Corruption: The inconvenient truth

Slow progress on investigations against the former regime and ongoing allegations of Government corruption threaten the stability of a fragile ruling coalition and puts its plans for democratic and constitutional reform in grave jeopardy

President Maithripala Sirisena travelled to London yesterday to attend an International Anti-Corruption Summit organised by the British Government. 

The summit is aimed at ‘driving out the culture of corruption wherever it exists’. Some of the world’s most corrupt political leaders will flock to London this week, an irony that was not lost on British Prime Minister David Cameron who was recorded telling Queen Elizabeth II recently that the leaders of Nigeria and Afghanistan, two countries he referred to in the conversation as “fantastically corrupt”, would be attending the Anti-Corruption summit. 

The Sri Lankan President attends the summit in London on a slightly different footing. As the reformist President who was swept to power on an anti-corruption, good governance and transparency platform, even one year later he continues to be recognised by the international community as a progressive politician trying to make Sri Lanka fit better in a world crying out for more transparent government.  

But President Sirisena’s problems at home trying to reform a political system riddled with corruption, nepotism and shadowy wheeler-dealing are far removed from his global image.

On Sunday (8), most of the political firmament turned up at the Cinnamon Grand for the wedding of Rakitha Rajapakshe, Media Secretary to the Ministry of Defence and son of Justice Minister Wijeyadasa Rajapakshe. 

‘Wedding of the year’

Few members of the Yahapalanaya administration feel a compulsion to keep up appearances of austerity in public life. At the Rajapakshe wedding, over 800 guests were in attendance, with the hotel’s Oak Room car park closed off and used as a massive banquet tent for the ceremony. Every guest was sent an electronic key card with their invitation, to be carried along with them to the wedding. At the Atrium lobby entrance to the main ballroom, ushers swiped guests in on computers that displayed their name and table numbers and escorted them to their tables. 

Wedding planners were attired in colourful saris instead of professional outfits, blending into the crowd. Giant television screens beamed images of key moments of the ceremony to guests even at the far corners of the extended ballroom. Local music icons Bathiya and Santhush provided entertainment for the wedding, with their performances displayed on the giant screens around the room. 

Colombo is renowned for its opulent weddings, but guests in attendance said Sunday’s ceremony was in a class of its own, in terms of organisation and scale. President Sirisena and Speaker Karu Jayasuriya signed as witnesses for the couple. A notable absentee at what politicians are dubbing the ‘wedding of the year’, was of course former Army Chief turned MP, Sarath Fonseka. 

Fonseka has lampooned Minister Rajapakshe publicly for his alleged connections to the controversial Chairman of Avant-Garde Maritime Services, Nissanka Senadhipathi. Images also surfaced of a Rajapakshe family trip to Disneyland, prominently featuring Senadhipathi. The clash between the two Ministers intensified before the Justice Minister was strongly advised to back off by Prime Minister Ranil Wickremesinghe amid rising calls for Rajapakshe’s resignation on the back of Tilak Marapana’s exit. Marapana, who served as lawyer for Avant-Garde for some time, lost his job after he used time in Parliament to defend his former client and legitimize his security operation. 

Both Marapana and Rajapakshe had been called out by a top official of the Attorney General’s Department at an anti-corruption Cabinet subcommittee meeting in February 2015, for allegedly slowing down the investigations into Avant-Garde, accused of illegally leasing weapons owned by the Sri Lankan Government to run floating armouries around the world. 

In a queer twist of fate, the day after the big Rajapakshe wedding, news broke that Nissanka Senadhipathi had been named in the Panama Papers, a data trove of offshore accounts set up by Panamanian law firm Mossack Fonseca. 

Avant-Garde and the Panama Papers

The leaked documents released on Monday night by the International Consortium of Investigative Journalists (ICIJ) revealed that Senadhipathi and three others linked to the Avant-Garde operation had used Mossack Fonseca’s Singapore office as an intermediary to set up an offshore company in the British Virgin Islands. 

The Panama Papers revealed that Senadhipathi, Senerath Bandara Dissanayake, Kithsiri Manjula Yapa and Prasanna Rajaratne, all involved with Avant-Garde’s sprawling security corporation, have been named as shareholders of the British Virgin Islands company set up by Mossack Fonseca in August 2012. Senadhipathi’s lawyers promptly released statements to the media rejecting the Panama Papers information as baseless and challenged the press to prove he had a single dollar in an offshore account.

