Midweek Review

Growing foreign dependency and India’s USD 4 bn lifeline

Published

3 years ago

2023/03/22

Sahan Weerasooriya

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.

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Midweek Review

Opp. caught up in CIABOC offensive

Published

6 days ago

2026/06/24

Sahan Weerasooriya

Mahinda Rajapaksa leaving CIABOC on 12 June, 2026

The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) on 12 June questioned former President Mahinda Rajapaksa regarding the USD 2 Mn bribe allegation directed at the late SriLankan CEO Kapila Chandrasena, whose body was found on 8 May in a close relative’s home in Kollupitiya. Chandrasena’s alleged suicide sent shock waves through political circles and interested parties questioned the circumstances leading to him being granted bail on 6 May on cash bail of Rs. 500,000 with three sureties of Rs. 10 million each. The Colombo Magistrate court also imposed a travel ban. The issue at hand is as to how Mohamed Riswan and Mohamed Irshan stood as sureties for Chandrasekera. Of all the investigations undertaken by the CIABOC, the USD 2 Mn bribe case is the most politically charged probe.

Of the Rajapaksas, former State Minister Shasheendra Rajapaksa is so far the last to be indicted. CIABOC on 19 June filed indictments before the Colombo High Court against him and two others Sepalika Saman Kumari and Keerthi Bandara Kotagama. According to the charges, the accused are alleged to have committed the offence of corruption and aided and abetted the commission of the offence by using official influence to pressure certain government officials, attached to the Office for Reparations, to obtain compensation amounting to Rs. 8.85 million for a property built on a state land by Shasheendra and destroyed by marauding Aragalaya mobs.

By Shamindra Ferdinando

The ruling National People’s Power (NPP) government last week emphasised, in no uncertain terms, that it wouldn’t tolerate the growing Opposition challenge.

Amidst the growing controversy over the continuing detention of retired Maj. Gen. Suresh Sallay. in terms of the draconian Prevention of Terrorism Act (PTA), under humiliating conditions, in connection with the ongoing investigations into the 2019 Easter Sunday carnage, police arrested Sugeeshwara Bandara, leader of the New People’s Front (NPF). The Central Crime Investigation Bureau (CCIB) apprehended him on 18 June and the Fort Magistrate’s Court remended him till 1 July..

The CCIB also apprehended Binoy Hettiarachchi who was accompanying Bandara. Hettiarachchi served as a media coordinator at the former President Ranil Wickremesinghe’s Flower Road Office. Police intercepted their vehicle at Kollupitiya where the arrests were made like in an action-packed movie. Hettiarachchi was freed four hours later.

But, it would be better to identify Bandara as the former private secretary to President Gotabaya Rajapaksa as well as the Director General of Special Projects at the Presidential Secretariat in the wake of Ranil Wickremesinghe taking over the presidency.

Accused of receiving two salaries simultaneously, under the President’s Expenditure Head, Bandara who managed the media for Gotabaya Rajapaksa, in the run-up to the 2019 presidential election, is under investigation for abuse of government vehicles and employing government workers for political work.

Having launched his political career as the Colombo District organiser of the alliance New People’s Front, a breakaway faction of the UPFA, in February, 2024, Bandara contested the November, 2024, parliamentary polls on the New Democratic Front (NDF) ticket. But, of late, Bandara, as the leader of NPF, became one of the most active opposition activists, aligned with the political grouping, dubbed People’s United Opposition, operating from Ranil Wickremesinghe’s Flower Road Office.

Bandara drew the wrath of the government when he launched a noisy protest outside Finance Secretary Dr. Harshana Suriyapperuma’s residence at Akuregoda, Pelawatta, on 26 April, where he and his protesting supporters were given a shower of excreta. The group, led by Bandara, demanded the Finance Secretary’s resignation over the theft of USD 2.5 mn from the Treasury. No less a person than President Anura Kumara Dissanayake reacted angrily to Bandara’s actions.

Acknowledging the right for legitimate protests, the President warned against protests directed at residences of officials. On 18 April, Bandara led a protest outside Agriculture Minister K.D. Lal Kantha’s recently built luxury residence at Weliwita, Kaduwela, where he questioned how the JVPer managed to build such a home as he was on record as having repeatedly said that he lived a difficult life.

