India to help Sri Lanka set up FIU to trace billions stashed abroad by Mahinda
Wednesday, 4 February 2015 00:00
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NEW DELHI (Economic Times): India will help Sri Lanka set up a finance intelligence unit (FIU)-like entity in the island nation at Colombo’s request to trace more than $ 5 billion allegedly stashed overseas by the erstwhile Rajapaksa regime.
President Maithripala Sirisena is moving to fulfill electoral promises to check corruption and repatriate money allegedly siphoned off abroad by Mahinda Rajapaksa, who ruled Sri Lanka for a decade, and members of his family, government sources told ET.
The new Lankan regime has informally approached the Narendra Modi Government to assist in setting up the body, sources said, adding that a formal proposal could be expected soon.
The Finance Ministry will share its best practices with Colombo to set up the unit, which could be modelled after the Indian body, the sources indicated.
“We could help close neighbour Sri Lanka with capacity building exercise regarding FIU,” said an official familiar with the process.
India set up the FIU in November 2004 as a national agency to receive, process, analyse and disseminate information related to suspect financial transactions. It coordinates and strengthens efforts of national and international intelligence, investigation and enforcement agencies in pursuing global efforts against money laundering and related crimes, reporting directly to the Finance Minister.
Last November, FIUIndia and its Australian counterpart decided to jointly crack down on international financial crimes.
India could also consider a formal proposal from Colombo seeking the Reserve Bank of India’s expertise in tracing money allegedly hoarded in tax havens.
Relations between New Delhi and Colombo have picked up pace less than a month after the change of guard in the island nation.
After the visit of Lankan Foreign Minister Mangala Samaraweera last month, his Indian counterpart Sushma Swaraj is scheduled to visit Colombo this month.
The new President has chosen New Delhi as his first destination abroad and will be here in February. This will be followed by Modi’s trip to Colombo in March - the first by an Indian PM on a stand-alone bilateral visit in 26 years.
Sirisena, who handed Rajapaksa a surprise defeat in the 8 January polls, has alleged that the former President and his immediate family had siphoned $ 5.38 billion from public coffers.
Sources from Colombo told ET that high-level corruption was one the key reasons for Rajapaksa’s rout. Several members of his family held ministerial positions or controlled state-run corporations.
Sri Lanka’s economy expanded 7.3% to $ 67.1 billion in 2013, according to data on the World Bank website.
The new Government has started reforming various government institutions, including regulators allegedly made defunct by the previous regime. Lanka’s anti-corruption body has issued overseas travel bans on former Central Bank Governor Nivard Cabraal and Sajin de Vass Gunawardena, a key Rajapaksa assistant, pending a corruption investigation.
Led by Prime Minister Ranil Wickremesinghe, the new Cabinet has appointed a high-powered “rapid response team” to look into corrupt land transactions, stock market price-fixing and the abuse of State funds for political purposes.
According to Energy Minister Champika Ranawaka, a preliminary study by a local university showed the cost of new road construction in Sri Lanka in 2013 had been inflated by $ 1.53 billion. Rajapaksa was the minister in charge of highways, finance and ports. The government will review mega projects awarded to Chinese companies, including a $ 1.4-billion port city near Colombo harbour.
