideration of Rs. 300 million to be paid over 27 years.

Later on August 9, 2001 the Urban Development Authority and APGC signed a Deed of Rectification where many of the clauses of the above lease were amended. Accordingly the lessee, Asia Pacific Golf Course by this Deed No. 821 was given the right to construct villas, apartments, resorts, and cottage houses and to transfer the free hold title to the buyers of villas and apartments as determined by Cabinet.

Nevertheless Sumal took over the payment of the lease for 224 acres of Rs. 300 million over 27 years. As at September 1, 2008 according to the payment schedule in the above deeds he would have paid Rs. 60 million to the UDA. That is lease rental for 224 acres of land.

By Deed 473 he was now free to block and sell part of this leasehold land - that is 105 blocks of 20 perches each as free hold for a hefty profit. For this right he paid approximately Rs. 62 million to the UDA. That is some Rs. 500,000 per 20 perch block. A block which he then sold at Rs. 12 million thus making a profit of Rs. 11.5 million per block sold.

UDA in the knowThis is not withstanding the several 20 perch blocks he 'bought' for himself and his family.  

Not that the UDA didn't know he was making a killing at their expense. Deeds of transfer to the ultimate buyers of which the UDA is a party along with APGC specifically mention the sale price as Rs. 12 million.

Little wonder the Supreme Court has ordered the Bribery Commission to investigate allegations of bribery and corruption and to conduct an immediate inquiry into the entire transaction.

Be that as it may, by early 2003 APGC now run completely by Sumal Perera though mind you he took over 100 % control only in June 2003 was already accepting deposits for luxury villa blocks. (See elsewhere for copy of a receipt.)

For example take the trajectory of Lot 12.  The individual Agreement to Sell Lot 12 by Deed No 543 was signed by Sumal Perera and J.C. Joshua as directors of APGC and the ultimate purchaser on July 29, 2003 for a purchase price of Rs. 12 million.

As per Deed No. 473 it was only on March 7, 2006 that a Deed of Release No. 6 was executed for Lot 12 of the 205 blocks of land. Deed 473 gave a time period up until February 2008 for release and transfer of the said blocks. This Deed of Release of free hold land to Asia Pacific was signed on behalf of the vendor, the UDA by Prasanna Dahanayaka, chairman UDA and K.V.Dharmasiri, director general of the UDA  together with the common seal of the UDA on March 7, 2007.

It would seem that this Deed was signed by APGC Directors Sumal Perera and Joseph Joshua as the purchasers one week later on March 15, 2007. Mind you we are now into the Mahinda Chinthana rule.

Following the above execution of the Deed both the UDA and APGC, now acting as joint vendors, sign a Deed of Transfer of the land and right of way to the end buyer suckered in by grandiose advertisements and a prawn cocktail to purchase the plot.

UDA as vendorsIn this Deed No 7, Asia Pacific as the second named vendor agrees with the buyer of Lot 12 also known as the purchaser to nominate him as the purchaser of and for the absolute sale and assignment of Lot 12 in extent 20 perches for a purchase price of Rs. 12 million.      

The Deed also specifically states that the "Vendors shall and will at all times hereinafter at the request and cost of the purchaser defend the title to the said land and premises and every part or portion thereof against any and every person or persons whomsoever claiming any right or title thereto. and.do and execute..all such further and other acts, deeds, matters, assurances and things whatsoever as shall or may be reasonably required for more perfectly and effectually and assuring the said land and premises and every part and portion thereof to the Petitioner."

As for those who bought the land in good faith such an assurance was not only likely to instill confidence but the presence of the UDA as a joint vendor in the game obviously gave them the assurance this was a deal which not only had the stamp of approval of the state but that it also was a water tight deal. The presence of the UDA gave the transaction a veneer of respectability and added legality in so far as the lay purchasers were concerned.

Nevertheless this Deed was also signed by the UDA Chairman and Director General as the first mentioned Vendor on March 7, 2007 and Sumal Perera and J.C. Joshua as Directors of APGC as the second mentioned Vendor on March 15, 2007.

Indeed the plans for these blocks of land were drawn up by Gamini B. Dodanwela, Licensed Surveyor and Leveler as far back as October 30, 2002.

