Beyond the Defence: Defrauded of millions

"The millions spent on vehicles that were eventually transferred to the ‘fleet’ of Rambukwella would have paid the salaries of all the original 34 employees at the SLFEA for years. But of course the list of dubious transactions apparently effected by Nanayakkara for the benefit of Rambukwella does not end there — in fact the value of these transactions only continued to increase."
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By R. Wijewardene
Courtesy: Sunday Leader

(September 06, Colombo, Sri Lanka Guardian) Keheliya Rambukwella is amongst the most prominent and powerful of the country’s overabundance of ministers.

As Defence Spokesman he is the face of the military establishment and was throughout the final days of the war the liaison between a media eager for information and an army determined to prevent any journalistic intrusion into the business of war.

For successfully managing both international and domestic media coverage of the war and relentlessly putting across the view of the government both in the local and international media Rambukwella won broad plaudits and came to be seen as an indispensable member of the government’s inner circle.

Defence Spokesman however is only one of the hats worn by the able Rambukwella whose primary function as a government servant is his roll as Foreign Employment Promotion and Welfare Minister. And it is in this capacity — as Minister-in-Charge of Sri Lanka’s second largest source of foreign exchange — foreign employment, that documents in the possession of The Sunday Leader suggest his conduct has been less than exemplary.

An ancient sin

In fact volumes of documentary evidence now in our possession suggest that the Honourable Keheliya Rambukwella has been involved in an ancient sin, a vice no Sri Lankan public official seems able to avoid, and a word ubiquitous in Sri Lankan politics — corruption.

So common of course is this vice, that the very word ‘corruption’ has been cheapened by over use. In today’s Sri Lanka abuse of power and authority is so commonplace that petty thefts, illegal appointments, or minor frauds committed by government officials are hardly considered newsworthy.

The case of the Sri Lanka Foreign Employment Agency (SLFEA) — a state owned enterprise which falls under the purview of the Ministry headed my Rambukwella is different however because of the scale of the fraud that appears to have taken place.

Documents and sources suggest that a once profitable and successful government owned company has been defrauded of millions of rupees as a result of interference from the Foreign Employment Promotion Ministry.

Allegations extremely serious

The evidence in this case is extensive and some of the allegations extremely serious. The suggestion is that the Sri Lanka Foreign Employment Agency, as that rarest of things — a profitable state owned company — was simply viewed as a cash cow by senior officials in the Foreign Employment Ministry including Rambukwella who by interfering in the management of the company were able to defraud the SLFEA of millions of rupees worth of assets.

To fully understand the nature and extent of the fraud and the involvement of the Ministry and Rambukwella however it is necessary to tell the story of the SLFEA and its transition from a profitable public company to its current state as a shambolic and near bankrupt state enterprise, struggling to pay the salaries of its staff and stuffed with the inefficient cronies of senior officials.

In 1996 the government under the direction of then Labour Minister Mahinda Rajapakse incorporated the Sri Lanka Foreign Employment Agency — a state owned employment agency established to compete with the dozens of private agencies offering local workers jobs overseas.

Provider of foreign employment

As a licensed and legitimate provider of foreign employment, the SLFEA was an immediate success and between 1996 -2008 thousands of workers found employment abroad, particularly in South Korea, through the agency.

By charging a fee for these placements the SLFEA was able to earn healthy profits, and by 2008 the company possessed almost Rs.160 million in various fixed deposits.

Such healthy finances in a state institution are almost unheard of. What’s even more remarkable is that the SLFEA was able to achieve these returns not with the usual wastage and extravagance associated with the public sector but with just 35 staff operating out of a small office in Narahenpita.

In every sense the SLFEA was a model public enterprise; sadly in Sri Lanka models are rarely emulated in fact, particularly in the public sector profitable models tend quickly to fall prey to the greed and covetousness of powerful politicians and their cronies.

Which appears to be what happened when in 2006 the government it its quest to enter the Guinness Book Of Records by creating more ministries than any other nation in the world established the Ministry of Foreign Employment Promotion with Rambukwella serving as the relevant minister.

