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 More nepotism in IT contracts

Nepotism: the Rajapaksa family tradition endures

The contract between ICTA and Samsung

Documents complaining of low quality equipment

By Nirmala Kannangara 

Blatantly disregarding government tender regulations, the Rajapaksa regime has once again allowed nepotism to reign in a multi-million-dollar scandal centring on an IT-related contract. It is alleged that the Samsung Corporation was awarded the contract simply because the Sri Lankan agent of the Korean company is a relative of the First Lady, Shiranthi Rajapaksa.

Details have surfaced as to how the cabinet bypassed tender procedures and offered a multi-million-dollar tender to Samsung Corporation to implement the E-Sri Lanka Government Network, a brainchild of President Mahinda Rajapaksa.

In order to bring all government institutions under a single computer network, the cabinet on July 6, 2005 approved a US $ 15 million loan from the Korean Import and Export Bank on the condition of offering the project to a Korean company.

Two Korean companies – Korea Telecom and Samsung — submitted bids for the project.  On a government recommendation, Samsung, the highest bidder, was awarded the tender by the cabinet on July 5, 2006, sidelining the less expensive bid by Korea Telecom.

In August 2006, a US $14.8 million contract was signed between the Information and Communication Technology Agency (ICTA), which comes under the purview of President Rajapaksa, and the ASSET Network – the Sri Lankan agent for Samsung.



President Rajapaksa signed the contract on behalf of the ICTA, while Chief Executive Officer (CEO) Dilshan Wickremasinghe of ASSET Network signed it on behalf of Samsung (see box for a copy of the agreement).

Wickremasinghe, it has been learnt, happens to be the nephew of Shiranthi Rajapaksa.

The contract was offered for procurement of the design, supply, installation and operation of E- Sri Lanka Government Network, but questions have been raised about whether the contractors have honoured the agreement.

The Sunday Leader is in possession of details about low-quality equipment that was imported for the project. The government lost money because the same items could have been purchased from Sri Lanka at a lower price.

Two local government institutions expressed their concern to the ICTA  about the significant problems they have had to face due to the use of low-quality IT products. The expensive low-quality equipment was imported on tax-free basis.

Unnecessary imports

Among the imported equipment were 123 central UPS’ at a rate of US $1598.29 each, when a better product could have been purchased at a rate of US $800 on the local market. A total of 3225 Celeron PCs were imported at a cost of US $1394.19 per computer, whilst the same product would have cost between US $350 to $450 in the local market. 325 IPG Hard Drives were imported at a cost of US $1175.19 each, when the cost in Sri Lanka for a single unit would have been around US $ 350. And although the ASSET Network purchased 325 HP Scanjet 8200s at a rate of US $519 each, the local price per unit was US$ 254.

The alleged fraud has reportedly cost the country a colossal US $3.5 million, or around Rs. 400 million.

Meanwhile, The Sunday Leader has learned that the ASSET Network installed low-quality XP Home Edition software instead of the more sophisticated Windows XP Professional.  The imported UPS and Routers are also not up to the required standard. And although 325 Celeron PCs have been imported for the above project, the equipment was un-branded, thereby violating the rules and regulations of the contract.

No proper audit

As per the contract, the ICTA only has to pay the ASSET Network after proper assessment of the equipment. However, the ICTA failed to carry out a full assessment before making the full payment.

“Although the contractors had to store excess spare parts for future repairs, the ASSET Network had not stored the required spare parts and have also failed to take immediate action to attend on breakdowns which have left government institutions in a quandary,” according to documents in the possession of The Sunday Leader.

In a letter to the ICTA on September 10, 2007, Rideemaliyadda Divisional Secretary J.C. Ranepura wrote that due to low-quality UPS units, computers have failed to start up and there have even been problems with the mouse. Continuous attempts made by Ranepura to contact the appropriate help desks for assistance failed.

In a letter dated September 7, 2007, Galagedara Divisional Secretary of the Thumpane W.M.K.K. Karunaratne, said that the equipment provided to them under the E-Sri Lanka Government Network project continues to give problems. 

When The Sunday Leader contacted ASSET Network CEO Dilshan Wickremasinghe to ask about these allegations, he declined to comment.


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