Blue Christmas While the Judgment has already impugned the UDA for acting as a vendor and lands sales agent, Sumal Perera was to be seen post Supreme Court order, wearing a mask of nonchalance. At a company party held in grand style at the Water's Edge club house just days after the judgment on November 1 observers say he showed no emotion or anxiety as he danced the night away.

He maintained he was unable to do anything for the purchasers as he too had suffered a huge blow through the judgment.

It was only after last week's article in this newspaper and the fact that many of the buyers were now seeking legal action that the full magnitude of the situation had hit Sumal Perera. In a panic he was to then call up his friends among the buyers seeking hurried meetings with them.

Come Christmas and New Year Sumal Perera will continue to profit from the dances and the celebrations of the festive season but for many of the buyers who were duped into parting with Rs. 12 million for luxury villas, Christmas is definitely over.

CBK 'perplexed' by turn out of events

19th November 2008

Mr. Lasantha Wickramathunga

Editor in Chief

The Sunday Leader

24, Katukurunduwatte Road,

Ratmalana

Dear Mr. Editor,

Sumal: Laughing all the way to the bank

I have read with interest the article arried in The Sunday Leader of 16th November, under the heading "Sumal laughing all the way to the bank."

While congratulating your newspaper on its attempts to undertake investigative journalism with impartiality, I wish to add some facts with regard to this matter which may not have come to your notice.

The said article speaks of the environmental damage caused by the filling of the land leased to APGC Ltd. for a BOI project, specifying the damage caused to the fauna and flora living in the area.

In addition to this, a serious consequence of filling the said land could be the flooding of residential areas in Colombo, as they would be denied the areas reserved for water retention during the monsoon rains.

In fact, soon after my government came in to power in August 1994, I informed the Cabinet of Ministers that the indiscriminate allocation and sale of retention land during the previous government, had caused much damage to the environment and that our government should not permit construction on any of the remaining retention land.

When the BOI received an application for an investment to create a golf course on part of this retention area, I gave instructions - in my capacity as the minister then in charge of the BOI, that the application should be studied in detail by all relevant authorities, including the Central Environment Authority and allowed only if the retention capacity of the said land was not harmed in any way. Hence the relevant authorities agreed to the project on the basis that no buildings would be constructed on the land and that it would only be grassed for a golf course. As such, it would retain its retention capacity

It transpires that the original shareholders decided to sell their company - Asia-Pacific Golf Courses Ltd. in a legally acceptable transaction, to a different group of shareholders led by the said Mr. Sumal Perera (after the change of government in 2001). As Head of State I did not have any involvement with the private transactions of companies. Although I may have had a few friends or acquaintances who happened to be shareholders or directors of private companies, as a matter of strict principle, I never interfered nor even kept myself informed of the transactions of such companies. Hence, I was totally unaware that the above said sale of the company had occurred, for some time.

Yet when this came to my notice, I presented a Cabinet Paper to the Government of Mr. Ranil Wickremesinghe, requesting an inquiry and a report on the status quo of the APGC Ltd.(see Cabinet Paper dated 03rd July 2002). Finally a report was made to Cabinet after several reminders from me, stating that the project was progressing well and nothing irregular had happened.

Despite the above report, I was informed that land filling was taking place on the said land, but information requested by me from relevant ministries were not given to me. This was at a time when a sharply conflictual relationship was maintained with me - the President - by the UNP government.

At the first opportunity I had of directing the affairs of government, after the PA was returned to power in April 2004, I ordered a full inquiry into the matter. I presented a second Cabinet Paper, proposing the complete termination of the project as it had violated some of the major conditions of the BOI agreement i.e. the environmental ones (Cabinet Paper dated 28th July 2004). Approval was obtained and the ministers in charge of the BOI and the UDA were instructed to take action and take back possession of the land.

I held several discussions with the minister in charge of the UDA to ensure implementation of the Cabinet decision. After some months the relevant minister informed me that his ministry consulted the AG, whose written opinion was that there could be serious implications to reacquiring the land. Nevertheless, I instructed the minister to consult senior lawyers and find a solution to this.

I could not ensure the implementation of the Cabinet decision, as I had to leave office, one year before the due date, in consequence to a surprise Supreme Court judgment.

