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Midweek Review

Growing foreign dependency and India’s USD 4 bn lifeline

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Baglay on an inspection tour of the State Printing Corporation

By Shamindra Ferdinando

The Japanese embassy and UNICEF (United Nations Children’s Fund, previously known as United Nations International Children’s Emergency Fund), on 16 March, 2023, issued a joint statement that dealt with the impact the developing political-economic-social crisis is having on the poor in Sri Lanka.

The statement focused on the suffering of the children and measures taken by UNICEF, in consultation with the Governments of Japan and Sri Lanka, to provide relief to the needy.

However, what really captured public attention was the declaration made by the Japanese Ambassador, in Colombo, Mizukoshi Hideak, that with the latest contribution, amounting to USD 1.8 mn, the total Japanese financial assistance, provided through UNICEF alone, exceeded USD 3.8 mn, since the beginning of last year. That is definitely a significant package provided through a single UN agency, particularly against the backdrop of the unceremonious cancellation of the Japan- funded Light Rail Transit (LRT) project, in late Sept., 2020, by the Gotabaya Rajapaksa Government.

The directive, in this regard, was issued on 21 Sept., 2020, by Dr. P. B. Jayasundera, in his capacity as Secretary to the President, to the then Transport Secretary, Monti Ranatunga. That move ruined Sri Lanka’s relations with Japan.

Whoever advised the then President Gotabaya Rajapaksa to terminate the project, without consulting Japan, as head of the Cabinet-of-Ministers, he couldn’t absolve himself of the responsibility for the ruination of vital relationship with Tokyo. Had it not been the case, Japan, most probably, would have delivered a substantial assistance to Sri Lanka, at the onset of the ongoing unprecedented crisis.

Sri Lanka made a failed bid to secure as much as USD 3.5 bn loan from Japan, during the tenure of Sanjiv Gunasekara as Sri Lanka’s Ambassador in Tokyo. Gunasekara, a close associate of President Gotabaya Rajapaksa, resigned in the wake of the 09 May, 2022, violence, that gave a turbo boost to the campaign against his government.

Unlike Japan, India provided direct aid in various forms to Sri Lanka, struggling to cope up with what became an insurmountable crisis to overcome on our own. India has repeatedly declared that the continuing assistance is in line with Premier Narendra Modi’s much touted ‘Neighbourhood First’ policy. Sri Lanka received concessional credit facility, amounting to USD 1 bn, in March last year. In addition to that, by the second week of March this year, Sri Lanka received other lines of credit, worth over USD 3 bn. Therefore, the total Indian assistance is worth over USD 4 bn, a staggering amount as Sri Lanka’s debt before the Japanese and Indian interventions stood at over USD 53 bn. Indian intervention cannot be compared, under any circumstances, with assistance provided by any other country.

The Indian assistance is of immense importance as the International Monetary Fund (IMF), after much deliberation, promised USD 2.9 bn over a period of four years. The delay on the part of China to provide an assurance as regards debt-restructuring support, hindered the finalization of the tripartite agreement involving Sri Lanka, creditors and IMF. Finally, China gave that assurance, in writing, early this month.

Indrajit Coomaraswamy

The situation was so precarious, Sri Lanka couldn’t have even provided the free text books that have been given, annually, to the student population ,from the time of the JRJ regime. Those who had been at the helm of political power, over the past three decades, to varying degrees, ruined the economy, and, by 2021/2022, Sri Lanka was unable to provide even the basic requirements, like cooking gas, kerosene, petrol, etc., as even remittances from our expatriate workers, which in the past amounted to about seven billion dollars per year, dropped drastically due to the illegal underground banking system, hawala/undiyal, hijacking much of it from the normal banks. The government didn’t have the means to provide school text books for the 2023 academic year. In consultation with India, of the USD 1 bn concessional credit facility, over USD 10 mn was utilized by the State Printing Corporation, and private importers, to procure printing paper and other material from India. India met 45% (four mn students) of the total requirement. Indian High Commissioner Gopal Baglay visited the SPC, on 09 March, 2023, to dispatch a consignment of textbooks to schools. Education Minister Dr. Susil Premjayantha joined Baglay. The Indian High Commission statement, issued two days later,, was aptly titled ‘India’s support for text books investment in Sri Lanka’s future.’

The government and the Opposition should be ashamed of their failure to provide for the children’s need.

Perhaps, a Parliamentary Select Committee (PSC) should be appointed to examine the circumstances leading to Sri Lanka’s bankruptcy status. Decades of utterly irresponsible management of the economy, coupled with an explosive mixture of causes – waste, corruption and irregularities – caused the current crisis.

Political parties, represented in Parliament, are responsible for the continuing crisis, to varying degrees.