Rich coffers

The SLFEA fell under the purview of this new Ministry and in fact with its rich coffers of fixed deposits the Sri Lanka Foreign Employment Agency was one of the Ministry’s principle assets.

This wealth was to be the company’s undoing, where once the SLFEA had functioned without significant political interference in the years following the incorporation of the Foreign Employment Promotions Ministry, politicians, it seems particularly Rambukwella would take an unhealthy interest in the company.

In 2008, a Ranjini Nanayakkara was appointed by Rambukwella to serve as General Manager of the SLFEA.

Political appointments to key positions in public companies are of course just par for the course in Sri Lanka except that in this case it appears that the installation of Nanayakkara as General Manager, spelled the beginning of the end for the once well managed SLFEA.

A retired officer

Nanayakkara had previously been Ministry Secretary at the Foreign Employment Ministry and worked directly with Rambukwella. And as a pension drawing retired officer her appointment made without the approval of the Public Service Commission (PSC) appears to violate the terms of PSC Circular No. 03/2003 which states that retired officers can only be appointed to government institutions with the prior approval of the Public Service Commission.

Despite drawing a salary of only Rs. 40,000, documents in the possession of The Sunday Leader suggest that Nanayakkara consistently drew an extravagant fuel allowance exceeding Rs.18,000, while also, questionably in view of the PSC circular, drawing a pension from her previous position as secretary to the ministry.

But of course the matter of a few thousand questionable rupees is no more than the slightest of quibbles where corruption in Sri Lanka is concerned.

More serious are documents that indicate she authorised the company to lease a vehicle — No. WP KK3204 belonging to her husband for Rs. 40,000 a month violating the usual practice made for payments in the SLFEA, by herself approving cheques which were paid directly to her husband.

Dubious transactions

But again Rs. 40,000 worth of pocket money is but the most minor of peccadilloes, but where dubious transactions in public companies are concerned of course, what starts as thousands quickly becomes hundreds of thousand and then millions, and in this case these initial thousands appear to have been only the beginning.

To cement her position and influence within the company in early November 2008, Nanayakkara appears to have made a number of transfers moving some of the senior staff who had served the company well during its decade of profitability to the Sri Lanka Bureau of Foreign Employment (SLBFE).

The acting manager of administration and crucially the manager of business promotions and publicity were transferred from the SLFEA to the SLBFE without any of the normal transfer procedures — inquiry, board approval being followed. The relevant transfers were effected with exceptional rapidity and the transferred managers were in fact barred from entering the premises of the SLFEA.

These transfers particularly the removal of the manager in charge of business promotions and publicity would prove crucial — in light of what happened next; the Central Provincial Council elections.

Cut-outs for election

What the connection between a Narahenpita based employment agency and the Central Provincial Council election is may seem unclear. However, in November 2008 the SLFEA paid Rs. 2. 5 million to a company named Kuma Printers to print and fix cut-outs for a promotional campaign. While the expenditure on these cut-outs was listed as expenses incurred for business promotion in reality the cut-outs were posters used for campaigning in the Central Provincial Council election. It must be remembered that Rambukwella himself hails from the Central Province.

Subsequently in December 2008 another Rs.1.8 million was spent by the SLFEA on printing 100,000 calendars bearing photographs of Rambukwella. Again the expenditure was justified as business promotion. Needless to say the SLFEA’s business promotion manager had never mentioned the need for 100,000 Keheliya calendars.

That the money of a state company was diverted for use in a minister’s electioneering is in itself a serious allegation. However in the case of the SLFEA the two or Rs.3 million that appear to have been diverted to provide more publicity to Rambukwella is little more than the tip of the iceberg. The scale of the financial rape of a once wealthy company would reach an altogether different level with the purchase in October 2008 and February 2009, of two new double cab vehicles for over Rs.10 million.

