First with the news and free with its views                                     First with the news and free with its views                             First with the news and free with its views                                    


July 8, 2007  Volume 14, Issue 3










President's Tiger deal exposed

The purported office at Mill Road, Vavuniya as per the Cabinet Paper (inset) Mahinda Rajapakse, Basil Rajapakse, P.B. Jayasundera, Lalith Weeratunga, and Tiran Alles

Multi million dollar housing project given to front company of Emil Kanthan

Company formed one month after Rajapakse wins presidency

Cabinet paper put by President while battle for Mawilaru raged

Shareholder directors of company are Emil's common law wife and her brothers

Money first given to Emil and cabinet paper put as cover

Bogus addresses of company awarded deal revealed

By Sonali Samarasinghe 

Damning evidence of the government's secret deal with the LTTE has now surfaced, revealing President Mahinda Rajapakse granted unsolicited multi million rupee bogus housing projects to the Tigers to allegedly facilitate the transfer of money under the deal.

The bogus projects were being given to the Wanni even as a water crisis depriving some 15,000 farmers of water raged on in Mawilaru, a humanitarian crisis was brewing in Muttur resulting in thousands of Muslims being displaced from their homes, and hundreds of soldiers had been killed in fierce fighting ordered by Rajapakse no less.

The projects were whitewashed through a cabinet paper submitted on August 2, 2006 by Rajapakse himself well after the decision had already been taken and after a large sum of money had already been transferred to the said company.

Two part deal

In fact it was part of the deal agreed upon before the presidential election with the LTTE in exchange for the Tigers enforcing a boycott of the poll in the north and east.

The deal with the Tigers our investigation reveals was two fold. The first part was the payment of a large sum of money by Basil Rajapakse to the LTTE front man Emil Kanthan. Some of the money was in dollar notes, the numbers of which the LTTE had noted before putting it to good use to further their goal for a separate state.

The second part of the deal was to come into effect in the event of Mahinda Rajapakse's victory and was to include inter alia a housing project for the LTTE, disarming the Karuna group, appointing LTTE nominees to various political offices and resumption of talks in Thailand.

The cabinet note forwarded by the President on August 2, 2006 sought approval to grant the first housing project in the north and east in terms of the post election part of the deal. It was for forms sake to be under the Rebuilding the Nation Jayalanka Housing Programme and given to B & K

Holdings (Pvt) Ltd. of No. 437A, 3rd Lane, Hirunavukulam, Thandikulum, Vavuniya. The deal was for the construction of 400 housing units at Trincomalee; and another 400 units in Batticaloa was awarded to Everest Civil Engineering services of 113/1, Mill Road, Ukulangkulam, Vavuniya.

The note also states ambiguously that 400 other housing units will be implemented in other districts but do not even name the districts, merely stating the entire cost estimate for the 'required' 1200 housing units would be Rs. 757,166,000 (inclusive of consultancy fees).

Key player

The key player in the entire drama was of course Emil Kanthan, the man the Attorney General's Department and the Terrorism Investigations Division have identified as a key LTTE intelligence officer in records filed in court.

In fact, former Airport and Aviation Chief Tiran Alles was arrested for allegedly providing funds to Kanthan, a matter he has hotly denied but an investigation by The Sunday Leader reveals it was none other than President Mahinda Rajapakse who provided funds to a front company of Kanthan under the guise of a housing project. 

The consultant named in the cabinet note is GS Builders & Consultants of Vavuniya, who top sources said was also connected to Emil Kanthan.

Sources also said that while the cabinet note attempted to allude to some sort of procedural propriety by stating that approval was granted for invited and solicited offers no such thing had actually occurred and the reality was that President Rajapakse engineered the entire post secret deal operation.

It was in fact President Rajapakse who had directed the Reconstruction and Development Agency to put up a board paper and approve the project to be granted to the Emil Kanthan front.

Therefore there had been no cabinet approved tender board, no cabinet procurement committee approval as is mandatory in such development projects and certainly no pre qualification of contractors as per the government rules under ICTAD's Grade M1 certification.

