The Government of President Nandasena Gotabaya Rajapaksa looks set to sell hundred acres of prime land to Chinese companies in the Colombo Fort and Slave Island areas, as Beijing continues to seize strategic control of Sri Lanka’s capital city, its major highways, and ports, Colombo Telegraph learns.

China Harbour Engineering Corporation (CHEC) is the company that built and now has virtually complete management, administration and jurisdiction of the Colombo Port City, the reclaimed landmass that was annexed to Sri Lanka’s territory.

Gotabaya

This week in a brazen move, the Nandasena Government which is already under fire for rushing through the Port City Bill in the middle of a major coronavirus outbreak, handed over an elevated highway project to CHEC. The Cabinet of Ministers decided to award the contract to build the 17 km Kelaniya-Athurugiriya elevated highway to the Chinese state-owned CHEC sans a competitive bidding process. By winning the bid worth USD 1 billion, CHEC will become the first foreign company to own a major highway in Sri Lanka on which it will operate a toll.

CHEC will operate the New Kelaniya Bridge highway for 15 years, during which it will earn revenue. In 18 years, the Highway will be transferred back to Government of Sri Lanka ownership, Cabinet Spokesman Udaya Gammanpila said. The Cabinet made the decision to hand the project over to CHEC on the basis that the company would take the least amount of time to complete the project and the shortest period by which it will recover the cost, Gammanpila said, without elaborating on a transparent bidding process.

The Company was exposed by a 2018 New York Times investigation for “donating” over Rs 800 million to Mahinda Rajapaksa’s presidential re-election campaign in 2014/2015 through its Standard Chartered Bank account in Colombo. The payments were made from a subaccount controlled by CHEC named the HPDP Phase 2, shorthand for “Hambantota Port Development Project”, the New York Times revealed in its report. In 2011, the World Bank officially blacklisted China Communications Construction Company and all its subsidiaries after an investigation into fraudulent practices in a Phillipines Highway project. CCCC is CHEC’s parent company.

CHEC has reaped massive returns after the Rajapaksa family was returned to power in November 2019 but the procurement of thousands of acres of land in Colombo City would be essentially a seizure of Sri Lanka’s most strategic landmass by China. Beijing is vying for geo-political influence with other foreign powers including the US, Japan and India and Sri Lanka has become an important linchpin in this process.

But the Gotabaya Rajapaksa Administration has much bigger plans for CHEC, a company that has a reputation for oiling the palms of corrupt politicians world over.

Over the next two years, the Government plans to sell hundreds of acres of prime state-owned land in Colombo Fort and its adjacent Slave Island area, including property currently being used by the Sri Lanka Air Force and Sri Lanka Army. Colombo Telegraph learns that the bulk of these properties have been reserved for China Harbour Engineering Corporation, through an intermediary local firm created specifically for the purpose of easing the path for transfer to the Beijing-owned entity and other affiliated investors.

Many of these properties were already listed for diversification by the Yahapalanaya Government and other administrations who hoped to transform Colombo City into a commercial and financial capital and move the state administrative headquarters inland. However, that diversification was to be streamlined under a competitive bidding process for interested investors.

Selendiva Investments Limited in which the Treasury holds 100 percent of shares was established last year.

According to a Cabinet Paper submitted on May 17 by Prime Minister Mahinda Rajapaksa, in his capacity as Urban Development Minister Selendiva Investments has been tasked with transforming several underperforming state-owned assets into “viable, profitable and marketable” assets. Selendiva Investments is empowered to enter into long-term lease agreements with commercial entities about any land owned by the UDA. With private investors in these UDA properties and holdings, Selendiva will “smooth the way” for easy approvals from the state sector.

Based on the proposal now before Cabinet Selendiva Investments will set up Special Purpose Vehicles for specific investments.

According to the Cabinet Paper, the UDA is seeking approval to move ahead with three investment portfolios – namely: The Colombo Fort Heritage Square, The Immovable Property Development and The Government-owned Hospitality Sector under Selendiva Investments.

The proposal seeks to open multiple state-owned properties and UDA holdings for investment.

