Connect with us

Midweek Review

Growing foreign dependency and India’s USD 4 bn lifeline

Published

on

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

How massive Akuregoda defence complex was built with proceeds from sale of Galle Face land to Shangri-La

Published

on

Defence Headquarters Complex (DHQC) at Akuregoda

The Navy ceremonially occupied its new Headquarters (Block No. 3) at the Defence Headquarters Complex (DHQC) at Akuregoda, Battaramulla, on 09 December, 2025. On the invitation of the Commander of the Navy, Vice Admiral Kanchana Banagoda, the Deputy Minister of Defence, Major General Aruna Jayasekara (Retd) attended the event as the Chief Guest.

Among those present were Admiral of the Fleet Wasantha Karannagoda, the Defence Secretary, Air Vice Marshal Sampath Thuyacontha (Retd), Commander of the Army, Lieutenant General Lasantha Rodrigo, Commander of the Air Force, Air Marshal Bandu Edirisinghe, Inspector General of Police, Attorney-at-Law Priyantha Weerasooriya and former Navy Commanders.

With the relocation of the Navy at DHQC, the much-valued project to shift the Ministry of Defence (MoD) and Headquarters of the war-winning armed forces has been brought to a successful conclusion. The Army was the first to move in (November 2019), the MoD (May 2021), the Air Force (January 2024) and finally the Navy (in December 2025).

It would be pertinent to mention that the shifting of MoD to DHQC coincided with the 12th anniversary of bringing back the entire Northern and Eastern Provinces under the government, on 18 May, 2009. LTTE leader Velupillai Prabhakaran was killed on the following day.

The project that was launched in March 2011, two years after the eradication of the Liberation Tigers of Tamil Eelam (LTTE), suffered a severe setback, following the change of government in 2015. The utterly irresponsible and treacherous Yahapalana government halted the project. That administration transferred funds, allocated for it, to the Treasury, in the wake of massive Treasury bond scams perpetrated in February and March 2015, within weeks after the presidential election.

Maithripala Sirisena, in his capacity as the President, as well as the Minister of Defence, declared open the new Army Headquarters, at DHQC, a week before the 2019 presidential election. Built at a cost of Rs 53.3 bn, DHQC is widely believed to be the largest single construction project in the country. At the time of the relocation of the Army, the then Lt. Gen. Shavendra Silva, the former Commanding Officer of the celebrated Task Force I/58 Division, served as the Commander.

Who made the DHQC a reality? Although most government departments, ministries and armed forces headquarters, were located in Colombo, under the Colombo Master Plan of 1979, all were required to be moved to Sri Jayewardenepura, Kotte. However successive administrations couldn’t go ahead with the massive task primarily due to the conflict. DHQC would never have been a reality if not for wartime Defence Secretary Gotabaya Rajapaksa who determinedly pursued the high-profile project.

The absence of any reference to the origins of the project, as well as the significant role played by Gotabaya Rajapaksa at the just relocated Navy headquarters, prompted the writer to examine the developments related to the DHQC. The shifting of MoD, along with the Armed Forces Headquarters, was a monumental decision taken by Mahinda Rajapaksas’s government. But, all along it had been Gotabaya Rajapaksa’s determination to achieve that monumental task that displeased some within the administration, but the then Defence Secretary, a former frontline combat officer of the battle proved Gajaba Regiment, was not the type to back down or alter his strategy.

GR’s maiden official visit to DHQC

Gotabaya Rajapaksa, who made DHQC a reality, visited the sprawling building in his capacity as the President, Defence Minister and the Commander-in-Chief of the Armed Forces on the morning of 03 August, 2021. It was Gotabaya Rajapaksa’s maiden official visit to the Army Headquarters, located within the then partially completed DHQC, eight months before the eruption of the externally backed ‘Aragalaya.’ The US-Indian joint project has been exposed and post-Aragalaya developments cannot be examined without taking into consideration the role played by political parties, the Bar Association of Sri Lanka, media, as well as the weak response of the political leadership and the armed forces. Let me stress that a comprehensive probe should cover the period beginning with the Swiss project to humiliate President Gotabaya Rajapaka in November, 2019, by staging a fake abduction, and the storming of the President’s House in July 2022. How could Sri Lanka forget the despicable Swiss allegation of sexual harassment of a female local employee by government personnel, a claim proved to be a blatant lie meant to cause embarrassment to the newly elected administration..

