| by Rajeev Sharma
Mahinda Rajapaksa
and family members may get 1.2 -1.8 billion US dollars as commissions for
chinese projects during 2005-2015
( December 5,
2012, New Delhi, Sri Lanka Guardian) The Dragon’s shadow is lengthening over
Sri Lanka with every passing day. China has committed since 2005 contracts and
investments worth US$ 6.4 billion, as per treasury records. So far, $ 3.6
billion has been disbursed. Projects worth $ 2.8 billion are waiting to be
signed. In another three years, the Chinese investment in Sri Lanka will nearly
double and touch $ 12 billion.
Rajapaksa, who
began his life by testing his luck in the tinsel world as an extra and
clambered the political ladder with ruthless ease, is not a man of the masses
as he presents himself with an earthy brown shawl to remind his interlocutors
of his rural roots. His family rule puts to shame the Sukarnos, Bhuttos,
Burnhams and Mugabes of the world.
Let the facts
speak
The Dragon’s
shadow is lengthening over Sri Lanka with every passing day. China has
committed since 2005, as per treasury records, contracts and investments worth
US$ 6.4 billion. So far, $ 3.6 billion has been disbursed; projects worth $ 2.8
billion are waiting to be signed. In another three years, the Chinese
investment in Sri Lanka will nearly double and touch $ 12 billion.
As the African
experience with Bamboo capitalism shows, China’s investment is not benign but
is aimed at cornering raw materials, markets and profits. It is also routed
through middlemen to reduce risks.
The First Family
In Sri Lanka
context, the gateway appears to be a close family friend of the Rajapaksas. And
the friend has the word ‘gateway’ in the name of his very company. Like in
Africa, here also, commissions are paid to agents and front companies and these
are really hefty probably because of the competition the Chinese are facing in
grabbing local business. Available data shows that the First Family (FF) stands
to receive in commission anywhere between US$1.2 to US$ 1.8 billion during
2005-15. It works out to an annual ‘intake’ of $120 to US$ 180 million from the
Chinese projects. An intricate web of front companies is in place to receive
and disburse the commissions, as is the practice with the Chinese.
The Chinese
generally walk the extra mile to cover the tracks leading to the real
beneficiary. But they have slipped up badly in their Colombo enterprise. So
milestones along the way are clearly visible.
Names of two
businessmen figure prominently in the shady business deals of the First Family.
One of them, Bandula Weerawardena, Sri Lanka born British passport
holder-businessman, is more or less history, as he gave way to the new star,
Prabath Nanayakkara, the Chairman of Sri Lanka Gateway Industries.
A little known
businessman, Prabath’s meteoric rise ran parallel to President Mahinda
Rajapaksa’s ascent to power. The sobriquet of FF insider has helped him bag
massive construction contracts and licenses for TV and other media network.
Prabath’s mainstay is said to be Dilshan Wickremasinghe (38). He is the son of
the President’s brother-in-law, Nishantha Wickremasinghe, who is also the
Chairman of Sri Lankan Airlines. Dilshan is CEO of Asset Networks (Pvt) Ltd and
Asset International, both subsidies of Prabath’s Asst Holdings Pvt Ltd.
Chinese Projects
Chinese funded
projects are mostly handled by five companies, and the FF hand is behind all of
them, according to local business circles, though they are economical on
details. The FF is said to be pumping in four billion US dollars into
Trincomalee, where decks are cleared for setting up a deep water jetty, bulk
commodities terminal, and power plant amongst other facilities as a composite
venture on develop, operate and manage basis.
Like in all
other FF involvements, in Trinco deal also, Prabath signed the agreement with
Board of Investment (BOI) on June 13, 2012. His Asset Holdings Pvt. Ltd is a
partner in the Mitchell Consortium of Australia which had won a contract for
setting up a heavy Industry Zone in Sampur.
Spread over 1200
acres, the project will see an investment of US $ 2 bn. It will be completed in
three phases and the first phase would come up at a cost of US $ 700 million.
The Rajapaksa cabinet approved the project on 23 February 2011.
