Supreme Court takes AG to task as the Tiger
deal returns to haunt Govt.
Sarath N. Silva, Romesh de Silva,
Shirani Thilakawardena, Tiran Alles
and G.G. Arulpragasam
SC says indictment against
Tiran is mala fide
Attorney General accused of
harassment by SC
Tiran indicted for dealing with
Emil during 2004-2005
'Terrorist' Emil Kanthan given new
passport by Govt. in April 2007
Emil was in and out of
2006 doing business with Govt.
By Sonali Samarasinghe
Attempting to subvert the course of justice
in relentless pursuit of a past political
dissident comes easy to the common or garden
regime. And last Thursday it was yet again
the intervention of the Supreme Court that
prevented such a pass as the apex court
observed it was the duty of the court to
grant relief to persons who are subjected to
We said before that the Supreme Court now
seemed to be the most effective opposition
to a toxic government and last Thursday (4)
the judiciary proved this true once again as
it issued a stay order on the proceedings of
the High Court in indictment filed against
former Airport and Aviation Chief Tiran
Alles and CBE Finance Director Dushyantha
The Supreme Court Bench comprising Chief
Justice Sarath N. Silva, Justices Shiranee
Tilakawardena and K.Sripavan in issuing the
order observed that the Attorney General has
filed indictment based on legal provisions
that had no validity or force of law in
Basnayake and Alles filed motions in
Fundamental Rights applications 94/2007
against their alleged arbitrary arrest and
detention on May 30, 2007 for alleged
financial deals with Tamil Tigers under the
Suppression of Terrorism Financing Act No.
25 of 2005. The duo were released on cash
and surety bail.
Following the arrests Alles and Basnayake
filed Fundamental Rights Applications in the
Supreme Court against their alleged
arbitrary arrest and detention.
Just last month on November 10 the Supreme
Court granted Alles's company Communication
and Business Equipment (CBE) Ltd. interim
relief to operate Dialog services in the
In granting relief the Bench comprising
Chief Justice Silva and Justices Shiranee
Tilakawardena and Saleem Marsoof came down
hard on the Rajapakse cartel warning state
counsel the government would be in deep
trouble if CBE took up the matter in the
Deeming the action to freeze all operations
of CBE disgraceful, the SC said the
Petitioner could have even gone to the Human
Rights Council in Geneva.
CBE owned by former presidential confidant,
chairman Airport and Aviation Services and
head of RADA, Tiran Alles was the exclusive
dealer for Dialog in the north and east
until it was suspended following a
government directive after then Foreign
Minister Mangala Samaraweera and Minister
Sripathi Sooriyaarachchi parted ways with
the Rajapakse regime.
The Telecommunications Regulatory Commission
(TRC) Director General, Kanchana Ratwatte on
March 3, 2007 suspended the dealership of
CBE following a directive by the Defence
Ministry citing security considerations.
Following a stoppage of their services in
March 2007 CBE was to file a Fundamental
Rights Application against the Director
General of TRC among others claiming their
action to stop their services to the north
and east was ultra vires, arbitrary,
capricious and violated its fundamental
rights to equality and the freedom to engage
in any lawful business.
Alles alleged the actions of the respondents
were politically motivated and the CBE had
become a victim of a political spat
involving the state hierarchy.
The CBE is also part of a company that
published the two newspapers, namely Mawbima
and Sunday Standard which were forced to
close by the government last year even as
the Rajapakse government proceeded to freeze
Alles' assets and bank accounts. Alles has
so far been successful in releasing his
assets through court intervention but his
two newspapers remain silent.
Deputy Solicitor General Sanjay Rajaratnam
on November 10, told court the AG would be
indicting the petitioner in one month on the
strength of these revelations.
Following this submission the AG had in fact
filed indictment No. AC 4506/2008 in the
High Court of Colombo where Tiran Alles and
Dushyantha Basnayake were charged on two
counts of assisting and promoting terrorism
by buying a land on Epitimulla Road, Kotte
for a sum of Rs. 4.4 million for the mother,
namely Anthony Anna Lakshmi of one Anthony
Lakshmi Emil Kanthan knowing him to be a
member and/or agent of the LTTE and for
building a house for the said mother on the
said land for a sum of Rs. 9.9 million on or
about September 1, 2004 to August 31, 2005.
The indictments stated that by these acts
the accused had violated a Gazette
notification issued on October 16, 2001
based on the United Nations Act of 1968.
The UN Act No 45 of 1968 provides for the
Government of Sri Lanka to give effect to
any decision taken by the UN Security
Council. In such an event the Foreign
Minister may implement these decisions by
regulations including provision for the
apprehension, trial and punishment of
persons offending against the regulations.
According to Section 2(2) every regulation
made under the preceding provisions of this
section shall, forthwith after it is made,
be tabled in parliament. Accordingly in
order to give the force of law to Security
Council Resolution 1189 adopted subsequent
to the horrendous acts of terrorism that
took place in Kenya and Tanzania on August
7, then foreign Minister Lakshman Kadirgamar
was to sign the UN Regulation No. 1 of 2001
on October 11, 2001.
Under the regulations:
(a) no person who is a citizen of Sri Lanka
or residing in Sri Lanka and no citizen of
Sri Lanka living outside Sri Lanka shall do,
or cause to be done any act which assists or
promotes or is intended to assist or promote
any act which is directly or indirectly
connected with the collection of funds, for
any terrorist organisation or which are
intended to be used to carry out a terrorist
(b) Any funds or other financial assets or
resources of persons who do, or cause to be
done, any act which assists or promotes or
is intended to assist or promote any act
which is directly or indirectly connected
with any terrorist organisation or a
terrorist act, or participates in, or
facilitates the commission of any terrorist
act shall be frozen with immediate effect;
(c) No citizen or any other person or body
of persons shall within the territory of Sri
Lanka make available directly or indirectly
for the benefit of any organisation or
person who commits or attempts to commit or
participates in or facilitates the
commission of any terrorist act any funds,
financial assets or economic resources shall
be guilty of an offence under these
Here's the thing. While this newspaper shall
not make any comment on the merits or
demerits of the case, or the culpability or
otherwise of any of those connected to the
case we are entitled to point out that the
government best be wary of pointing fingers
at those who at one time were high on their
lists of special dinner guests.
