President’s former Chief of Staff, Dr.H.I.K.Mahanama, the top most senior state officer to be caught up in the bribery net in the 60 year history of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) was filed indictments at Permanent High Court Trial at Bar on 24 counts last week.
The indictments were filed against former Chief of Staff and Land Ministry Secretary (first accused) and his accomplice former State Timber Corporation (STC) Chairman Piyadasa Dissanayake (second accused) by CIABOC Director General Sarath Jayamanne, PC on Thursday. They were netted in the act by Bribery sleuths, in a major sting operation in May last year.
The officials were caught while accepting a bribe of Rs.20 million from an Indian investor, K.Pedappaiya Nagaraja at the Taj Samudra Hotel car park in Colombo.
According to the charge sheet which was handed over to the Permanent High Court Trial at Bar, the senior officials who have since been evicted from their jobs, were indicted for conspiring and soliciting a bribe of Rs.450 million (US$ 3m) to facilitate the smooth transfer of the defunct Kantale Sugar Factory to the investor and a further Rs.100 million to release the machinery for scrap iron.
The CIABOC has pointed out the officials violated Section 19, 20 and 25 of the Bribery Act by their actions hence were liable to be punished under the tough anti graft laws of the country.
The case was opened in February 2018 following a complaint to the Bribery Commission by the Indian investor who had won a BOI contract to re-structure the defunct, state owned Kantale Sugar Factory. He had complained that Mahanama and Dissanayake were blocking the project from being implemented in an attempt to elicit a stupendous bribe.
The two men were arrested in May 2018 in a major sting operation after putting the duo under surveillance for over two months by Bribery sleuths. The conversations between the corrupt officials and the businessman were wire tapped. Immediately after the arrest the two officials were issued marching orders by the President.
The CIABOC DG presented 41 court productions in support of the case, which included the red colour American-Tourister travel bag that carried the 20 million in cash to be given to the two officers. The DVDs carrying CCTV footage of the Colombo restaurant (Bread Talk) and Hotel Taj Samudra where the meetings were held earlier and finally the arrests were made, were also produced in court.
Forty six witnesses have been listed to give evidence in the case.
The massive corruption case was brought before the anti-graft body, in February 2018, when the Indian Businessman decided to challenge the corrupt officers head on in a bid to save his money and the project that he won in competitive bidding.
In his complaint to the COABOC the Indian investor said his company M.G.Sugars Lanka Pvt Ltd was awarded a contract in 2015 to revive the Kantale Sugar Factory that had been closed for 25 years. The Cabinet of Ministers granted the approval which was carried out under the auspices of the Board of Investment (BOI).
The BOI gave approval for the foreign investor to revive the company along with the rights to discard the dilapidated machinery. However, in a subsequent Cabinet Paper in which the project was approved by the Cabinet of Ministers, the ‘rights to discard the old machinery’ was omitted.
Citing the Cabinet Paper, Mahanama objected to the company having the rights to sell the machinery for scrap metal. Later, he had allegedly solicited a bribe, to ‘clear the path’ for the Indian businessman. The investor had pointed out that their demand for Rs.500 million was unreasonable. The value of the unusable machinery in the old factory, closed down due to poor output was estimated to be around Rs.500 million. Due to this ongoing tug-of-war the project remained at a standstill since 2015.
When the Lands Secretary retired as the Lands Ministry Secretary, he took over the seat of Chief of Staff at the Presidential Secretariat, a far more powerful position within the Government. For some elusive reason the Kantale Sugar Factory project remained dormant even by early 2018.
According to Bribery officers, it was at a time like this former STC Chairman Dissanayake had stepped in to end the stalemate. He approached the Indian businessman and said he could strike a deal with Mahanama to help him to implement the Kantale project.
Dissanayake confided that Mahanama who had been at the Land Ministry over a long period, could influence the present Land Secretary to grant the businessman’s ‘wishes’, and release the unusable machinery. That is when the Investor decided to walk into the Bribery Commission for help.
According to widely publicized news reports, the BOI struck a mega $110 million deal in 2015 to revive and restructure the defunct Kantale Sugar Factory - a white elephant which had reduced to a junk yard of scrap metal at the time - with M.G.Sugars Lanka Pvt Ltd. The deal was signed when former Bar Association President Upul Jayasuriya was BOI Chairman.
The foreign investor, SLI Development Ltd, Singapore was to bear the total cost of the USD 110 investment. Sri Lanka was allowed to hold 51% share of the stake while 49% would be held by the foreign investor. The project agreement was to run over a period of 30 years on Build, Operate and Transfer (BOT) basis. The technical partner for the project was Shri Prabulingeshwar Sugars and Chemicals Ltd., Bangalore, reportedly an experienced group of companies engaged in sugarcane cultivation, sugar manufacturing, the co-generation of power plants and dairy industry.
If the project was allowed to get off the ground, the work to revive the factory would have begun four years ago.