23 October, 2019

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Questionable FDIs, Money Laundering & EU ‘Blacklist’

By Amrit Muttukumaru

Amrit Muttukumaru

Hard on the heels of the top headline news item Smooth start for FDI: Govt.’ in Sri Lanka’s only stand-alone business journal ‘Daily FT’ on March 20 giving pride of place to a purported “$ 3.85 billion investment for an oil refinery in Hambantota” where the Sultanate of Oman is to have a 30% stake comes the DENIAL from Salim al-Aufi, Under-Secretary in Oman’s Ministry of Oil and Gas by stating “It came as news to me, I don’t know who is signing the cheque for $ 3.8 billion.” Intriguingly the Oman denial next day in the ‘Daily FT’ did not receive the prominence anywhere comparable with the controversial investment story! What does this convey about our businessmen controlled media? 

The remaining 70% stake is reportedly held by Silver Park International Pvt Ltd the “Singapore investment vehicle owned by India’s Accord Group”. The question arises whether the ‘Accord Group’ which does not even have a significant web presence has the resources to have a 70% stake in a ‘$ 3.8 billion’ oil refinery? ‘Accord Group (India) Pvt Ltd’ which does have a web presence claims to be an “executive search firm”.

Despite Reuters reporting that ‘Silver Park’ was “registered in Singapore” as recently as June 2017, ‘Silver Park’ claims it is “an international oil and gas refinery company spread in all over the world”. This is contradicted by Reuters stating “The refinery will be Chennai-based Accord’s first foray into oil refining”Will the BOI shed clarity on this discrepancy? 

It is alleged that three of Silver Park International’s four directors are family members of controversial Tamil Nadu senior politician S. Jagathrakshakan.

A Google search indicates that the address of Silver Park International Pte. Ltd: 18 Roberts Lane, #03-01, Goodland Building, Singapore 218297 is the address of Sigma Corporate Solutions Pte Ltd. and that Sigma offers ‘virtual’ office and other such facilities from this location.  A further Google search indicates there are many companies that use the same address as ‘Sigma’ for correspondence purposes.

The BOI has now shifted the goalposts from Oman’s Oil & Gas Ministry to Oman Trading International also said to be owned by the Sultanate of Oman.

The Board of investment (BOI) falling under the Ministry of Development Strategies and International Trade went gung-ho at a news conference on this purported “$ 3.85 billion” FDI. The Cabinet Minister responsible for the BOI is former UNP Chairman, Malik Samarawickrama a close associate of PM Ranil Wickremesinghe.

Volkswagen & Tyre FDIs

One wonders whether this is a replay of the much hyped 2017 Volkswagen vehicle assembly plant in Kuliyapitiya which turned out to be a hoax. Those who hyped the Volkswagen assembly plant are largely the same persons now hyping the purported oil refinery in Hambantota. There was even a ground breaking ceremony for the Volkswagen plant.

Even the earlier 2016 $75 million tyre manufacturing plant in Horana is mired in controversy due to its promoter’s alleged involvement in controversial business dealings under the Rajapaksa administration. This case brings into focus the cosy relationship between competing politicians and the raison d’être why competing administrations are reluctant to hold wrongdoers accountable.

 Although the tyre manufacturing plant is held out by BOI to be a joint venture between the Sri Lankan Dubai based promoter Nandana Lokuwithana and world renowned Italian tyre manufacturer Marangoni S.p.A., this appears to be not factual. The Marangoni website does not include Sri Lanka in its global network. 

Will BOI clarify the allegation in the ‘Economy Next’ website that the sole Marangoni connection is “to sell old equipment in a closed plant to Ceylon Steel Corporation”. The Chairman and owner of Ceylon Steel Corporation is Nandana Lokuwithana who is the promoter of the tyre manufacturing plant in Horana.

‘Earned’ EU ‘Blacklist’?

The above mentioned shenanigans in relation to questionable FDIs must be viewed in the more than year old European Union (EU) ‘BLACKLIST’ placed on Sri Lanka for money laundering subsequent to the ‘Financial Action Task Force’ (FATF) placing the country on its ‘GREY LIST’ from November 2017. The FATF recommendations are “recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.” 