Tiran Alles was a close confidant of Mahinda
Rajapakse during the 2005 presidential
A close ally of former Foreign Minister
Mangala Samaraweera, Alles was not only
appointed Airport Chief but also the
Reconstruction and Development Agency
Chairman by Rajapakse following his victory
and was welcomed by the President to Temple
Trees on the day after the election with a
bear hug in front of the television cameras,
and those in the inner circle knew only too
The appointment to RADA was not without
significance since it was tasked with
handling tsunami reconstruction in the
In fact it was Alles who was credited with
sealing the deal with the LTTE urging them
to boycott the elections for Rajapakse prior
to the presidential election through the
facilitation of Emil Kanthan.
Early in 2007 the late Sripathi
Sooriyaarachchi, a minister Rajapakse sacked
along with Samaraweera, charged that Rs. 200
million was paid to the LTTE by the
Rajapakse campaign team to get the boycott
order issued. The LTTE and Rajapakse denied
the charges. But police continued to
investigate Alles' alleged business dealings
with Emil Kanthan, a Tamil businessman
allegedly close to the LTTE.
But if the government alleges Emil Kanthan
is a spawn of the LTTE and a terrorist agent
pray why was it that this man was not
arrested on his many trips in and out of the
The government in order to suppress the
media has been blacklisting journalists and
editors and even attempting to prevent them
from traveling overseas.
However it would seem the Rajapakse regime
has no qualms in even escorting to the plane
and lavishing travel comforts on such former
LTTE members as Karuna Amman and according
to the government itself a Tiger agent, Emil
According to documents and passenger lists
in our possession Emil Kanthan whom the
government now identifies as a LTTE
terrorist for the purpose of indicting Alles
has traveled in and out of Sri Lanka while
the Immigration Department has turned a
blind eye on whom the government identifies
as an LTTE operative.
Mind you that is in the backdrop of the
National Intelligence Bureau having a
permanent presence at the airport to monitor
the movement of undesirables.
On January 10, 2006 Emil Luxmi Kanthan
Anthony departed the Katunayake Airport on
UL Flight 123 at 7pm. He filled out
Embarkation Card No. E290026 and was cleared
by officer Chinthina Rathnayake. Eight days
later he arrived on UL122 at 12.20am filling
out Disembarkation Card No. D285593 and
cleared out by Sripathi Ranji
Here's a list of his departures and arrivals
between January 2006 and May 2006
Flight Departure Arrival
The irony is that Alles was indicted for
alleged dealings with Kanthan even before
this date but at that time given the
allegations of the secret deal for the
presidential election, Kanthan was a VIP as
far as the regime went and was free to
travel to and from Sri Lanka without any
In fact this was the time Emil Kanthan was
given a multi million rupee contract by the
government to build houses in the north and
east for services rendered during the
presidential election and millions of state
funds doled out to him. And all this on a
Cabinet Memorandum under the signature of
President Mahinda Rajapakse no less.
More shocking is the revelation and
documentary proof now in the possession of
The Sunday Leader that Emil Kanthan was also
issued a valid passport by the Immigration
authorities on 11.4.2007.
This is well after Tiran Alles was arrested
on charges of financial dealings with
suspected terrorist Emil Kanthan and mind
you over two years after the period
mentioned in the indictment as the period in
which the offenses were said to be committed
- that is in 2004/2005.
The application for Emil Kanthan's travel
document was received by the Sri Lanka
Dubai and issued to him on 2007.04.11. His passport number as of
2007 was N1887710. His address is given as
B2F/21 Kotahena Flats,
Colombo 13. (See box)
However Emil Kanthan traveled in 2006 on
passport no. N1600130
The issue is this. Why did the Rajapakse
regime countenance the application for a Sri
Lankan passport in 2007 and enable this Emil
Kanthan to travel freely in and out of
in 2006 without apprehending him forthwith
if they believed him to be a LTTE operative?
Surely two citizens of
had already been arrested on charges of
financing this very man. At the least he
would have served as a prime witness to the
indictment that was to follow.
Or is one to believe that like facilitating
the travel for Karuna Amman on forged
documents under a false name, this too may
be dismissed with a shrug of the shoulders?
Funnily enough the regulations brought by
Kadirgamar it is alleged were signed only a
day after parliament was dissolved on
October 10, 2001 and thus had no force or
validity in law.
However that is a matter for the courts to
AG told off
Indeed the Supreme Court was to zero in on
this issue when the motions filed by Alles
and Basnayake on November 28 were supported
by President's Counsel Romesh De Silva
instructed by G.G Arulpragasam on December
Chief Justice Sarath Silva who had earlier
warned the Attorney General not to file
indictment for the sake of filing indictment
was to tell the AG 'I gave order saying
don't file indictment for the sake of
filing.' Justice Tilakawardena was just as
harsh. 'It's like challenging the Supreme
Court order' she said. 'For almost two years
you have harassed this person. Failing
everything you now latched on to this
Gazette which is also not valid,' she said.
Funnily enough the two senior officers of
the AG's Department, Dapula De livera and
Buwaneka Aluvihare were not present in
The AG's representative was to then make an
application to court not to grant any
interim relief in the case but to give a
date as Dapula Livera DSG was unable to be
present in court due to personal reasons.
Chief Justice Silva shot back, is it a
personal problem or a legal problem?
