Noose tightens round BoC Chairman

Kariyawasam forced to resign as Kalu  takes over

BoC internal audit report on GOH out

Chairman's appointee Priyantha interdicted

Accountant Fernando sent on compulsory leave

Bribery Comm. takes vital GOH 
documents into custody

Presidential Investigation Unit commences inquiry 

By Sonali Samarasinghe

Following The Sunday Leader exposŠs on the Bank of Ceylon (BoC), its Chairman Udaya Sri Kariyawasam was last month compelled to resign as chairman of its lucrative Grand Oriental Hotel (GOH) subsidiary. The upset came in the wake of a Bribery Commission Investigation as Bribery officials seized files from the accounts department of the hotel amidst desperate attempts by Kariyawasam's henchmen to hide the relevant documentation and spirit it away to another location.

However while two investigations at the highest levels were commenced by both the Bribery Commission and the Presidential Investigations Unit following the exposŠs, bank employees fear influence may be brought to bear on officials to freeze the investigations.

Be that as it may, in the aftermath of the investigations conducted by this newspaper on the alleged corruption and financial mismanagement at the BoC in general and the GOH in particular, and with the issue gathering uncomfortable momentum for Kariyawasam, he was compelled to resign. 

Resigned

 On January 8, the GOH held a crucial board meeting attended by  BoC General Manager Kariyawasam; BoC Director, S.N.P.Palihena;  General Manager, GOH, Dr. Buddhadasa Kaluarachchi; Prajantha Ratwatte; Chaminda Kularatne; Deputy General Manager, BoC, Kumudini Kulatunga including others. Kariyawasam knowing fully well the resentment and anger he had caused among the employees and with media reports President Rajapakse too was gunning for him, was compelled to step down. Accordingly he resigned and Dr. Kaluarachchi was immediately appointed acting chairman.

However reliable sources say though the board suggested that Kaluarachchi be appointed chairman , Kariyawasam in typical style though stepping down pending investigation, continued to retain his powers and in violation of best practices continued also to attend vital board meetings.

Earlier with two of The Sunday Leader and Irudina articles already published, Kariyawasam and his henchmen were getting agitated. 

Documents snatched

The Accountant of GOH Anura Fernando appointed to the post by Kariyawasam, meanwhile was to act quickly. On December 23, last year, following the publication of two initial investigative articles and on learning about the Bribery Commission Investigation, Fernando was to dash into his offices that Saturday and attempt to spirit away the documents in a bag. Vigilant workers at the GOH now fired up and angry over the way Kariyawasam and his hand picked employees were running the hotel like his grand mother's semi detached flat, caught him in the act attempting to make a quick getaway in the car park. Having snatched the bag of documents belonging to the hotel from Fernando, several employees sealed the same in a cabinet under lock and key. They then made an entry at the Fort police station. Fernando meanwhile did not report to work from that day.

Later, knowing the game was up, Kariyawasam himself was to summon an emergency board meeting and send Fernando on compulsory leave pending inquiry. 

Complaint lodged

Three days later on December 27 the Ceylon Bank Employees' Union (CBEU) represented by its chairman M.R.Shah; its General Secretary, M.Sukumaran; Chairman BoC CBEU, Ranjith Moonesinghe; Secretary, R. Kalupahane and Deputy Chairman BoC CBEU,  A.D.K.Guruge were to lodge a complaint with the Bribery Commission. The Bribery Commission immediately visited the GOH and commenced its investigations by taking into custody several documents. Investigators also opened the office safe, removed documentation relevant to the case and also took copies of documents at the hotel itself.

Meanwhile a week before on December 21, in a shockingly blatant move, a board paper was presented by Kariyawasam to make Accountant Anura Fernando permanent. This was objected to by Directors Chaminda Gunaratne, Kaluarachchi, and others who pointed out to the Bank of Ceylon Chairman, in dismay that Anura Fernando had only been employed with the GOH for eight months and could not be made permanent under  government regulations as he had to serve out his probation period of one year. It was also pointed out to Kariyawasam that Fernando was holding a government job and the board was accountable to the state.

Funnily enough Fernando had only just applied for a loan of Rs. 1.5 million in December which was pending to be granted. In fact on November 24, Manager Administration and  Promoting GOH, D.G. Priyantha, another of Kariyawasam's special appointees had written a letter to the Chief Credit Manager Metropolitan Branch giving false information stating for instance that Anura Fernando was a 'permanent' employee of the GOH. Only permanent employees are entitled to loan facilities.(see box for copy of letter.)

