by Manjula Fernando and Anurangi Singh
On February 22 this year, a foreign national walked in to the Investigation Office of the Bribery Commission, to make a formal complaint. It was not the type of complaint the Bribery officials confront on any regular day.
Speaking with a strong Indian accent, the businessman dropped a bombshell on the Chief Investigation Officer of the Commission to Investigate Allegations of Bribery and Corruption, ASP Ruwan Kumara. The complainant mentioned two high profile names, one of them from the highest Government office in the country.
The Indian businessman told the Commission officials that he had been wooed and harassed by the two officials to pay a stupendous bribe to get a long delayed investment project off the ground.
At first, Bribery Commission sleuths were cautious to act on the Indian businessman’s complaint. The Commission needed solid proof of an attempt to solicit a bribe before they could tail a suspect or put high profile officials under surveillance. One wrong step and things could have gone wrong – badly.
In his complaint to the Bribery Commission the businessman said his company had been awarded a contract to revive the Kantale Sugar Factory in 2015 that had been closed for 25 years. The Cabinet of Ministers granted the approval which was carried out under the auspices of the Board of Investment in Sri Lanka (BOI).
The businessman, who the Bribery Commission still will not name, said he suspected that the officials in question were blocking its implementation, dead set on grabbing a chunk of the investment money by sapping the businessman.
According to widely publicised news reports, the BOI struck a mega $110 million deal in 2015 to revive and restructure the defunct Kantale Sugar Factory – a white elephant which had reduced to a junk yard of scrap metal at the time – with M.G.Sugars Lanka Pvt Ltd. The deal was signed when former Bar Association President Upul Jayasuriya was BOI Chairman.
The foreign Investor, SLI Development Ltd, Singapore was to bear the total cost of the USD 110 Investment. Sri Lanka was allowed to hold 51% share of the stake while 49% would be held by the foreign investor. The project agreement was to run over a period of 30 years on Build, Operate and Transfer (BOT) basis. The technical partner for the project was Shri Prabulingeshwar Sugars and Chemicals Ltd., Bangalore, reportedly, an experienced group of companies engaged in sugarcane cultivation, sugar manufacturing, the co-generation of power plants and dairy industry.
The agreement was perfectly “healthy” BOI officials told the Sunday Observer speaking anonymously, though the Lands Ministry Secretary began to refuse to release the machinery to the new investors. Three years later, the same official was caught red handed soliciting a bribe from the same investor.
The Attorney General’s Department had even given an opinion that the agreement signed with BOI should be given effect. However, since no action was taken based on the agreement, the investors moved for international arbitration in Singapore, a senior BOI official said. During the February Local Government elections, the investors had also complained to the Prime Minister’s Office. Officials from his Office are believed to have also tipped off the Bribery Commission about the case around the same time the complainant stepped into the Commission offices.
Once the details became clearer, Commission officials felt emboldened. Investigators decided to initiate surveillance nearly one month after the complaint was made. Subsequent discussions between the businessman and top state officials now under surveillance for suspected corruption were “wire-tapped”.
It turned out that the conversations being overheard by the Bribery Commission officials were between President Maithripala Sirisena’s Chief of Staff Dr. I.H.K Mahanama and Timber Corporation Chairman P. Dissanayake and the Indian complainant. The sleuths picked up every detail in order to begin weaving a net to catch the two corrupt officials.
Mahanama impedes from the start
According to what has transpired in the investigation, the President’s Chief of Staff, Dr. Mahanama who was previously Lands Ministry Secretary, had demanded a bribe of Rs.540 million to ‘clear the path’ for the businessman’s company to implement the project. It was revealed that the BOI gave approval for the foreign investor to revive the company along with the rights to discard the dilapidated machinery. Somehow, in the subsequent Cabinet Paper approved by the Cabinet of Ministers, the ‘rights to discard the old machinery’ had been omitted for an unknown reason.
Citing the Cabinet Paper Mahanama objected to the company having the rights to sell the machinery for scrap metal. Later, he had allegedly solicited a bribe, to ‘clear the path’ for the Indian businessman. Refusing to pay the bribe, the investor had pointed out that the monies sought by the Secretary were unreasonable. The real value of the old machinery in the defunct factory which was closed for over 24 years due to poor output was estimated to be around Rs.500 million. Due to this ongoing tug of war the project has remained at a standstill since 2015.
When Dr. Mahanama ultimately retired as the Lands Ministry Secretary, two months ago he found a job at the Presidential Secretariat as the Chief of Staff, a far more powerful position within the Government. For some elusive reason the project could not be revived yet. It was at a time like this the Timber Corporation Chairman Dissanayake had stepped in to end the stalemate. He approached the Indian businessman and said he could strike a deal with Mahanama to help him to implement the Kantale project. Dissanayake confided that Mahanama who had been at the Land Ministry over a long period, could influence the present Land Secretary to grant the businessman’s ‘wishes’, and release the unusable machinery.