Controversy over ISBs

The Island discussed some of the issues at hand in last week’s midweek piece, headlined ‘All praise for Lanka’s saviours!

What Dr. Coomaraswamy didn’t say was that as the CB Governor, he was also directly responsible for the Yahapalana government borrowing a record USD 12.5 bn from the international bond market, at high interest rates, from private lenders, primarily in the West. So what did that government achieve with such huge borrowings? All that the Yahapalana regime achieved, with all that money, we cannot see, except to lay the foundation for the current debt crisis?

Our comment on the basis of recent claims that the Governor of the Central Bank, Dr. Coomaraswamy (2016-2019), only told one side of the truth, attracted responses from several parties, including the Central Bank.

Consequently, the writer discussed the borrowing of USD 12.5 bn, and related matters, and was told the following: First, it is important to point out that the Governor, Central Bank, has no authority to approve or undertake any borrowing on behalf of the government. The borrowing limit, in any given year, is set by Parliament. Therefore, the government cannot borrow beyond the limit set by Parliament. In addition, all external borrowing has to be approved by the Finance Minister, and the Cabinet of Ministers. The Governor and the CBSL only have an advisory role. On ISBs, they have marketing and issuance as additional responsibilities once the Cabinet approved the transaction.

It is also important to recognize that ISBs are only one channel for external commercial borrowings. Others include short-term SWAPs, foreign term loans/syndicated loans and external flows into government rupee securities. The article dealt with only one instrument, having ignored the switching that was undertaken during 2015-19 to increase the maturity and reduce the cost of foreign borrowing.

As regards the USD 10 bn increase in ISBs outstanding during 2015-19, USD 5 bn of this increase can be attributed to switching away from shorter term (one year or less) and more expensive SWAPs and highly volatile foreign portfolio investment (hot money) in Government rupee securities to longer term (5 and 10 years) and less costly ISBs. SWAPs were reduced from approximately USD 2.5 bn to USD 500 mn.

Volatile and foreign investment in government rupee securities was reduced from USD 3.5 bn to USD 600 mn. In addition, during the course of 2019, a second ISB of USD 2 bn was issued to create a stronger buffer of external reserves to address the inevitable increase in uncertainty going into elections due shortly thereafter. (The money required for 2019 had been raised through an ISB, issued in March 2019.)

So about USD 7 bn of the USD 10 bn increase in the stock of ISBs outstanding, during 2015-19 may be attributed to increasing the stability and reducing the cost of the ISBs outstanding by switching instruments and raising the buffer provided by external reserves prior to a period of uncertainty, associated with elections.

The remaining increase of USD 3 bn may be partly attributed to the fact that borrowing incurred earlier had not resulted in a sufficient increase and/or saving of foreign exchange. Hence money had to be borrowed to repay debt incurred earlier. In fact, Verite Research found that 89 percent of external debt, repaid during 2015-19, could be accounted for by liabilities incurred prior to 2015.

The adverse debt dynamics were recognized and the Medium Term Debt Management Strategy was published in April 2019 to chart the way to sustainability. In addition, the Active Liability Management Act (2018) was introduced to expand the tools available to the CBSL for managing external debt sustainably. The CBSL, as the economic adviser to the Government, also advocated that there should be a primary surplus in the budget and that non-debt creating inflows (such as exports, remittances, tourism proceeds, FDI, inflows into the CSE and government securities) should be increased to enhance the capacity to service debt while supporting the level of imports necessary to achieve the growth potential of the economy.

They also pointed out that only one of the ISBs, issued during 2015-19, has been settled to date. This amounted to USD 500mn. They expressed the view that it is not possible to sustain the argument that servicing ISBs, incurred during 2015-19 ,led to the standstill in debt repayments in April 2023.

Treasury bond scams and tax cuts

The US embassy released this picture of
Ambassador Chung at an event in
Colombo where the second shipment of
36,000 metric tons of Triple Super
Phosphate (TSP) was handed over to Sri
Lanka. It brings the total of USAID-supported
TSP and urea fertiliser to more than
45,000MT, over the last year.

Sweeping tax concessions to the rich and reduction of VAT, that had been introduced by President Gotabaya Rajapaksa’s government to encourage business in 2019/2020, escalated the financial crisis, leading to the declaration of the state of bankruptcy, two years later. No one in the Gotabaya Rajapaksa’s cabinet dared to challenge such far reaching tax concessions and VAT reduction.