Meanwhile the Acting Chairman of the GOH, Dr. Kaluarachchi confirmed to The Sunday Leader that such a letter had been sent. High level sources at the Bank of Ceylon separately told The Sunday Leader the letter sent by Priyantha as Manager Administration and Promoting and as a senior employee carried 'completely false information' as Priyantha had issued the letter ironically to the bank's own department about the accountant Anura for purpose of obtaining a housing loan of Rs. 1.5 million.

False letter

Separate sources said not only had he issued this false letter but Priyantha had asked the assistant accountant Wajira Fernando not to accept any letter of interdiction the previous day when a letter was in fact issued by Dr. Kaluarachchi as acting chairman. Dr. Kaluarachchi confirmed to The Sunday Leader that Priyantha had been interdicted considering these issues and the GOH had called for his explanation within two weeks.

Read below how both Priyantha and Fernando came to be employees of the GOH and by a happy coincidence particularly for Kariyawasam whose financial dealings are now under intense scrutiny, both were appointed on Kariyawasam's instructions to the accounts department of the hotel.

It was obvious by his actions on December 21 that Kariyawasam was attempting to bend the rules in cahoots with his appointees by trying to force the board into irregular action. However it was not many days later that his friend Anura Fernando's world started crumbling about him.

While an Investigations Unit from the Internal Audit Department of the Bank of Ceylon has also been deployed to the GOH, employees say Kariyawasam has made sure a mixed bag of audit officials have been sent while experienced seniors from the Head Office Unit which usually handled internal audits of subsidiaries have been reduced with only two from that department sent. Due to this, officials claim an internal audit has yet not been conducted properly with delays due to difference of opinion on procedure. 

Internal audit

However a top source within the GOH said the internal audit was being duly conducted for all appearances and was nearly over with a report to be finalised soon.

Kaluarachchi told The Sunday Leader the internal audit investigation was complete and the report has already gone to the DGM in charge of the unit.

Q: Only two experienced members of the head office have been sent.

A: I have seen at least three people doing the work, they appeared to be doing a genuine job really

 Q: Is there influence brought to bear?

A: I don't know to what extent they will be influenced, I can't comment without seeing the report.

The Sunday Leader learns a complaint against Kariyawasam has also been lodged by employees with the Special Presidential Investigations Unit housed at the Presidential Secretariat and investigations are underway. Inquiries have already commenced on lavish refurbishment of the 28th and 29th floors of the Bank of Ceylon building housing Chairman Kariyawasam's recently decorated opulent offices, with senior bank officials called in for extensive questioning. These inquiries will also prove a challenging game of hide and seek for it is learnt the file on the refurbishment of the Banquet Hall on the 28th floor of the BoC Building has already gone missing.

In the meantime employees at the bank allege that Kariyawasam on finding the noose tightening around his neck had instructed his minions such as Anura Fernando to spirit away relevant documentation and to organise a strike. Kariyawasam could not be immediately contacted by The Sunday Leader , however the fact remains that for whatever reason a number of workers did strike.

Thirteen interdicted

 An emergency meeting was called by Acting Chairman Kaluarachchi and other board members who attempted to reason with the employees to return to work. Kaluarachchi told The Sunday Leader the employees had refused to go back to work but required in writing an assurance that what happened to their colleague wouldn't happen to them. The board gave them several chances and the striking employees were told to go outside and deliberate. However they again stated they would report to work but would not engage in any of their duties. The board therefore interdicted these employees.

Those interdicted were Tharindu Samarasekera, Janith Weerasekera, Wasantha Peiris, Fero Dhalley, Samantha Dissanayake, B. Ariyaratne, Hasanthi de Silva, Srimal Fernando, Janaka Priyadharshana, Niroshan Prasanna,  Padmasiri Perera and Waruna Sampath. The latter four in the list employees claim, are appointees of Kariyawasam.

Be that as it may, no sooner than he was appointed chairman in December 2005, Kariyawasam went on a rampage not only spending money willy-nilly violating all regulations but also appointing henchmen sans any thought for procedure or best practice. And it is the appointment of two of his henchman Anura Fernando and D.G.Priyantha to the accounts department of the GOH that reeks of corruption. Anura Fernando is now, like his master, under investigation.