The Sunday Observer learns that investigators had not yet unearthed evidence to prove that the current Secretary of the Land Ministry was in any way aware of this deal.
The initial Rs.540 bribe was reduced to Rs.100 million after several rounds of negotiations between the trio. Unknown to the suspects, by this time, Bribery Commission sleuths were eavesdropping on every one of their conversations.
Finally, D-day approached. After changing the venue of the transaction several times by the officials who were very cautious not to get exposed, they settled for the seaside Hotel Taj Samudra. The Indian businessman was briefed extensively and as previously discussed he arrived at the Hotel around 4 pm on Thursday (4). The three men met at the lobby and helped themselves to refreshments which had been on the businessman.
Money in the car
When the subject of money was raised, the businessman indicated that the bag with the money was in his car. Later, the three men walked up to the Hotel car park, all the while watched by seven Bribery Commission sleuths.
The money had been placed on the backseat of the Indian businessman’s car in four bundles of Rs 5,000 notes. The money had been held by the Commission officials for safe-keeping before being placed in the businessman’s car.
Dr. Mahanama voluntarily got into the back seat of the car along with a bag of his own into which he was hoping to transfer the money. The officials planned to take an initial payment of Rs 20 million that Thursday evening as an advance. The balance – Rs 80 million – was to be paid once the mission had been accomplished and the company got its clearances to go ahead.
At the Taj Samudra car park, the businessman and Timber Corporation Chairman Dissanayake stood watching, along with investigators who were still in hiding, as Dr Mahanama touched each of the four bundles to ensure the money was real. Patiently, the sleuths watched while Dr Mahanama slipped three bundles of cash into his bag. As he was about to place the fourth and last bundle in his bag, they surrounded the car. Both Mahanama and Dissanayake were arrested and produced before courts, and remanded until May 9. While they were still being questioned by Bribery Commission investigators, orders came from President Sirisena’s office that both officials had been interdicted with immediate effect.
President had no clue
Chief Investigator ASP Kumara told the Sunday Observer that the Commission would be seeking their detention until the probe was complete. His team was armed with audio recordings and video tapes to support their case, ASP Kumara said, but declined to give further information because the investigations were still continuing and there could be more arrests in the offing.
“When we understood the gravity of this case, we did not worry about their status. Fortunately, we did not confront any resistance or influence from anyone in the course of discharging our duty in this instance,” CIABOC Commissioner Chandranath Neville Guruge said.
Secretary to President Sirisena Austin Fernando confirmed this was true, saying the President had no clue that the arrest of these two officials was impending.
Fernando said, the former Chief of Staff Dr Mahanama had been appointed to the position only about six weeks ago. Asked if background checks are usually conducted when staff is hired for the Presidential Secretariat, Secretary Fernando said that was not usually the case.
“In fairness to the President who appointed him, what happened was he retired from the post of a secretary. He has been a secretary for a few years. Sometimes, we do a background check. But here he stepped from one job to another. Usually, we do not expect a person of his calibre to do something like this,” Fernando explained.
In any case, even if Dr. Mahanama was under investigation prior to his appointment, the Bribery Commission could not have flagged it, since its investigations are top secret, he said. Even though it had been reported that the President had been notified prior to the arrest, Fernando said he had no knowledge at all of such a communication. “Informing the President prior to the arrest would have undermined the independence of the Commission – this would not have been done,” he said.
Fernando said immediately after the arrest, President Sirisena had issued marching orders to both officials.
“The incident proves that independent commissions are in fact functioning independently. Normally, sprats are caught and never big fish. But here you have two top officials being netted,” he said. Fernando said, laws needed to be updated in order to empower these institutions further and make the legal system more effective. “These laws have not been updated in decades,” he added saying that the Commission to Investigate Allegations of Bribery and Corruption Act would also be updated.
Speaking to the Sunday Observer, START Chairman and anti-corruption activist and lawyer J.C. Weliamuna PC said, what was remarkable about this sting operation by the Bribery Commission was that administratively, the Commission comes under the Presidential Secretariat itself. “All the budget allocations for the Commission come through the Secretariat. So the fact that they have managed to keep this top secret until the arrest, is remarkable,” Weliamuna said.
Weliamuna added that it was to President Sirisena’s credit that he had secured a system in which even top officials in his own Office could be investigated and arrested.
Lawyers for Democracy (LfD) also hailed the Commission’s independence and pushed for more support for investigating officers. “We have no hesitation recognizing that in this instance, the head of State has practised good governance, by refusing to interfere in the raid or the investigative process,” the LfD said in a statement.