How the loss of as much as Rs 600 bn in revenue, as alleged by the Opposition ,due to tax concessions and reduction of VAT, contributed to the current crisis, should be examined, also taking into consideration (1) Treasury bond scams perpetrated in Feb, 2015 and March 2016 at a time the CBSL has been under the then Prime Minister Ranil Wickremesinghe, in his capacity as Minister of Policy Planning and Economic Affairs (2) Enactment of new Foreign Exchange Act in 2017 in the wake of Treasury bond scams. Critics say the repealing of time-tested exchange control law that has been in place for decades paved the way for exporters to ‘park’ export proceeds overseas. Of the 225 MPs, 94 voted for the new law whereas 18 voted against. In spite of Justice Minister, Dr. Wijeyadasa Rajapakse, PC, taking up this issue, both in and outside Parliament, remedial measures hasn’t been taken, to date. The Finance Ministry owed an explanation as to how it intended to compel the exporters to bring back export proceeds (3) Continuing public-private sector partnership in corrupt practices, particularly mis-invoicing (under invoicing and over invoicing of imports/exports) (4) Pivithuru Hela Urumaya leader Udaya Gammanpila, MP, has moved the Supreme Court against the Central Bank Bill. The Attorney-at-Law alleged that the new law violated Article 3 and 4 of the Constitution hence needing the approval of the people at a referendum. In addition to Gammanpila, Dr. Gunadasa Amarasekera and Jathika Nidahas Peramuna leader Wimal Weerawansa, too, moved the Supreme Court in terms of the Article 121 against the Bill titled ‘Central Bank of Sri Lanka.’ Former JVP MP Wasantha Samarasinghe, on behalf of the Jathika Jana Balavegaya (JJB), too, moved the Supreme Court in this regard.

A warning from Hanke

The country is in a bind. In spite of the execution of the agreement with the IMF later this month, the situation remains dicey. The absence of economic recovery plan continues to cause further instability.

Therefore, the government and the Opposition should seek a consensus on a national action plan, even if Local Government polls cannot be conducted in late April, regardless of the Supreme Court intervention.

Steve Hanke, Professor of Applied Economics, at Johns Hopkins University, in the USA, recently issued a dire warning to Sri Lanka. Appearing on CNBC’s ‘Squawk Box Asia,’ Prof. Hanke declared Sri Lanka needs institutional reforms in order to achieve long-term debt sustainability.

Referring to Sri Lanka and what was described as emerging markets (Argentina and Montenegro), where he played a key role in establishing new currency regime, former economic advisor to US President Ronald Reagan warned “Unless you change the institutions and the rules of the game, governing these countries, they’re always going to remain in the same … situation that they’ve been in for a long time.”

Prof. Hanke added: “In fact, most of the personalities, involved in Sri Lanka ,at the high level, are exactly the same as they’ve been for years. So nothing has changed.”

In other words, those who have ruined Sri Lanka are spearheading the economic recovery process. The American is spot on. Sri Lanka is in a pathetic situation. Those who had systematically brought Sri Lanka to its knees, by pursuing ill-fated policies, emerged as its saviours. That is the bitter truth. The role of the executive, legislature, and judiciary, needs to be examined. Those who have moved the Supreme Court against the Bill, titled ‘Central Bank of Sri Lanka,’ have quite conveniently forgotten how the Yahapalana government, and Central Bank, twice perpetrated Treasury bond scams. What would have Prof. Hanke said if CNBC raised Treasury bonds scams during ‘Squawk Box Asia.’

If not for Deepa Seneviratne, the then head of Public Debt Department, Governor Arjuna Mahendran’s role couldn’t have been proved. Former Auditor General Gamini Wijesinghe said so at an event organized by the Colombo Municipal Council years ago.

Sri Lanka cannot forget Prof. Hanke’s remark in the CNBC programme. “You have to remember that we have a country that since 1965 has had 16 IMF programmes and they’ve all failed. You get temporary relief in anticipation of a bailout. But in the long run … none of these IMF programmes work.”

It would be pertinent to briefly examine how interested parties brazenly protected perpetrators of the Treasury bond scams.

Having named Mahendran as the Governor, regardless of the opposition from President Maithripala Sirisena, those planning to commit the first daylight robbery of the Central Bank moved Deepa Seneviratne to the Public Debt Department as its head, in spite of her not having had any previous experience in the particular division. It seems they had obviously felt comfortable in having a lady officer there they thought they could manipulate her to suit their need. But Seneviratne turned tables on the bond thieves by putting up a note to register her strong opposition to Mahendran’s move. She should have been rewarded for her fearless stand with at least a national honour if not an international one, even from bodies like the UN, the Transparency International, Amnesty International, etc. But it seems that even these international busy bodies have their own political angles.

It would be of pivotal importance to keep in mind that President Sirisena appointed a Commission of Inquiry (CoI) in January 2017, about 10 months after the second robbery, and two years after the first.

The Commission comprised Justice K.T. Chitrasiri, the late Justice P S Jayawardena and retired Deputy Auditor General V. Kandasamy. Sumathipala Udugamsuriya functioned as its Secretary. CoI issued a devastating report that implicated Perpetual Treasuries Limited (PTL) in the Treasury bond scams.

