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Procurement of Hambantota Port Project, Road net work in the North, purchase of Arms for MOD by violating the NPA Guidelines and the Imprisonment of General Fonseka on Fabricated “HiCorp” Procurement Charges.

By: Sellakapu S Upasiri de Silva,

“Government should commit itself to being a best practice client” Latham, M

When the Government of Sri Lanka (GOSL) is giving contracts to the Chinese without calling for tenders, thereby going against the accepted norms of transparency and good governance by withholding the use of NPA Guidelines recommended by President Rajapaksa on January 27, 2006, is tantamount to creating high level of corruption by procuring these multi million dollar “publically funded” contracts without proper tender procedures. President Mahinda Rajapaksa expected the, Cabinet of Ministers, Secretaries of Ministries Head of Government Departments, State Corporation & Statutory Bodies, Fully Government Owned Companies and Head of Local Authorities of the Government of Sri Lanka to play a very important role in procurering contracts ‘large or small’ using these NPA Guidelines to have a balanced national development to enhance the quality of life of the citizen of Sri Lanka.

 

Contracts without Tenders

But unfortunately Mahinda Rajapaksa as the President of Sri Lanka, his Cabinet of Ministers, Secretaries of Ministries and Head of Government Departments and Statutory Bodies  have violated all these norms by awarding contracts to Chinese contractors (as well as others) without following the established tender procedures as recommended by the NPA Guidelines. This is a very serious criminal offence punishable by a jail sentences ( President Rajapaksa’s government created this as a criminal offence ) as awarding tenders to one individual contractor by violating NPA Guidelines without calling and evaluating tenders by professionals as specified in the NPA Guidelines to ascertain the builderbility and the cost effectiveness of the project.  General Fonseka was imprisoned for 2 years 6 months for not divulging his relation ship to Danuna Thilakarathne his son-in law, [not even connected with the HiCorp Company (Tender)], where the Army purchased Night Vision Glasses by OPEN tender following the NPA Guidelines, because he was the Chairman of the Tender Board.

In procuring contracts if the client bypasses or violates the Tender procedures purposely, according to the unwritten laws in the construction industry there is a possibility that the client or the person handling the contract is trying to ‘create major corrupt practises, and that act will hinder the COST & QUALITY control of the project. This corrupt criminal act will allow the citizen of the country to believe that the government (Rajapaksa brothers and the family) has adopted corrupt practices and President Rajapaksa is a party to these corrupt dealings and may have earned a good share of the borrowed money from these contracts.

 

Not to follow tender procedures as laid down by the NPA Guidelines and to do away with a tender evaluation committees and a Tender board is the unusual way of creating  very serious corrupt practices by the people responsible for procuring these contracts where the funds involved in these projects are “Public Funds”, borrowed from Exim Bank of China.

 

Preface to NPA Guidelines

This was what President Rajapaksa wrote as a PREFACE to the NPA Guidelines on January 27th 2006 urging all Government Departments and Ministries to follow the guidelines by affixing his seal of approval.

 

President of Sri Lanka

“THE Government of Sri Lanka has placed the highest priority to ensure that development efforts across all sections are evenly balanced and distributed to all cross section of the society, in order to meet the overall national development and enhance the quality of life of its citizens. To achieve the desired results it is imperative to ensure speed, transparency and integrity in all the development spheres and in regard to which the procurement function of goods, works and services plays a critical role.

The development programmes which are instituted and other in the pipe line include those which are financed by public funds as well as external funding. Within this context the availability of a set of guidelines on procurement which harmonizes the processes to be followed under the different funding agency procedures been identified and acknowledged by all providers of the development funding as a vita factor.

It is in this context that the National Procurement Agency (now closed down) has been established under Presidential directive. The institution which functions directly under my purview is mandated to study, revise and adopt the procedures and processes in order to govern the vital aspect. The ………………………………..achievement.

I trust that this publication on procurement guidelines in the area of goods and works would be made use by all stockholders of national development in order that the overall national development goals as well as the individual organization development objectives are realized on a timely and cost effective manner.

January 27.2006.                                            Sgd. Mahinda Rajapaksa, President

 

 

Repealed Treasury Circulars on Tender Procedures

It is very important for all Government Ministers, Ministry Secretaries, Head of Departments, State Corporations & Statutory Bodies and Fully Government owned Companies (like Lanka Logistic) responsible for procuring goods, services & works for the government to realise that the Guidelines on Government Tender Procedure (Revised Edition, 1977) Revised Guidelines on Government Tender Procedures for Projects assisted by Foreign Financing Agencies (Revised Edition - 2000) and Treasury circular pertaining to the Guidelines on Government Tender procedures issued up to 20.10 2005 were repealed and replaced by the NPA Guidelines as instructed by Daya Liyanage, then CEO and Chairman of the NPA by NPA Circular No : (08) on 25th January 2005.