Ear-marked for “investment” under these portfolios are the Grand Oriental Hotel (GOH), the Gafoor Building, York Building, Republic Building (Ministry of Foreign Affairs), the General Post Office building (Slave Island), Hilton Hotel, Water’s Edge Hotel, Cey Nor Restaurant (Slave Island), International Coordination Centre, Kankesanthurai (Jaffna), and Grand Hyatt Colombo.

Colombo Telegraph learns that the second phase of this Rajapaksa leasing/selling spree will include the Sri Lanka Air Force HQ, SLAF Grounds, other military holdings including the FCID headquarters on Chatham Street where CHEC already has its plush offices in Colombo.

The moves are especially ironic for the Government that swept to power on the basis that the previous Sirisena-Wickremesinghe administration was selling national assets.

Colombo Telegraph learns that the Chinese Government hopes the transactions will be complete by 2022. Chinese firms are often preferred investment partners for the ruling Rajapaksa family because of the potential for massive kickbacks.

Spearheading the work for this major acquisition by the Beijing owned company is Urban Development Authority Secretary Siri Nimal Perera.

Perera was reportedly instrumental in securing the former Army Headquarters in Galle Face for sale to the Hong-Kong based Shangri-La corporation without a tender process on a free hold basis. Perera held office as Chairman of UDA when President Mahinda Rajapaksa was in power.

When the Rajapakasa were last in power, China built a port, an airport, a cricket stadium and a series of other white elephant constructions in the Hambantota region.

Eight years later, with the Government having changed and struggling to pay back massive foreign loans due to Beijing, China wrested control and operation of the Hambantota Port, the most strategically important of the Rajapaksa vanity projects it had bank-rolled when Mahinda Rajapaksa was president of Sri Lanka. Of Sri Lanka’s deep-water ports, Hambantota lies closes to the busiest international east-west shipping lane.

The Rajapaksas are engaged in a sustained effort to make their political survival in Sri Lanka, Beijing’s official business, a foreign policy analyst told Colombo Telegraph.

Unseating the Rajapaksas will be a herculean task, with any Government that hopes to succeed this one likely to be compelled to pledge fealty to Sri Lanka’s overlords in Beijing, the analyst noted.

“By the time Gotabaya Rajapaksa concludes the first term of his presidency, China will have wrested control of several ports in the island and strategic inland property. It will own the bulk of Sri Lanka’s debt, as Colombo repeatedly leans on President Xi Jingping for bailouts amidst a serious debt crisis. Any Government that follows this regime will be saddled with this economic and strategic subjugation – there will almost be no way out,” the analyst, who did not wish to be named, told Colombo Telegraph.

Colombo was already behaving like a vassal state, with the President himself or five-man ministerial delegations going to the airport to accept delivery of the Sinopharm vaccines being donated by Beijing, the analyst pointed out. “There is no question that with every move it makes, the Rajapaksa administration making it known that it is a willing client of the Chinese Government and a supporter of Beijing’s expansion in the Indian Ocean,” the analyst told Colombo Telegraph.

As it expands its strategic advantage in Sri Lanka, Beijing has been careful to invest in all influential sections of society in the island – Buddhist temples and their chief incumbents, senior journalists and media houses, powerful trade unions in the port and medical sectors and local politicians, Colombo Telegraph learns authoritatively. Beijing also has assets situated in senior levels of the ruling Gotabaya Rajapaksa administration that are constantly looking out for China’s interests in all matters, it is learnt. Beijing’s cyber-intrusion into Sri Lanka’s social media landscape has also been noteworthy, and seen an escalation in recent months it is learnt.

It was the determination to create a monopoly on the island’s ports that led to Beijing’s mobilisation of monks and trade unions and other stakeholders to staunchly oppose the lease of the East Container Terminal in the Colombo Port to an India-Japan led joint venture, the analyst explained.

“The west terminal of the Colombo Port is very different – there is nothing there yet in terms of infrastructure, and the way the deal was manoeuvred to be handed over to the Adhani Group of India, it doesn’t look like the Indian Government will have a major role to play in the transaction,” the analyst noted. In the coming years, Sri Lanka’s national electoral battles will also become a form of proxy war between Beijing Vs. The Quad. We saw some measure of that in the 2015 presidential election when the Chinese Ambassador in Colombo himself became a canvasser of votes for the sitting President. We should expect to see this on a much bigger scale in the future,” the analyst added. (By Nimal Ratnaweera)