In rejecting the date for the AG the court
observed that the case was mala fides, and
ultra vires the law and issued a stay order
forthwith. The Chief Justice in doing so
stated "I cannot understand the mindset of
the AG in formulating this indictment."
The court also observed that for one and a
half years the AG had not filed indictment
and only did so when the Supreme Court
The next date of hearing is January 19,
By Sonali Samarasinghe
Amidst an unfolding picture of high stakes
and relentless business interests and
despite attempts to restrict blame for the
disastrous oil hedging scam to Ceylon
Petroleum Corporation Chairman Asantha De
Mel and to Petroleum Minister A.H.M. Fowzie
an investigation by The Sunday Leader
reveals that almost every top official in
government including the BOI Chairman
Dhammika Perera, Central Bank Governor
Nivard Cabraal, Treasury officials and the
entire cabinet were well aware of the
hedging process during either a part or the
whole of the 18 month period of hedging by
the CPC since February 2007.
Even as the Supreme Court last Friday (28)
declared Minister A.H.M.Fowzie unfit to hold
the post of Petroleum Minister over the
hedging scam set to shrink the country's
foreign reserves by well over USD 400
million, with some in the industry now
warning the loss could be as high as USD900
million, Fowzie was to emerge from the melee
with his gloves off.
Keeping Nivard clean
In spite of a carefully orchestrated
campaign to keep Nivard Cabraal's role in
the deal out of media focus, proving The
Sunday Leader correct in its expose last
week, Fowzie told parliament last Wednesday
it was Central Bank Governor Ajith Nivard
Cabraal who single-handedly foisted the oil
hedging concept on the CPC.
Minister Fowzie said it was Cabraal who
personally made a presentation to the
September 6, 2006
and advised the government to enter into
'hedging arrangements.' Indeed this is not
denied by the Governor who in a letter to
now suspended Ceylon Petroleum Corporation
Chairman Asantha de Mel almost two years ago
on January 10, 2007, urged the CPC to make
arrangements to hedge. (The Sunday Leader
exclusively reported on this letter last
Be that as it may it was already clear the
government had decided early in the piece
not to pay the five banks involved in the
hedging deals including the two foreign
banks Standard Chartered and Citi Bank.
President hedges on hedge payment
At a crucial cabinet meeting two weeks ago
Minister of Finance President Mahinda
Rajapakse hard pressed to balance the books
despite a parliamentary nod to his massive
war budget told cabinet the CPC had been
mislead by the two foreign banks into
entering into these deals and therefore the
government need not pay the banks.
And while Asantha De Mel may now be singled
out for lampooning by his former associates
it would seem the country's economic
aristocracy - such as it is - were not only
fully and thoroughly aware of the hedging
process that was going on for 18 months but
also approved of the same.
In the meantime the CPC had not made many
friends in the industry. The oil and gas
industry is a lucrative one and from
lubricants to bunkering to LP Gas, the
Ceylon Petroleum Corporation was foraying
into other business areas and inevitably
stepping on the toes of entrepreneurs and
companies in the same fields.
Big business, small CPC
It has for instance a 1/8th stake in the
LMSL bunkering tanks. The CPC was also
against the government renewing the lease of
a 10 acre area of land due to terminate in
July next year inside the CPC's Kolonnawa
premises leased by Chevron Lubricants Lanka
Ltd (formerly Caltex) owned by the US oil
giant Chevron-Texaco. Caltex changed its
corporate identity to Chevron Lubricants
Lanka Ltd., following its parent company
which is the majority shareholder of the
CPC sources said the rationale was that
since the CPC too was trying to get into the
business of lubricants it made no sense to
lease out land to their competitor in the
market while the CPC moved to an outside
Indeed the CPC intent on getting into
collateral business ventures in order to
ensure various sources of income perhaps to
subsidise fuel ( a subsidy that had stopped
since 2006) or for whatever reason on the
one hand, was getting into the hair of
competing companies on the other. Therefore
many stake holders on the pretext of public
interest ideals were really motivated either
wholly or in part by personal business
interests et al when hunting down
But while private business interests may now
be playing a jackal like role in reaping the
spoils, what is shocking is that government
officials including a specially appointed
study group recommended after several days
of deliberation a Zero Cost Collar hedge
among other guidelines CPC officials now say
they followed to the letter.
BOI chief rolls in
Not only that, the likes of BOI Chairman
Dhammika Perera and Deputy Governor Central
Bank, Dr. Thenuwara were appointed as
'observers' to the Board of the Ceylon
Petroleum Corporation and were present in
that capacity all through the hedging
process as and when it went to the board.
Funnily enough having sat through the
process as an observer at board meetings and
18 months after the first of several hedging
contracts and several accolades to the CPC
on its hedging deals by none other than the
Central Bank and its Governor, Dhammika
Perera on November 7 was to write to the CPC
Chairman Asantha de Mel the following letter
"My dear Chairman,
I am informed that there may be a few
positions that the Ceylon Petroleum
Corporation (CPC) has taken in relation to
oil hedging which may be claimed by certain
banks as a result of the price of oil
decreasing substantially. I am also informed
that in today's hedging scenario, some of
the instruments that the CPC may have
entered into are schemes for investors and
are not proper hedges.
"All over the world, many banks are now
being sued for misleading clients and mis
selling complex products, and in that
context it may be quite possible that the
CPC too, has fallen victim to such a
"In that context, it is better that the CPC
does not make any payment towards any claims
that may be made and immediately seek
specialist advise in this regard, so as to
avoid any unnecessary liability to the CPC.
It is obvious that Perera having arisen from
some slumber is now trying to give the
government a helping hand in its quest to
wriggle out of the contracts - especially
those contracts with foreign banks.
Perera one recalls is a man made for such a
job. Last year he single handedly hounded
out the former CEO of SriLankan Airlines
Peter Hill as the government wriggled out of
its obligations to ensure a stabilised
national carrier and took back control of
But the government burdened though it
economically is plays a dangerous game.
