Cabinet removes consultancy firm for Rs. 40 b Defence HQ

Defence headquarters in Akuregoda

By Uditha Jayasinghe 

Cabinet has decided to remove the architect consultant firm for the Rs. 40 billion Defence complex headquarters in Akuregoda after a Government report recommended an investigation into large-scale payments earmarked under the project as well a budget reevaluation for the venture. 

The construction of the Defence headquarters in Akuregoda, Battaramulla has been under a corruption cloud for several years. Former Defence Ministry Secretary Gotabaya Rajapaksa proposed the state-of -the-art defence headquarters and in 2011 Parliament approved Rs. 20 billion for its construction. At the time the former Government announced it would be completed by 2013.

However at the time the main Opposition United National Party (UNP) spearheaded by Deputy Foreign Minister Dr. Harsha de Silva alleged that the defence headquarters would be funded by money collected from selling property along Galle Face to two foreign companies.

Former Economic Development Deputy Minister Lakshman Yapa Abeywardena in June 2015 disclosed in Parliament that the Government was successful in selling the 10-acre land to Chinese State-run Company China National Aero Technology Import and Export Corporation (CATIC) for $ 136 million while the second plot was sold to Shangri-La for $ 125 million. 

Faced with intense pressure the former Government headed by President Mahinda Rajapaksa subsequently cancelled the CATIC deal on Galle Face and said separate land would be allocated elsewhere on a 99-year lease basis. 

After the change of Government last year Finance Minister Ravi Karunanayake on 18 March 2015 ordered an investigation into the project, which was approved by the Cabinet. The committee was tasked with submitting a report on the entire project including its scope, total cost, operational time frames and awarding of consultancy contracts. At the time Karunanayake described the plans of the defence headquarters to be “bigger than the Pentagon” to reporters. 

The report ordered by the Finance Minister was submitted to Cabinet on 5 August 2015 by the Defence Minister. Subsequently the Cabinet made a request to the Secretary of the President to appoint a second committee to look into the consultancy firms appointed for the project and re-evaluate their payments. 

This second committee appointed by the President’s Secretary submitted its report to Cabinet this week recommending that the architectural consultancy firm should not be considered for consultancy services of the project in future. The report also called for cost estimates to be redone and consultancy fees appropriately adjusted. The Cabinet paper seen by Daily FT was signed by President Maithripala Sirisena and also calls for Central Engineering Consultancy Bureau (CECB) to be given the consultancy role. 

“The report found this architect firm is run by someone who is not even a qualified architect and is not even a credible firm. But they were to be paid Rs. 2.2 billion as consultancy fee. Therefore Cabinet has decided that they will be removed,” Cabinet Spokesman Dr. Rajitha Senaratne said. 

He also defended the previous award of the contract alleging the true state of the consultancy firm was withheld from the Cabinet and details were not accurately noted in the Cabinet paper. 

“The previous Government made a habit of handing out contracts without calling tenders and this was discussed by members several times. But preferential treatment was given for defence matters and no one dared question them. This is how the controversial MiG aircraft issue was created as well,” he said.