The great BCCL robbery 

Sripathi accuses Basil of masterminding corrupt 
BCCL deal in letter to Mahinda

Investor company incorporated only three weeks 
before cabinet memo on BCCL

Transfer of BCC to investor company one month 
before cabinet approval obtained

Directors of investor company illegally appointed 
to board of BCCL

Vital discrepancies in Sinhala and English versions 
of cabinet memo

Transfer of prime land in Colombo and other assets 
sans tender procedure

By Sonali Samarasinghe

Startling details of blatant robbery of BCC Lanka assets including 16 acres of prime land in the heart of Colombo by top officials in government have come to light, with Presidential advisor and younger brother Basil Rajapakse again taking centre stage in the steal.

BCCL was transferred in October last year to a company incorporated in Sri Lanka on an unsolicited proposal long before cabinet had even approved the deal.

Even though a specially appointed cabinet committee headed by Prime Minister Ratnasiri Wickremanayake had recommended that the BCCL be handed over to a Malaysian registered Company, it was in fact handed over to a Sri Lankan registered company purporting to have links to the Malaysian company. All this without any cabinet approval.   

The company to which BCCL was handed over - Assar Senari Holdings SDS Corporation was hastily incorporated in Sri Lanka just weeks before a cabinet memorandum was tabled by Minister for Coconut Development Salinda Dissanayake to revitalise BCCL. What is more Assar SDS Directors were then appointed as BCCL directors without due authorisation of the secretary to the Treasury.    

Fiddler on the Roof

With allegations that the President's brother is not only fiddling in the affairs of other ministries but is also driving the agendas of certain spuriously run NGOs, a letter dated February 7, written to President Rajapakse by his one time trusted friend Sripathi Sooriyaarachchi detailing the BCC Lanka scam, also exposed Basil's hand in several other multi million dollar deals. Charges which have hitherto gone unchallenged.

Only two days before Sripathi Sooriyaarachchi was sacked from his ministerial post by an irate and indignant President Rajapakse, he was to expose Basil Rajapakse's involvement in several allegedly corrupt projects including the Hingurana Sugar Corporation, Lanka Phosphate Fertiliser Company and Lanka Mineral Sands Company, the recent MIG fighter plane deal by the Ministry of Defence and the BCC Lanka deal.

Sooriyaarachchi in his letter stated, "I am sure that you are fully aware of the situation concerning BCC Company. There was an attempt to hand over 16 acres of prime land in the heart of Colombo as well as other assets of BCC worth in excess of Rs. 8 billion without any tender process or any agreement indicating payment to the government. These assets were to be handed over to Assar SDS Company, a business that was only formed on June 26, 2006."

The said letter which largely dealt with Basil Rajapakse's interference in allegedly securing irregular and corrupt deals went on to add regarding the BCC deal, "I was completely opposed to this proposal and submitted a very lengthy cabinet paper on  January 1, 2007 to try and prevent this blatant attempt to steal BCC's assets. I don't think I need to remind you of the person behind this corrupt agreement as you are fully aware of what transpired."

BCCL deal

Sooriyaarachchi who refrains from naming Basil in his letter to President Rajapakse, as he states the President should be fully aware of who is involved, has however told several confidants that the person referred to in his letter is in fact Basil Rajapakse.

Earlier, former Foreign Minister Mangala Samaraweera in a letter, had also accused Basil Rajapakse of fighting to secure the Hambantota Port deal by bringing in a Chinese company while another close family member of Mahinda Rajapakse's had also separately pushed for the project.

Here's the story on the BCC Lanka deal

Considering the influence of the coconut development sector, The British Ceylon Corporation (BCC) was taken over by the government in 1972. It was later made a public company in 1988 under the name BCC Lanka Pvt. Ltd. Since 1982 it had been running at a loss and by 2006 was deemed an unsuccessful business venture.    

At a cabinet meeting held on March 8, 2006 it was observed that there were several non functional state enterprises due to unsuccessful privatisation, where large sums  paid on salaries and assets belonging to these institutions were under utilised. Therefore a Sub Committee of the Cabinet under the Chairmanship of Prime Minister Ratnasiri Wickremanayake was appointed to go into several of these enterprises.

The sub committee also comprised Jeyaraj Fernandopulle, Dr. Sarath Amunugama, Ferial Ashraff, Athauda Seneviratne, Sripathi Sooriyaarachchi and Keheliya Rambukwella.