President Sirisena went to the extent of dissolving Parliament, in June 2015, to prevent the Committee on Public Enterprises (COPE) tabling its report on the first bond scam. SLFP leader Sirisena owes an explanation. Justice Chitrasiri’s CoI didn’t inquire into that aspect. Sri Lanka’s response to waste, corruption, irregularities and mismanagement is baffling. Let me end this piece reminding how the Bar Association of Sri Lanka (BASL) secured a substantial sponsorship from Perpetual Treasuries Limited (PTL) deeply mired in a bond scam, in 2016, for the Law Asia Conference during the tenure of its then President Geoffrey Alagaratnam, PC. The BASL never explained why it obtained PTL sponsorship even after the exposure of Treasury bond scams. That partnership also escaped the CoI. The rest is history.

Knowing what is now happening to the US economy with a string of bank failures and unprecedented bailouts, especially due to hoodoo economics it introduced in recent decades, like repeated quantitative easing (blindly printing trillions of dollars leading many to say the dollar is now only good as toilet paper) that has been practiced to ensure its world hegemony, the whole world might be hit with bank failures and even by a depression worse than the one that befell with the stock market crash of 1929. Already the contagion has spread to Europe with some leading banks there also requiring help.

Washington’s debt now stands at USD 31 trillion and climbing, but our own debt burden is still under USD 55 billion. So if we can get our exporters, who have stashed export earnings abroad, to bring them back, the picture here will not be as scary as it is made out to be. Even Minister Wijeyadasa Rajapakse has said that our export proceeds that have been parked overseas is in the region of USD 55 billion.

Soonwe will start receiving the IMF bailout, but our economic whiz kids have not done anything to plug the massive foreign exchange leak that has been freely draining foreign currency from the country, since the nineties, by way of private foreign exchange dealers who have been allowed to sell foreign exchange to any Tom, Dick and Harry, including drug dealers, to take their sales proceeds out of the country!

We would also like to ask the relevant authorities what they have done to recover monies stashed abroad by Lankans illegally that were exposed in great detail by the likes of Panama Papers and Pandora Papers.



Midweek Review

At the edge of a world war

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In September 1939, as Europe descended once more into catastrophe, E. H. Carr published The Twenty Years’ Crisis. Twenty years had separated the two great wars—twenty years to reflect, to reconstruct, to restrain. Yet reflection proved fragile. Carr wrote with unsentimental clarity: once the enemy is crushed, the “thereafter” rarely arrives. The illusion that power can come first and morality will follow is as dangerous as the belief that morality alone can command power. Between those illusions, nations lose themselves.

His warning hovers over the present war in Iran.

The “thereafter” has long haunted American interventions—after Afghanistan, after Iraq, after Libya. The enemy can be dismantled with precision; the aftermath resists precision. Iran is not a small theater. It is a civilization-state with a geography three times larger than Iraq. At its southern edge lies the Strait of Hormuz, narrow in width yet immense in consequence. Geography does not argue; it compels.

Long before Carr, in the quiet anxiety of the eighteenth century, James Madison, principal architect of the Constitution, warned that war was the “true nurse of executive aggrandizement.” War concentrates authority in the name of urgency. Madison insisted that the power to declare war must rest with Congress, not the president—so that deliberation might restrain impulse. Republics persuade themselves that emergency powers are temporary. History rarely agrees.

Then, at 2:30 a.m., the abstraction becomes decision.

Donald Trump declares war on Iran. The announcement crosses continents before markets open in Asia. Within twenty-four hours, Ali Khamenei, who ruled for thirty-seven years, is killed. The President calls him one of history’s most evil figures and presents his death as an opening for the Iranian people.

In exile, Reza Pahlavi hails the moment as liberation. In less than forty-eight hours, the Islamic Revolutionary Guard Corps collapses under overwhelming air power. A regime that endured decades falls swiftly. Military efficiency appears absolute. Yet efficiency does not resolve legitimacy.

The joint strike with Israel is framed as necessary and pre-emptive. Retaliation follows across the Gulf. The architecture of energy trade becomes fragile. Shipping routes are recalculated. Markets respond before diplomacy finds its language.

It is measured in the price of petrol in Colombo. In the bus fare in Karachi. In the rising cost of cooking gas in Dhaka. It is heard in the anxious voice of a migrant worker in Doha calling home to Kandy, asking whether contracts will be renewed, whether flights will continue, whether wages will be delayed. It is calculated in foreign reserves already strained, in currencies that tremble at rumor, in budgets forced to choose between subsidy and solvency.