Shadow offensive

Ironically even though a shadow military offensive was continuing in the north and east and the armed forces were engaging in combat with the terrorists, Rajapakse did not force a full blown military confrontation until after the Mawilaru incident and well after his cabinet paper was tabled. 

President Rajapakse meanwhile maintained publicly he was a patient man who did not rush to war and was observing the Ceasefire Agreement even though there was to be a marked increase in civilian and military deaths in the north east, while privately seeking to allegedly honour promises made to the LTTE. 

To top the diabolical deception the Rajapakse administration while making good  its promises on the secret deal with the LTTE on the one hand was facetiously calling on the international community to convict the Tigers of war crimes over the Mawilaru anicut.

Our investigation shows that the trumped up projects were handed over to Barkavi Shanthikumar, the common law wife of whom the government identifies as a LTTE intelligence wing member and go-between Emil Kanthan and her two brothers Shanthikumar Kishokumar and Shanthikumar Gajankumar,. The projects were handed over  through a construction company - B & K Holdings (Pvt) Ltd. of No.437A, 3rd Lane, Hirunuvakulam, Thandikulam, incorporated just one month after Mahinda Rajapakse took office as the President.

Diabolical deed

President Rajapakse himself signed the cabinet note on August 2, seeking approval to grant the over Rs. 700 million project to the bogus company whose stated Vavuniya address in the cabinet note is anything but an office.

A Sunday Leader search revealed the company was incorporated on December 23, 2005 in Colombo and not in Vavuniya as stated in the Cabinet Memo giving as its address No.45/4, Church Road, Wattala. However our investigations found the address to be as mysterious as the one given in Vavuniya. There was certainly no office with that number on Church Road, Wattala.

 The subscriber shareholders of the company - the common law relatives of the infamous Emil Kanthan -- have given their address as No. 48A, Albert Place, Dehiwala. Though this address exists our investigations found only a deserted residence which had been padlocked from the outside.

What is also potentially treacherous is that the bogus company to which the President and Commander in Chief of the Armed Forces was now handing over construction projects had as its primary objects not only the business of construction building but also building, owning, managing and operating plants for the generation of electricity using hydro power, thermal power, wind power, fuel or oil and bio gas or other resources not to mention the business of telecommunications.


The very fact the government had not checked the credentials of the companies to which the President was seeking to hand over a project running into over Rs. 700 million was evident from the above details alone and it was so because what was in play was part of the secret deal and the only credential required was that of the man who delivered Rajapakse the Presidency, Emil Kanthan. After all which other company incorporated just six months earlier with no credentials would be given a project worth over Rs.700 million? And just to cover their tracks a bank guarantee was sought.

Be that as it may, the authorised share capital of B & K Holdings Private Ltd. is stated as Rs. 10,000,000. The Secretaries are LM Management Services (Private) Limited of No 291/32A, Havelock Gardens, Havelock Road, Colombo 5. 

Funnily enough President Rajapakse would have us believe that the cabinet was satisfied that this recently incorporated bogus company was sufficiently able to undertake a Rs.700 million project to construct homes in the north east when even the Vavuniya addresses given in the cabinet paper of both the consultant firm and B&K holdings were false to say the least.

A Sunday Leader investigation revealed there were no offices at these addresses. No. 113/1, Mill Road in Vavuniya was a residence where one P. Nandakumar and one Rajeswari Nandakumar lived.

No. 437A, 3rd Lane in Vavuniya was also a residence occupied by one Wannisingham Subramanium.

Of little concern

Certainly these did not look like the offices or the employees of two companies able to construct, maintain, manage and operate electricity generators, leave alone construct 700 million rupees worth of houses in the difficult north and east area.

For Rajapakse who is willing to waive the government's right to first refusal and transfer 25% of NTT shares in Sri Lanka Telecom to a company hastily incorporated in the Netherland Antilles like Global Telecommunications Holdings such a matter may be trivial.

Certainly even the cabinet note seeking approval seems to be mere chicanery and only an attempt to launder the money transfer under the alleged deal.

Pre-election promises

Both Sooriyaarachchi and Alles who were President Rajapakse's closest allies at the time revealed it was Basil who had been the main negotiator for the President. Sooriyaarachchi also alleged Basil had paid millions in furtherance of the deal.