Their report on 36 enterprises stated with regard to the BCCL that it was running at a loss due to mismanagement.  The Treasury has to finance Rs. 274 million for VRS in addition to the money released for salaries amounting to Rs.71mn. The Ministry, the Cabinet Sub Committee says, "proposes to release the BCCL to a Malaysian registered company under the Sri Lanka government with existing oil refinery pipe lines laid up to Colombo harbour  warehouse complexes together with the land occupying main coconut oil factories on a joint agreement to hand over same to government on completion of the stipulated period of 30 years after fulfilling development work."

The sub committee in its report said that the proposal above should be recommended to cabinet subject to the condition that the 'Investing Company will take over the entire liabilities of  BCC with a view to restructure the company without any burden on the Treasury."

PERC meanwhile put forward a series of proposals and suggestions to revive the Company and later all staff were retrenched on a voluntary retirement scheme and tenders were called to re establish the company.

Unsolicited proposal

A cabinet memorandum dated 14. 07.2006 was also put forward by the Minister of Coconut Development Salinda Dissanayake, where he sought to award the revival and re establishment of BCC Lanka to a company by the name of Assar SDS Corporation Pvt. Limited based on an unsolicited proposal by this company. 

In that cabinet paper presented on July 14, it was stated that a new board of directors had been appointed (NOTE: unauthorised) and dismissing the tender procedure as unfruitful Dissanayake proceeded to push for Assar Senari Holdings SDS Corporation Private Limited.

This Cabinet Memorandum No. 06/1316/253/012 dated 14.07.2006 had this to say inter alia:

 "Assar Senari Holdings Corporation Private Limited which is affiliated to Assar Senari Holdings SDS Company registered under Malaysian Government, and Sri Lanka Government has put forward proposals to acquire this company on 30 year lease basis."

It also said, "If the BCC Lanka (Company) Limited is to be handed over as expected, Assar SDS Corporation (Private) Ltd has given its consent to invest 1.9 billion US $ Dollars (Rs. 199.5 billion ) to make this venture a success."

"70 % of the net profit accrued from the business enterprises within the first 25 years and 50% of net profit accrued within the next five years must be paid to Assar SDS Corporation Private Limited."

Sinhala version different

 However according to the Sinhala version of this same cabinet memo approval is sought to lease BCCL out to the Company registered in Sri Lanka. Whereas the English version seeks approval to lease out BCCL to the company registered in Malaysia.

But further discrepancies arise. According to the cabinet memo approval is sought only to hand over the land upon which the factories and main pipelines are located which is approximately six acres in extent. However the cabinet memo mentioned above refers to handing over the entirety of the BCCL which according to Sooriyaarachchi's observations is the entire 12 acres of land.

Therefore many problems surfaced with regard to the land itself. Firstly, in 2002, two acres and four acres respectively of this land had been demarcated for sale. 

Secondly these six acres are already occupied by some 22 tenants.

A meeting was then jointly held by the Minister of Skills Development and Public Enterprise Reforms and the Minister of Coconut Development, PERC on removing these tenants so as to make the land unencumbered. By PERC's letter dated 23.05.2006 the Chairman BCCL was advised on the procedure to evict the remaining tenants.

However Chairman BCCL, S.A.R.Madduma Bandara informed PERC that:

1) The expired lease agreements had not been renewed;

2) Lease agreements which are due to expire will not be renewed; and

3) It is unwise to terminate the lease agreements which are to expire in a few years time, as there is the very real possibility of unwanted litigation being leveled against BCCL, which would result in further turmoil and prolonged encumbrances on the premises.

Sooriyaarachchi in his observations in January 2007 states that if the land is to be handed over to the Assar SDS Company there indeed could be possible litigation and therefore eviction of tenants should be looked at carefully.

Sooriyaarachchi also observes that even though the Coconut Development Minister in his cabinet memo of July states that the investor "proposes to fund, develop and operate the entire BCC Lanka Ltd. infrastructure including the manufacturing facility for soaps, detergents, oil refinery, bottling plants, packaging plants, paid parking complex, mixed development complex and other industries," there is no clear indication where these would be located.