Zaara was the breadwinner of her house in Sri Lanka. Her husband had been unemployed for years. At last, he secured an opportunity to travel to Israel as a foreign worker—like many Sri Lankans who depend on employment in the Middle East. It was to be their turning point: a small house repaired, debts reduced, dignity restored.

Now she lowers her eyes when she speaks. For Zaara, geopolitics is not theory. It is fear measured in distance—between a construction site abroad and a village waiting at home.

The war in Iran has shattered calculations that once felt practical. Nations like Sri Lanka now require strategic foresight to navigate unfolding realities. Reactive responses—whether to natural disasters or external shocks like this conflict—can cripple economies far faster than gradual pressures. Disruptions to energy imports, migrant remittances, and foreign reserves show how distant wars ripple into daily lives.

War among great powers is debated in think tanks. Its consequences are lived in markets—and in quiet kitchens where uncertainty sits heavier than hunger.

The conflict does not unfold in isolation. It enters the strategic calculus of China and Russia, both attentive to precedent. Power projected beyond the Western hemisphere reshapes perceptions in the Eastern theater. Iran’s transformation intersects directly with broader alignments. In 2021, Beijing and Tehran signed a twenty-five-year strategic agreement. By 2025, China was purchasing the majority of Iran’s exported oil at discounted rates. Energy underwrote strategy. That continuity has been disrupted. Yet strategic relationships do not vanish; they adjust.

In Winds of Change, my new book, I reproduce Nicholas Spykman’s 1944 two-theater confrontation map—Europe and the Pacific during the Second World War. Spykman distinguished maritime power from amphibian projection. Control of the Rimland determined balance. Then, the United States fought across two vast theaters. Today, Europe remains unsettled through Ukraine, the Pacific simmers over Taiwan and the South China Sea, Latin America remains sensitive, and the Middle East has been abruptly transformed. The architecture of multi-theater tension reappears.

At this juncture, the reflections of Marwan Bishara acquire weight. America’s ultimate power, he argues, resides in deterrence, not in the habitual use of force. Power, especially when shared, stabilizes. Force, when used with disregard for international law, breeds instability and humiliation. Arrogance creates enemies and narrows judgment. It is no surprise that many Americans themselves believe the United States should not act alone.

America’s strength does not rest solely in its military reach. Its economy constitutes roughly one-third of global output and generates close to 40 percent of the world’s research and development. Structural power—economic, technological, institutional—has historically underwritten deterrence. When force becomes the primary instrument, influence risks becoming coercion.

The United States now confronts simultaneous pressures across continents. The Second World War demonstrated the capacity to sustain multi-theater engagement; the post-9/11 wars revealed the exhaustion that follows prolonged intervention. Iran, larger and geopolitically deeper, presents a scale that cannot be resolved by air power alone.

Carr’s “thereafter” waits patiently. Military victory may be swift; political reconstruction is slow. Bishara reminds us that deterrence sustains stability, while force risks unraveling it.

At the edge of a potential world war, the decisive question is not who strikes first, but who restrains longest.

History watches. And in places far from the battlefield, mothers wait for phone calls that may not come.

Asanga Abeyagoonasekera is a Senior Research Fellow at the Millennium Project, Washington, D.C., and the author of Winds of Change: Geopolitics at the Crossroads of South and Southeast Asia, published by World Scientific

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Midweek Review

Live Coals Burst Aflame

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Live coals of decades-long hate,

Are bursting into all-consuming flames,

In lands where ‘Black Gold’ is abundant,

And it’s a matter to be thought about,

If humans anywhere would be safe now,

Unless these enmities dying hard,

With roots in imperialist exploits,

And identity-based, tribal violence,

Are set aside and laid finally to rest,

By an enthronement of the principle,

Of the Equal Dignity of Humans.

By Lynn Ockersz

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Midweek Review

Saga of the arrest of retired intelligence chief

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Retired Maj. Gen. Suresh Sallay’s recent arrest attracted internatiattention. His long-expected arrest took place ahead of the seventh anniversary of the bombings. Multiple blasts claimed the lives of nearly 280 people, including 45 foreigners. State-owned international news television network, based in Paris, France 24, declared that arrest was made on the basis of information provided by a whistleblower. The French channel was referring to Hanzeer Azad Moulana, who earlier sought political asylum in the West and one-time close associate of State Minister Sivanesathurai Chandrakanthan aka Pilleyan. May be the fiction he wove against Pilleyan and others may have been to strengthen his asylum claim there. Moulana is on record as having told the British Channel 4 that Sallay allowed the attack to proceed with the intention of influencing the 2019 presidential election. The French news agency quoted an investigating officer as having said: “He was arrested for conspiracy and aiding and abetting the Easter Sunday attacks. He has been in touch with people involved in the attacks, even recently.”