Used by other parties

The vehicles were purchased under the direction of Nanayakkara. Of course any company needs new vehicles to function, what is unusual however is that in this case the vehicles purchased by the SLFEA were not used by the SLFEA but by other parties only remotely or simply not connected to the company.

One double cab WP PB 7251 was issued to Waruna Lasantha Liyanage, a coordinating secretary to Rambukwella, not on the staff of the SLFEA.

The second Double Cab PB 7729 was issued to a Anura Weerasekera, also a coordinating secretary to Rambukwella not employed by the SLFEA.

In reality it seems the second vehicle is used by a Buddhist monk, Ven. L. Seelanada Thero, one of 17 coordinators on the payroll of SLFEA, but who according to sources in the company has never set foot in the building nor done any service to the SLFEA.

Of course the expenses for both vehicles, fuel, maintenance etc., are borne by the SLFEA despite the fact that the vehicles do not appear to be used for SLFEA work. Both vehicles draw monthly fuel and service bills in excess of Rs. 30,000.

Minister’s brother

The transfer of a vehicle bought by the SLFEA to coordinators of Rambukwella not attached to the SLFEA is suspicious. However far more troubling is the matter of the Montero jeep WP HM1897 belonging to the SLFEA which is now reportedly being used by the brother of Minister Rambukwella.

The Minister’s brother Lalith Rambukwella operates a catering business and a rival foreign employment agency called ‘Sheikh,’ one which actually competes with the SLFEA.

He has no direct connection with the SLFEA which begs the question as to why he is currently using a vehicle belonging to the SLFEA. Once again the fuel expenses of the Montero are of course borne by the SLFEA.

In every case documents authorising the purchase and transfer of the vehicles concerned were signed by Nanayakkara without the approval of the company’s board of directors — which was required for transactions involving more than Rs. 500,000.

Again there is a clear and questionable nexus between Nanayakkara and Rambukwella with Nanayakkara authorising transactions which appear to benefit her former boss Rambukwella, without consulting the chairman and board of the SLFEA.

The millions spent on vehicles that were eventually transferred to the ‘fleet’ of Rambukwella would have paid the salaries of all the original 34 employees at the SLFEA for years. But of course the list of dubious transactions apparently effected by Nanayakkara for the benefit of Rambukwella does not end there — in fact the value of these transactions only continued to increase.

And in January 2009 Mrs. Nanayakkara’s dealings moved from vehicles to real estate.

On January 8, 2009 through its GM, the SLFEA paid Rs. 62 million for a house in Nawala.

However the same house had been valued by a government valuation dated 24.09.2008 just four months previously at Rs. 42.5 million. It is also reported that the seller divulged that he wanted only Rs. 52 million for the property.

Therefore in purchasing the property for Rs. 62 million the SLFEA paid Rs. 10 million above the asking price and 20 million more than the government valuation suggested was the real value of the property.

Which again begs the question why did the SLFEA spend so many millions above what the government valuer considered was the real value of the property?

Minister had personal interest

The answer according to senior officials at the SLFEA is that Minister Keheliya Rambukwella had a personal interest in the sale of the property.

In an extraordinary letter from Chairman, SLFEA, N.M. Shaheed written to Chairman, Foreign Employment Bureau Kingsley Ranawaka, Shaheid implores Ranawaka to use his influence with Minister Rambukwella to dissuade him from purchasing the house.

In his letter Shaheed writes, “I am reliably informed the value of the property has come down these days and this property will not fetch more than Rs.50 million. I met the Minister and told him we had better look for another property … but the Minister is keen because he is being pressured by his brother.”

Shaheed goes on to state that the SLFEA as a service organisation does not need such large and expensive premises. And explains that the SLFEA currently pays Rs. 140,000 as monthly rent and that the expenditure of Rs. 64 million would cause a dramatic and devastating decrease in the value of the company’s fixed deposits.

He concludes by beseeching Ranawaka to use his “good office with the Minister and drop this idea of buying this property.”