 More importantly Alles had stated in his statement to the TID that Rajapakse had asked him to secure a connection to the LTTE during the presidential campaign and he had informed the then prime minister he could only give him a business contact - Emil Kanthan.

Once the contact was introduced however it was Lalith Weeratunga, P.B. Jayasundera and Basil Rajapakse who decided on the nitty gritties and allegedly clinched the deal.

Keeping promises post win

While President Rajapakse is not known as a man inclined to honour legal agreements or Memoranda of Understanding the promises to the LTTE which secured his victory and fulfilled his lifelong dream, he was determined to keep.

Once Emil Kanthan had made a request to hand over the moneys under the alleged deal through some project, President Rajapakse shortly after he took oaths as Chief Executive, was made aware of this. He immediately informed Treasury Secretary P.B Jayasundera to do the needful. 

To this end President Rajapakse also requested that housing projects be handed over to persons nominated by LTTE's Emil Kanthan.

By a happy coincidence it was Tiran Alles then still close to Mahinda Rajapakse who headed RADA, the agency now in charge of reconstruction. However Alles had wanted tenders called and evaluations done before handing over such large housing construction projects but Rajapakse, sources alleged, had insisted that both the construction company and the consultant should be nominated by the LTTE link.

Approved without question

Rajapakse had also insisted a board paper on the subject be put up for approval to the RADA board and as it was a request by the President himself the RADA board -- as is the habit in Sri Lanka and other underdeveloped, simple-minded third world countries -- had approved it without question.

President Rajapakse was to then call P.B. Jayasundera and tell him to release the money to RADA in order to facilitate the unsolicited projects.  

RADA sources told The Sunday Leader there were many other bona fide projects discussed relating to the north and east. It is obvious the bogus projects were to be embedded within the bona fide projects to camouflage the government's subterfuge. 

Cabinet paper

It was to this end that President's Secretary Lalith Weeratunga, ever the bureaucrat and expert in cover-up documentation, who at a meeting at the Presidential Secretariat which included RADA officials, suddenly realised that the project which had been already granted to Emil Kanthan should be 'covered' by a cabinet paper.     

By this time some Rs. 150 million had already been paid to the bogus company of Emil Kanthan.

Furthermore once the Chief Operating Officer (COO) of RADA Saliya Wickramasuriya was appointed to the Ports Authority as its chairman it was Shanthi Fernando, wife of Sunimal Fernando, special advisor to President Rajapakse who took over as the COO of RADA.

The cabinet paper was therefore prepared by Lalith Weeratunga and the information had also been communicated to Shanthi Fernando.

The cabinet not surprisingly had approved the project which was indicated as the first housing project for the north and east under Rebuilding the Nation Jayalanka Housing Project. (See box for full text of cabinet paper)

Deal struck

While speculation was rife during the 2005 elections the Rajapakses had struck a deal with the Tigers to disenfranchise over 600,000 voters in the north east in a bid to ensure a Mahinda Rajapakse win, details of the diabolical deed only came to light when ousted Minister Sripathi Sooriyaarachchi publicly announced he was privy to certain aspects of the secret deal with the Tigers and alleged a large sum of money had changed hands.

It was at about this time that former Rajapakse confidant and Airport & Aviation Chief Tiran Alles was also becoming increasingly distanced from the President. But it was not always so. 

It was Alles, who was earlier widely rumoured to be the link man between the government and the LTTE, that Mahinda Rajapakse appointed as head of the lucrative Reconstruction and Development Agency (RADA) even though it was first speculated RADA would come under the purview of UNP cross-over Mahinda Samarasinghe's Disaster Management Ministry - an agency Samarasinghe had eyed when making his decision to jump. Though promised to Samarasinghe, we know now why RADA was kept within presidential control.

RADA was established in November 2005 under a Presidential directive, as successor to the Task Force for Rebuilding the Nation (TAFREN).

End of silence

Meanwhile Alles who was credited with securing the deal with the LTTE for Rajapakse prior to the presidential election had maintained silence throughout the controversy over the secret deal which led to the Tiger enforced boycott of the election but finally broke his silence May 30.