The police apprehended Bandara as he was returning from a meeting between senior representatives of the People’s United Opposition and the IMF Colombo at the Tiki Bar, Shangri-La. In spite of negligible parliamentary presence, with those elected on the NDF ticket at the last parliamentary election not really speaking in one voice, the Flower Road project has become a headache for the government.

In fact, the Flower Road operation has been causing continuous harassment to the NPP, while the Samagi Jana Balawegaya (SJB) struggled to play its anticipated role as the main Opposition. Instead of conducting a cohesive campaign against the cocky NPP government, members of the SJB seem to be pulling in different directions at the expense of the common opposition front.

Regardless of the Wickremesinghe-led grouping vowing to press ahead with its campaign, the arrest of Bandara is obviously meant to have a detrimental impact on the activities of the Opposition.

It would be pertinent to mention that Bandara had been among those who stayed with President Gotabaya Rajapaksa at the President’s House, in Colombo, as a massive protest erupted on 9 July, 2022. Bandara was among the last to flee the President’s House as the military withdrew, amidst mounting pressure on their positions.

The police arrested Bandara as former President Gotabaya Rajapaksa moved the Court of Appeal in terms of Article 140 of the Constitution to prevent him being arrested under the PTA. The wartime Defence Secretary sought the court intervention in the wake of police probing the 2019 Easter Sunday carnage and obtaining a travel ban against him.

The court heard Romesh de Silva PC’s submissions on behalf of the ex-President on 18 June. The court deferred the hearing to 24 June. The crux of the matter is that the ex-President fears that the CID is about to arrest him on the basis of a statement made by fugitive Azad Moulana, in Paris, linking Sallay directly with the Easter Sunday carnage.

NPP intensifies pressure

The NPP seems confident of its current course of action meant to pin down the Opposition. In spite of unbridled corruption being the major issue on the post-war election platform, no political party succeeded in going flat-out against the political opposition.

However, the NPP allowed the judicial process to continue. The first major sentencing was announced on 2 April, 2025, just six months after the parliamentary polls, handsomely won by the NPP. The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) moved the Colombo High Court successfully against the former Chief Minister of the North Central Province S.M. Ranjith Samarakoon.

Colombo High Court No. 01 Judge Adithya Patabendige sentenced him in terms of Section 70 of the Bribery Act. The HC declared the former CM perpetrated malpractices by ordering fuel to his personal secretary’s vehicle. The personal secretary happened to be Shanthi Chandrasena, wife of his brother S.M. Chandrasena, a former Cabinet Minister and one of the most powerful Ministers to represent the North Central province.

The ex- Chief Minister and the second accused, his personal secretary, were convicted guilty of two charges. Both were sentenced to 16 years rigorous imprisonment and were also ordered to pay a fine of Rs. 200,000/- with an additional two-year prison term in case of default.

Deputy Director General Asitha Anthoney appeared on behalf of the Commission to Investigate Allegations of Bribery or Corruption.

There had never been any really coordinated CIABOC campaign against corruption. No political party, or a particular family, felt threatened by CIABOC. Both those in and outside Parliament acted with impunity. They feared no one. There was no need to be because the powerful and the influential operated above the law.

Just a couple of weeks after sentencing of S.M. Ranjith Samarakoon and Shanthini Chandrasena, the CIABOC arrested the latter’s husband, one-time Deputy Economic Development Minister and Special Projects Minister, S.M. Chandrasena. The CIABOC took him into custody on 4 July, 2025.

The CIABOC accused the former Minister of causing loss to the government by distributing seed corn, imported at a cost of Rs 25 mn, in 2024, among the farmer community in the Anuradhapura district, at a subsidised price. The distribution had taken place ahead of the 2015 presidential election contested by Mahinda Rajapaksa and estranged former SLFP General Secretary Maithripala Sirisena. The CIABOC alleged that Chandrasena exerted undue influence on the Director (Planning) and other officers of the District Secretariat and distributed seeds through his political allies to gain an advantage in the 2015 presidential election and incurred a loss to the government.

Chandrasena was granted bail on 1 August, 2025. He was indicted on 12 June before the Colombo High Court.

Before further discussing the ongoing anti-corruption campaign, let me introduce the top leadership of CIABOC. The Commission consists of Justice W.M.N.P. Iddawela (Chairman), K.B. Rajapakse and Chethiya Goonesekera P.C, with High Court judge R.S.A. Dissanayake as its Director General.

