The Sunday Leader

Gin-Nilwala Scam Resurfaces

  • The credibility of the committee questioned
  •  Advance payment of Rs. 3,012 million paid
  •  Money paid without obtaining proper approvals
  •  Another Rs. 12,000 million allocated for other projects


by Nirmala Kannangara

A scam exposed by The Sunday Leader newspaper this year on the Gin-Nilwala diversion project has been indirectly confirmed by President Maithripala Sirisena.

Last week, the President revealed that the previous government had spent millions of rupees as an advance on the project which is yet to be launched.

R. M. W. Rathnayake, Secretary to the Ministry of Irrigation, had told this newspaper when the scam was first reported, that a three-member committee appointed to investigate the allegations did not find any misdeeds and that all payments had been made legally and transparently.

However, the credibility of the committee has been questioned following the revelations of President Sirisena last week.

Employees at the Ministry of Irrigation, who wished to remain anonymous, said that they did not have any regard to the members of the investigation committee.

“The Committee was headed by Additional Secretary, Irrigation Development, D. D. Ariyaratne, who worked with Ministry Secretary Ratnayake at the Irrigation Ministry during the previous regime as Additional Secretaries. When Ariyaratne, Ratnayake and Ivan de Silva had worked together in the same ministry when this scam took place, can anyone expect the committee that was appointed to investigate the irregularities that took place at the Gin-Nilwala project to reveal the truth? Will the committee Chairman Ariyaratne level allegations against his onetime superior Ivan de Silva?” sources alleged.


Irrigation Ministry Secretary’s answers to the Government Audits in regard to the misuse of public funds, Director General Department of National Budget letter to Secretary to Irrigation Ministry to hold an impartial inquiry and Chief Accountant’s note to Ivan Silva that he cannot release more than Rs.40 million and Silva’s reply demanding to release Rs.2, 000 million

According to the sources, when there are documents to prove how former Ministry Secretary Ivan de Silva had released Rs. 3,012 million and had paid China CAMC Engineering Company Limited as an advance payment without obtaining the proper approvals, it is surprising as to how the three-member inquiring committee, according to Ratnayake, says that the payments have been made transparently.

“The Gin-Nilwala diversion project was initiated in 2014 and 5% of the project cost as a mobilisation advance had been paid when the agreement was signed in November 2014. When Ivan de Silva wanted Irrigation Ministry Chief Accountant to release a further Rs. 2,000 million, the Chief Accountant wrote back to De Silva on January 2, 2015 that he cannot release more than Rs. 40 million as the Treasury had allocated only that amount for Gin-Nilwala project for year 2015. Since Ivan De Silva knew that the Ministry had received money for all projects carried out by the Irrigation Ministry, he insisted the Chief Accountant and the Project Director that Rs. 2,000 million to be released until the remaining Rs. 15,000 million is released by the Treasury later on,” sources claimed.

The sources further revealed as to how the then Secretary had told his officials that the total advance payment amounting to Rs. 3,700 had to be paid in 2015 and once the money is received from the Treasury, he (Ivan de Silva) will approve the payments for the entire amount.

In a letter to the Chief Accountant and the Project Director, Ivan de Silva has further stated: ‘Although only Rs. 40 million had been allocated for the project during 2015, another Rs. 12,000 million had been allocated for other special projects undertaken by the Irrigation Ministry which confirms the Finance Ministry letter dated December 31, 2014. In my reply to the aforesaid letter, I have made a request to release Rs. 3,700 million for the Gin-Nilwala diversion project. Since we have already received funds amounting to Rs. 2,000 million for the above project, the Finance Ministry informed us that another Rs. 1,000 million would be released in future. Hence I give my approval to make arrangements to pay Rs. 2,000 million from the funds the Finance Ministry has already released and the rest should be paid once the remaining allocations are received’.

When this scandalous payment was revealed to the Finance Ministry, the National Budget Department instructed the present Ministry Secretary R. M. W. Ratnayake to hold an inquiry.

In a letter dated September 4, 2015, Director General, Department of National Budget, A. R. Deshapriya had requested the Irrigation Ministry Secretary to hold an investigation to find out whether the staggering advance payment had caused a loss to the country and to find out who the responsible officers into the scam are.

Although Ratnayake had wanted the Treasury Secretary to appoint a committee to hold the investigation, Director General, Department of National Budget had wanted Ratnayake to hold an inquiry impartially.

“We were disappointed as to why the National Budget Department failed to hold the inquiry but asked Ratnayake to do so. It is now said the inquiry report had already been sent to the Finance Ministry without levelling allegations to the parties concerned who were behind this fraud,” sources added.