In a statement to the Terrorism Investigations Division (TID)  Alles revealed details of the pre-presidential election deal with the LTTE and informed the TID he was requested by Mahinda Rajapakse as prime minister to establish a link with the LTTE to coordinate the presidential election strategy for the north-east.

So happy was Percival Mahinda Rajapakse with the results at the time that Alles was one of the first persons he rushed up to and delightedly hugged at his Presidential inauguration ceremony in November.

Be that as it may, Alles was arrested shortly after making the damning statement indicting the Rajapakses, for allegedly funding a LTTE intelligence wing member identified as Emil Kanthan.

Startling revelations

However Alles in his statement while maintaining he at no stage was informed by Sri Lankan Intelligence that Emil Kanthan was a LTTE member, made some startling revelations including that Presidential Advisor Basil Rajapakse, President's Secretary Lalith Weeratunga and Treasury Secretary P.B. Jayasundera had also in his presence had discussions with Emil Kanthan on matters agreed upon prior to the presidential election.

He further said it was Basil Rajapakse who had several rounds of discussions with Emil Kanthan, a fact reiterated by former Minister Sooriyaarachchi on several occasions in public fora. 

He also told the TID a full affidavit revealing the entire sequence of events was sworn by him on February 12 and that he would furnish it to the TID for further investigations. Indeed, Alles has revealed that it was Basil Rajapakse who gave money before the presidential election to the LTTE, details of which no doubt will also surface through the affidavit when it sees the light of day.

Answer to public

President Percival Rajapakse not only as the country's first citizen but as the Commander in Chief has to now answer the people why he was to continue to deal with Emil Kanthan as the Head of State while the LTTE had only weeks before taken control of the Mawilaru anicut cutting off the water supply to 15,000 innocent civilians in the Seruwila area and resulting in the destruction of some 30,000 acres of paddy lands.

The LTTE when closing the sluice gates on July 20, 2006 claimed that under an ADB scheme meant for uncleared territory as well had been taken out of the implementation programme. According to TNA Parliamentary Group Leader R. Sampanthan the LTTE claimed this was the work of the new governor for the north east and the new government agent for Trincomalee.

It was even as the SLMM was sitting and talking to the LTTE and to local villagers to resolve this problem that the air force dropped a bomb in the vicinity and the meeting was thwarted.

 Attempts to resolve this conflict continued with even Norwegian Special Envoy Jon Hanssen-Bauer arriving in Sri Lanka and visiting Kilinochchi.


An agreement was reached but when the SLMM Chief, the Political Head of the LTTE and some people from that area went to release the water on Sunday, August 6 more military attacks were to follow.

Following this it was reported in the media the SLMM was holding the government totally responsible for the breakdown in the settlement to the Mawilaru water crisis after the security forces allegedly launched a fresh shell attack on LTTE cadres near the anicut just before the LTTE was to open the sluice gates.

Other agendas

It was reported the "SLMM Spokesman Thorfinnur Omarsson had in fact charged it was clear the government had other agendas in mind but stressed that it was not the end of the road as negotiations for a settlement were still continuing."

While the water war was raging on the one hand with the government only intent on a prestige battle rather than supplying water to the starving villagers, simultaneously the LTTE moved in to Muttur and heavy clashes between the Tigers and the military ensued resulting in the displacement of over 53,000 Muslims.

The army meanwhile vowing to recapture the anicut was to commence military operations from Kallaru army camp on July 28 risking the lives of soldiers even as troops attempted to move towards the anicut through heavily mined fields and amidst LTTE artillery attacks. By July 30 a fierce battle had commenced some 400 metres from the anicut which left several military personnel dead.

The incident was getting to such proportions the UNP also warned that an armed conflict between the LTTE and the government would result in the destruction of the Mawilaru tank, calling on both parties to adhere to the Cease-Fire Agreement (CFA).