The allegation in this case is shocking. In his letter Shaheed claims that at the behest of his brother Rambukwella is driving the purchase of the Nawala house at an inflated price.

It is clear that Shaheed at least firmly believes that Rambukwella was behind the transaction.

Of course despite Shaheed’s initial objections on January 8, the relevant documents were signed by Nanayakkara and the SLFEA purchased the Nawala property for Rs. 62 million.

Again the nexus between Nanayakkara and Minister Rambukwella is clear with the former secretary to the ministry executing transactions favourable to her former boss.

As a result of the land transaction the SLFEA saw its fixed deposit base decimated.

A company that paid only Rs. 140,000 a month in rent paid Rs. 62 million for a new property worth not more than Rs. 50 million. But most shocking of all is the fact that the house at No. 12, Narahenpita Road, Nawala continues to stand empty.

The SLFEA has not made any steps to transfer its operations to the new premises and continues to pay rent.

Waste is outrageous

The waste is outrageous and the allegation that it was driven to further the interests of a Minister and his family is extremely grave.

By this point the extravagant purchases authorised by Nanayakkara – millions of rupees in printing, and tens of millions for vehicles and the new but unoccupied premises had left the once profitable and financially stable SLFEA desperately short of funds. It seems however that the company had not yet been bled enough.

In January 2009 the SLFEA would be the subject of yet another dubious and massive transaction.

The SLFEA specialised in finding Sri Lankan workers employment in Korea. The majority of these workers were sent to Korea through an industrial placement scheme and the SLFEA paid a $700 fee to a Korean agent, Bohon Entrust Company for each successful placement.

Over 4000 trainees had been sent to Korea through this scheme and according to senior employees of the company all the money owed to Bohon had been paid.

However, in August 2008 Bohon claimed that as a result of a subsequent agreement signed by Kingsley Ranawaka of the SLBFE an additional $46,000 was owed to them — $40 for every trainee sent to Korea since 2006.

The demand was startling as former employees of SLFEA claim that all the money owed to Bohon had already been paid. However on December 5, 2008 the SLFEA received a letter from the Bohon Chairman claiming that $195,000 was in fact owed by the SLFEA to the Bohon company but that the Korean company was prepared to settle for just $ 46,000 leaving the balance $150,000 as a ‘donation.’

However on January 12, the same Korean company wrote to Keheliya Rambukwella demanding the full 195,000 dollars. The Minister then wrote to the Chairman of the SLFEA Shaheed saying “look into this if the amount stated is in the accounts as a liability make the necessary arrangements.”

Shaheed then called for a report from SLFEA’s accountant to investigate the reality behind Bohon’s claims, however before that report was delivered on January 15, $195,000 — over Rs. 20 million was transferred to the Bohon company.

Money deposited at DFCC

The transfer was doubly suspicious as $ 46,608 — the amount originally demanded by Bohon was transferred to a bank in Korea while $146,692 was transferred to a DFCC Bank account numbered 007106001006 allegedly maintained by a Korean national, Mr. D. J. Kim.

It is an open question therefore if the 146,000 dollars paid to the local bank account ever reached Korea.

What is ultimately alleged is that a spurious transaction was carried out – as no money was really owed the Korean company and no investigation into the accounts showed a $195,000 liability.

The payment was authorised by Nanayakkara in violation of the company’s rules which required that the approval of the company’s chairman and board of directors be sought before the transfer of such large amounts of money.

Again, as only $46,000 was sent to Korea what happened to the remaining $148,000 is a mystery and as this transaction too appears to have been driven by Nanayakkara whose actions previously seem to have benefited Rambukwella rather than the SLFEA the final destination of the money remains debatable.

Whatever happened to the money allegedly paid to the Bohon company the effect of the $195,000 payment was to cripple the SLFEA.

A company once running at a healthy profit was now running at a loss and a voluntary retrenchment scheme was announced in July 2009 to allow the company to cut costs.

It is alleged of course that only the gross mismanagement of the SLFEA’s assets made the retrenchment programme necessary and that for the most part productive long term employees of the SLFEA are now being retrenched against their will.