Standard Chartered Bank and Citibank had
hedged these instruments with the New York
Mercantile Exchange (NYMEX) which is usual
practice. The banks will claim to be making
only a small profit on the instrument as it
had re-hedged the instrument with a third
party. Therefore any default by the
government will be perceived as default of
sovereign debt - a claim some analysts say
is poppy cock. There is enough evidence to
prove the deals were mis-sold, they say. The
government must stand firm.
Be that as it may, last week the Head of
Fitch Credit Rating Agency, Chanaka
Wickramasuriya told the Business Section of
The Sunday Leader, Sri Lanka's existing
international credit lines may be suspended
or be given at a premium due to the interim
order by the Supreme Court last Friday that
suspended making any hedge payments to the
banks. Foreigners were pulling out of the
bourse already and the hedging disaster will
only make matters worse sources had said.
On the same day however Asantha De Mel
replies Dhammika Perera stating that the CPC
had taken hedge positions based on Zero Cost
Collars as directed by the cabinet decision.
He also promises to forward the hedge
contract agreements (ISDA agreements) to the
Attorney General for further perusal as
suggested by Perera.
Back in time
But let's go back to 2006. In fact as far
back as August 30, 2006.
Dr. H.N.Thenuwara, Director Economic
Research, Central Bank writes to the then
CPC Chairman, Jaliya Medagama on hedging of
Thenuwara refers to a discussion the
governor of the bank had with Medagama on
the subject of hedging on oil prices and
states it would be useful if a mechanism is
discussed as to how it could be done. A
paper developed by the CB is also attached
and a specimen letter which can be used to
call for quotations on prices of different
The Central Bank suggests that the CPC
Chairman of the day Medagama arrange a
discussion between the board members of the
CPC and the CB, obtain cabinet approval,
apprise the relevant institutions and
persons of the benefit of entering into
hedging arrangements, and conduct an
awareness programme among members of the
general public. (Please see elsewhere on
this page for a copy of this letter.)
Recall it was on September 6 that year that
Central Bank wonder-boy Nivard Cabraal made
his presentation titled "Maintaining
stability in a volatile global oil market"
which urged hedging, to the President and to
the cabinet of ministers. It was only in
October of that same year that de Mel was
made chairman of the Ceylon Petroleum
Corporation (CPC). A man coming in from the
private sector no sooner than he arrived
almost, it was Cabraal who prevailed upon
him over coffee and over tea that it was
hedging that must be had or else. And for
this there is ample proof.
Cabraal declines to talk
The Sunday Leader contacted Cabraal to
obtain his response on several matters
raised by us but he declined his right of
reply stating that the hedging matter was
now before Supreme Court and he could
therefore not comment.
Nonetheless the cabinet decided that the
subject should be further studied by a group
of officials from the Central Bank, Ministry
of Finance and Planning, Ministry of
Petroleum and Petroleum Resources
Development, Minister of Power and Energy,
and any other agencies concerned.
Accordingly the following were appointed to
the study group that included two senior
Central Bank officials by the Former
Treasury Secretary P.B. Jayasundera by
letter dated October 19, 2006. Ironically
Jayasundera's projects never seem to go
away. Those appointed were,
(1) Y.M.W.B. Weerasekera, Assistant
Governor, Central Bank of Sri Lanka
(2) Dr. H.N. Thenuwara, Assistant Governor,
Central Bank of Sri Lanka
(3) Saliya Rajakaruna, Chief Financial
Officer, Bank of Ceylon
(4) Kapila Ariyarathne, Head of Corporate
and Institutional Banking, People's Bank
(5) Kanthi Wijethunge, Additional Secretary,
Ministry of Petroleum and Petroleum
(6) Lalith Karunarathna, Deputy General
Manager (Finance) CPC
(7) V. Kanagasabapathy, Financial Management
Advisor, Ministry of Finance and Planning
Study group appointed
On November 16, 2006 this study group was to
submit its report to P.B.Jayasundera which
would be presented to the Cabinet of
Ministers for a decision to be taken on the
alternatives suggested in Cabraal's
The study group made five recommendations
and stated in the body of its report that
there is a cost involved in hedging. It went
on to say "This cost could either be direct
cost of hedging such as premium or from lost
profit due to rapid movement of market
prices on the reverse direction (E.g:
significant drop in oil prices). However the
benefits of protection from high oil prices
are greater than the cost of hedging."
Therefore the report was more concerned
about the upper band prices than the lower
It also states:
"The main objective of engaging in hedging
instruments with banks is to protect from
high volatility in oil prices thereby
maintaining stability in domestic prices.
The cap involves a payment of a premium,
while the Zero Cost Collar does not involve
any payment if the market price falls within
the agreed range of prices. Thus the Zero
Cost Collar is the better alternative."
Zero Cost Collar recommended
The group therefore made five
(1) CPC to hedge purchase of petroleum
products, both crude oil and refined
products, in the international market
(2) Use Zero Cost Collar as the hedging
instrument with the upper bound based on
(3) Commence hedging with smaller quantities
for a shorter period and gradually increase
the quantity and the duration
(4) Grant authority to the CPC to call for
quotations for oil hedging, decide on future
prices and purchase hedging instruments from
(5) Grant authority to CPC to change the
instrument based on the developments in the
Not two months later so keen was Cabraal to
implement hedging, he was to call De Mel on
January 9, 2007 and extol to him the virtues of hedging. He did not
stop there. Even before cabinet approval had
been granted for the hedging deals Cabraal
would write a letter marked 'URGENT' to De
January 10, 2007. De Mel was barely three
months in office having taken over as
chairman CPC only in October of 2006.