All the above actions were undertaken by me, in keeping with my government's New Vision For A Better Sri Lanka, which included the protection of the environment, as one of its priorities.

Up to this date I have met Mr. Sumal Perera only at a wedding reception and once before at an official event of the Bank of Ceylon. During my tenure of office as Minister of Finance and Planning the BOI has awarded land (as was the usual practice from its inception under the Jayewardene presidency), to over a thousand BOI projects.

I took great pains to ensure that land allocation for BOI projects, as well as for others, be carried out as transparently as possible.

A high level Presidential Task Force was set up within a month of my assuming the presidency to recommend regulations, systems and procedures in order to regularise and render transparent all allocation of state land by ministries and government agencies.

A landmark presidential circular was sent in 1995 to all ministries and government institutions based on the recommendations of the above Task Force. Allocation / alienation of all state land was carried out in accordance with conditions set out in this circular.

Similarly land allocated to all BOI projects - including to the Asia-Pacific Golf Courses Ltd. were in adherence to the said Presidential Circular.

The two Cabinet Memos mentioned above, together with dozens of relevant BOI, UDA and CEA documentation were presented to the Supreme Court together with my Affidavit and Written Submissions.

I am greatly perplexed as I remain totally unaware of the consideration that has been accorded to these documented facts placed by me before the Supreme Court.

Yours sincerely

Chandrika Bandaranaike Kumaratunga


Chronology of events

1984 - Decision by then Minister of Lands Gamini Dissanayake to acquire a large tract of land in Kalapaluwawa, Rajagiriya under the Land Acquisition Act for the public purpose of urban development and for increasing the Parliamentary Administrative Complex and for providing water retention as a low lying area. 

October 14, 1988 - Declaration by Gazette notification to notify owners of land, following which compensation of Rs.312 per perch paid and Vesting Certificate issued granting land to the Urban Development Authority   

April 7, 1997 - Managing Director of Asia Pacific Golf Course Ltd. (APGC) Shantha Wijesinghe submits proposal to Board of Investment to establish 18 hole golf course on 150 perches of aforesaid land. (This land according to the SC judgment was recommended to Asia Pacific by the UDA in response to the APGC's original inquiry letter. 

June 5, 1997 - BOI grants approval for project with effect from May 14, 1997

February 9, 1998 - Former President Chandrika Kumaratunga in her capacity as Minister of Finance and Planning submits Cabinet Memorandum titled release of land on concessionary terms - Asia Pacific Golf Courses Ltd, strongly recommending the project and its promoters and participants.

March 4, 1998 - Cabinet approval granted without query, clarification or amendment.

March 4, 1998 - UDA board approval allowing sale of constructed villas and apartments by the UDA to willing buyers.

April 27, 1998 - Director General, BOI sends letter to UDA to enter into a lease agreement with APGC as per Cabinet Memorandum.

February 19, 2000 - Cabinet Memo by Indika Gunawardena then Minister of Urban Development to allocate another 7.8 hectares (approx. 190 perches) to the Kaduwela Pradeshiya Sabha (KPC) for developing a playground.

March 23, 2000 - Cabinet approval granted and land filled with public funds by the KPC.

May 3, 2000 - Letter allowing License Indenture to APGC free of charge of 41 acres of low lying land in addition to the 140 acres already leased.

May 30, 2000 - Board of management of UDA approves this move.

September 4, 2000 - Indenture of Lease 758/760 between UDA And APGC for 140 perches of land for a term of  99 years at a per annum rental amount of Rs. 300 million.

September 4, 2000 - Indenture 759/767 licensing to APGC 41 acres of land contiguous to already leased land free of charge

Undated UDA Board Paper - To license to APGC free of charge a further 44 acres in front of leased land. To amend license for earlier 41 acres to survive for 99 years and to narrow rights of the UDA to revoke. To reallocate to APGC Ltd. free of charge the 7.8 hectares of land given to KPC and for which the KPC had already spent a large amount of public funds to fill. To allow APGC to build 100 luxury holiday villas on stilts on the marsh areas. To remove restrictions prohibiting sale of the acquired land to third parties and permit APGC to sell the aforementioned holiday villas on a free hold basis.