Let me get back to the DHQC project. The war-winning Mahinda Rajapaksa government laid the foundation for the building project on 11 May, 2011, two years after Sri Lanka’s triumph over the separatist Tamil terrorist movement. The high-profile project, on a 77-acre land, at Akuregoda, Pelawatta, was meant to bring the Army, Navy, and the Air Force headquarters, and the Defence Ministry, to one location.

President Gotabaya Rajapaksa’s visit to Akuregoda would have definitely taken place much earlier, under a very different environment, if not for the eruption of the Covid-19 pandemic, just a few months after his victory at the November 2019 election. The worst post-World War II crisis that had caused devastating losses to national economies, the world over, and delivered a staggering blow to Sri Lanka, heavily dependent on tourism, garment exports and remittances by its expatriate workers.

On his arrival at the new Army headquarters, President Gotabaya Rajapaksa was welcomed by General Shavendra Silva, who also served as the Chief of Defence Staff. Thanks to the President’s predecessor, Maithripala Sirisena, the then Maj. Gen Shavendra Silva was promoted to the rank of Lt. Gen and appointed the Commander of the Army on 18 August, 2019, just three months before the presidential poll. The appointment was made in spite of strong opposition from the UNP leadership and US criticism.

President Gotabaya Rajapaksa hadn’t minced his words when he publicly acknowledged the catastrophe caused by the plunging of the national income and the daunting challenge in debt repayment, amounting to as much as USD 4 bn annually.

The decision to shift the tri-forces headquarters and the Defence Ministry (The Defence Ministry situated within the Army Headquarters premises) caused a media furor with the then Opposition UNP alleging a massive rip-off. Defence Secretary Gotabaya Rajapaksa reiterated his commitment to the project. If not for the change of government in 2015, the DHQC would have been completed during Mahinda Rajapaksa’s third term if he was allowed to contest for a third term successfully. Had that happened, Gotabaya Rajapaksa wouldn’t have emerged as the then Opposition presidential candidate at the 2019 poll. The disastrous Yahapalana administration and the overall deterioration of all political parties, represented in Parliament, and the 19th A that barred Mahinda Rajapaksa from contesting the presidential election, beyond his two terms, created an environment conducive for Gotabaya Rajapaksa’s emergence as the newly registered SLPP’s candidate.

Shangri-La move

During the 2019 presidential election campaign, SLPP candidate Gotabaya Rajapaksa strongly defended his decision to vacate the Army Headquarters, during Mahinda Rajapaksa presidency, to pave the way for the Shangri-La Hotel in Colombo. Shangri-La was among the hotels targeted by the Easter Sunday bombers – the only location targeted by two of them, including mastermind Zahran Hashim.

President Gotabaya Rajapaksa is on record as having said that vacation of the site had been in accordance with first executive President J.R. Jayewardene’s decision to move key government buildings away from Colombo to the new Capital of the country at Sri Jaywardenepura. Gotabaya Rajapaksa said so in response to the writer’s queries years ago.

Gotabaya Rajapaksa said that a despicable attempt was being made to blame him for the Army Headquarters land transaction. “I have been accused of selling the Army Headquarters land to the Chinese.”

Rajapaksa explained that Taj Samudra, too, had been built on a section of the former Army Headquarters land, previously used to accommodate officers’ quarters and the Army rugger grounds. Although President Jayewardene had wanted the Army Headquarters shifted, successive governments couldn’t do that due to the war and lack of funds, he said.

President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe declared open Shangri-La Colombo on 16 November, 2017. The Hong Kong-based Shangri-La Asia invited Gotabaya Rajapaksa for dinner, the following day, after the opening of its Colombo hotel. Shangri-La Chairperson, Kuok Hui Kwong, the daughter of Robert Kuok Khoon Ean, was there to welcome Gotabaya Rajapaksa, who had cleared the way for the post-war mega tourism investment project. Among those who had been invited were former President Mahinda Rajapaksa, former External Affairs Minister Prof. G.L. Peiris, former Presidential Secretary Lalith Weeratunga, and President’s Counsel Gamini Marapana, PC.

The Cabinet granted approval for the high-profile Shangri-La project in October 2010 and the ground-breaking ceremony was held in late February 2012.