The sentencing of the S. M. Ranjith Samarakoon didn’t really bother his side. The arrest of his brother S.M. Chandrasena, too, didn’t really upset those facing charges. But, sentencing of former Minister Mahindananda Aluthgamage and former Sathosa Chairman and former Trade Minister Nalin Fernando on 29 May, 2025, sent shock waves through the Opposition.

The Colombo High Court Trial-at-Bar sentenced Aluthgamage and Fernando for committing the offence of corruption by purchasing 14,000 carrom boards and 11,000 checkers boards through Sathosa, allegedly to distribute to schools and sports clubs selected by the Sports Ministry, and distributing them to party offices of the government, during the 2015 presidential election campaign thereby, causing a loss of over 53 million rupees to the government, stunned the Opposition.

Aluthgamage was sentenced to 20 years of rigorous imprisonment, Fernando received a sentence of 25 years of rigorous imprisonment. Additionally, a fine of Rs. 100,000 (hundred thousand) was imposed for each count.

The CIABOC’s Assistant Director General Mrs. Anuththara Jayasinghe and Assistant Director General Mrs. Thushari Dayaratne conducted the prosecution.

During the Yahapalana government Aluthgamage spearheaded a high profile anti-corruption campaign, dubbed ‘Yahapalana Top 10 kamba horu’. The then Joint Opposition (JO) group, led in Parliament by Dinesh Gunawardena, published a 750-page book, targeting the Yahapalana ministers. Mahindananda, who spearheaded that campaign, is now serving a long sentence.

The JO group consists of UPFA lawmakers who declined to throw their weight behind the then President Sirisena aligned with the UNP.

Let me mention the names of those against whom the accusations were made by the JO.

Yahapalana corruption

The JO dealt with 10 major cases. (1) The Treasury bond scams perpetrated in 2015 and 2016. Accusations were directed at Ranil Wickremesinghe, Ravi Karunanayake and Governor Central Bank Arjuna Mahendran. The losses were estimated at Rs 26 bn. (2) causing losses amounting to Rs 10 bn through the fraudulent import of vehicles. Ravi Karunanayake was named the chief culprit (3) Misappropriation of Mahapola funds to the tune of Rs. 1 bn. Allegations were directed at Malik Samarawickrema (4) Stealing from an insurance scheme implemented for the benefit of those going for employment in West Asia. The JO accused Thalatha Atukarale of misappropriating funds amounting Rs 1.5 bn (5) Receiving Rs 1.5 bn through the leasing of Hambantota port to China on a 99-year lease. Ranil Wickremesinghe, Malik Samarawickrema and R. Paskaralingam were named the offenders (6) Kabir Hashim was accused of causing a loss of Rs 54 bn by cancelling aircraft ordered from Airbus Industries for the national carrier (7) fraudulent activities pertaining to the release of paddy stocks held by the government. The JO estimated the losses caused to the government at Rs 10 bn. (8) Scam in vehicle parts. Ravil Karunanayake was accused of causing losses amounting to Rs. 6.5 bn, (9 A) Dr. Rajitha Senaratne was accused of leasing of the Modera fisheries harbor and procurement of eight vessels to catch fish, fraudulently, and thereby causing losses up to Rs 1 bn, (9B) The JO also found fault with Dr. Senaratne for perpetrating Rs 1.5 bn fraud in the procurement of medicine and lastly (10) Ranil Wickremesinghe, Malik Samarawickrema, R. Paskaralingam and Charitha Ratwatte were blamed for a massive fraud in the procurement of coal for the Norochcholai coal-fired power plant. That particular fraud was estimated at Rs 5 bn.

Although the JO transformed itself to Sri Lanka Podujana Peramuna (SLPP) later, to successfully contested the 2019 presidential election, none of the above-mentioned cases were investigated. As far as we know, none of those cases had been dealt with during the SLPP rule, from November, 2019, to July, 2022. Faced with an externally backed regime change operation, the SLPP invited Wickremesinghe, who had been named by them in three major corruption cases, to accept the premiership in May, 2022, and presidency in July same year.

So far, there is no indication whether the mentioned JO allegations had received the attention of the CIABOC or the Attorney General of the government. As far as we know of all the politicians and officials, Wickremesinghe is the only one facing imminent threat due to the ongoing case pertaining to him visiting the UK in September, 2023, to join his wife Prof. Maithree at the University of Wolverhampton at her graduation ceremony.

Wickremesinghe has been accused of squandering nearly 17 mn rupees at a time the country was in deep economic turmoil. The Fort Magistrate’s court is scheduled to take up the case on 8 July.