January 18, 2001 - Mangala Samaraweera, Minister of Urban Development sought approval for the above changes.

January 31, 2001 - Cabinet approval granted.

June 21, 2001 - BOI and APGC enter into Agreement 3146.

August 9, 2001 - Deed of Rectification 821 to effect Cabinet approved changes.

August 9, 2001 - Agreement 822 license to release further 44 acres as per Cabinet approved changes.

September 18, 2001 - Cabinet approves sale price of land to be sold to APGC to be determined as a pro rata share of the CV's evaluation.

January 22, 2002 - Sumal Perera's Access Holdings Pvt. Ltd. became beneficial owner of 50 percent of APGC shares. 

June 19, 2002 - Ravi Karunanayake, then Minister of Trade submits Cabinet Memorandum to cancel allocation of land to APGC.

Seven days later - Withdrawn without reason.

November 28, 2002 - Minister of Urban Development issues approval (SC Judgment states the UDA was never intended by law to be a land sales agent or empowered to acquiesce indirectly or actively in land sales.

January 8, 2003 - UDA Board Paper (altering March 4, 1998 UDA approval) allowing for sale of land directly to APGC and to do so though no villas had yet been built.

March 3, 2003 -   Agreement to sell Deed No. 473 executed effecting transfer of said land for approximately Rs. 62 million. (As per Deed no 473 the joint vendors UDA and APGC owned by Sumal were given a time period up until February 2008 for release and transfer of the said luxury villa blocks..)

For instance even as recently as 2007 transfers were still being made. And that under this government underscoring the all governments had willingly carried the baby. 

June 17, 2003 - Access Holdings acquires 100 % ownership in APGC.

December 24, 2003 - Sri Lanka Land Reclamation and Development Corporation (SLLRDC) grants approval of revised master plan to construct villas and use marsh land designated for flood retention and demarcated as wetlands.

March 7, 2007 - A Deed of Release No 6 was executed for Lot 12 of the 205 blocks of land signed by the UDA

March 7, 2007 - Deed of transfer to a public buyer signed by joint vendors the UDA and APGC pertaining to Lot 12

October 8, 2008 - Supreme Court holds entire deal illegal and orders entire transaction null and void and orders total land extent to revert back to UDA.

 November 10, 2008 - Urban Development Authority submits to the Supreme Court the Deed of Revocation of ownership of 224 acres of land to the state.

Pulsating moments ahead in South Asia

By Malladi Rama Rao

Elections appear to be the flavour of the season in South Asia. Nepal and Bhutan have already had their tryst with elections. Bangladesh is all set for a ballot on December 18, though it is still unclear whether the Begum Khaleda Zia led Bangladesh Nationalist Party (BNP) will take part in the election.

BNP and its closest ally, Jamaat-e-Islam, are demanding lifting of emergency as a pre-condition for their participation in the poll process, according to New Age. The country came under emergency regulations when the army backed caretaker set-up took over the reigns of the country after Prime Minister Khaleda Zia bowed out after months of unrest in January 2007.

BNP's absence from the fray may not mean a cakewalk for its rival, Sheikh Hasina led Awami League, which appears as the favourite at the very outset.

Pakistan drifting towards polls

Pakistan is also drifting towards elections. President Asif Ali Zardari's People's Party of Pakistan doesn't enjoy a majority in parliament. Its tie-up with former Prime Minister Nawaz Sharif's Pakistan Muslim League (N) has ended after a public spat. Former President Pervez Musharraf's Pakistan Muslim League (Q) is no longer in the pink of health.

It has come a long way from the days of public adulation as the King's Party but it is in a position to bailout PPP on the floor of the National Assembly. That means paying a huge price for Zardari literally in these days of Taliban threats, economic meltdown, IMF's conditional aid package and inflation running at around 25 to 30 per cent. Hence his advisors are veering round the view that it is time to sound the electoral bugle.

Alliance of religious parties

PPP leadership sees a red herring in the coming together of Jamiat Ulema-e-Islam-Fazl (JUI-F) and the Jamaat-e-Islami (JI). Daud Khattak of The Daily Times says the two religious parties are closing together to stay afloat in the political arena. In November 2007, both had parted ways after (then) President Musharraf imposed emergency to check the lawyers' movement against the sacking of the chief justice of Pakistan, Iftikhar Muhammad Chaudhry.