The Mitchell
consortium comprises four companies – Mitchell Group of Australia, Salva
Corporation (mining services), Asset Holdings Pvt. Ltd (of Prabath Nanayakkara)
and an unnamed Brazilian partner. Inquiries show that Mitchell Group could be a
paper company acting as front for Prabath.
If so, could it
be a case of rerouting of ‘money’ earned by the FF in the Chinese projects with
Prabath acting as the Front Man of an Illegal Empire? Could it be a case of
creating a long lasting vote bank in the South? All questions with no ready
answers. Only a deep probe can ferret out the truth.
Bandula
Weerawardena
Prabath’s
association with the FF pre-dates Dilshan’s involvement with Asset Networks
(Pvt) Ltd and Asset International, in a manner of speaking. It began in 2005
when Bandula Weerawardena, who was then the sole liaison man for Chinese
investors, switched his allegiance from President Chandrika Kumaratunga to
Mahinda Rajapaksa.
Bandula’s
dealings as local agent for the Chinese companies were carried through his
Bahama based Celweera Trading Limited. The scene changed by end 2006. Mahinda
Rajapaksa became the President and his family set up several front companies to
deal with the Chinese investors.
The FF ventures
soon took over Bandula’s Chinese liaison work and sole agency work to his
dismay though he had funded liberally Rajapaksa’s bid for presidency. He has
either been replaced or his role is drastically reduced in the process; he is
still around though; he shuttles between Communist China and Colombo, and
spends time mostly in China.
When and how
Prabath entered the scene is shrouded in mystery. He appears to have started
his association with the FF in partnership with Bandula himself. And the
decline of Bandula heralded the growth of Prabath Empire. `Till five-six years
back, Prabath Nanayakkara, mainly owned and ran the hereditary ‘Mount Jean Tea
Plantation’, which employees about 200 workers. Today, it is difficult to
estimate the exact worth of his business empire.
Prabath and
Dilshan’s hand has become omnipresent with several projects that span the entire
spectrum from highways to expressways and from roads and bridges to buildings.
Metallurgical
Construction Co. (MCC), China Harbour Engg Co. (CHEC), Sinohydro Corp, China
National Machinery & Equipment (CMEC), and China Huanqiu Contracting &
Engineering Corporation (HQCEC) are the main Chinese players in Sri Lanka.
These companies are doing virtually all the Chinese funded projects in the
countries. Prabath’s Asset Holdings is representing them though it is said that
the tie-up with CMEC isn’t exclusive.
The Commission
As local agent,
its commission depends on the value of the project negotiated. Generally, it is
said to be range between 10 and 15 percent of the contract value. Sometimes, it
can be a little more depending upon the circumstances of the deal like, for instance,
competition.
· CHEC and
Sinohydro has implemented the first phase of US$ 360 million Hambantota port;
both are in talks to take up the second stage worth US$ 1.0 billion plus.
· CHEC is also
implementing Hambantota International airport; it executed a part of Southern
Expressway at a cost of US$ 200 million.
· Sinohydro is
mostly into road projects. It recently bagged US$ 252 million Moragahakanda
Reservoir project.
· CMEC is
setting up coal fired Norochcholai project to generate 900 MW. The project
cost: US$1.5 billion.
· HQCEC executed
Hambantota Bunkering& Tank Farm project (US$ 76.5 million) and is
negotiating modernization and expansion of Sapugaskanda refinery (US$2.0
billion).
The Lankan Tilt
for China
It will be
patently unfair to say that the tilt towards Beijing is a Rajapaksa innovation
to win the Wanni War. The credit for taking Sri Lanka into China’s fold goes to
Chandrika’s mother, Sirimao Bandaranayke, while her predecessor, JR
Jayewardene, opened the windows to Pakistan.
Under Rajapaksas
the ties with Beijing and Islamabad have become deepened and widened. Yes, he
has personally ensured the successful sailing of several Chinese projects,
while letting the Pakistani leaders put their money in the Lankan bourses.
Informed
observers say that the commissions to the FF would be much more than US $ 120
to 180 million per year projected at the outset in this article. The projection
factors in only pure vanilla commission through Chinese projects alone,
according to them.
So what would be
the real ‘intake’? It would be anywhere between US $ 400 and $ 500 million per
year, say the knowledgeable.