Rajapaksa said that the Shangri-La proprietor, a Chinese, ran a big operation, based in Hong Kong, Malaysia and Singapore. Another parcel of land was given to the mega ITC hotel project, also during the previous Rajapaksa administration. ITC Ratnadipa, a super-luxury hotel by India’s ITC Hotels, officially opened in Colombo on April 25, 2024

Following the change of government in January 2015, the remaining section of the Army headquarters land, too, was handed over to Shangri-La.

Gotabaya Rajapaksa emphasised that the relocation of the headquarters of the Army, Navy, and Air Force, as well as the Defence Ministry, had been part of JRJ’s overall plan. The change of government, in January 2015, had caused a serious delay in completing the project and it was proceeding at a snail’s pace, Rajapaksa said. Even Parliament was shifted to Kotte in accordance with JRJ’s overall plan, Gotabaya Rajapaksa said, explaining his move to relocate all security forces’ headquarters and Defence Ministry into one complex at Akuregoda.

Acknowledging that the Army Headquarters had been there at Galle Face for six decades, Rajapaksa asserted that the Colombo headquarters wasn’t tactically positioned.

Rajapaksa blamed the inordinate delay in the completion of the Akuregoda complex on the Treasury taking hold of specific funds allocated for the project.

Over 5,000 military workforce

Gotabaya Rajapaksa’s maiden visit to DHQC on 3 August, 2021. General
Shavendra Silva is beside him

Major General Udaya Nanayakkara had been the first Director, Project Management Unit, with overall command of approximately 5,000 tri-forces personnel assigned to carry it out. The Shangri-La transaction provided the wherewithal to implement the DHQC project though the change of government caused a major setback. Nanayakkara, who had served as the Military Spokesman, during Eelam War IV, oversaw the military deployment, whereas private contractors handled specialised work such as piling, AC, fire protection and fire detection et al. The then MLO (Military Liaison Officer) at the Defence Ministry, Maj. Gen Palitha Fernando, had laid the foundation for the project and the work was going on smoothly when the Yahapalana administration withheld funds. Political intervention delayed the project and by September 2015, Nanayakkara was replaced by Maj Gen Mahinda Ambanpola, of the Engineer Service.

In spite of President Sirisena holding the Defence portfolio, he couldn’t prevent the top UNP leadership from interfering in the DHQC project. However, the Shangri-La project had the backing of A.J.M. Muzammil, the then UNP Mayor and one of the close confidants of UNP leader Ranil Wickremesinghe. Muzammil was among those present at the ground breaking ceremony for Shangri-La held on 24th February, 2012 ,with the participation of Minister Basil Rajapaksa.

Having identified the invaluable land, where the Army Headquarters and Defence Ministry were situated, for its project, Shangri-La made its move. Those who had been aware of Shangri-La’s plans were hesitant and certainly not confident of their success. They felt fearful of Defence Secretary Rajapaksa’s reaction.

But, following swift negotiations, they finalised the agreement on 28 December, 2010. Lt. Gen. Jagath Jayasuriya was the then Commander of the Army, with his predecessor General Fonseka in government custody after having been arrested within two weeks after the conclusion of the 2010 26 January Presidential poll.

Addressing the annual Viyathmaga Convention at Golden Rose Hotel, Boralesgamuwa, on 04 March, 2017, Gotabaya Rajapaksa, perhaps for the first time publicly discussed his role in the Shangri-La project. Declaring that Sri Lanka suffered for want of, what he called, a workable formula to achieve post-war development objectives, the war veteran stressed the pivotal importance of swift and bold decision-making.

Gotabaya Rajapaksa explained how the government had acted swiftly, and decisively, to attract foreign investments though some such efforts were not successful. There couldn’t be a better example than the government finalising an agreement with Shangri-La Hotels, he declared.

Declaring that the bureaucratic red tape shouldn’t in any way be allowed to undermine investments, Rajapaksa recalled the Chairman/CEO of Shangri-La Hotels and Resorts, Robert Kuok Khoon Ean, wanting the Army Headquarters land for his Colombo project. In fact, the hotels chain, at the time, had proposed to build hotels in Colombo, Hambantota and Batticaloa, and was one of the key investors wanting to exploit Sri Lanka’s success in defeating terrorism.