 

The Chinese Contractor building the Hambantota Port (Harbour) project is China Harbour Engineering (CHE) and the US $ 336 million Contract (1st Phase) was awarded to the CHE without calling for tenders, violating the NPA guidelines as well as the instructions issued by the President of Sri Lanka HE Mahinda Rajapaksa. Was this violation of the NPA Guidelines was instigated by the President as the Minster of Port and Aviation Ministry or someone else with the full support of the President?

 

If the Government of Sri Lanka has placed the highest priority to ensure that development efforts across all sectors are evenly balanced and distributed to all cross sections of the society, to meet the overall national development, then why was President Rajapaksa allowed to procure this Hambantota Port project and many other projects constructed using loans obtained from the Exim Bank of China on *commercial terms*, without calling for Tenders in accordance with  the NPA guidelines, still in use, operated under the authority of the Secretary of the Treasury.

 

 

Economics of Public Debt

It is a common situation for the government to borrow money for Development projects. It is not necessarily detrimental to the economy of the country. According to Economist borrowing money is advantageous for the long term development of the country if the development gives a return (IRR) for the money higher than the interest paid for the borrowing. Borrowing according to economist is a means of increasing total savings to enable increased investment. Short term borrowing like what has borrowed by the Exim Bank can assist in resolving constrains in foreign resources to tide over temporary balance of payment difficulties, if the borrowing is on acceptable interest rates. But, utilising the public debt borrowed at high interest rates in development without following normal procedures like calling for tenders and negotiating with a single contractor without a proper base is detrimental to the economy as it indicates corruption is rampant and these hidden corruption may hampered the rate of return from the development.

 

Are these projects handed over to the Chinese Contractors such as CHE and others, without calling for open tenders are coming within the ambit of National Development projects?  If they are National Development projects why by-pass the use of NPA Guidelines the President Rajapaksa has fully endorsed and supported to use by all stakeholders of National Development. Who ordered the Port Authority to by –pass the tender procedures, was the order given by the President Rajapaksa or someone else? Did they by-pass the Chairman of the Port Commission, Dr. Wickrama (from Weeraketiya) a stakeholder of this development. Has he negligently allowed this corrupt practice as he was ordered to do so? As the Chairman of the Tender Board of the Port Commission, as well as the Chairman of the Port Commission who signed these contracts with the CHE to engage the said CHE as the Main Contractor, IS HE NOT GUILTY for by-passing the NPA Guidelines and signing a contact with the China Harbour Engineering, when there were possibilities to get other international contractors to tender for this project at get a competitive price,  than the one CHE quoted saving million of dollars for the CITIZEN OF THIS country? [If the Common Law is applicable in Sri Lanka, Dr. Wickrama and others associated in this crime to rob the citizens of Sri Lanka of the funds obtained on loan, may be guilty of this offence as the Judges of the Court Martial has established this common law principle by jailing General Sarath Fonseka for violating the NPA Guidelines?]

 

Open Tender.

If the GOSL called for open Tenders, there was a possibility of selecting a contractor offering a very much lower price say at least 50% to 70% less than the CHE to construct this Port project, I like to quote the Sunday Leader of October 31st, 2010.  “While Hyundai which is building the Colombo South Port Breakwater quoted Rs.33.5 billion and clinched the Tender in 2008. China harbour Engineering (CHE) bid for Rs. 58.2 billion i.e. 24.7 billion more than the lowest tender from Hyundai (sic, lost the tender)”.

 

For instance the ADB (Asian Development Bank) loan of US $ 300 million to build the Colombo South Harbour (CSH) breakwater is payable in 25 years (beginning from 2007 the year in which the contract was signed) and carries and interest component of six month LIBOR plus 0.6%. At present LIBOR is less than 1%.

 

But the terms of the loans obtained from the Exim Bank of China is not disclosed to the public, but according to information received from people having access to the “borrowing” a detail of these loans by the GOSL the interest rate payable varies from 5.8% to 7.2% payable in 10 years.