In September last year, a court dismissed the Avant-Garde floating armoury case after CID officials told the Magistrate that they had been instructed by the Attorney General’s Department to stop pursuing the case. The AG told the CID to continue investigations into whether Avant-Garde could have been in violation of the Money Laundering Act after the CID said it had failed to find evidence that the Avant-Garde operation was illegal. The suspension of legal proceedings against Avant-Garde and its Chairman shocked the nation and raised suspicions that the Government had somehow caved into pressure from the shadowy corporate entity. 

Ripples were created again when one month later, in October 2015, Harbour Police apprehended another Avant-Garde vessel – the MT Avant-Garde – floating off the shores of Galle with dubious documentation and weapons sporting defaced serial numbers. The documentation also grossly understated the number of weapons MT Avant-Garde was carrying on board. That investigation is still ongoing, but sources with knowledge of the inquiries say legal action could have been filed against the company on the basis of the findings of the Harbour Police alone.

For some reason then, Senadhipathi has become practically untouchable, even under the new administration. Avant-Garde’s tentacles into ruling UNF-SLFP coalition also run deep, Daily FT learns, and the enormous funds and resources at its disposal could be a contributing factor to the slow pace of investigations against the company. Under the circumstances, the revelations in the Panama Papers about Senadhipathi’s offshore operations are also unlikely to be genuinely investigated by the authorities. 

Presidential fears 

Shortly before he took off for the summit in London, President Sirisena also found himself dealing with an extraordinary situation after it was alleged that a FCID informant had been assaulted and threatened by the Colombo Crimes Division (CCD), a separate division of the Police Department.

Sarath Dissanayake claims to have been employed as a driver by a former top presidential aide of dubious repute under the Rajapaksa regime. Dissanayake claims the CCD was trying to convince him to withdraw his testimony to the FCID. Highly-placed sources at the FCID told Daily FT that Dissanayake was only an informant so far. The FCID was still in the process of trying to verify Dissanayake’s claims as credible, the sources said. The CCD claims it had arrested Dissanayake.

The incident was taken up with the highest channels by a UNP MP from Gampaha.

Interestingly, during the drama involving the FCID informant, President Sirisena made several remarks to confidants, some of them members of the UNP, about the slow progress of corruption probes. In these discussions President Sirisena also made it apparent that he believed the UNP-led Government was actively stalling corruption investigations, particularly against the former First Family. He went on to tell confidants that he believed this was a political strategy aimed at keeping Mahinda Rajapaksa in play as a credible threat to the current President and prevent a unification of the SLFP. 

President Sirisena had also predicted that in due course, junior parliamentarians and grassroots politicians in the UNP would begin a campaign to attack and damage him, to ensure his position as Leader of the SLFP remains tenuous. In the closed-door discussions, he revealed that he had pleaded with Prime Minister Wickremesinghe to reconsider the appointments of Finance Minister Ravi Karunanayake and Central Bank Governor Arjuna Mahendran, who was already under a cloud ahead of last year’s Parliamentary election. “Everything I begged them not to do, they did anyway. Now these same things are making the Government unpopular and derailing its stability,” President Sirisena confided.

The murkiness of the current Government structure makes it difficult to corroborate the President’s claims. He is increasingly seeing himself as being politically isolated and subject to the machinations of the UNP. The 19th Amendment to the Constitution that he personally pushed through Parliament has stripped him of real power as executive president of Sri Lanka. Without the power to dissolve Parliament, he has lost crucial leverage that could decide the lifespan of a prime minister and a government. He has delegated the business of everyday administration to his Prime Minister. On at least three key matters – the co-sponsorship of the UNHRC resolution in Geneva last September, the Government’s decision to sign the Landmine Treaty and the sudden increase in VAT – the President claims the UNP administration blindsided him. 

Cold war?

Wickremesinghe’s vast political experience in actual governance and administration made him the natural choice between the duo to deal with a looming economic and foreign policy crisis. President Sirisena has held top ministerial positions and shepherded the SLFP for 13 years, but he has always been far removed from matters of State, choosing to stay out of the limelight and confining himself to his ministerial subject matter alone. 

Prime Minister Wickremesinghe therefore is by far the better suited to handle both subjects. But the Prime Minister is also renowned for keeping his own counsel and failing to communicate his policies effectively to political colleagues or the public. The tendency to side-line or the failure to engage the President on crucial governance decisions before they are made has contributed to President Sirisena’s disgruntlement about the present status quo. He also remains convinced that the UNP has a hand in perpetuating the Rajapaksa circus that has refused to go away since the former President’s twin electoral defeats last year.