SLPP parliamentary group leader Namal Rajapaksa is also facing a major legal challenge. The former Minister has been indicted on charges of criminal misappropriation of Rs. 70 mn in connection with the controversial Krrish project. The indictments have been forwarded to the Colombo High Court by the Attorney General, alleging that Namal Rajapaksa misappropriated funds by receiving Rs. 70 million from the Indian real estate company for the development of rugby in Sri Lanka.

Yoshitha Rajapaksa, too, has been dealt with by the CIABOC. The Rajapaksas have been accused of lowering qualifications required to join the executive branch of the Navy and then sending him to the Royal Naval Academy in the United Kingdom at taxpayers’ expense. Produced before the Colombo Additional Magistrate, Yoshitha was released on three personal bail bonds of Rs. 5 million each.

Producing Yoshitha before court on 17 June, Deputy Director General of the Bribery Commission, Ruvini Wickramasinghe declared: “”Your Honour, the complaint regarding this incident was received on June 25, 2016. Accordingly, the Commission initiated investigations. The complaint states that the suspect had participated in naval training programmes held in England and Ukraine by misusing government funds, while depriving qualified applicants of such opportunities. At that time, this individual, who is a civilian in the dock today, was also a civilian in 2006 when he was deemed eligible for the Royal Navy Young Officer training at the Royal Naval Academy in the United Kingdom. The opportunities to receive this training are extremely limited. Your Honour, selection to this prestigious course is usually based on being the most outstanding cadet officer during a two-year training period or based on performance during training. However, this suspect, although a civilian in 2006, was proposed and included in the list and was sent for the course in haste.”

The Deputy Director General also stated that Yoshitha Rajapaksa had undergone medical examinations required for overseas training even before being officially recruited into the Navy.

The court was also told that though Sri Lanka previously received scholarships from the UK the Rajapaksa government funded Yoshitha to the tune of Rs 6.2 mn.

Opp. attacks CIABOC

The Opposition has repeatedly attacked the CIABOC with its Director General Ranga Dissanayake being the primary target. Accusing Dissanayake of being a JVPer, the Opposition has repeatedly questioned the conduct of the High Court judge demanding that the CIABOC inquired into the top official’s conduct, especially with regard to the alleged suicide of former Sri Lankan CEO Kapila Chandrasena who had been under investigation pertaining to the receiving of USD 2 mn bribe to facilitate procurement aircraft from Airbus Industrie during Mahinda Rajapaksa’s second term.

Former Foreign Minister Prof. G. L. Peiris, a regular speaker at Flower Road media briefings, alleged that the CIABOC was a political tool in the NPP’s hands.

A section of the Opposition to question the circumstances one-time JVP heavyweight Nandana Gunatilleke died in January this year at the Ragama Teaching Hospital after accusing Dissanayake of pursuing an agenda beneficial to the JVP, a charge denied by the High Court judge. When the writer raised the allegations with Dissanayake, he emphatically denied any wrongdoing on his part https://island.lk/ciaboc-dg-denies-jvp-link/.

The CIABOC has simply ignored accusations directed at its DG who proved through his actions that he really meant high profile public pronouncements against corruption.

Former Deputy Minister and ex-MP Sarana Gunawardena was sentenced to a total of 16 years rigorous imprisonment by the Colombo High Court on June 8, 2026.

During the Yahapalana administration many cases, filed by the CIABOC as well as the Attorney General, were either dismissed or dropped due to lapses on their part. The accused in such cases were ex-MP Sajin Vass Gunawardena, ex-EP Chief Minister Sivanesathurei Chandrakanthan alias Pilleyan, ex-Ministers Johnston Fernando, Rohitha Abeygunawardena, Basil Rajapaksha, Mahindananda Aluthgamage and Janaka Bandara Tennakoon and former AG and CJ Mohan Peiris.

Regardless of Opposition protests, the public appreciate tangible action against corruption. However, the NPP has not been free from serious allegations against it since the last general elections. The release of suspicious 323 containers, plus two containers filled with ice, in January, 2025, followed by the massive coal scam perpetrated in September 2025, loss of over USD 2.5 mn from the Treasury and controversial Aswesuma payments, as well as wealth, accumulated by NPP Ministers as revealed by declarations made to CIABOC, shocked the electorate.