Drum plant

Sooriyaarachchi also points out that while Minister Dissanayake talks of the soap manufacturing plant and the oil refinery being redeveloped there is no mention of the steel drum manufacturing plant. He points out that the drums required by the CPC is provided for by the drums produced by the BCCL drum plant and the operation of this plant is vital and notes that ironically while Dissanayake does not mention this vital aspect it is the only section of the BCCL which is currently in operation. 

However as part of the Cabinet Sub Committee initiative Prime Minister Wickremanayake now sought cabinet approval on November 6, 2006 to implement the recommendations referred to in the Committee report within a period of six months. 

Cabinet approval was accordingly given on November 15, 2006 stating "the proposal to be recommended to the cabinet of ministers subject to the condition that the investing company will take over the entire liabilities of BCC with a view to restructure the Company without any burden on the Treasury."

No  approval

Nonetheless long before this conditional cabinet approval was obtained the BCCL was already handed over to Assar SDS on an unsolicited proposal.

On October 13, 2006 BCC Lanka was handed over and Assar SDS took over possession of the company. Mind you this was one month before cabinet even approved this transfer.

BCCL transferred sans cabinet approval

The letter dated October 13, 2006 and addressed to Assar SDS Corporation (Private) Limited on a Ministry of Coconut Development letterhead was signed by Secretary Ministry of Coconut Development and Chairman of Assar, Sampath Liyanage.

The letter dated October 13, and specifically said to be effective on that date, ironically and somewhat psychically refers to cabinet approval given on November 15. It states,

"In terms of the recommendation made by the Cabinet Sub Committee on Non Functional State Enterprises and by the Board of Directors of BCC Lanka Limited and by the Decision of the cabinet of ministers dated 15th November 2006 and in terms of the management agreement and the lease agreement entered into by and between BCC Lanka Limited and Assar SDS Corporation (Private) Limited, the possession of the land and premises and all other assets of BCC Lanka Limited is hereby handed over to Assar SDS Corporation (Private) Limited with effect from today." (see copy of letter elsewhere on this page)

Unauthorised directorial appointments

 Furthermore four unauthorised persons, two of them directors of Assar SDS were appointed to the board of directors of BCCL by a board resolution dated October 25, 2006.

Present at the meeting held on October 25, 2006 at 11 a.m at the Ministry of Coconut Development at Govijana Mandiraya, Rajamalwatte Road, Battaramulla were S.A.R.Madduma Bandara - chairman BCC, W.J.l.S.Wijesekera and S.D.Karu-naratne.

The minutes stated that in terms of the Management Agreement also of October 25, 2006 signed between BCCL and Assar SDS, three directors namely W.D.H.Chandraratne, W.A.Gunarathne and S.D.Karunaratne resigned and new directors Sampath Liyanage, Harsha de Silva, D.S.Akkarawatte and Yasantha Fernando nominated by Assar SDS were appointed.

These appointments Sooriya-arachchi says in his January 7 observations to cabinet were illegal.

Board minutes

The minutes of the board meeting (see copy elsewhere on page) also stated that the new appointments were made pursuant to a management agreement of even date but Sooriyaarachchi points out in his observations to cabinet that there does not seem to be approval for the move by the Attorney General.

The Chairman BCCL was instructed to make arrangements to hand over the management of BCCL to Assar SDS Company by letter dated November 28, 2006 sent by K.W.E. Karaliyadda, secretary, Ministry of Coconut Development.

Sooriyaarachchi in his observations to cabinet also points out that even the Presidential Investigation Commission had instructed the Chairman of BCCL not to hand over the possession of BCCL until further notice.

Suspicious company

Strangely however Assar SDS was incorporated in Sri Lanka only three weeks before the cabinet memorandum was presented, and by a happy coincidence no doubt the primary objects of the company were conveniently linked to the many businesses normally carried out by BCCL.

The registered office of this company was given as 126/17, Lake View, Horana Road, Panadura and the shareholders were S.R.H.Liyanage and K.L.N. Jayatissa. The directors included the two shareholders and D.S.Akkarawatte.

According to observations presented to cabinet on January 1, 2007 Sripathi Sooriyaarachchi says that the Commissioner of Labour has confirmed that this company had not registered with the Department of Labour and that no ETF, EPF has been remitted thus giving rise to the assumption that the company does not have any employees.