Nivard congratulates Asantha
Cabraal was to refer to their conversation
the day before and writes to the brand new
Chairman, "As you are aware, the Central
Bank of Sri Lanka was instrumental in
promoting hedging as a means of purchasing
petroleum and made a presentation to His
Excellency the President and the Cabinet of
Ministers on 6th September 2006. The Central
Bank has also made available to the Ceylon
Petroleum Corporation (CPC), certain
technical details and options for hedging.
However we note that the CPC has so far not
been able to enter into any form of hedging
or other acceptable financing arrangement to
ensure that Sri Lanka's petroleum bill will
be at manageable levels in 2007.
"As you may agree, petroleum prices have now
reduced to about US $ 55 per barrel, this
may appear to be the opportune time to enter
into suitable arrangements to hedge at least
a part of our country's total requirements.
Hence, in the interest of the national
economy, I would urge you to take the
necessary steps to ensure that expenditure
on fuel prices will not cause undesirable
effects on the macro economy in 2007.
A copy of this letter was sent to Secretary
Ministry of Finance at that time, P.B.
It was only three days after this letter was
sent to the CPC Chairman that the Cabinet
Memorandum titled 'Introduction Of Oil
Hedging For Maintaining Stability In A
Volatile Global Oil Market' dated January
13, 2007 was tabled. The memorandum was
approved on January 24. Secretary, Petroleum
Ministry, A.P.A.Gunasekera on January 26
received the draft cabinet decision which
stated that the January 13 memorandum was
considered along with the observations of
the Finance Ministry and approval granted to
the proposals which were to be implemented
without delay as suggested by the Central
Bank of Sri Lanka.
Asantha de Mel was to reply this letter on
January 11 stating,
Reference your letter dated 10 January 2007
contents of which are duly noted; I wish to
inform you that I am in the process of
working out necessary details in getting the
hedging process expedited as quickly as
Cabraal on January 16 in congratulatory
tones was to pat Asantha on the back for his
"We are pleased that you are working out the
necessary details in relation to
implementing the hedging processes as
quickly as possible,
Ajith N. Cabraal" (See elsewhere ion this
page for copy of letter)
Evidently then the Central Bank Governor was
well aware of the contracts being entered
into. He was even patting the CPC Chairman
on the back for a job well done. In any
event as the foremost regulator in the
country Cabraal cannot sit back and blame
others like he did in the Sakvithi scam, in
the GoldQuest fiasco and now this.
He cannot get away by merely warning the
public through advertisements in the media.
He must do his job. Sakvithi Ranasinghe
advertised big time too. One wonders why it
missed the hawk eye of the Central Bank
CB just as culpable
The Central Bank having engaged in a range
of Machiavellian tactics to shield GoldQuest
on the one hand while pretending to warn the
public about pyramid schemes on the other is
content while an occasional operative from a
poor village is arrested by the CID. However
it was the CB that closed down the
investigative unit that handled the pyramid
scams and sent packing the crack three
member CID team specially appointed for the
Now the Central Bank of
again seeks to wash its hands off the
biggest gamble perpetrated on the public of
this country by attempting to wriggle out of
On January 23, 2007 the Central Bank was to
engage in more correspondence with the CPC.
Mrs. P. Liyanage, its Director International
Operations now wrote a letter to De Mel
requesting for a report on the status on the
implementation of hedging strategy proposed
by the CB to face the risk of oil price
fluctuation. The letter also referred to
discussions held on the settlement of CPC
import bills and hedging with both the
Central Bank and the Secretary to the
Treasury at the time, P.B.Jayasundera.
This obviously indicates that both the CB
and the Treasury were fully part of
discussions being held. This newspaper is in
no way attempting to diminish the
culpability that may lie with both the CPC
Chairman and the Minister in charge but
surely the rest of the officials -
ostensibly learned men and women with
degrees and experience to boot cannot allow
a man whom the Supreme Court seems to
denigrate due to the fact he has more
private sector experience than he has
letters behind his name, to take the fall
for a project that went far beyond the tiny
purview of the chairman of the CPC.
Observers galore at CPC
Besides from documents in our possession it
becomes clear that the Treasury Secretary
himself had appointed as observers at CPC
board meetings the assistant governor of the
CB, the financial advisor to the Treasury,
the director general of investment and
trade, the director general of treasury
operations and a staff member of SEMA.
In fact at a board of directors meeting on
November 2, 2006 there was a presentation by
the Standard Chartered Bank with regard to
crude oil hedging. At this presentation the
CPC board of directors, the Financial
Advisor to the Treasury V. Kanagasabapathy
and the Assistant Governor of the Central
Bank, Dr. Thenuwara were present.
Sequence of events
Be that as it may on January 29, 2007 the
said cabinet decision was communicated to
the Chairman CPC by the Petroleum Ministry
for necessary action.
Mind you earlier on January 17, the cabinet
had deferred its decision for the next
meeting awaiting the observations of the
Finance Ministry. It was then on January 24,
2007 the cabinet decided that oil hedging be
implemented without delay as suggested by
the Central Bank.
Anyway a few days later on February 8, 2007
a board paper was submitted to the CPC by
its Chairman seeking approval to take the
hedge position of 0.05% Sing Gas oil on Zero
Cost Collar method for a quantity of 450,000
barrels for a period of three or six months.
This was approved on February 9, with a
Central Bank Deputy Director K.D.Ranasinghe
in attendance as an observer on financial
On March 14, 2007 the Secretary to the
Petroleum Ministry writes to the CPC
Chairman stating that at a progress review
meeting held on February 23, 2007 it was
decided to submit a Cabinet Memorandum
informing the cabinet about the
implementation of the hedging proposal.
A draft Cabinet Memorandum was to be
therefore prepared by March 20 by CPC which
included several details including the name
of the bank selected as the hedge provider,
the hedge period, benefits so far accrued,
indicative prices etc.