JI Chief, Qazi Hussain Ahmad is still actively associated with the lawyers' campaign to the dismay of Zardari. JUI-F is itching to settle scores with the PPP and Awami National Party (ANP) which have claimed its turf in the Talibanised North West Frontier Province. Significantly, its Chief Fazlur Rehman said this week in Peshawar that revival of the alliance of religious parties is the need of the hour.

Qazi Hussain Ahmad remains the head of the alliance which was formed during the Musharraf days. Addressing a rally in Lahore on November 18, he threatened to obstruct supplies to NATO forces if the army operation in tribal areas is not stopped forthwith. And demanded that the Pakistan People's Party government hold mid-term polls after abdicating power. Political uncertainty is about to compound the miseries of Pakistan.

India - A land of elections

India is a land of elections throughout the year. In that sense, it is quite the opposite of Pakistan and even the rest of South Asia for that matter. Right now the country is witnessing a mini-general election with polling for six provincial assemblies. These polls are considered as a semi-final between the Congress-led United Progressive Alliance and the BJP-led National Democratic Alliance (NDA). Going by the mood in the Congress, the finals appear set for mid-February. And that amounts to advancing the general election by about three months.

India is like an oasis in an economic desert which is spreading from the US to Japan. Inflation is down to a single digit to the great relief of economy managers led by Palaniappan Chidambaram, who belongs to a family of traditional Tamil businessmen. Yet, Prime Minister Manmohan Singh and his team are unprepared to face the ballot in the months of April-May. It is the fear of the heat wave that would sweep the country and ushers in cyclical shortages of water and electricity.

Elections in Sri Lanka

Across the Palk Strait, in Sri Lanka , President Mahinda Rajapakse finds the going really encouraging to call for a general election early next year, may be some time in February. There are sound political and economic reasons to hold elections. Of course, Ministers like Nimal Siripala de Silva have said there is no need to hold parliamentary election till 2010 because 'the government is stable.'

One has learnt to live with such ministerial pronouncements. It is their job to be in denial mode. That is politics even when the ministers and the journalist putting the question know that it was an exercise for the record.

Any how, de Silva has a tough job to hide the truth when his senior colleagues have set in motion the process of sounding the allies on an early election. And when an opinion poll, timed to cash in on the victories in the war front, said President Mahinda Rajapakse is the darling of the people. More than half of the respondents said they would vote for him 'if elections are held now.'

Almost 80 per cent of those who were polled in the LMD-TNS Lanka's countrywide poll 'feel that he is right to seek a military solution to the ethnic conflict.' Yet, nearly a third are dissatisfied with the flip-side of Rajapakse's economic management which is evident in soaring inflation (30 per cent), mounting fiscal deficit ( 336 billion Sri Lanka rupees), shrinking exports of tea, rubber and textiles (by $300 to $500 million).

Economy

The economic situation is not going to improve; in fact it may deteriorate, according to the IMF and the World Bank. The international credit rating agency, Standard & Poor's (S&P) has named Sri Lanka as the amongst the countries in Asia at the highest risk. "Pakistan is the weakest, followed by Sri Lanka, then Vietnam," the agency's spokeswoman, Elena Okoro-tchenko said in Hong Kong as the S&P rated Sri Lanka's long-term currency debt at B+ with a negative outlook.

It may further downgrade Lanka as foreign investors have begun to pull out and the country's forex reserves have nose dived to $2.6 billion in October from a peak of $3.4 billion in July. Since short term external debt has become a mirage, the government will be forced to visit the mint street. This year alone, it added around 87 billion rupees to circulation. A sure recipe for runaway inflation.

It is not for nothing the favourite headline of sub-editors the world over is 'It is the Economy, Stupid.' President Rajapakse is acutely aware of these grim realities. It is clear from his budget (presented to parliament in the third week of October and expected to be adopted by the end of the first week of December). It is a crisis budget aimed at scoring as many talking points as possible with sops to a cross section of the society and a hefty allocation (17 per cent of total outlay to defence amounting to $ 1.8 billion, a record) for the war machinery.