The NPP has failed to counter allegations. The circumstances under which Energy Minister Kumara Jayakody resigned, along with Energy Secretary Udayanga Hemapala, on 17 April, just a week after the NPP defeated the no-confidence motion moved by the Opposition against the Energy Minister. dealt a devastating blow to the NPP’s much touted integrity. The NPP couldn’t explain as to why a person under investigation by the CIABOC for an alleged fraud perpetrated during the Yahapalana government was accommodated in President Dissanayake’s first Cabinet. Indicted before the Colombo High Court, Jayakody’s case commenced last week.

Asset declarations of some NPP Ministers have shocked the country. The SJB has called for CIABOC to investigate them without delay and prove that CIABOC was not only going after the Opposition. Ministers Lal Kantha and Wasantha Samarasinghe are two of the top JVPers who have attracted attention as the Opposition hits back at the government.

SJB MP Mujibur Rahuman said that the JVP/NPP owed an explanation as to how their members amassed so much wealth since 2024 as they repeatedly claimed their inability to meet even their basic needs. But, their asset declarations exposed their blatant lies.

Midweek Review

Geopolitics of the Indian Ocean

Published

6 days ago

2026/06/24

Sahan Weerasooriya

Listening to the Winds, Reading the Waves:

Prof. Gamini Keerawella’s latest publication, Winds and Waves: Geopolitical Currents in the Indian Ocean since 1945 will be launched on 5 August at the Auditorium of the Bandaranaike Centre for International Studies (BCIS). The keynote address will be delivered by Prof. T. V. Paul, James, McGill Professor of Political Science at McGill University, Canada and the former President of the International Studies Association (ISA).

Prof. Keerawella, Professor Emeritus of History at the University of Peradeniya, has dedicated hisbook to the memory of Dr. Newton Gunasinghe, the eminent sociologist and Marxist theoretician who encouraged him to venture beyond disciplinary frontiers. In many respects, this work represents a successful realization of that intellectual endeavour. In her testimonial to back cover of the book, Dr. Radhika Coomaraswamy observes that “Gamini Keerawella offers a nuanced and layered account of the Indian Ocean region’s strategic evolution from the era of decolonization to the contemporary phase of intensifying great-power rivalry. Its distinctive analytical perspective makes it an important contribution to the study of international relations, maritime geopolitics, and regional strategic dynamics.” This assessment accurately captures the significance of the work, and I fully endorse her judgement.

This volume constitutes the final publication of a trilogy that explores the evolving dynamics of international relations from a distinctly Sri Lankan perspective. The first study examined the trajectory of Sri Lanka’s defence and foreign policy, while the second revisited the origins, evolution, and principal constituent elements of international relations as an academic discipline from a Global South perspective. The present work broadens the analytical canvas by tracing the shifting geopolitical contours of the Indian Ocean since 1945 and examining the evolving interplay between great-power competition and regional agency.

Indian Ocean not merely maritime transit space

At the heart of Prof. Keerawella’s analysis is the argument that the Indian Ocean is not merely a maritime space of transit but a living archive whose language is inscribed in tides, trade, and collective memory. To uncover the deeper structures that have shaped the region, he draws on Michel Foucault’s concept of the archaeology of knowledge, probing beneath the visible layers of historical experience to reveal successive strata of thought, exchange, and power. This approach enables him to trace the multiple origins of the Indian Ocean’s geopolitical significance through the sedimented traces of how the ocean has been known, governed, and imagined across time. Complementing this perspective is Fernand Braudel’s concept of the longue durée, which provides the framework for understanding the long-term evolution of Indian Ocean geopolitics. As Keerawella notes, for Braudel, history unfolds not as a single linear sequence but as a layered field of continuity and change, revealing the deeper architecture of the past—the slow yet powerful currents that shape political and economic developments beneath the surface of events (Keerawella 2026: xxiii).Prof. Keerawella further notes that later historians such as K. N. Chaudhuri and M. N. Pearson drew on Braudel’s insights and adapted them to understand the Indian Ocean as a polycentric world.

Prof. Keerawella argues that the terms employed in the title of this work—Winds, Waves, and Currents—evoke the ocean’s dual language of surface movement and underlying structure. In his reading, winds and waves signify motion: the visible and often turbulent forces that carry ships, peoples, commodities, and ideas across shifting maritime frontiers. Currents, by contrast, refer to the deeper and less visible forces that shape historical trajectories and connect coasts and continents through enduring patterns of interaction. As he observes, while winds and waves represent the restless dynamics of the ocean’s surface, currents embody the slower yet more consequential energies that operate beneath it, binding disparate regions into a larger maritime system (2026: xx).