Readers can judge whether or not Sri Lanka has EARNED the ‘Blacklist’ from the following examples:

1) Notwithstanding the FATF in October 2016 giving NOTICE that the country will be assessed on the effectiveness of measures put in place to combat money laundering, Sri Lanka on 20 November 2017  in CALLOUS DISREGARD of this FATF determination made its contentious Foreign Exchange Act, No. 12 of 2017 further liberalizing capital inflows EFFECTIVE. On this date the Exchange Control Act, No. 24 of 1953 was repealed.

2) It has been plausibly argued that the new Act (i) does not have appropriate penal sanctions to discourage money laundering (ii) does not strictly demand declaring the ‘source’ of the monies brought into the country (iii) dilutes oversight by Parliament and unduly empowers the minister responsible for the ‘Central Bank’.

3) It beggars belief that CBSL has the AUDACITY to cite this DANGEROUS ACT to justify its INACTION on Sri Lankans named in the ‘Panama Papers’: 

“The time period prescribed by the Foreign Exchange Act No. 12 of 2017 to conclude investigations under ECA expired on 19.05.2018 as stipulated in the Foreign Exchange Act No 12 of 2017. These investigations also lapsed on that date.”

4) A name included in the ‘Panama Papers’ is an erstwhile colleague of  CBSL Governor, Indrajit Coomaraswamy on the Director Board of JKH, arguably the country’s most diversified conglomerate with top tier market capitalization.

5) On the subject of PEPs (Politically Exposed Persons)  where else in the world would (i) a Senior Deputy Governor of the Central Bank soon after retirement be appointed a Director of a leading bank?(ii) a Chief Justice of the Supreme Court soon after retirement be appointed  a Director of a leading bank? (iii) a highly connected PEP previously Chairman of a leading bank be currently Chairman of a COMPETITOR bank?

6) In the context of the CBSL being the issuing agency for Treasury Bonds, a key recommendation of the report of the Presidential Commission of Inquiry into the egregious Treasury Bond scam was the FORENSIC AUDIT to be carried out by the CBSL.  The report was available in the public domain from 3 January 2018. It is now 15 months since then and let alone carrying out the forensic audit, the CBSL does not appear to have even selected the audit firm to carry out this task.

7) IMPUNITY is so endemic in Sri Lanka that even crucial issues incidental to the bond scam related to possible money laundering thrown up by witnesses at the Presidential Commission  which include possible tax evasion and PEPs (Politically Exposed Persons) being directors of banks do not appear to be even on the CBSL radar.

8) We await to see whether the CBSL in its forensic audit will even CONSIDER addressing the alleged (i) “millions” encashed “several times” being left on “PTL CEO Kasun Palisena’s chair” (ii) “cash amounting to Rs.145 million” being “dumped” without being “supported by any documentation” in the “Chairman’s safe”

9) Just a few weeks back the Director General of Customs Department, Ms. P.S.M. Charles was removed from office under controversial circumstances connected with the alleged “probes on 143 suspicious containers” allegedly linked to some influential officials in the Ministry of Finance under which falls the Customs Department. Due to the agitation of Customs ‘unions’ Ms. Charles was reinstated as Director General. 

EAP Group Sale

The CBSL has failed to disclose whether its claimed ‘DUE DILIGENCE’ in regard to the sale of EAP Group companies has considered the DAMNING allegations in the news report in ‘The Sunday Times’ of 3 June 2018 “Purchase of Edirisinghe Group: Investors in a labyrinth of multiple companies”? 

In particular CBSL has AVOIDED confirming whether there is any truth to the terrible allegation:

“But punitive action is being blocked by the Ministry of Finance which has taken from the Customs Department a file containing evidence against the suspects”

If the CBSL considers the report spurious, why has ‘The Sunday Times’ not been taken to task?

Mano Tittawella until recently Chairman, EAP Group is currently Senior Adviser to the Minister of Finance under which falls the CBSL.

Hub for Illicit Drugs?

Frequent detections of large hauls of heroin, cocaine and other illicit drugs which most likely are the tip of the iceberg would suggest that Sri Lanka has become a regional hub for the trade in illicit drugs in the Asian region. Such an occurrence is only possible under ENABLING conditions which include lax laws which facilitate money laundering/smuggling and the nexus between sections of the political leadership and bureaucracy with key players in the trade in illicit drugs. Does not the Reuters report “Sri Lanka is becoming a hub for cocaine as it is a risk-free location with less legal restrictions” CONFIRM this position?

The link between money laundering, illicit drugs and funding of terrorism does not require elaboration.  