When contacted by The Sunday Leader newspaper, Ratnayake said the FCID was investigating the allegations so he could not comment.

“The Financial Crime Investigation Division (FCID) is now doing an investigation and I didn’t want to make any comment in this regard now. Even after the President spoke about this project, the Ministry wanted to hold a press conference but still we had to cancel it since the matter is now being investigated by the FCID,” Ratnayake said.

However Ratnayake said that the article this newspaper had published earlier claiming that there was a scam involving the Gin-Nilwala project, was completely fabricated without any basis.

China CAMC Engineering Company Limited had been awarded a tender for the irrigation project Gin-Nilwala to benefit the Hambantota and Matara districts bypassing government procurement guidelines in November 2014 by the previous regime. An advance payment to the tune of a staggering Rs. 3,012 million had been paid to the Chinese company on two occasions prior to the 2015 presidential election. According to President Maithripala Sirisena, the second advance payment into Rs. 2,000 million had been paid on January 7, 2015, the day prior to the presidential election without proper approvals at a time when all ministries and department officials were engaged in election duties in the country.

According to the sources, Irrigation Ministry had signed two agreements with the Chinese contractor on November 5, 2014 and on November 28, 2014.

“The then Ministry Secretary Ivan de Silva had signed the first agreement with Chairman CAMC Engineering Company, Luo Yan, while the second agreement had been signed between Ivan de Silva and CAMC Engineering Representative in Sri Lanka, Yan Hai Lu. For the second agreement, the Irrigation Ministry had not taken the Attorney General’s opinion. Before going for any agreement, the Attorney General’s views have to be obtained although in this instance the Irrigation Ministry had failed to obtain them. Investigations are now on to find out how this large scale contract had been offered to the said Chinese Company and why the then government without calling for tenders decided to offer an unsolicited contract to this company. The cabinet approval for this unsolicited contract had been given on November 18, 2009 but payments had been made in a rush prior to the 2015 presidential election. If the government was really committed to go ahead with the project they gave approvals, the Irrigation Ministry had time to follow the standard procedure and obtain the necessary approvals before payments amounting to Rs. 3,012 million was paid in a rush within a few weeks,” sources alleged.

Although Rs. 3,012 million had been paid to CAMC Engineering Co. Ltd. by January 7, 2015, the contractors had failed to implement any work even by the end of May 2015 which led Gamini Rajakaruna, the then Irrigation and Water Resources Management Secretary, appointed by President Sirisena to write to the Chinese contractor to refund the mobilization advance until the project is re-started.

Rajakaruna’s letter to CAMC Engineering Company dated June 22, 2015 further states:


‘Mr. Yan Hailu,

Chief Representative in Sri Lanka,

CAMC Engineering Co. Ltd.

EPC Contract for Gin-Nilwala Diversion Project.

Contract No: MIWRM/ AGR/ CONS/2014/ 064.


The agreement has been signed between your company and the Ministry of Irrigation and Water Resources Management and an advance payment (part of the total agreed mobilisation advance) also has been paid. This project will be implemented under the newly formed Ministry of Irrigation hereafter as the employer.According to the agreement (clause 5 of the main agreement) the contract shall come into effect when the employer confirms the date on which the condition stipulated for contract to be in full effect.

Meanwhile the cabinet Sub-Committee on Economic Affairs chaired by Hon. Prime Minister has directed to hold the work of the project and to do a proper inquiry before proceeding of work.

Therefore, I kindly inform you to temporary suspend any proceedings of project preparation activities until further notice.

Also since the part of the mobilisation advance already paid will not be used for mobilisation of project activities immediately you are kindly requested to refund same which will be paid back to you once the government issues clearance to proceed with the project please.


Gamini Rajakaruna


Ministry of Irrigation


Although Gamini Rajakaruna had sent this letter one-and-a-half years ago, it is learnt the CAMC Engineering has stated that they cannot refund the mobilization advance as requested but would carry out the project once the government approval is received.

The FCID meanwhile on November 28, 2016 had requested Colombo Magistrate Court to grant permission to obtain bank details from Irrigation Ministry bank account at Bank of Ceylon Hyde Park Colombo (Account Number 7040840) – to find out how the money had been transferred to CMC Engineering Company between December 1, 2014 and January 31, 2015.

“We requested the Magistrate to grant us permission to check the Irrigation Ministry bank account to find out when the payments had been made and to which bank this money had been remitted,” sources from FCID, who wished to remain anonymous, told The Sunday Leader.

Comments are closed

Photo Gallery

Log in | Designed by Gabfire themes, pub-1795470547300847, DIRECT, f08c47fec0942fa0