“Khoon-Ean’s request for the Army Headquarters land caused a serious problem for me. It was a serious challenge. How could I shift the headquarters of the war-winning Army? The Army had been there for six decades. It had been the nerve centre of the war effort for 30 years,” said Rajapaksa, who once commanded the First Battalion of the Gajaba Regiment (1GR)

Rajapaksa went on to explain how he exploited a decision taken by the first executive president J.R. Jayewardene to shift the Army Headquarters to Battaramulla, many years back. “Within two weeks, in consultation with the Secretary to the Finance Ministry, Dr. P.B. Jayasundera, and the Board of Investment, measures were taken to finalise the transaction. The project was launched to shift the Army, Navy and Air Force headquarters to Akuregoda, Pelawatte, in accordance with JRJ’s plan.”

The Hong Kong-based group announced the purchase of 10 acres of state land, in January 2011. Shangri-La Asia Limited announced plans to invest over USD 400 mn on the 30-storeyed star class hotel with 661 rooms.

The hotel is the second property in Sri Lanka for the leading Asian hospitality group, joining Shangri-La’s Hambantota Resort & Spa, which opened in June 2016.

Rajapaksa said that the top Shangri-La executive had referred to the finalisation of their Colombo agreement to highlight the friendly way the then administration handled the investment. Shangri-La had no qualms about recommending Sri Lanka as a place for investment, Rajapaksa said.

The writer explained the move to shift the Army Headquarters and the Defence Ministry from Colombo in a lead story headlined ‘Shangri-La to push MoD, Army Hq. out of Colombo city: Army Hospital expected to be converted into a museum’ (The Island, 04 January, 2011).

Yahapalana chaos

In the wake of the January 2015 change of government, the new leadership caused chaos with the suspension of the China-funded Port City Project, a little distance away from the Shangri-La venture. Many an eyebrow was raised when the then Finance Minister Ravi Karunanayake declared, in March, 2015, that funds wouldn’t be made available to the DHQC project until the exact cost estimation of the project could be clarified.

Media quoted Karunanayake as having said “Presently, this project seems like a bottomless pit and we need to know the depth of what we are getting into. From the current state of finances, allocated for this project, it seems as if they are building a complex that’s even bigger than the Pentagon!”

The insinuating declaration was made despite them having committed the blatant first Treasury bond scam in February 2015 that shook the Sirisena-Wickremesinghe administration to its core.

In June 2016, Cabinet spokesperson, Dr. Rajitha Senaratne, announced the suspension of the Akuregoda project. Citing financial irregularities and mismanagement of funds, Dr. Senaratne alleged that all Cabinet papers on the project had been prepared according to the whims and fancies of Gotabaya Rajapaksa.

The then Minister Karunanayake spearheaded the campaign against the DHQC project alleging, in the third week of January, 2015, that Rs 13.2 billion, in an account maintained at the Taprobane branch of the Bank of Ceylon had been transferred to the Consolidated Fund of the Treasury. The matter was being investigated as the account belonged to the Ministry of Defence, he added. The Finance Minister stressed that the MoD had no right to maintain such an account in violation of regulations and, therefore, the opening of the account was being investigated. The Minister alleged that several illegal transactions, including one involving Samurdhi, had come to light. He estimated the Samurdhi transaction (now under investigation) at Rs. 4 billion.

Having undermined Shangri-La and the DHQC projects, the UNP facilitated the expansion of the hotel project by releasing additional three and half acres on a 99-year lease. During the Yahapalana administration, Dayasiri Jayasekera disclosed at a post-Cabinet press briefing how the government leased three and a half acres of land at a rate of Rs. 13.1 mn per perch whereas the previous administration agreed to Rs 6.5 mn per perch. According to Jayasekera the previous government had leased 10 acres at a rate of Rs 9.5 mn (with taxes) per perch.

The bottom line is that DHQC was built with Shangri-La funds and the initiative was Gotabaya Rajapaksa’s whose role as rock solid wartime Secretary of Defence to keep security forces supplied with whatever their requirements could never be compared with any other official during the conflict.