Combined with the President’s growing suspicion that the UNP Government is stalling corruption probes against top officials of the defeated regime, all this could threaten the fragile UNP-SLFP coalition in Parliament or worse, precipitate a crisis in the co-habitation between a SLFP President and his UNP Prime Minister. The tensions are being exacerbated by the Government’s growing unpopularity, with the economy in crisis and news of Government excess and extravagance that continues to abound.

In the one year and few months since the President was elected to office, bringing with him a new administration largely run by the United National Party, the Sirisena Government is struggling to deal with large-scale corruption in the past and miscreants within its own ranks now fighting for their turn to make hay while the sun shines. 

Senior Government officials argue that State sector corruption has not yet reached levels Sri Lankans grew accustomed to seeing during the tenure of the Rajapaksa regime, and the actual value of corruption by the incumbent Government still remains negligible. But even these officials admit that major players in the new administration have already begun to push the limits. They appear to be warming up for the killing that is surely to come.

They are blocking attempts by reformist ministers and officials to create accountable systems and independent oversight measures. In some cases, intense pushback from ministers pushing for greater Government accountability has successfully rolled back potentially disastrous State sector sales that, had they gone through, would have caused a substantial loss of revenue for the Government.

JEDB controversy

A case in point is a controversial land deal forged in 2013, while the Rajapaksa regime was still in office – the sale of a 273-perch prime commercial property owned by the Janatha Estates Development Board (JEDB) at Vauxhall Street on a 99-year lease to a Japanese investor at Rs. 4.2 million perch. JEDB officials argued that the land was grossly undervalued, with its actual surveyed value in the range of Rs. 8 million per perch. The Board argued that if the sale went ahead at the original price of Rs. 4.2 million, the Government would lose almost Rs. 1 billion in revenue and JEDB would be unable to cover its losses and debts associated with the property with the monies from the sale.

Despite the concerns, the Prime Minister’s advisors led by R. Paskeralingam were making a strong case for the deal to be concluded swiftly, before the Japanese investor got skittish. But the JEDB position was strongly backed by State Enterprises Minister Kabir Hashim, who fired off a letter to the Premier’s advisors, warning them about a massive loss of revenue for the Government if the land sale went ahead at the current prices. A copy of the letter was leaked to the media, and the Government was forced to put the deal back on the table. Senior officials with knowledge of the ongoing negotiations say the current price under discussion for the Vauxhall Street property is in the range of Rs. 7.2 million per perch, three million more than the previously negotiated price.

The JEDB controversy illustrates something about the current administration that fortunately, still holds true. That is that it remains vulnerable still to negative publicity and public outcry and backlash. Over the past few months, several moves to control the press have seen similar rollback of policy after an intense pushback from the media and civil society. That the Government remains sensitive to public opinion to a degree is heartening, but political observers warn that the window for genuine reform in Sri Lanka is fast closing as the new administration steps into its second year of incumbency.

Disillusionment

President Sirisena, who will address the opening session of the London anti-graft summit, has demons of his own to fight on this front. His brother continues to create waves as Chairman of Sri Lanka Telecom. His son continues to attend high-level Government meetings, now staying away from official photographs after the UN General Assembly fracas last year. The antics of both the sibling and the offspring give rise to unpleasant feelings of déjà vu and continue to erode the President’s credentials as a true reformer of Sri Lanka’s political culture.

As quiet doubt and disillusionment creep in about the new Government’s capacity and will to deliver on ‘Yahapalanaya’, one fact has become increasingly indisputable. Corruption is endemic in Sri Lanka’s political culture. The system is rigged against reformers and a handful of parliamentarians and officials still holding fast to ideals of financial and ethical integrity. And in the UNP and the SLFP, power is still far too concentrated in the political ‘old guard’ that does not know another way to conduct the business of governance.

Whether by omission or design, the new administration has failed to put any tangible measures in place that would lay a solid foundation for corruption-free, transparent governance. It’s becoming increasingly clear that the more things change, the more they stay the same; that political change without a total systemic overhaul is meaningless.

Every day now, a perception is growing among the electorate that on 8 January 2015, they merely exchanged one group of outrageously corrupt politicians for another. The perception undermines progress made by the administration on democratic reform and reconciliation. It provides a rallying point for a nationalist Opposition to garner support against the Government. And it puts a fragile constitution-making process aimed at ending decades of ethnic strife at grave risk of being rejected by a people seething about economic distress and reneged promises. Every early warning is already glaringly obvious. The Sirisena-Wickremesinghe administration ignores them at its own peril.