****

Suresh Sallay of the Directorate of Military Intelligence (DMI) received the wrath of Yahapalana Prime Minister Ranil Wickremesinghe, in 2016, over the reportage of what the media called the Chavakachcheri explosives detection made on March 30, 2016. Premier Wickremesinghe found fault with Sallay for the coverage, particularly in The Island. Police arrested ex-LTTE child combatant Edward Julian, alias Ramesh, after the detection of one suicide jacket, four claymore mines, three parcels containing about 12 kilos of explosives, to battery packs and several rounds of 9mm ammunition, from his house, situated at Vallakulam Pillaiyar Kovil Street. Chavakachcheri police made the detection, thanks to information provided by the second wife of Ramesh. Investigations revealed that the deadly cache had been brought by Ramesh from Mannar (Detection of LTTE suicide jacket, mines jolts government: Fleeing Tiger apprehended at checkpoint, The Island, March 31, 2016).

The then Jaffna Security Forces Commander, Maj. Gen. Mahesh Senanayake, told the writer that a thorough inquiry was required to ascertain the apprehended LTTE cadre’s intention. The Chavakachcheri detection received the DMI’s attention. The country’s premier intelligence organisation meticulously dealt with the issue against the backdrop of an alleged aborted bid to revive the LTTE in April 2014. Of those who had been involved in the fresh terror project, three were killed in the Nedunkerny jungles. There hadn’t been any other incidents since the Nedunkerny skirmish, until the Chavakachcheri detection.

Piqued by the media coverage of the Chavakachcheri detection, the Sirisena-Wickremesinghe administration tried to silence the genuine Opposition. As the SLFP had, contrary to the expectations of those who voted for the party at the August 2015 parliamentary elections, formed a treacherous coalition with the UNP, the Joint Opposition (JO) spearheaded the parliamentary opposition.

The Criminal Investigation Department (CID) questioned former External Affairs Minister and top JO spokesman, Prof. G.L. Peiris, over a statement made by him regarding the Chavakachcheri detection. The former law professor questioned the legality of the CID’s move against the backdrop of police declining to furnish him a certified copy of the then acting IGP S.M. Wickremesinghe’s directive that he be summoned to record a statement as regards the Chavakachcheri lethal detection.

One-time LTTE propagandist Velayutham Dayanidhi, a.k.a. Daya Master, raised with President Maithripala Sirisena the spate of arrests made by law enforcement authorities, in the wake of the Chavakachcheri detection. Daya Master took advantage of a meeting called by Sirisena, on 28 April, 2016, at the President’s House, with the proprietors of media organisations and journalists, to raise the issue. The writer having been among the journalists present on that occasion, inquired from the ex-LETTer whom he represented there. Daya Master had been there on behalf of DAN TV, Tamil language satellite TV, based in Jaffna. Among those who had been detained was Subramaniam Sivakaran, at that time Youth Wing leader of the Illankai Thamil Arasu Kadchi (ITAK), the main constituent of the now defunct Tamil National Alliance. In addition to Sivakaran, the police apprehended several hardcore ex-LTTE cadres (LTTE revival bid confirmed: TNA youth leader arrested, The Island April 20, 2016).

Ranil hits out at media

Subsequent inquiries revealed the role played by Sivakaran in some of those wanted in connection with the Chavakachcheri detection taking refuge in India. When the writer sought an explanation from the then TNA lawmaker, M.A. Sumanthiran, regarding Sivakaran’s arrest, the lawyer disowned the Youth Wing leader. Sumanthiran emphasised that the party suspended Sivakumaran and Northern Provincial Council member Ananthi Sasitharan for publicly condemning the TNA’s decision to endorse Maithripala Sirisena’s candidature at the 2015 presidential election (Chava explosives: Key suspects flee to India, The Island, May 2, 2016).

Premier Wickremesinghe went ballistic on May 30, 2016. Addressing the 20th anniversary event of the Sri Lanka Muslim Media Forum, at the Sports Ministry auditorium, the UNP leader castigated the DMI. Alleging that the DMI had been pursuing an agenda meant to undermine the Yahapalana administration, Wickremesinghe, in order to make his bogus claim look genuine, repeatedly named the writer as part of that plot. Only Wickremesinghe knows the identity of the idiot who influenced him to make such unsubstantiated allegations. The top UNPer went on to allege that The Island, and its sister paper Divaina, were working overtime to bring back Dutugemunu, a reference to war-winning President Mahinda Rajapaksa. A few days later, sleuths from the Colombo Crime Detection Bureau (CCD) visited The Island editorial to question the writer where lengthy statements were recorded. The police were acting on the instructions of the then Premier, who earlier publicly threatened to send police to question the writer.