This company according to the Cabinet Memorandum of July 14, put forward by Salinda Dissanayake is purported to be linked to a Malaysian company called Assar Senari Holdings SDS Company. However the link has not been established and Sooriyaarachchi himself in his memo to cabinet on January 7, states that such a link could not be traced.

As the two companies are separate legal entities the government should first establish a proper link before leasing out valuable assets to a little known company hastily incorporated for the purpose.

According to a communiqu‚ from the Director of the Department of Public Enterprises, General Treasury, the following were appointed without nomination or authorisation from the Secretary to the Treasury. They were S.R.H.Liyanage, D.S.Akkarawatte, D.S.P.A.H. de Silva and Y.F.C.Fernando.

Both Liyanage and Akkarawatte of course were also Directors of this Johnny Come Late company Assar SDS Corporation.

The Director, Department of Public Enterprises later addressed a letter to the company secretary of BCCSL instructing that all the above appointments be cancelled with immediate effect. 

Lease drawn up by Dissanayake and Amaratunge Associates

A draft lease agreement of BCCL drawn up by Srima Dissanayake's law firm, Dissanayake and Amaratunge Associates between Assar SDS and the Ministry of Coconut Development had also been approved on October 19, 2006 by the Secretary Ministry of coconut Development, K.W.R. Karaliyadda.

The lease agreement deals with the land and buildings belonging to BCCL, the storage tanks at the Colombo Port, and the pipe line from the said land and premises.

Blessings from above

It is obvious therefore that the whole deal had the blessings of a top official that Sooriyaarachchi now reveals was none other than Basil Rajapakse. The scant regard for cabinet procedure and administrative decorum has been demonstrated by President Rajapakse himself who once told cabinet he does not need their approval as he could run the country with his three brothers.   

Be that as it may, Sooriyaarachchi as the minister of Skills Development and Public Enterprise Reforms on January 1, 2007 was to table his observation on the deal and recommend that if the Treasury were not providing funds to develop BCCL, to call for open proposals with specific Terms of Reference which will be beneficial to Sri Lanka and in the best interests of the BCCL.

BCCL liabilities

What is more BCCL has liabilities of about Rs. 825 million as at May 20, 2006 which includes a loan granted by the Bank of Ceylon. However no mode of settlement by the investor of these loans is mentioned in the Cabinet Memorandum of July.

In fact the Bank of Ceylon has confirmed that a sum of Rs. 149 million due on mortgage of the factory and lands should be paid before the BCCL is leased out. The BOC has also confirmed that no payment has been made by BCCL to the bank thus far.

In a letter sent by Deputy General Manager Corporate Recovery S. Liyanwala, to S.A.R Madduma Bandara, the BoC states that a mortgage bond for the land and premises on which the BCCL factory is located had been executed on March 21, 2003 for a sum of Rs. 120 million and the BCCL now owes the bank a sum of Rs. 149.01 million rupees and that sum should be paid before any transfer of property is made. 

In fact Sooriyaarachchi in his observations to cabinet states that while the investor intends  investing US$ 1.9 billion to revitalise the BCCL, the mode of recovering the investment is through a profit sharing basis. In the absence of a proper feasibility report, a proper business plan and a financial report, an investor deriving profits could not be realistic.

Little wonder then that the public perception that Sri Lanka today has become a family company is gathering momentum.

State complicity alleged

Sri Lanka's  thriving abduction  industry

By Dilrukshi Handunnetti

Amidst a growing culture of human rights abuses in the form of abductions, disappearances and extra judicial killings, the capital city of Colombo is fast becoming a haven for criminal activities and a fearful place for most.

With the military operations confined to the northeastern provinces of the island, a strange phenomena prevails in Colombo, where abductions are carried out in broad daylight and  massive extortion rackets coupled with general violations of privacy have become the order of the day.

The statistics tell the story more graphically, that not only is Colombo a fortress of sorts, but also is one of the most unsafe places to be, particularly for the Tamil ethnic minority where abductions are on the increase, where human safety of unarmed civilians is being seriously challenged.

With militancy becoming more pronounced elsewhere in the country, there have been several instances of abductions taking place in Colombo  last month dispelling the belief that comparatively, Colombo guaranteed  human safety.

And according to the police, the information so far gathered indicates that different groups carry out the abductions as well as extortions, and often both types of offences are committed against Tamil civilians.