Government stance

On July 24, the Government Peace Secretariat released a report which stated the LTTE action was a war crime under International Law and the Roman Statute of the International Criminal Court, also saying; "The LTTE has forcibly closed the water supply from the Mawilaru Anicut (irrigation channel) to the Seruwila, Muttur and Ichalampattu areas in the Trincomalee District, preventing the flow of water that sustains approximately 15,000 families and feeds approximately 30,000 acres of paddy land. The LTTE has prevented the Irrigation Department from opening the sluice gates. In addition, the LTTE has prevented the SLMM from having access to the location and blocked efforts by the SLMM to facilitate restoration of the water supply."

Two days later the Government Peace Secretariat, now desperate over Mawilaru stated, "The Government of Sri Lanka, at the highest levels, has repeatedly called upon the LTTE, through the Norwegian facilitators and the SLMM, to restore the water supply to over 15,000 families in the Trincomalee District who have been deprived of water since the LTTE forcibly closed the Mawilaru Anicut on Thursday, 20 July, 2006."

The report went on to add, "The Government of Sri Lanka has also raised the matter with the diplomatic community and international organisations. There is agreement that the denial of water to civilians by the LTTE is a blatant contravention of all norms of civilised behaviour and the rules of international law.'

In what was to become a cruel joke and in their haste for prestige both the LTTE and the government claimed they had opened the sluice gates. However the SLMM confirmed the sluice gates had been opened by the LTTE.


It is during this horrendous ordeal that the Commander in Chief of the Armed Forces was continuing to deal with the LTTE. It was during this period of starvation and suffering that the Chief Executive of this country who neither honoured his pre election commitments to the Marxists or to the Buddhist monks was to be hell bent on honouring his agreement with the terrorists.

Meanwhile it is ironically Tiran Alles who is arrested by the TID for keeping company with the LTTE point man to whom it is in fact the President of this country Mahinda Percival Rajapakse who granted projects signed under his very hand.

It is now Tiran Alles and funnily enough UNP Minister Jayalath Jayawardena who are being questioned by the TID on their knowledge of Emil Kanthan.

President Percival should know this.  Knowing a man is one thing. Doing deals with him in order to disenfranchise hundreds of thousands of people in order to perpetrate election fraud is quite another.

Mahinda's note to cabinet

Rebuilding the Nation under 
Jayalanka Housing Programme
First Housing Programme for North and East

The Reconstruction and Development Agency (RADA) has been directed by me to commence projects for equitable assistance to all needy communities, irrespective of whether they were affected by conflict or Tsunami, in the fields of housing, livelihoods, social and physical infrastructure.

One of the first projects identified for immediate and speedy implementation is the construction of housing units for conflict-affected communities in Kilinochchi, Mullaitivu, Trincomalee, Batticoloa, Ampara, Vavuniya and Mannar districts. Housing requirements obtained from 42 GN divisions in these districts amounted to 1200 housing units. The Board of Management of RADA granted approval to invite offers from consultants and contractors in the area to implement this project. Funds for the project are to be obtained from the Consolidated Fund.

Accordingly, offers were solicited from prospective consultants and parties willing to undertake housing construction in the stipulated areas. GS Builders & Consultants of Vavuniva was selected as the Consultant for the project.

B&K Holdings (Pvt) Ltd of No. 437A, 3rd Lane, Hirunavukulam, Thandikulam, Vavuniya, which offered the lowest quote for a 500 sq. ft housing unit at Rs 624,725/(exclusive of VAT) was selected as the Contractor for the construction of 400 housing units at Trincomalee. Another 400 units in Batticaloa was awarded to Everest Civil Engineering Services of 113/1, Mill Road, Ukulangkulam, Vavuniya, at the same rate of Rs 624,725.00 (exclusive of VAT).

Housing projects in Trincomalee and Batticaloa are in progress, and the total cost estimate for both projects is Rs 499,780,560/-. With the addition of 400 housing units to be implemented in other districts shortly, the entire cost estimate for the required 1200 housing units is Rs 757,166,000/- (inclusive of consultancy fees).I seek the approval of the Cabinet of Ministers to proceed with the construction of the 1200 housing units as envisaged above.

August 2, 2006


Mahinda Rajapakse 

P. B. Jayasundera sheds light

When The Sunday Leader spoke to P.B Jayasundera regarding the secret deal significantly he did not deny meeting Emil Kanthan but referred instead to a meeting at ousted Minister Mangala Samaraweera's house and stated he had met people but did not know who they were. 