Appointment of Anura Fernando

Anura Fernando of No. 20, first Lane, Siddamulla, Piliyandala was born on 22/10/1975 and ironically according to his two page Curriculum Vitae has a vision to set an example in leadership, business ethics, and good conduct. From January 2003 he was working at Raigam Marketing Services Pvt. limited as an accounts executive and from November 2004 as a senior accounts executive. But his real claim to fame was that for 14 months he worked as an audit trainee in 2001-2002 at a little known audit outfit in Nugegoda called Udaya Sri Kariyawasam and Company. Readers will no doubt get the picture.

Therefore it was no wonder that his two page CV dated March 1, 2006 proudly carried the name of Udaya Sri Kariyawasam, Chairman Bank of Ceylon, Colombo 1, as one of two referees.

That Kariyawasam having been appointed as chairman in 2005 no doubt knew that his name was to be added as a referee in March 2006 to join an institution of which he was chairman is obvious. Not even a fool would include a referee on a CV without first intimating his intention to do so. Furthermore the name also carried the designation Chairman, Bank of Ceylon.

Abuse of power

But what is more horrendous and a gross conflict of interest and abuse of power is that Kariyawasam with no formal application in his own hand writing scribbles a minute on the CV itself addressed to General Manager GOH, Prajantha Ratwatte as follows. "Prajantha, Please arrange letter of appointment w.e.f 02/03/06. signed Udaya Sri Kariyawasam. (Please see box for copy of CV and minute.)  Fernando was appointed as accountant with a salary of Rs. 25,000 and s/c 100 percent.

So there was no doubt that Anura Fernando was Kariyawasam's plant. Now let's come to D.G. Priyantha.

D.G.Priyantha, a friend of Kariyawasam's had worked at O.T.David & Co. as an audit assistant from 1984,  at Alli Co. Pvt. Limited as an assistant accountant from 1989, and later at Wijitha Group of Companies from 1996 to 2004. According to his file, he was employed under contract for an initial period of one year with effect from 24.03.2006 with the GOH. Priyantha was also taken in without any formal application or advertisement in the media with Kariyawasam again getting into the thick of the decision.

In the case of Priyantha he minuted on a draft of the letter of contract to be sent to D.G.Priyantha as follows: "Prajantha, please prepare the letters and issue." Signed Kariyawasam dated 23/03/2006. Not only that he also wrote another note with the Bank of Ceylon frank on it to Prajantha Ratwatte,  General Manager GOH.

"Dear Prajantha, Please arrange everything for Mr. D.G.Priyantha. He needs to takeover the work of Mr. Pieris."

Signed Kariyawasam 'chairman'

(Please see box for copy of note and minute elsewhere on this page). D.G.Priyantha as aforesaid has now been suspended from work in connection with the ongoing investigations.

The Sunday Leader in December already dealt with the colossal and wasteful spending of Kariyawasam no sooner than he ascended the throne with over Rs. 40 million spent on 278 name boards, Rs. 26 million on Nugegoda building, over Rs. 2.5 million spent on refurbishing his own office suite, over Rs.1.8 million for banquet hall makeover. Moreover he contracted all these projects to one Creations Advertising and Promotions Pvt. Ltd. violating tender procedure and regulations.

The Sunday Leader also exposed the alleged plunder of funds as Kariyawasam secured a contract with one B-Mech Engineering (pvt) Ltd where colossal sums of money were paid out with no work done. Furthermore these sums were not paid to the purported company but to an individual.

Kariyawasam under his chairmanship has thought it fit to grant numerous contracts running into millions of rupees to B-Mech Engineering, a dodgy company with no office and whose purported director, F.B.de Alwis, bank sources claim is a buddy of the chairman's appointee, Anura Fernando.

Advance payment

Be that as it may, the purported director of B-Mech Engineering De Alwis was paid an advance of Rs. 4,350,108 on an air conditioning contract totaling over Rs. 14 million even though no work was done.

Payments were also made to this F.B.De Alwis with the Bank of Ceylon Metropolitan Branch issuing cheques in his personal name for work done by B-Mech Engineering. Between 24.08.2006 and 07.11.2006 a sum of Rs. 1,108,400 was paid to De Alwis.

Meanwhile Dr. Kaluarachchi admitted to this newspaper that B Mech had been paid without any work being done and that De Alwis had been paid in his personal name. He also admitted the money had been paid by the BoC without a bank guarantee and it would be difficult to recover these moneys.