Metaphors and Conceptual Foundation

Building on this conceptual foundation, the author employs winds, waves, and currents not merely as metaphors but also as analytical categories. Winds represent changing strategic directions and geopolitical realignments; waves denote recurring cycles of commerce, conflict, and interaction; and currents symbolize the deep structural forces that connect societies across space and time. Viewed from a distinctly Sri Lankan perspective, the volume demonstrates how a strategically located small state at the centre of the Indian Ocean perceives and navigates this maritime space through its own strategic lens. The book opens by situating Sri Lanka within the intersecting forces of history, geography, and power that have shaped the Indian Ocean world. It advances the notion of a dual strategic consciousness that has informed Sri Lanka’s external engagements: a persistent sense of vulnerability, rooted in colonial experience and geographical exposure, coexisting with a cosmopolitan outlook forged through centuries of maritime exchange. Prof. Keerawella contends that this dual consciousness constitutes the underlying framework through which Sri Lanka has historically interpreted and responded to developments in its external environment.

Winds and Waves is a comprehensive study comprising eleven chapters and an extensive introduction that establishes the analytical foundations of the work by treating the ocean simultaneously as text and method. The opening chapter situates Sri Lanka within the wider Indian Ocean system, tracing the island’s navigation through shifting configurations of power while emphasising the agency of small states. The Indian Ocean is presented not merely as a strategic arena but also as a moral and political space, linking Sri Lanka’s historical experience to the broader aspirations and consciousness of the Global South.

Revisiting British withdrawal

The book revisits Britain’s withdrawal from the Indian Ocean, arguing that it was not simply a consequence of post-war decline but the culmination of deeper structural transformations in the international system. Decolonisation, Afro-Asian nationalism, and the emergence of bipolarity fundamentally altered the regional order and created the conditions for Britain’s retreat. In turn, this withdrawal opened the way for superpower competition, particularly between the United States and the Soviet Union, transforming the Indian Ocean into major theatre of Cold War geopolitics.

A substantial portion of the volume is devoted to examining the policies and strategic trajectories of the major powers. The author traces American engagement from Cold War containment through post-Cold War maritime predominance to contemporary Indo-Pacific formulations, demonstrating that U.S. strategy has evolved through the interaction of structural imperatives and changing strategic discourses. Particular attention is paid to the 2026 U.S.–Iran War, which is interpreted as a transformative event that exposed the limits of military hegemony and accelerated patterns of strategic hedging and multi-alignment among regional actors. The book also explores the Soviet Union’s entry into the Indian Ocean in 1968 and the subsequent re-emergence of Russia under Vladimir Putin through selective naval deployments, arms transfers, and strategic partnerships, illustrating what the author characterises as the recurrent rhythms of great-power engagement in the region.

The rise of China receives extensive treatment as one of the most significant structural developments of the twenty-first century. Through the Belt and Road Initiative, port development projects, and naval modernisation, China has translated growing economic power into expanding strategic influence. The author contrasts Beijing’s assertive posture in the South China Sea with its relatively restrained approach in the Indian Ocean, where economic diplomacy and cooperative security initiatives have assumed greater prominence. Equally significant is the discussion of India’s transformation from a regional power into an emerging global strategic actor. The evolution of Indian maritime strategy—from Nehruvian custodianship to contemporary blue-water ambitions—demonstrates how a rising power navigates structural constraints while expanding its strategic reach. Initiatives such as SAGAR, naval modernization, and deepening partnerships with the United States, Japan, and Australia have positioned India as a central actor in the evolving Indo-Pacific order.

Roles of Japan and EU examined

The volume also examines the roles of Japan and the European Union in shaping the contemporary maritime order. Japan’s transition from post-war restraint to proactive strategic engagement, embodied in the Free and Open Indo-Pacific (FOIP) vision, illustrates how middle powers adapt to changing geopolitical realities through coalition-building and maritime capacity enhancement. The European Union’s engagement is portrayed through less visible but nevertheless significant mechanisms, including trade, development cooperation, maritime governance, and norm diffusion, contributing to what the author terms a form of “quiet-making multipolarity” that encourages restraint, stability, and pragmatic cooperation.