Killings galore

According to current data available with the Civil Monitoring Commission which monitors abductions, disappearances, extra judicial killings, arbitrary arrests and detentions in Colombo, its suburbs and other areas in the south within one year (from February 2006 to February 2007) a total of 78 civilians have been killed, 51 abducted or disappeared while another 15 had been abducted but subsequently released.

"If you look at the statistics, it shows that the rule of law is a thing of the past. Within the past few days alone, six were found dead in Muthurajawela, another body was found floating on the Kelani River and five other charred bodies were found in Anuradhapura.

This is not all, on February 28, ten boys were taken in from Dehiwela, Wellawatte and Mount Lavinia areas and the question is, why this questioning process takes such a long time and why suspects cannot be charge sheeted and dealt with according to the law," demands Convenor, Civil Monitoring Committee (CMC), Mano Ganesan.

Adding to this, Chairman, CMC, Siritunga Jayasuriya says that the entire human rights chapter of the Sri Lankan Constitution was being blatantly violated, particularly Article 13 of the Constitution.

The said constitutional provision guarantees freedom from arbitrary arrest, detention and punishment and prohibition of retroactive penal legislation.

Article 13 (1) specifically states, "No person shall be arrested except according to procedure established by law. Any person arrested shall be informed of the reason for his arrest.

"How can this be possible in a country where people are killed, abducted or taken in for questioning in such a manner that their privacy is not even guaranteed? Then how can there be a sense of security if you simply get hauled out of your home," asks Ganesan.

What is more, he says that having studied the pattern of abductions, extra judicial killings and extortions, he is compelled to believe that there is also serious government complicity.

Giving two examples, he said that in three cases of abductions, victims' relatives have identified a suspect in custody of the Kotahena police to be responsible for collecting millions of rupees as ransom money pledging to release three Tamil businessmen. But charges have not been pressed against the suspect, alleges Ganesan, though a CID inquiry has begun which is yet to yield any results.

"For five months, the suspect continued to remain in custody. Three positive identifications were not good enough for the police to press charges," he alleges, claiming that in such instances, it becomes difficult to believe that the law enforcement authorities are serious about maintaining law and order.

Serious implications

Aiding this argument, Siritunga Jayasuriya adds that bodies of persons who are from Batticaloa have been later discovered in Anuradhapura. "How did anyone transport the bodies without being detected at the many check points. If they did, without being found out, doesn't it at least imply something," he queries.

And the Civil Monitoring Committee insists that there is a new fear, especially among the Tamil community.  "It is called the white van syndrome," notes Ganesan.  He said that several recorded instances have revealed that white vans  or military personnel riding motorcycles were picking up civilians.

The monitors also feel that not only was Colombo the worst place besides the Eastern Province as far as abductions went, these abductions were often carried out during broad daylight, sometimes in close proximity to high security zones or well manned security check points.

As for the extortion racket, the monitors have found out that the same groups or individuals are linked to ransom taking. "People are scared to offer information to the police not only because of inaction, but also because their identities could be divulged to the offenders themselves."

What is more, civil monitoring activities also show that there are increasing incidents of a criminal nature in the Eastern Province. According to the monitors, more abductions are being recorded there coupled with some extortions. In Colombo they feel, a record number of abductions and extortions were taking place.

Violence against civilians

Given the increasing violence against civilians, disappearances and ransom taking, the monitors fear that a new culture of impunity has set in. they also feel that if the villages were identified as being unsafe during the 1988-1989 insurgency, the present day situation made Colombo the unsafest of all.

"The fear is enormous. Tamil business people are leaving the island fearing for their lives.They have scaled down their business operations fearing extortion and there is no general feeling of safety since the reimposition of emergency islandwide," notes Mano Ganesan.

"There is no need for us to over-emphasise the fact that there is a serious break down in law and order. There is genuine fear among all communities, especially so among Tamils. They are being victimised for their ethnicity, their political aspirations and also if they have considerable wealth," Jayasuriya noted with concern.

And the abduction of businessman Raja Pulendran on February 21 sums up Colombo's story.  Rifle wielding gunmen abducted Pulendran - once more in a white coloured van. The victim is the brother in law of Director, Colombo Crimes Division (CCD), SSP Sarath Lugoda. That should tell the story of Colombo's security much louder than any other incident.  

More Spotlight

Sri Lanka's  thriving abduction  industry