This Draft Memorandum prepared by the CPC on
March 19, 2006 while giving several details
of prices, dates and periods as requested
stated that the CPC had hedged 900,000
barrels of Singapore Gas Oil 0.05% (300,000
Barrels per month) with effect from March 1,
Cabinet updated on progress
It also indicated that as at March 15, 2007
CPC was in a favorable possession of USD
These details were accordingly tabled in
cabinet by Minister Fowzie in March 2007.
This effectively meant therefore that the
cabinet of ministers was in fact being kept
abreast of the hedging agreements being
contracted with the banks including the
names of the banks and the terms on which
they were being signed.
It was really in February 2007 that hedging
began in earnest and had been going on for
18 months since. So pleased was the Central
Bank Governor with the progress of the
hedge, a concept Canadian based economist
Upul Anurajith claims was an idea the
Central Bank stole from him, that in its
Annual Report 2007 the CB states thus rather
proudly at page 58:
"The CPC has implemented several measures to
reduce the cost of its oil purchases. The
hedging of oil purchases against price
volatility was continued in 2007. CPC
entered into six hedging agreements during
the year and has gained Rs. 209 million as
risk mitigating income during the year.."
In fact another Cabinet Memorandum tabled by
Fowzie on November 17, 2008 was to suggest
to the cabinet of ministers that due to the
unexpected downturn in world oil prices
experienced in August 2008 the government
should consider whether the CPC should
continue with oil hedging in keeping with
the decision taken by the cabinet on January
24, 2007 based on the observations of the
In seeking approval the Minister also listed
out a terms of reference (TOR) for the
committee which included negotiating with
present hedge providers to restructure hedge
positions in order to minimise possible
It was nine days later that the two
Fundamental Rights applications regarding
the hedging contracts were filed in the
Supreme Court. The rest as they say is
history. However as far as we are concerned
this is not the last word or even the next
to last word on the subject. Watch this
space next week.
How ministers live at
Ranaweera Pathirana, Janaka Bandara
Tennekoon, Piyasena Gamage
and Dulles Alahapperuma
By Dilrukshi Handunnetti
The glare of publicity the ministers began
receiving due to the repeated oral questions
raised in parliament on the official
residences, house rents, who pays the
electricity and water bills and more
importantly the amounts paid for by the
state appear to be causing much ministerial
discontent at present.
In fact, Chief Government Whip, Dinesh
Gunawardena dubbed the persistently
questioning JVP Parliamentarian, Ranaweera
Pathirana as "commissioner of rented
premises" in parliament just last week.
According to Public Administration Circular
10/2007 issued on May 9, 2007 by Secretary,
Public Administration and Home Affairs, D.
Dissanayake to all Ministry Secretaries, all
Ministers of Cabinet, Non Cabinet and Deputy
ranks who are eligible for a Colombo
official residence but has not been provided
with such is paid a rent allowance of Rs.
100,000 as per cabinet decision taken on
April 4, 2007.
The said allowance was to cover not just the
rent but also the electricity and water
bills of the said household.
Given the global recession and increased
defence expenditure and the increase in the
prices of essentials, the cabinet on
November 5, 2008 decided to curb expenditure
to the maximum.
This decision was given expression to by the
Finance Ministry through Budget Circular 141
(My Ref: BDA965/1/508) dated November 11,
2008 wherein it was stated that four
measures would be taken to effectively curb
expenditure during a period of economic
What comes to light during oral question
time in parliament during the budget season
is anything but effective implementation of
the said Budget Circular or frugal living by
some of the ministers.
Either the homes that are provided to the
ministers are in such bad shape or, there is
a habitual need to effect improvements by
the occupants that the state appears to have
annually spent varying amounts on house
repairs on most of the official homes
provided to ministers.
Let's take the case of Minister of Local
Government and Provincial Councils, Janaka
Bandara Tennakoon, recorded in the Hansard
of October 22, 2008.
While no improvements have been made in
2005, Rs. 237,442.00 and Rs. 1,781,676.27
have been spent in 2006 and 2007 on house
Furniture too had been purchased for the
residence at state expense during the last
preceding three years. The amounts spent
were, Rs. 50,320.00, Rs.167,692.50 and Rs.
121,795.00 respectively. Tennakoon's monthly
electricity bills have ranged from Rs.
9,044.40 to Rs. 49,787.52.
As opposed to the above, Minister of Mass
Media and Information, Anura Priyadarshana
Yapa has managed to keep his repairs at more
For the same three years, the state had
spent Rs. 14,275.00, Rs.36, 997.50 and
Rs.173, 247.00 on repairs while in 2006,
furniture had been purchased for Minister
Yapa's official residence for Rs. 202,436.00
In 2006 and 2007, Minister Yapa's annual
electricity bills were Rs.195, 596.97 and Rs.
252,457.56 while the annual payments for
water supply had been Rs. 73,317.63 and Rs.
If Yapa appears to give the impression of a
frugal politician going by the usual
standards, the same does not apply to
Minister of Transport, Dulles Alahapperuma
who was provided with an official residence
from September 1, 2007.
The Ministry of Public administration has
incurred Rs. 1,395,416.63 for the repair of
the Alahapperuma official abode.
His electricity bills from September to
December 2007 were Rs. 36,862.08, Rs.
26,484.24, Rs.28, 292.64 and Rs. 13,212.96
respectively totaling to Rs.104, 851.92 for
just four months. No electricity bills were
cleared that year.
Minister of Water Supply and Drainage, A.L.M.
Athaullah too has had his official residence
renovated annually since 2005. The cost
incurred on these repairs were Rs.100,
000.00, Rs. 893, 632.00 and Rs. 485,392.50
Not only that, the state had spent Rs.
384,680.22 on purchasing furniture for his
residence in 2007.