Conclusion

In the context of little respect for the rule of law and regulatory agencies such as CBSL for the most part being indifferent, is there no danger that the proposed ‘Colombo International Financial City’ with high end CASINOS also reportedly being part of the mix, may enhance Sri Lanka’s image as a premier hub for money laundering in the Asian region? 

Discerning visitors to Sri Lanka have commented on the MISMATCH on the one hand of a country with a weak economy and infrastructure bending over backwards even for questionable FDIs and financial assistance and on the other the swanky high-rise apartments, fancy restaurants and luxury department stores dotting the city of Colombo with high-end vehicles which would do even a first world country in Europe proud.

This article is written in the best interest of Sri Lanka in the expectation that at least ‘outside’ pressure will compel Sri Lanka’s political leaders, public officials and MEDIA to meaningfully address the growing SCOURGE of money laundering, illicit drugs and corruption particularly in high places which appears to position Sri Lanka as a REGIONAL HUB for these evils. What is particularly disconcerting is the IMPUNITY. 

For how long more will Sri Lanka continue to be bailed out by multilateral lending agencies and geo-political interests of China, India and US and still have even a façade of sovereignty? 

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Latest comments

  • 4
    0

    “For how long more will Sri Lanka continue to be bailed out by multilateral lending agencies and geo-political interests of China, India and US and still have even a façade of sovereignty? “
    Yes, good question indeed. When our people stop voting for demagogues who promise heaven on earth. When the people learn that everything has a price, and they are willing to pay it .
    When the people stop believing that prices will go down instead of up. When the people vote for someone who promises only hard work for a better tomorrow.
    I doubt this will happen soon. The best solution would be to give up this fake sovereignty and join anybody willing to take us.

  • 1
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    Mr. Muthukumaru: Some well known information source said, that CBK, Mahinda Rajapakse also had tried to begin such investment. But, some unknown source disallowed even when the same Indian Investor was to be involved. Another question is Oman Oil minister came but the minister denied any such involvement as an investor. They may be providing Oil. The information source says that money went outside (I am suspicious even the Drug money taken away comes back) as Bond Scam profits are coming back. further to that some politicians who attended the Foundation Stone laying ceremony was questioning whether the project come to life and whether they also can invest in it. With respect to the Cement manufacture factory. I am thinking why MR planning any factories. “I heard he allowed even the R PEMADASA established apparel manufacturing outlet to disappear.
    Some time ago, the former BASL chairman, BOC chief, one who wanted to sing for ‘Maithripala sirisena wanted to Bring $ TWO billion Mutual fund money to invest in Sri lanka. That did not happen. So, they last year bought Treasury bills and bonds. Sri lanka pays high interests to american buyers (7.5-8.5%)when Japanese buyers can buy it cheaper. American High interest rates are jacked up and they down grade Sri lanka just for their benefit when the 52 days FRAUD Drama come to life.
    Mangala Samaraweera is involved in this Oil refinery which will be another fiasco, Gamperaliaya which MCC money, given as IMF loan, for election the country will pay back
    I heard that Mono-rail or Light rail or Elevated High speed rail loan from Japan is now connected to the IMF. why is that ?.

  • 3
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    Remember the collapse of the Bernard Madoff ‘Pyramid aka Ponzi’ collapse in US?
    On 10 December Bernard told his sons that his investments were “all one big lie”. The following day he was arrested and charged with a single count of securities fraud. As of December 2008 the losses were estimated to be $65 billion, easily making it the largest fraud in history. Madoff was sentenced to 150 years in prison on June 29, 2009.
    .
    Has Amrit Muttukumaru unravelled, in Mannar Basin, a Pyramid Scheme in “Questionable FDIs, Money Laundering & EU ‘Blacklist’?”.
    We, layLankans, must not forget that fraud has no political boundaries.

  • 1
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    There is an article some where else about how EPF funds and the incumbent govts bankrupted those with the help of chairmen appointed by both the previous and the present govt. It is simply a first class traitor ship of Srilanka. Those leaders should be treated like the way Mussolini or Nicolai Ceausessku of Romania. It is that Cruel way of pilfering poor peoples Pension.

  • 0
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    This is what you call Yahapalanaya playing Pandu at the expense of Sri Lanka and her Economics.
    The value of the SL Currency and the status of the SL Central Bank was lost the day “Rulers became Rulers”.

  • 0
    0

    Well done Sir for continuing to expose these frauds

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