 

Now it is not a secret that the Government owned Sri Lanka Ports Authority (SLPA) which is the implementing agent of the Hambantota project where Dr. Wickrama is the Chairman, is expected to award the second phase of this project which includes the building of container terminals, again to the same Chinese contractor CHE, without calling for Open Tenders for a cost of US $ 800 million, in the coming months. It is not a secret that the GOSL is now negotiating with the Exim Bank to obtain a Commercial Loan for this amount and the interest rate will be not less than 7.2%. If the GOSL is borrowing money from the Exim Bank on Commercial Terms then it comes under Public Funds and if Public Funds are utilised to construct this Container terminal the correct procedure is to obtain OPEN TENDER under NPA Guidelines.

 

Most professionals are questioning the wisdom of constructing a Harbour without a feasibility study to verify the builderbility of this harbour.  The former Deputy Governor of the Central Bank Mr. W.A Wijewardane, a very experienced officer, has expressed his concerns over the construction of this Port at a seminar he addressed organised by the Organisation of Professional Associations.

 

General Fonseka and the NPA Guide Lines

General Fonseka, who is now serving a prison sentence of 2years and 6 months, was found guilty by a CM headed by Cashiered officers not having an iota of knowledge about Tender procedures or the NPA Guidelines. They found him guilty for being the Chairman of the Tender Board [a requirement under the NPA Guidelines that the Head of the Department should be the Chairman of the Tender Board] even he never sat in any Tender evaluation or approval body as the Chairman of the Tender Board, as he was very busy planning and preparing for a war every one thought including President Mahinda Rajapaksa is not winnable.

If General Sarath Fonseka, the Commander of the Army, who lead the victorious Army to annihilate the LTTE (now the same Army is selling vegetables and may sell fish  in the very near future according to some Army Brigadiers) had no time to worry about Rs. 2.4 million worth of purchases by the Army. But as the Chairman of the Tender Board he directed a Major General to be the Chairman and two other senior officers to be it is members to decide on a tender to purchase Night Vision Glasses, and few other items, the Army used to annihilate the enemy on the 18th May 2009.

 

Secretary of the Ministry of Defence Gotabaya Rajapaksa recommended and appointed the Tender Evaluation Committee consisting three Army Officer, who cull the tenders. Did these three officers were influenced by the then Army Commander General Fonseka?

 

 

 

Conclusion.

President Mahinda Rajapaksa, if he is an honest leader will questioned the Officers and others who procured the Hambantota Harbour without calling for open tenders by-passing his own instructions as given above and request the Attorney General to prosecute these officers to prove that he is a fair and reasonable leader.  If he failed to do so the right thinking people of Sri Lanka will believe that to take a personal revenge, President Rajapaksa and his brother Defence Secretary Gotabaya Rajapaksa fabricated a case against General Fonseka, with the help of the Attorney General and the Army Commander and selected three Cashiered Army Officer to sit as Judges and found him guilty for not disclosing his son-in-law who was not even a Director of HiCorp a company tendered for the supply of the above materials.

 

If General Sarath Fonseka is guilty of the above simple offence, what punishment should be given to Dr. Wickrama, Chairman of the Port Commission and others for violating the NPA Guidelines, by not calling for proper open tenders and awarding a tender to use Public Funds to construct a Harbour at Hambantota?

 

What about the Chairman of the Lanka Logistic and the Secretary of Defence Gotabaya Rajapaksa purchasing US $ 900 million (this figure and the details of Lanka Logistics is in the public domain) worth of Arms, ammunition, fighter planes etc,  over riding the NPA Guidelines assisted by a Legal Officer and the General Manager of Lanka Logistics.

 

Who is the Minister responsible for awarding Contracts for the 953 km road net work in the North to the Chinese without calling for open tender? The total costs of these contracts are not in the public domain but insiders of the Ministry of Highways assumed that Rs. 100 million + 25% Contingency sum i.e. Rs. 125 million may cost around Rs. 120 billion.  If this total funding cost is obtained as a loan from the Exim Bank @ 5.8% interest, it becomes Public Funding and as per the former Treasury regulations and the NPA Guidelines the Chairman of the RDA should have called for open tender to get the best available cost effective contact to complete all these works, as the ordinary people of Sri Lanka supposed to pay this money in few years time.

 

Not divulging the relationship of his son-in-law is constructed as a crime to imprison General Fonseka for purchasing Rs. 2.4 million worth of goods using the NPA Guidelines, I think our present Attorney General, the custodian of the Law and order of the country should indict every individual responsible for this robbery of public funds for procuring billion of rupees worth of goods and works NOT USING the NPA Guidelines, without any further delay and if not possible to indict them due to various other reasons request the Chief Justice to set free General Fonseka as he is wrongfully imprisoned for a crime  he has not committed and this crime is not recognise by Law in Sri Lanka.

 

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