It is in this backdrop of financial mismanagement that Kariyawasam ironically claims that the Bank of Ceylon has made huge profits under his guidance in the space of one year. Stay tuned as we debunk this absurd myth next week.

The cost of maintaining the world's largest cabinet

By Dilrukshi Handunnetti, Mandana Ismail Abeywickrema, Jamila Najmuddin, Arthur Wamanan and Nirmala Kannangara

Anyone would think that the war ravaged island of Sri Lanka would be cash strapped given the escalation in hostilities which in turn has resulted in the spiralling cost of living. Proving such theories wrong, Sri Lanka can justly boast of the world's largest cabinet and the most top-heavy administration as of January 28.

Not only have we beaten most developed countries in the world by appointing 54 cabinet and 34 non cabinet ministers, we now have a cabinet minister per every 370,370 citizens, according to  rough estimates. We also have some minister, either of cabinet or non-cabinet rank for every 229,885 citizens.

Elsewhere in the world, the examples differ. They believe that a few at the helm of affairs would increase the prestige of cabinet office and keep faith in the public administration system to deliver than rely on politicians.

According to recent most surveys, Israel had one of the biggest cabinets. What transpires in the surveys should put Sri Lanka to shame.

Expensive exercise

Even the country with the world's largest population, China has one minister for 47 million people, no less!

The expensive exercise now has even holders of portfolios openly expressing their disgust. Some have felt self conscious enough to comment like Ministers Maithripala Sirisena and Rauf Hakeem.

It is important to note at this point, that there is hardly any difference between a cabinet and non-cabinet member excepting just one. The non-cabinet rankers are precluded from attending cabinet meetings. Other powers and privileges including the salaries and perks enjoyed are very much the same.

As UNP General Secretary, Tissa Attanayake said, "Let's not be misled to accept the theory of 54 ministers. The 34 non cabinet members are very much a part of the deal, specially when calculating the enormous cost the country has to bear."

And getting to the rupees and cents of this exercise, simple calculations prove that for a country saddled with a protracted war, perhaps this is the one single extravaganza, no sane political leadership should have even given a passing thought to. Appointing so many to high office, is not just  a wasteful exercise but it also reduces the dignity associated with high political office. And to think that Karu Jayasuriya, the man who talks of good governance at the drop of a hat spearheaded this move shows the depths to which politics in this country has sunk.

Contrast that with the JVP  which for all its faults when joining the government in 2004 made it a condition to limit the cabinet to under 30 ministers.

The tax payers will have to now cough out a monthly total of Rs.6, 915,000 simply to maintain three tiers of portfolio holding politicians. And this means, out of a parliament of 225 members, 108 members hold portfolios leaving only 117 ordinary members of parliament. And when you take the opposition out of the equation, 108 members of the 121 government members hold portfolios.  

The 54 cabinet ministers include President Mahinda Rajapakse and newly sworn in Environment Minister, Chamapika Ranawaka of the JHU. For the basic salaries of both cabinet and non-cabinet rankers, the monthly cost would be Rs. 5,655,000. Their annual salaries would come up to a thumping Rs. 67,860,000.

Equal to war cost

For the salaries of deputy ministers, who only draw Rs.2, 000 less than the other two ranks, the monthly cost would be Rs. 1,260,000 and the annual cost on their salaries alone amounts to Rs.15, 123,000.

President Mahinda Rajapakse's 'jumbo' ministerial team of 108 members, some feel will be more expensive than waging a full-scale war. 

Following horse-trading which led to mass defections from the parliamentary opposition, the original numbers excluding the President was a total of 105. The President has since then added on two, one cabinet minister and a deputy.

The two new members are Champika Ranawaka who was sworn in on Thursday (1) as environment minister. He will enter parliament shortly when Ven Dr. Omalpe Sobhitha Thero resigns his parliamentary seat next Tuesday (6).

In addition, there is to be a new deputy minister, S. Radhakrishnan that will increase the number of deputies to a total of 20.

All 18 MPs from the main opposition UNP, as well as five of the six from the Sri Lanka Muslim Congress (SLMC) were all rewarded with portfolios. However, the new line up also means that finally, President Rajapakse enjoys a simple majority in parliament and would not be dependent on opposition parties like the UNP and the JVP for support  on an issue-by-issue basis.