Q: Your name has transpired as having been present at meetings..

A: I can only say I have not participated in any discusions with the LTTE

Q: With Emil Kanthan?

A:I haven't participated with anybody because I attend various discussions with various people. I don't know the peole who come to those meetings and from which group.

Officially  Minister Mangala Samaraweera invited us for a meeting so we have gone, so there must have been people but we went as officials. But our dealings are as officials. So I don't know why Tiran Alles made that statement because my dealings with him was only as chairman RADA, not beyond that.

Shaky Mihin Lanka runs into a storm

Sajin de Vass Gunawardena and 
Abeydeera de Vass Gimawardema

Father's bank buys  shares in son's airline

Lalith wants AASL to buy Rs. 250 million 
worth of shares in Mihin

Mihin goes back on BOI conditions

Lankaputra Bank buys shares in 
Mihin without due diligence

By Sonali Samarasinghe

With details of a letter written to Airport and Aviation Services (Sri Lanka) Ltd. (AASL) by Presidential Secretary Lalith Weeratunga, calling on the company to dump Rs.250 million into Mihin Lanka surfacing last week, the controversial budget airline has again come into sharp focus.   

Weeratunga's letter dated May 8, was sent just weeks before Airport and Aviation Minister Chamal Rajapakse tabled a note informing cabinet of an arbitrary decision to form a private company, Weerawila International Airport (Sri Lanka) Ltd. as a subsidiary of AASL.

Minister Chamal's note tabled May 30, also informed cabinet the AASL - a fully Treasury owned company would transfer a sum of Rs. 1,500 million to Weerawila International Airport (Sri Lanka) Ltd. as equity capital of equivalent value.

Lalith Weeratunga's letter to 
Abeydeera de Vaas Gunawardena 

Lalith a director

Even as the Rajapakse family eyes  AASL as a cash cow to be milked dry for their own projects, what is also shocking is that Weeratunga, when he calls for infusion of funds to Rajapakse's budget airline, does so not only as the Presidential  Secretary but also as one of the directors of Mihin Lanka.

The contents of Weeratunga's letter addressed to the Chairman, AASL, Chandima Rasaputra, not only demonstrates the arrogance of the present regime run by four brothers and its officials when it comes to expending public funds, but also confirms Mihin Lanka had obtained its initial capital from Lankaputra Bank and the bank became a preferential shareholder. Lankaputra is fully owned by the Treasury.

Weeratunga refers Rasaputra to a previous conversation on the subject of infusion of capital into the private airline.

Funnily enough, despite government assertions Mihin Lanka  is a  feasible financial venture, Weeratunga states that Mihin "being the government budget airline, requires further infusion of capital funds to surmount the initial difficulties of establishing it on a firm basis."

Weeratunga then urges AASL to follow the Lankaputra Bank example as it manages the civilian airports in Sri Lanka and suggests AASL becomes a preferential shareholder of Mihin Lanka by contributing Rs. 250 million to its capital. (See copy of letter)

Board meeting

On June 19, Rasaputra held a board meeting where an unsigned board paper on the subject was distributed to the directors for perusal. When The Sunday Leader contacted Rasaputra to inquire if payment would in fact be made, we were directed to Deputy Chairman Shalitha Wijesundera. Wijesundera declined to comment stating matters discussed at board meetings were confidential.

The board members of AASL as per Form 48 of 26.04.2007 are Chandima Rasaputra - Chairman, Shalitha Wijesundera - Deputy Chairman, Nalaka Bamunusinghe - Coordinating Secretary to the President, Kosala Wickramanayake - Director of Kosala Enterprises Pvt. Ltd, Palitha Gamage - Attorney at Law and Aelian Nanayakkara - Attorney at Law.

Be that as it may, interestingly enough, Lankaputra is headed by none other than Abeydeera de Vass Gunawardena, the father of Sajin De Vass. Sajin of course is the Chief Executive Officer of Mihin Lanka and the general factotum and gopher extraordinaire to President Percival. He also draws a six figure salary from Mihin as CEO.