In response to police queries about Sallay passing information to the media regarding the Chavakachcheri detection and subsequent related articles, the writer pointed out that the reportage was based on response of the then ASP Ruwan Gunasekera, AAL and Sumanthiran, as had been reported.

Wickremesinghe alleged, at the Muslim media event, that a section of the media manipulated coverage of certain incidents, ahead of the May Day celebrations.

In early May 2016 Wickremesinghe disclosed that he received assurances from the police, and the DMI, that as the LTTE had been wiped out the group couldn’t stage a comeback. The declaration was made at the Lakshman Kadirgamar Institute for International Relations and Strategic Studies (LKIIRIS) on 3 May 2016. Wickremesinghe said that he sought clarifications from the police and the DMI in the wake of the reportage of the Chavakachcheri detection and related developments (PM: LTTE threat no longer exists, The Island, May 5, 2016).

The LTTE couldn’t stage a comeback as a result of measures taken by the then government. It would be a grave mistake, on our part, to believe that the eradication of the LTTE’s conventional military capacity automatically influenced them to give up arms. The successful rehabilitation project, that had been undertaken by the Rajapaksa government and continued by successive governments, ensured that those who once took up arms weren’t interested in returning to the same deadly path.

In spite of the TNA and others shedding crocodile tears for the defeated Tigers, while making a desperate effort to mobilise public opinion against the government, the public never wanted the violence to return. Some interested parties propagated the lie that regardless of the crushing defeat suffered in the hands of the military, the LTTE could resume guerilla-type operations, paving the way for a new conflict. But by the end of 2014, and in the run-up to the presidential election in January following year, the situation seemed under control, especially with Western countries not wanting to upset things here with a pliant administration in the immediate horizon. Soon after the presidential election, the government targeted the armed forces. Remember Sumanthiran’s declaration that the ITAK Youth Wing leader Sivakaran had been opposed to the TNA backing Sirisena at the presidential poll.

The US-led accountability resolution had been co-sponsored by the Sirisena-Wickremesinghe duo to appease the TNA and Tamil Diaspora. The Oct. 01, 2016, resolution delivered a knockout blow to the war-winning armed forces. The UNP pursued an agenda severely inimical to national interests. It would be pertinent to mention that those who now represent the main Opposition, Samagi Jana Balawegaya (SJB), were part of the treacherous UNP.

Suresh moved to Malaysia

The Yahapalana leadership resented Sallay’s work. They wanted him out of the country at a time a new threat was emerging. The government attacked the then Justice Minister Dr. Wijeyadasa Rajapakshe, PC, who warned of the emerging threat from foreign-manipulated local Islamic fanatics on 11 Nov. 2016, in Parliament. Rajapakshe didn’t mince his words when he underscored the threat posed by some Sri Lanka Muslim families taking refuge in Syria where ISIS was running the show. The then government, of which he was part o,f ridiculed their own Justice Minister. Both Sirisena and Wickremesinghe feared action against extremism may cause erosion of Muslim support. By then Sallay, who had been investigating the deadly plot, was out of the country. The Yahapalana government believed that the best way to deal with Sallay was to grant him a diplomatic posting. Sally ended up in Malaysia, a country where the DMI played a significant role in the repatriation of Kumaran Pathmanathan, alias KP, after his arrest there.

Having served the military for over three cadres, Sallay retired in 2024 in the rank of Major General. Against the backdrop of his recent arrest, in connection with the ongoing investigation into the 2019 Easter Sunday carnage, The Island felt the need to examine the circumstances Sallay ended up in Malaysia at the time. Now, remanded in terms of the Prevention of terrorism Act (PTA), he is being accused of directing the Easter Sunday operation from Malaysia.

Pivithuru Hela Urumaya leader and former Minister Udaya Gammanpila has alleged that Sallay was apprehended in a bid to divert attention away from the deepening coal scam. Having campaigned on an anti-corruption platformm in the run up to the previous presidential election, in September 2024, the Parliament election, in November of the same year, and local government polls last year, the incumbent dispensation is struggling to cope up with massive corruption issues, particularly the coal scam, which has not only implicated the Energy Minister but the entire Cabinet of Ministers as well.

The crux of the matter is whether Sallay actually met would-be suicide bombers, in February 2018, in an estate, in the Puttalam district, as alleged by the UK’s Channel 4 television, like the BBC is, quite famous for doing hatchet jobs for the West. This is the primary issue at hand. Did Sallay clandestinely leave Malaysia to meet suicide bombers in the presence of Hanzeer Azad Moulana, one-time close associate of State Minister Sivanesathurai Chandrakanthan, aka Pilleyan, former LTTE member?