Among those who incurred high cost repairs
to the official residences we find Minister
of Power and Energy, John Seneviratne. The
relevant expenses were divulged to the House
on November 25, 2008 in answer to oral
It was then revealed that his official
residence had been renovated twice, in 2006
and 2007 - the first repair being a costly
one. The repair in 2006 cost Rs.
1,938,475.00 and in 2007, it was Rs.
On furniture and other equipment for the
household, Rs. 5,200.00 had been spent in
2006 and another Rs. 80,868.00 in the year
Minister Seneviratne's total annual water
bills for 2006 and 2007 were Rs. 25,610.00
and Rs. 36,283.63 respectively. His
electricity bills for the same years were Rs.
295,357.82 and Rs. 429,769.62 respectively.
According to replies provided to
parliamentary oral query No 0228/08
contained in the Hansard of November 13,
2008, a repair of Rs. 326,458.56 had been
effected on the official residence of
Minister of Livestock Development, C.B.
Ratnayake in 2007. To provide furniture to
the Ratnayake residence, Rs. 23,725.65 was
spent in 2006 and Rs. 86,239.84 in 2007.
Ratnayake's electricity bills too have
ranged from Rs.50, 578.10 in January to Rs.
35,13.04 in 2007 while water bills have
ranged between Rs. 32,090.00 to Rs.
An interesting phenomena about Minister of
Foreign Employment Promotion and Welfare,
Keheliya Rambukwella's bill settlement is
not the amount, but the fact that the
Presidential Secretariat had settled bills
up to July 2007. This house was occupied by
former President D.B. Wijetunga until
requested to leave in order to house
Rambukwella in May 2007.
In 2007, Rs. 13,495.00 had been spent on
furniture for Rambukwella's official
residence though a telecommunication system
at a cost of Rs. 372,220.37 had been
installed the same year.
Then there are those who buy their bedding
also at state expense, such as Non Cabinet
Minister of Home Affairs, Chandrasiri
Gajadheera. With regard to his official
residence of CD 90, Gregory's Avenue, the
breakdown of expenses submitted to
parliament shows that among the purchased
items in 2006 totaling to Rs. 53,710.00
include curtains for Rs. 30,400.00,
mattresses for Rs. 17,600.00 and mattresses
again for Rs. 5,710.00.
According to the details submitted on water
an electricity consumption, a total of Rs.
158,586.35 had been spent on electricity
while Rs. 38,702.75 was spent on water
consumption from August 2006 to November
2007. The house has been repaired in 2007
for Rs. 346,848.51
Then there are the high cost Nation Building
Ministers, six in all. An interesting aspect
portfolio is that it appears to be given to
anyone who has no portfolio with specific
functions. As such the numbers have grown
and now there are six ministers holding the
same portfolio and according to figures
submitted to parliament, five of the said
portfolio holders share No 29, Galle Face
Terrace, Colombo 3 as their office premises.
The state spends Rs.1, 200,000.00 as monthly
rent and the monthly VAT payment is another
Rs. 180,000.00. The annual rent is a massive
Rs. 14,400,000.00 and the annual VAT payment
is Rs.2,160,000.00, by no means cheap.
While Minister Susantha Punchinilame, one
out of the said six, runs his office at is
official residence, the government does not
settle water and electricity bills of
Minister Rohitha Abeygunawardene.
Out of the six Nation Building Ministers,
Gunaratne Weerakoon and S.M. Chandrasena
also receive the Rs. 100,000 rent allowance.
Petroleum and Petroleum Resources Minister
A.H.M. Fowzie, now entangled in the hedging
controversy occupies an official residence
since 2005. This home had been repaired in
2007 to the value of Rs. 262,298.00
In 2006, the cost of furniture purchased was
Rs.224, 965.00 and in 2007, it was Rs.
Like most others, Fowzie's electricity and
water bills are a bit shocking. In 2006 and
2007, the annual total payment for
electricity was Rs. 470,168.38 and Rs.504,
554.43 whereas the water bills stood at
Rs.341,436.00 and Rs.148,498.01 for the
Again a house that had been repaired at
state expense is the one occupied by Cabinet
Minister of Justice and Law Reforms,
Amarasiri Dodangoda. The cost involved for
the 2007 repair was Rs.543, 168.75.
Among the household goods purchased in 2006
and 2007 are 20 CFL bulbs, a wheelbarrow,
Fresco designed sofa settee, a rubber hose,
a water filter and a boiler, and 12
porcelain cups and saucers at a total cost
of Rs. 66,672.50
It transpires that Minister of Vocational
and Technical Training Piyasena Gamage's
electricity bills have regularly been on the
high side and often in the range of Rs.
40,000 each month last year.
It appears that the expenditure incurred
with regard to Gamage's household are mostly
to do with security considerations, an
aspect Defence Spokesman Keheliya
Rambukwella has not spent on, despite the
perceived threat to his life.
Minister Gamage had spent Rs. 823,000.00 in
2005 for colour washing and repair of four
security posts and in 2007, another Rs.
382,386.50 was spent on raising the walls
with Amano sheets. The same year, Rs.
74,635.00 was spent on the repair and
maintenance of the air conditioner.
Interestingly, the ministerial household has
also spent Rs. 40,130.00 in the same three
years under review to purchase two 250 W 250
V sodium vapour lamps, a vacuum cleaner and
a Dialog Cable TV connection.
Non-cabinet Minister of Water Supply and
Drainage Mahinda Amaraweera's incurred
expenditure since this government came into
office was also laid bare last Monday in
In the year 2005, Amaraweera's official
residence had been repaired at a total cost
of Rs. 397,115.22 and each year, there had
been some household items/furniture added to
the home at state expense.
Strangely enough, details pertaining to
Minister of Social Services and Social
Welfare Douglas Devananda's household
expenses were not divulged to the House due
to purported security reasons. It is
unexplained as to why the details of his
water and electricity consumption patterns
and basic house repairs cannot be furnished,
as the question was not about the strength
of his security.