Lankaputra for its part has received three million shares in Mihin Lanka for the grant.

Was it Rajapakse's intention having put father and son to head both Lankaputra and Mihin respectively, to allow a dead exercise like Mihin Lanka to feed off the Lankaputra Development Bank, set up to help small and medium enterprises in the country?

Was it also his intention to use the bank deposits of the rural poor to infuse his pet project Mihin Lanka while the country's national airline was in dire straights due to the situation in the country created by his own myopic policies?

JVP MP Anura Kumara Dissanayake quite rightly raised an issue in parliament stating if the government had wanted a fully owned state airline it should have waited until the Emirates deal expired in March 2008 rather than start a new airline - an airline it could ill afford given the country's economic downturn and heavy defence expenditure. 

Board of directors

Recall that Mihin Lanka Pvt. Limited, was incorporated on October 27, 2006, giving its address as West Tower, World Trade Centre, and its four original subscriber shareholders/directors were the President's brother Gotabaya Rajapakse - Defence Secretary, P.B. Jayasundera, Treasury Secretary, Roshan Goonetilleke - Air Force Commander and Sajin De Vass Gunawardena -  Coordinating Secretary to Mahinda Rajapakse.

However P.B. Jayasundera who is earlier on record as having told The Sunday Leader he knew nothing about airline issues, was to resign on April 10, 2007, and Lalith Weeratunga was appointed as a director. The other directors include Surendra Ediriweera - Managing Director of Ceylon Tours Ltd., and one Ranepura Hewage Samantha Samaratunga of Saman Mawatha, Homagama.

A cabinet memorandum was tabled on December 20 as a mere formality and last year, long after Mihin Lanka had been incorporated where it was stated funds for the operation of the airline will be taken from the Foreign Employment Bureau, Employees Trust Fund and any other government agency. 

  Recall also that Mihin Lanka had a nominal share capital of 500,000,000 and was granted BOI status in one of the most controversial applications for BOI status in recent times. It was none other than Sajin Vass Gunawardena giving his address as The President's Office who applied to the BOI.

BOI conditions

The approval was granted within 24 hours by the then BOI Chairman, Lakshman R. Watawala, where it was specifically noted that the investment application is approved with tax concessions on the following conditions:

(1)As stated in the investment application Mihin would invest a sum of US$ 3.616 billion.

(2)A minimum capital investment of US$ 100 million or its rupee equivalent should be invested in the project within a period of two years from the date of signing the agreement with the board.

(3)At least 70% of the income should be received in convertible foreign currency.

It also warned that if the project did not meet these criteria the BOI reserved the right to withdraw all or any of the concessions granted.

Not only has Mihin failed drastically to fulfill the conditions set by BOI but it is becoming a parasite by bleeding dry the AASL, which has since 2002, recorded an increasing profit which during last year was nearly Rs. 1 billion. However while it becomes obvious Mihin has flouted the conditions of the BOI agreement obviously no action is to be taken against the Rajapakse family enterprise.   

Monitoring mechanism

Sources at BOI said there was no effective mechanism in place to monitor default of enterprises already given approval, and granted tax concessions despite the fact that a monitoring department was in operation. 

However Chairman, BOI, Dammika Perera told The Sunday Leader there was a monitoring system in place and even such enterprises as Mihin Lanka would be monitored to check if they complied with the conditions. Perera however said Mihin was still a new and small enterprise. He however said he was not familiar with the details and would have to check with his staff and revert.

Mahinda's love for Nivard

In any event, despite the lofty protestations of Mahinda Percival of his love for the poor, especially the rural poor, his love for Central Bank Governor Nivard Cabraal knows no bounds. And Cabraal mind you does have a way of getting into the middle of everything most unexpectedly.

Lankaputra had provided credit facilities to Cabraal's family company, Capital Reach Leasing Ltd., a subsidiary of Capital Reach Holdings of which the infamous Gold Quest conglomerate holds considerable shares.

In fact when the JVP asked a question in parliament last week to whom the Lankaputra Bank had granted loans a list was submitted that did not include Mihin Lanka.

