{"id":167555,"date":"2016-09-13T01:29:05","date_gmt":"2016-09-12T19:59:05","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=167555"},"modified":"2016-09-18T11:32:38","modified_gmt":"2016-09-18T06:02:38","slug":"colombo-international-financial-city-a-money-laundering-hub","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/colombo-international-financial-city-a-money-laundering-hub\/","title":{"rendered":"Colombo International Financial City; A Money Laundering Hub?"},"content":{"rendered":"

By\u00a0Amrit Muttukumaru<\/span><\/a> –<\/strong><\/p>\n

\"Amrit<\/a>

Amrit Muttukumaru<\/p><\/div>\n

The controversial Chinese funded \u2018Colombo Port City<\/span><\/a>\u2019 project has been re-christened also without public consultation as \u2018Colombo International Financial City<\/span><\/a>\u2019 to establish an offshore financial centre as the centerpiece of the re-claimed land adjoining the Galle Face Green. It is said to \u201cfill the vacuum between Singapore and Dubai<\/em>\u201d and touted as a \u201cmajor income earner and an employment provider for Sri Lanka<\/em>\u201d.<\/p>\n

This is all well and good if the country like Singapore has a pool of competent legislators and civil servants with integrity and a track record of adherence to the rule of law. Sadly there is no comparison. Of course Sri Lanka scores on democratic values which are dwindling.<\/p>\n

The lack of transparency in responding to public concerns on environmental, land alienation, land use and employment issues is not the focus of this article. Its focus is on the integrity of the \u2018Colombo International Financial City\u2019 which is dependent on the political will to have and comply with internationally accepted accounting\/financial standards and regulations. If there is any breakdown or compromise as is the wont in this country, the \u2018Financial City\u2019 may end up as a hub for money laundering by drug dealers, arms dealers, the mafia, politically induced corruption and as a source of terror funding.<\/p>\n

Political Will<\/strong><\/p>\n

Examples galore under successive administrations of there being no political will for transparency in governance and upholding the rule of law particularly since then President J.R. Jayewardene in the post 1977 period is said to have issued the invitation \u2013 “Let the robber barons come<\/em>“!<\/p>\n

In the area of financial services under the present Yahapalanaya government there is no better example than the alleged Central Bank Treasury Bond scams which are still festering and the failure of the new Governor to restore the battered credibility of the CB through a transparent in-house investigation to determine whether due process was breached and by whom. Other examples under Yahapalanaya include (i) credible allegation of the shameful attempt by a Cabinet sub-committee to make the \u2018National Audit Bill\u2019 ineffective by the removal of some key provisions (ii) farcical \u2018Constitutional Council\u2019 for good governance where 7 of its 10 members are politicians. The purported \u2018independent\u2019 commissions are established under it and the CC recommends appointments to key State institutions which include the judiciary.<\/p>\n

There is also no political will to get to the root of credible allegations of financial and other crimes under the Rajapaksa administration and hold those concerned truly accountable. This is most likely a continuation of \u201cYou scratch my back and I’ll scratch yours\u201d syndrome which is a feature in this country not necessarily confined to politicians. Any deviation from this practice will most likely be for political or pecuniary expediency.<\/p>\n

Under the circumstances, is it reasonable to expect the \u2018Financial City\u2019 to be administered with integrity?<\/p>\n

Heroin Detections, Casinos, Floating Armoury<\/strong><\/p>\n

If frequent detections of large quantities of illegally-trafficked drugs such as heroin on the high seas is the \u00a0tip of the iceberg, Sri Lanka may well be on the way to becoming a regional hub for illicit drugs. There are allegations of a nexus between drug dealers and politicians. Stories doing the rounds of widespread corruption in the customs establishment in the context of the alleged extravagant lifestyles of many customs officers does nothing to allay the fears one may have in the integrity of the proposed \u2018Financial City\u2019.<\/p>\n

Although not much is heard today of the proposed setting up of large casinos initiated during the Rajapaksa administration, the public are all at sea on the actual position under the current Yahapalanaya government. The rate at which the Sirisena-Wickremesinghe administration are resurrecting Rajapaksa initiated projects which they condemned in the run-up to the elections, the country may also be on the verge of becoming a regional casino hub with all its likely implications for money laundering and mafia activities. It is possible that the feasibility of some major property development investments in the heart of Colombo is dependent on the establishment of large casinos. The writer is not stating that establishing casinos per se is all bad. In this day and age it can be argued it is inevitable particularly if tourism is going to be a major contributor to the economy. What needs to be flagged is that there must be appropriate laws and regulations which are enforced and zero tolerance of corrupt practices. Is this likely in the Sri Lanka of today? Will the government shed clarity on this issue?<\/p>\n

Much controversy also surrounds the legality or otherwise of the activities of Avant-Garde<\/span><\/a> Maritime Services (Pvt.) Limited said to be operating a floating armoury on the high seas and alleged to be engaged in money laundering. The government claims it has led to the country incurring a loss in excess of Rs. 11 Billion. Confusion is\u00a0worse\u00a0confounded after two senior Cabinet ministers in the Yahapalanaya government allegedly defended Avant-Garde after which one of them resigned.<\/p>\n