Further while permanent staff of the SLFEA are now being retrenched the company continues to maintain 17 coordinators appointed by Rambukwella. These coordinators including a Buddhist priest, the aforementioned Seelananda Thero and UPFA provincial council member Linton Wijesinghe, have according to staff at the SLFEA never set foot on the company’s premises.

Further, the allowance of approximately Rs. 25,000 each – or Rs. 500,000 a month in total paid to these coordinators by the SLFEA is not paid directly to the individual concerned but deposited directly in the bank account of Anura Weerasekera, the coordinating secretary to Rambukwella

Again the final destination of the money is open to question but what is clear is that the SLFEA has ultimately been ruined by a series of poor investments. The financial state of the company in early 2008 compared to its state in July 2009 hardly a year after Nanayakkara was appointed GM is testimony to its mismanagement.

However more than simply mismanagement there is evidence to suggest that the transactions that brought the SLFEA to its present penurious state were driven by Nanayakkara to further the interests of Rambukwella.

The scale of the alleged fraud amounts ultimately to over Rs.100 million and even more significantly the destruction of a revenue generating public company.

Again the severity of these allegations cannot be overestimated as at every level there are suggestions of flagrant mismanagement – imprudent transfer of vehicles, land purchases and huge financial transfers without proper authorisation.

The documentary evidence behind these transactions in almost every case leads to Nanayakkara and through her to coordinating secretaries at the Ministry of Foreign Employment and to Rambukwella himself.

Sadly The Sunday Leader was informed that Rambukwella is not in the country at present and that he will only be able to comment on these allegations when he returns to Sri Lanka on Monday.

Given the gravity of the allegations and the weight of documentary evidence in our possession we are eagerly awaiting his response.

The other side of the coin

Ranjini Nanayakkara claims that the allegations against her and Rambukwella are completely false.

While documents in the possession of The Sunday Leader suggest that the mismanagement at the SLFEA stemmed from the appointment of Nanayakkara as General Manager of the company there are always two sides to every story and when contacted the SLFEA’s GM denied that either she or Rambukwella was responsible for the mismanagement at the SLFEA.

Instead Nanayakkara claimed that the mismanagement began in the years prior to her appointment during which time one Shaheed was chairman of the company. She alleged that before her appointment transfers were made without proper authorisation and the finances of the company were in disarray. She further claimed that the SLFEA was grossly overstaffed as private employment agencies employed just five or six staff compared to the 34 at the SLFEA.

Further she claimed that the majority of these members of staff were in fact political appointments who not only failed to work for the benefit of the company but actively sabotaged her efforts to restructure the business. She claimed that a fire on the premises was started by these employees who were disgruntled by her efforts to make the company more transparent and efficient.

Regarding the allegation of the overvalued property at Nawala she claimed the purchase was necessary as the SLFEA would have to quit its current premises at Narahenpita later this year. She continued however that due to the poor financial state of the company the SLFEA had been unable to carry out the necessary refurbishment of the building at Nawala and that therefore the SLFEA would in the short term be compelled to find alternative premises perhaps within the Employment Promotions Ministry.

However this explanation begs the question as to why such an expensive building was purchased in the first place.

Regarding the issues of the vehicles purchased by the SLFEA but used by other parties including Rambukwella’s brother she claimed that all the vehicles in question were used by coordinators who found business for the SLFEA.

Throughout the conversation she insisted that Rambukwella had nothing to do with transactions at the SLFEA and that all the transactions had gone through the company’s Chairman and Board of Directors. She blamed the allegations and documents in the possession of The Sunday leader on disgruntled former employees.

Given the two widely contrasting account of events at the SLFEA The Leader will leave it to the public to decide what they believe really happened at the SLFEA.

However we eagerly await the response of Rambukwella as the documents in our possession regardless of Nanayakkara’s defence suggest that there is a case for him to answer.

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-Sri Lanka Guardian