However The Sunday Leader is in possession of a list of 167 names of individuals and enterprises given credit facilities by Lankaputra which includes The Finance Co. Ltd., Lankem Ceylon Ltd., Nawaloka Industries Ltd., Nawaloka Polysacks Ltd., Tri Star Apparel Exports Pvt. Ltd., and Saman Saban. The rates of interest too were not fixed with some getting credit facilities on interest as low as 8 % while others paid 17 %.

The fact is Mihin Lanka did not obtain credit facilities but rather Lankaputra dumped a large sum of money into Mihin Lanka by way of a grant in exchange for shares of little or no value. 

Loan criteria

Banking sources say Lankaputra Bank had provided credit facilities under a programme of new and relocation of 300 factories. The bank would also look into such criteria as benefit to society, benefit to environment, job opportunities for people of the area and so on.

Sources also said that under banking laws a single borrower could not be granted a loan over a specified amount and Lankaputra Bank could not give one venture a grant more than the total amount of assets.

Did Lankaputra Bank do a feasibility study of Mihin Lanka? Is it permitted under its memoranda to give grants in exchange for shares, and can it as a viable bank, blindly invest in a venture without doing proper due diligence and financial research in order to ascertain the viability of the venture?

The Sunday Leader attempted to speak to Chairman, Lankaputra, A. de Vass Gunawardena, but his staff on ascertaining the call was from The Sunday Leader, took several minutes to confer before they decided he had gone out and would not be in the whole day. 

Nonetheless Vass Gunawardena senior, in an interview to the media on June 23, 2006, had stated reportedly that lending rates at the bank would be 10% per annum, a considerable deviation from the fluctuating interest seen in the document in our possession.

The primary aim of Lankaputra he is reported to have said, was to create economic activity and narrow the disparity in rural and other areas. He had also stated the bank will be totally funded by the government with a capital of Rs.1500 million, and with the funds of the Private Sector Infrastructure Development Fund of which Gunawardena senior is the chairman as well.

 Worm that turned 

In fact President Rajapakse in his 2007 budget speech delivered in parliament on November 16 last year, was to propose a consolidation of the Lankaputra Development Bank with all regional development banks and the SME banks, to ensure that the bank will have a capital in excess of Rs. 5 billion.

Not only that. He told parliament he wanted to raise its capital by Rs. 10 billion within the next five years and he would absorb the existing branch networks of the SME banks and the Regional Development Banks and their employees into the Lankaputra Bank. He also stated that credit facilities provided by the national budget to government agencies will be channelled to beneficiaries through this bank network.

It was only last month (on June 15) that the projected earth worm and son of the soil, President Percival, was to address the 96th Session of the International Labour Conference in Geneva. There he ironically urged the international forum to bring about a decent work agenda. A decent work agenda said Rajapakse was important because it was central to peoples' lives.

Geneva speech

Work he said was also at the heart of politics. "As a politician, these are some of the issues that I have seen which people vote on. It has been said that elections are won or lost on promises, successes, and failures to deliver opportunities for work."

However the son of the soil was not above using a bank specifically set up under his Mahinda Chinthana to help the rural poor, to help the first family of Medamulane instead.

This is despite the fact that the Mahinda Chinthana stated that the  new banking scheme named "Lankaputra" would be set up to make available financial facilities to local, small and medium entrepreneurs, to become internationally competitive through this new window of finance.

Lankaputra Development Bank was incorporated on February 24, 2006 giving its address also as West Tower, World Trade Centre. However it was launched on June 27 and moved to a swank  new building at No.34, Maitland Crescent, Colombo 7.

In the final analysis  this tendency to exploit public property for personal gain President Rajapakse was to demonstrate early in his presidential campaign, even as he held election parties at public expense and unashamedly misused state vehicles and the state media for his private campaign. 

While both Mihin Lanka and the Weerawila airport are special private projects of the Rajapakse family the two controversial enterprises have come under heavy fire from the public and the media not only due to a lack of transparency in its dealings but also because the financial feasibility of the projects have been seriously in question.

.....More Spotlight

Shaky Mihin Lanka runs into a storm


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