Disgusted

"This was to secure a majority. The UNP dissidents did not demand any portfolio. We want a strong government and this is one way to achieve it," says non-cabinet Minister, Mahindananda Aluthgamage.

But not every government ranker feels the same way. Senior Minister and SLFP General Secretary, Maithripala Sirisena  expressed his  disgust recently about being a member of a top-heavy government. He has been humble enough to acknowledge that the taxpayers would be further burdened, at a time when the cost of living is spiraling and war expenses are on the rise.

Sirisena has interestingly added that it was still cheaper than conducting a general election.

That of course is not true. A General election would cost in the range of Rs. 800 million, given  the previous statistics on expenditure. Assuming that it reaches Rs. 1 billion, it is still going to be a cheaper exercise. Also, it would be a better reflection of public aspirations.

Among those elevated to cabinet rank in the administration are the President's brother, Chamal Rajapakse, Mahinda Yapa Abeywardene, Tissa Karalliyadde, Dullas Alahapperuma, Milroy Fernando, Jeevan Kumar-atunga, Rishard Badiudeen, C. B. Ratnayake, Kumara Welgama, Prof. Wiswa Warnapala and Keheliya Rambukwella. All of them held non-cabinet rank before.

The losers

Among those who got less significant portfolios are some key figures. Mangala Samaraweera lost his foreign affairs portfolio and Jeyaraj Fernandopulle his Trade Ministry. Maithripala Sirisena lost his long list of duties, agriculture, irrigation, Mahaweli and environment which have now been spilt among four ministers.

Pavithra Wanniarachchi lost her Samurdhi portfolio while Dinesh Gunawardena also sacrificed his water resources portfolio.

The only one who was sent on reverse gear was UNP defector Susantha Punchinilame who was relegated to the rank of a deputy minister. He previously held non-cabinet rank. 

In the meantime, three true blue SLFPers have been simply ignored in the portfolio offering exercise. The three ignored are Nirupama Rajapakse, Wijedasa Rajapaksa and Arjuna Ranatunga. Every other SLFP member today enjoys some portfolio or the other.

 With similar subjects being assigned to several ministers, there is also likely to be overlapping areas.  For example there is a minister for agriculture, coconut development, supplementary and crop development. There are also five non-cabinet ministers for nation building whose tasks cannot be imagined in anyway, until specific areas are assigned to them.

Ministries non functional

A week after the reshuffle that added some 26 new portfolios, it appears that the new administration is yet to get  started.

To do so, the ministers will require new buildings to run their offices from. At present, the areas are still being assigned which is yet to be come out in Gazette form.

Senior government sources told The Sunday Leader that ministry secretaries are currently being assigned, but explained that it would take another week to make final appointments.

 However, the cabinet reshuffle will not see any new secretaries or staff members being added to the already existing list due to a change in the system introduced for the very first time, the Public Services Commission (PSC) said.

An official from the Commission told The Sunday Leader that all non cabinet ministers will not be given any new staff members as they will be working directly with the ministers.

Lumped together

"The staff and secretaries will be shared between both the cabinet and non cabinet ministers. The non-cabinet ministers will be working directly with the minister in his ministry and this is the very first time this has happened. This has been a decision by President Mahinda Rajapakse," the official said.

The official added while details of the new system are yet to be divulged to the media and the public, plans and discussions were already underway with President Rajapakse and the ministers, urging them to  adjust to the new system. "The non cabinet ministers will be given specific areas to cover. They can work from the ministry and require no new secretaries and staff," the official said.

Secretaries

Old secretaries and staff members who were already in the ministries will be utilised and re-shuffled for the ministers and additional secretaries would be taken for the ministers if the need arises. The official said that  the new secretaries were yet to be decided. "Till then I cannot comment," the official said.

The official also refused to comment on the increase in expenses the additional ministries and their staff members would incur.

Justice Minister (non-cabinet) Dilan Perera maintained that non-cabinet ministers would not be given any new secretaries as they would be working in collaboration with the cabinet ministers.

He added that non-cabinet ministers will be given specific areas to cover and the secretaries and staff would be shared between both the minister and non-cabinet minister. "True enough that expenses in the ministries will increase. But these increases are minimal compared to the benefits the country will achieve from gaining a majority government," Minister Perera said.

He added that secretaries and staff members already working for the ministers would keep their posts and no new secretaries would be employed.

The cost of maintaining 
the world's
largest cabinet