The armed forces have justified his faith in them by opening a road to Jaffna to mark his third anniversary as President. And Rajapakse's macho talk in Delhi (defeat of LTTE first and political solution to the Tamil ethnic issue later) and with the European Union vis--vis conditions for garment exports reflects a new mindset.

Learnt it the hard way

A military solution and a political solution are two sides of the same coin, admits Vasudeva Nanayakkara, a close friend of Rajapakse. Both had worked together shoulder-to-shoulder for close to 38 years. His advice carries little weight today, obviously. As a practising politician, he knows something else which he doesn't appear to have shared with his friend.

Elections are a big gamble, always, anywhere. Ballot box and box office have a mystery shrouding them. No astrologer can predict as Indira Gandhi got to know the hard way. And as the BJP learnt it, also the hard way, after shining in the reflex glory of its 'India Shining' campaign. Also as Zulfikar Ali Bhutto and Pervez Musharraf realised it in Pakistan.

I have a sneaking feeling that President Rajapakse is also seized by the fear of the unknown as his Sri Lanka Freedom Party (SLFP) is slipping into the poll mode. Pundits in his camp expect a clean sweep - a two-thirds majority for his party, a runner up status for opposition UNP and marginalisation, if not total elimination, of extremists like the JHU and JVP. Such a scenario will give a free-hand to the President to fulfil his pledge of a political solution to the ethnic conflict.

From all accounts, the JHU is unwilling to vacate its turf. In fact, it is capitalising on the euphoria created by military victories in the north of the country. It has gone on an overdrive to collect donations to help the injured soldiers. Put differently, JHU is all set to steal the thunder from Rajapakse, if not fully, at least substantially. It will get all the support it needs from the Sinhala chauvinist lobby, which is the original constituency of Rajapakse.

Election mode

The Sri Lanka Muslim Congress (SLMC) is also in election-mode. Its plan is to bring together minority parties. The Ceylon Workers Congress and Western People's Front are willing to listen to voices of reason. Will the effort succeed? It may because they are working to cash in on the craving for a share of the political pie amongst the local communities. In other words, the goal is a genuine power sharing arrangement that goes beyond the provincial councils.

Demand for new administrative units for Muslims in the north and east where they are in majority and for Tamils in their pockets of majority in the Central, Uva and Sabaragamuwa provinces will become new rallying points in election season.

President Rajapakse has been hoping to exploit the political vacuum once the LTTE is defeated militarily. He has not factored in the possibility of new voices being heard and becoming darlings of the masses. And what is more he has hoped to create more Karunas as he did in the Eastern Province.

In their unifocal exuberance, Rajapakse and his advisors have utterly failed to realise the futility of nominating leaders. Sivanesathurai Chandrakanthan alias Pillayan has been the chief minister of the Eastern Province for a while. He is not comfortable in the saddle. And he has just described himself as another Vartharaja Perumal, who was a by-product of IPKF operations.

Strategy

Politics is not merely a game of one-upmanship, calibrated elimination of prospective challengers and rhetoric. Likewise, elections are not a game of votes and seats; the battle of the ballot is for winning the hearts and minds of the people by offering new ideas, new hopes and new visions. Status quo may have takers in the drawing room and the strategy sessions but not when one is on the electoral trail when promises of pluralism and vibrant democracy are bandied about.

As his adversaries are telling him, Rajapakse has not advanced a single new idea on devolution beyond setting up the APRC and then sending it to cold storage.

President Rajapakse will also have to contend with another improbability. If the campaign heat coincides with pounding of Tiger positions in the Wanni belt, both Colombo and Delhi will come under pressure alike, notwithstanding their pre-occupation with electoral politics. That will call for tact of a different kind. This caution needs to be sounded because of the time taken to 'liberate' the A-32 Road to Jaffna.

The military offensive began in the last week of September 2007. After 10-months of high risk, painstaking marching, the army wrested control of the Rice Bowl from the Giant Tank region to Mannar mainland. The march into Pooneryn upto Sangupiddy Jetty began on June 31 and ended in victory only on November 15.

The onslaught on Kilinochchi is going to have its own pulsating moments. And that will result in no dull moment on the Sri Lankan political scene and in the relations between India and Sri Lanka as well, to the dismay of pundits in Colombo. Any doubts?

 


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