This is the ground reality in a country that proposes to have an \u2018International Financial City\u2019 to function as an offshore international financial centre.<\/p>\n

CA Sri Lanka – Corruption<\/strong><\/p>\n

Given the political and socio-economic ground reality of present day Sri Lanka, it is difficult to envisage an ethical and transparent \u2018Colombo International Financial City\u2019 respecting the rule of law. A major impediment are influential sections of our professionals \u2013 particularly Chartered Accountants\/Auditors and lawyers.<\/p>\n

I state with responsibility that CA Sri Lanka (Institute of Chartered Accountants of Sri Lanka) which regulates the country\u2019s Chartered Accountants and Auditors is corrupt. After all, Chartered Accountants and Auditors are the first line of defence against corruption in all entities dealing with financial resources.<\/p>\n

I ask could the alleged terrible corruption and abuse of power under the Rajapaksa administration have taken place without the complicity of professionals and business leaders?\u00a0\u2028Let me emphasise \u2013 this by no means exonerates wrongdoing by politicians. They must be held accountable for their command responsibility.<\/p>\n

The integrity of CA Sri Lanka is heavily compromised due to its shameful conduct after my complaint made as far back as 8 August 2005 of the Professional Misconduct by the Sri Lankan affiliates of PwC and Ernst & Young in the fraudulent privatization of the Sri Lanka Insurance Corporation (SLIC). To date it has not concluded its investigation, has reneged on its undertakings given to me and kept me the complainant in the dark. This is notwithstanding several written reminders. The undertakings include:<\/p>\n

(i) \u201cto complete the investigation early and transparently.\u201d (Ref.\u00a0e-mail of 13 March 2006)<\/p>\n

(ii) \u201cAfter investigation is completed you will be informed of the determination.\u201d\u00a0 (Ref.\u00a0e-mail of\u00a018 March 2006)<\/p>\n

(iii) \u201cThe rationale for the determination would be given\u201d (Ref.\u00a0e-mail of\u00a018 March 2006)<\/p>\n

Notwithstanding these written undertakings, I was informed by Secretary, CA Sri Lanka in his \u2018Registered\u2019 letter dated 3 August 2016 marked \u2018Confidential\u2019:<\/p>\n

\u201cThe Council has directed me to inform that the Council appointed committees to inquire into your complaint and the proceedings of the said inquiries are now concluded.<\/em><\/p>\n

Therefore, we wish to inform you that this matter is now closed.<\/em>\u201d<\/p>\n

Does this not confirm CA Sri Lanka corruption? It is appalling that CA Sri Lanka keeps a major public interest issue \u2018Confidential\u2019!<\/p>\n

While PwC (Indonesia & Sri Lanka) functioned as Consultant, Investment Banking and Legal Advisory Services to the Government of Sri Lanka, Ernst & Young (Sri Lanka) were the Auditors to SLIC.<\/p>\n

In the context of all \u2018Partners\u2019 under the \u2018Partnership\u2019 law in Sri Lanka being \u2018Jointly and severally\u2019 liable for any wrongdoing, my demand that CA Sri Lanka:<\/p>\n

\u201cforthwith discloses in the public domain the identity of those who were \u2018Partners\u2019 of PwC and EY for five years prior to 11 April 2003 which is the date on which the scandalous SLIC privatization took place<\/em>\u201d has been ignored.<\/p>\n

It is outrageous that some Partners falling under this period are appointed directors of quoted companies and banks. Some have even been appointed to the Quality Assurance Board of CA Sri Lanka!<\/p>\n

It is baffling why even those purportedly battling corruption such as Friday Forum and its convener – Chandra Jayaratne, Transparency International Sri Lanka and its leading light – J.C. Weliamuna, Citizens\u2019 Movement for Good Governance and its President \u2013 Dr. A.C. Visvalingam\u00a0 steer clear of naming and shaming and demanding accountability from the Partners concerned of PwC and Ernst & Young faulted for grave professional misconduct by the Supreme Court, Parliament\u2019s watchdog COPE, the Attorney-General and CA Sri Lanka\u2019s Ethics Committee itself in the scandalous SLIC privatization.<\/p>\n

It is in this context that unbridled corruption flourishes with impunity.<\/p>\n

Conclusion<\/strong><\/p>\n

An article in \u2018The Guardian\u2019 titled \u2018Dubai’s dark side targeted by international finance police\u2019 inter alia alleges:<\/p>\n

\u201cFears are intensifying that the emirate has become a global centre for terror funding, money-laundering, drug money and mafia cash\u201d<\/em><\/p>\n

\u201cUnited Arab Emirates is not so much awash with vast oil wealth but built on a toxic tide of illicit cash: a place where Russian mafia and drug cartels clean their dirty cash and alQaida finances terror atrocities. And at its heart is Dubai, a world financial centre<\/em>\u201d<\/p>\n

Will the same be true of the \u2018Colombo International Financial City\u2019?<\/p>\n","protected":false},"excerpt":{"rendered":"

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