Moving beyond conventional geopolitics, the book broadens the analytical framework to address a range of non-traditional security challenges confronting South Asia in general and Sri Lanka in particular. Climate change, piracy, illegal fishing, maritime terrorism, public health vulnerabilities, and digital insecurity are examined as transnational challenges that transcend the capabilities of individual states. The author argues that these issues reveal the limits of unilateral action and underscore the growing importance of cooperation, collective action, institutional innovation, and middle-power leadership in maritime governance.

Prof. Keerawella further situates the Indian Ocean within the wider context of the emerging Asian Century. Asia’s resurgence—driven principally by China and India and reinforced by the dynamism of Southeast Asia—is presented as a major reconfiguration of global power. In this transformation, the Indian Ocean functions as a vital maritime artery connecting energy resources, manufacturing centres, and consumer markets. At the same time, the author cautions against deterministic interpretations, emphasising that the realisation of the Asian Century remains contingent upon how the region responds to persistent inequalities, environmental challenges, governance deficits, and intensifying strategic competition.

Assessing how SL has navigated shifts

The book concludes by returning to Sri Lanka and assessing how the country has navigated contemporary shifts in the regional and global balance of power under the National People’s Power (NPP) government that emerged in the aftermath of the Aragalaya of 2022. The author demonstrates how economic crisis, demands for accountability, and aspirations for a new political culture have reshaped the domestic context within which foreign policy is conducted. Under President Anura Kumara Dissanayake, Sri Lanka is portrayed as pursuing a carefully calibrated strategy that combines engagement with international financial institutions, enhanced cooperation with India in defence and energy sectors, continued economic engagement with China, and functional security relations with the United States. The government’s response to the 2026 U.S.–Iran War—rejecting military access requests from all parties while extending humanitarian assistance—serves as an illustration of the author’s broader argument that strategic flexibility, principled neutrality, and diplomatic agility remain essential for small states navigating an increasingly complex Indian Ocean order.

Taken together, the book advances several interconnected propositions. First, the Indian Ocean is entering an increasingly multipolar era in which power is exercised through complex networks of cooperation, competition, and interdependence rather than rigid alliance structures. Second, small states are neither passive spectators nor mere proxies of great powers; they possess strategic agency and navigate competing pressures through hedging, diversification, and calibrated diplomacy. Third, Sri Lanka’s strategic behaviour—characterised by navigating asymmetry through flexibility and ambiguity—reflects a historically rooted dual consciousness that combines vulnerability with cosmopolitan engagement. Fourth, non-traditional security challenges and environmental governance are no longer peripheral concerns but central components of the evolving regional order.

Need for adaptive navigation

Prof. Keerawella argues that contemporary statecraft in the Indian Ocean requires adaptive navigation rather than rigid alignment. In a fluid and contested maritime environment, survival and influence depend less on resisting structural change than on understanding and responding to it with prudence, flexibility, and strategic clarity. The book therefore offers important insights into how small states can transform structural vulnerability into strategic agency and convert exposure into opportunities for engagement within a changing regional order.

Combining historical depth with contemporary analysis, it provides a nuanced understanding of the interaction between great-power competition, regional transformation, and the strategic choices of smaller states. The book will be of considerable value to students and scholars of international relations, political science, strategic studies, and maritime affairs, while also offering useful perspectives to policymakers, diplomats, and practitioners. Equally important, it opens several promising avenues for future research on the Indian Ocean and the emerging Indo-Pacific order.

Hermeneutic approachs

Methodologically, the study draws upon hermeneutic approaches to examine the geopolitical and maritime environments that shape relationships among states, societies, and historical processes. The result is a work that is both analytically rigorous and intellectually engaging. This review has sought less to evaluate the book in a conventional sense than to introduce its central themes and encourage a wider readership to engage with its arguments. Having highlighted the many merits of the volume, it is worth noting one technical shortcoming: the absence of an index. Given the book’s wide thematic scope and rich empirical content, the inclusion of an index would have significantly enhanced its value as a reference tool for researchers and students alike.

In sum, Prof. Keerawella listens attentively to the winds, reads the waves with analytical precision, and traces the deeper currents that shape the Indian Ocean world. The outcome is Winds and Waves: Geopolitical Currents in the Indian Ocean since 1945, a timely and thought-provoking contribution published by the Bandaranaike Centre for International Studies.

Reviewed by
Dr. Ramesh Ramasamy
Department of Political Science, University
of Peradeniya