The British channel raised this issue with Sallay, in 2023, at the time he served as Director, State Intelligence (SIS). Sallay is on record as having told Channel 4 Television that he was not in Sri Lanka the whole of 2018 as he was in Malaysia serving in the Sri Lankan Embassy there as Minister Counsellor.

Therefore, the accusation that he met several members of the National Thowheeth Jamaath (NTJ), including Mohamed Hashim Mohamed Zahran, in Karadipuval, Puttalam, in Feb. 2018, was baseless, he has said.

The intelligence officer has asked the British television station to verify his claim with the Malaysian authorities.

Responding to another query, Sallay had told Channel 4 that on April 21, 2019, the day of the Easter Sunday blasts, he was in India, where he was accommodated at the National Defence College (NDC). That could be verified with the Indian authorities, Sallay has said, strongly denying Channel 4’s claim that he contacted one of Pilleyan’s cadres, over, the phone and directed him to pick a person outside Hotel Taj Samudra.

According to Sallay, during his entire assignment in Malaysia, from Dec. 2016 to Dec. 2018, he had been to Colombo only once, for one week, in Dec. 2017, to assist in an official inquiry.

Having returned to Colombo, Sallay had left for NDC, in late Dec. 2018, and returned only after the conclusion of the course, in November 2019.

Sallay has said so in response to questions posed by Ben de Pear, founder, Basement Films, tasked with producing a film for Channel 4 on the Easter Sunday bombings.

The producer has offered Sallay an opportunity to address the issues in terms of Broadcasting Code while inquiring into fresh evidence regarding the officer’s alleged involvement in the Easter Sunday conspiracy.

The producer sought Sallay’s response, in August 2023, in the wake of political upheaval following the ouster of Gotabaya Rajapaksa, elected at the November 2019 presidential election.

At the time, the Yahapalana government granted a diplomatic appointment to Sallay, he had been head of the Directorate of Military Intelligence (DMI). After the 2019 presidential election, President Gotabaya Rajapaksa named him the Head of SIS.

The Basement Films has posed several questions to Sallay on the basis of accusations made by Hanzeer Azad Moulana.

In response to the film producer’s query regarding Sallay’s alleged secret meeting with six NTJ cadres who blasted themselves a year later, Sallay has questioned the very basis of the so called new evidence as he was not even in the country during the period the clandestine meeting is alleged to have taken place.

Contradictory stands

Following Sajith Premadasa’s anticipated defeat at the 2019 presidential election, Harin Fernando accused the Catholic Church of facilitating Gotabaya Rajapaksa’s victory. Fernando, who is also on record as having disclosed that his father knew of the impending Easter Sunday attacks, pointed finger at the Archbishop of Colombo, Rt. Rev Malcolm Cardinal Ranjith, for ensuring Gotabaya Rajapaksa’s victory.

Former President Maithripala Sirisena, as well as JVP frontliner Dr. Nalinda Jayathissa, accused India of masterminding the Easter Sunday bombings. Then there were claims of Sara Jasmin, wife of Katuwapitiya suicide bomber Mohammed Hastun, being an Indian agent who was secretly removed after the Army assaulted extremists’ hideout at Sainthamaruthu in the East. What really had happened to Sara Jasmin who, some believe, is key to the Easter Sunday puzzle.

Then there was huge controversy over the arrest of Attorney-at-Law Hejaaz Hizbullah over his alleged links with the Easter Sunday bombers. Hizbullah, who had been arrested in April 2020, served as lawyer to the extremely wealthy spice trader Mohamed Yusuf Ibrahim’s family that had been deeply involved in the Easter Sunday plot. Mohamed Yusuf Ibrahim had been on the JVP’s National List at the 2015 parliamentary elections. The lawyer received bail after two years. Two of the spice trader’s sons launched suicide attacks, whereas his daughter-in-law triggered a suicide blast when police raided their Dematagoda mansion, several hours after the Easter Sunday blasts.

Investigations also revealed that the suicide vests had been assembled at a factory owned by the family and the project was funded by them. It would be pertinent to mention that President Gotabaya Rajapaksa’s government never really bothered to conduct a comprehensive investigation to identify the Easter Sunday terror project. Perhaps, their biggest failure had been to act on the Presidential Commission of Inquiry (PCoI) recommendations. Instead, President Rajapaksa appointed a six-member committee, headed by his elder brother, Chamal Rajapaksa, to examine the recommendations, probably in a foolish attempt to improve estranged relations with the influential Muslim community. That move caused irreparable damage and influenced the Church to initiate a campaign against the government. The Catholic Church played quite a significant role in the India- and US-backed 2022 Aragalaya that forced President Rajapaksa to flee the country.

Interested parties exploited the deterioration of the national economy, leading to unprecedented declaration of the bankruptcy of the country in April 2022, to mobilie public anger that was used to achieve political change.

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