In 2005, the said cost was Rs. 114,087.00
and in 2006, it was Rs.55, 917.00 while in
2007 it was Rs. 401,427.00 according to the
information furnished to the legislature.
According to the information submitted to
parliament, there are 40 Cabinet, Non
Cabinet and Deputy Ministers who are granted
the Rs. 100,000 allowance for obtaining
houses on rent basis.
According to the Hansard of October 24,
2008, the facility of obtaining houses on a
rent basis was granted to ministers for the
first time on April 4, 2007. The total
amount of money spent from 01.06.2004 to
31.12.2007 for obtaining houses for the
ministers on rent basis was a staggering Rs.
24,646,410.98 (approximately Rs. 24.6
According to the MP who has been raising the
series of questions relating to house rents
and utility bills settlement by the state,
JVP MP Ranaweera Pathirana, a certain trend
had been observed with regard to spending as
well as replies given in the House.
Earlier, an authentic breakdown of
expenditure was given with regard to
purchased furniture or household items.
That's a trend that is waning, with only a
few ministers doing so now, he notes.
The MP argues that at a time when the armed
forces were making immense sacrifices, the
replies offered in parliament hardly shows
an occasion where ministers have sought to
lead by example.
"There is obviously no frugal living.
Where's the example set by the rulers? This
is why I am compelled to raise these
questions," adds Pathirana.
The MP adds that the questions are raised in
the public interest, as citizens are not
just expected to foot these bills but that
they also have the right to know.
"The ministers often conceal information.
Some don't like to answer. Often the mood is
to table instead of read out answers for
that could lead to interim questions and
adverse publicity," he notes.
Meanwhile, Minister of Industrial
Development, Kumar Welgama had responded to
the inclusion of his name in the list of 40
ministers drawing the house rent of Rs.
A member of parliament is offered a period
of one week to check the information that
appears in the Hansard and to correct the
same in the event of information being
If the Minister indeed does not draw the
rent allowance as he claims, then it is up
to parliament to take up the issue of being
provided with false information by the
The other side
There are other tragedies about the Colombo
houses provided to the ministers, as it
transpired in relation to Non Cabinet
Minister of Power, Mahindananda Aluthgamage.
The Minister does not dabble in luxury going
by his bills, but when an oral question was
raised about his official residence on
Thursday, he had a question to be raised in
"Who is going to ensure that these houses
are all right for people to live in?"
Replying a question raised by MP Ranaweera
Pathirana, Minister Aluthgamage bemoaned the
fact that his Wijerama residence went under
water during the recent heavy downpours and
added that "all of Colombo's shit" was found
within the premises of several ministers who
are given official quarters down the same
"Please get the Ministry of Public
Administration to not just to maintain these
houses but to first come for an inspection.
They are in poor shape and some are
inhabitable," said Aluthgamage, claiming
that instead of luxurious living, some of
them were compelled to suffer.
D.E.W. and Felix set the record straight
Ref: our lead story and the special report
on ministerial expenditure published in The
Sunday Leader issue of November 30, 2008,
two cabinet ministers have sent
clarifications with regard to the figures
contained in the original reports.
Minister of Constitutional Affairs and
National Integration, D.E.W. Gunasekera
making a ministerial statement in this
regard on Tuesday (2) stated that there was
a gross mistake in the cost of the installed
generator. He said the actual amount was Rs.
175,000.00 which was misreported by the
He tabled the Hansard of October 21, 2008
that contained the answer to the oral query
raised with regard to the expenditure
incurred on his official residence and the
electricity and water bills.
Further, he said that the generator was not
installed to enhance comforts but for
security purposes at the insistence of the
security staff. "I do not have my comforts
increased, in fact it is a discomfort when
it functions," he said.
Referring to the rent allowance drawn by
him, he said that too was erroneously
reported, and stated that he had no official
residence in Colombo and after being
provided one, he had not drawn a red cent.
He said he only drew Rs. 45,000 as rent
allowance prior to being provided with a
house and for that period of three and a
half years, had drawn only Rs. 925,000.
"Had I drawn the stipulated amount,
hypothetically speaking, still I would have
drawn only Rs. 4. 3 million and not the
amount reported," he told parliament.
Minister Gunasekera said he wished to raise
the matter in parliament as the report was
purportedly based on parliamentary records.
Meanwhile, Minister of Fisheries and Aquatic
Resources Felix Perera too has sent us a
written clarification with regard to the
maintenance expenses of his official
"Maintenance expenses for the year 2006 and
2007, which are Rs. 161,837.19 and Rs.
242,107.93 respectively has been multiplied
by 10 (ten) to show them as Rs.1.6 million
and Rs. 2.4 million by the writer. The total
electricity expense for the year 2007, which
was Rs.139, 119.80 too has been distorted in
the same manner to show as Rs. 1.39
million," his letter seeking a clarification
We deeply regret the bona fide mistakes
committed when reporting on the expenses
incurred by the two ministers. The mistakes
were committed due to the commas after each
set of numbers when converting the figures
into millions, which is deeply regretted,
and an unqualified apology is herein
extended to both the ministers.
Further, the total amount spent on the rent
allowance of ministers appeared
inadvertently as an amount paid to Minister
Gunasekera, which is genuinely regretted.
The mistakes were genuine and were not
intentional or mischievous or calculated to
bring anyone to disrepute. The reports were
in no way 'an organised attempt to discredit
the government' as claimed by the Leader of
the House, Nimal Siripala de Silva.
Whilst extending an unqualified apology to
both the ministers, it remains a matter of
surprise that no efforts were made to
correct another national newspaper with
regard to similar mistakes regarding the
same ministers' incurred expenses though
some quarters of the government moved
swiftly to attribute motive to this
newspaper for a bona fide mistake.