By Shamindra Ferdinando

Continue Reading

Midweek Review

The Hour of the Invisible

Published

on

Picking-up the pieces in the bashed Isle,

Is going to take quite a long while,

And all hands need to be united as one,

To give it even a semblance of its former self,

But the more calloused and hardy the hands,

The more suitable are they for the task,

And the hour is upon us you could say,

When those vast legions of invisible folk,

Those wasting away in humble silent toil,

Could stand up and be saluted by all,

As being the most needed persons of the land

By Lynn Ockersz

Continue Reading

Features

Handunnetti and Colonial Shackles of English in Sri Lanka

Published

on

Handunetti at the World Economic Forum

“My tongue in English chains.
I return, after a generation, to you.
I am at the end
of my Dravidic tether
hunger for you unassuaged
I falter, stumble.”
– Indian poet R. Parthasarathy

When Minister Sunil Handunnetti addressed the World Economic Forum’s ‘Is Asia’s Century at Risk?’ discussion as part of the Annual Meeting of the New Champions 2025 in June 2025, I listened carefully both to him and the questions that were posed to him by the moderator. The subsequent trolling and extremely negative reactions to his use of English were so distasteful that I opted not to comment on it at the time. The noise that followed also meant that a meaningful conversation based on that event on the utility of learning a powerful global language and how our politics on the global stage might be carried out more successfully in that language was lost on our people and pundits, barring a few commentaries.

Now Handunnetti has reopened the conversation, this time in Sri Lanka’s parliament in November 2025, on the utility of mastering English particularly for young entrepreneurs. In his intervention, he also makes a plea not to mock his struggle at learning English given that he comes from a background which lacked the privilege to master the language in his youth. His clear intervention makes much sense.

The same ilk that ridiculed him when he spoke at WEF is laughing at him yet again on his pronunciation, incomplete sentences, claiming that he is bringing shame to the country and so on and so forth. As usual, such loud, politically motivated and retrograde critics miss the larger picture. Many of these people are also among those who cannot hold a conversation in any of the globally accepted versions of English. Moreover, their conceit about the so-called ‘correct’ use of English seems to suggest the existence of an ideal English type when it comes to pronunciation and basic articulation. I thought of writing this commentary now in a situation when the minister himself is asking for help ‘in finding a solution’ in his parliamentary speech even though his government is not known to be amenable to critical reflection from anyone who is not a party member.

The remarks at the WEF and in Sri Lanka’s parliament are very different at a fundamental level, although both are worthy of consideration – within the realm of rationality, not in the depths of vulgar emotion and political mudslinging.

The problem with Handunnetti’s remarks at WEF was not his accent or pronunciation. After all, whatever he said could be clearly understood if listened to carefully. In that sense, his use of English fulfilled one of the most fundamental roles of language – that of communication. Its lack of finesse, as a result of the speaker being someone who does not use the language professionally or personally on a regular basis, is only natural and cannot be held against him. This said, there are many issues that his remarks flagged that were mostly drowned out by the noise of his critics.

Given that Handunnetti’s communication was clear, it also showed much that was not meant to be exposed. He simply did not respond to the questions that were posed to him. More bluntly, a Sinhala speaker can describe the intervention as yanne koheda, malle pol , which literally means, when asked ‘Where are you going?’, the answer is ‘There are coconuts in the bag’.

He spoke from a prepared text which his staff must have put together for him. However, it was far off the mark from the questions that were being directly posed to him. The issue here is that his staff appears to have not had any coordination with the forum organisers to ascertain and decide on the nature of questions that would be posed to the Minister for which answers could have been provided based on both global conditions, local situations and government policy. After all, this is a senior minister of an independent country and he has the right to know and control, when possible, what he is dealing with in an international forum.

This manner of working is fairly routine in such international fora. On the one hand, it is extremely unfortunate that his staff did not do the required homework and obviously the minister himself did not follow up, demonstrating negligence, a want for common sense, preparedness and experience among all concerned. On the other hand, the government needs to have a policy on who it sends to such events. For instance, should a minister attend a certain event, or should the government be represented by an official or consultant who can speak not only fluently, but also with authority on the subject matter. That is, such speakers need to be very familiar with the global issues concerned and not mere political rhetoric aimed at local audiences.

Other than Handunnetti, I have seen, heard and also heard of how poorly our politicians, political appointees and even officials perform at international meetings (some of which are closed door) bringing ridicule and disastrous consequences to the country. None of them are, however, held responsible.

Such reflective considerations are simple yet essential and pragmatic policy matters on how the government should work in these conditions. If this had been undertaken, the WEF event might have been better handled with better global press for the government. Nevertheless, this was not only a matter of English. For one thing, Handunnetti and his staff could have requested for the availability of simultaneous translation from Sinhala to English for which pre-knowledge of questions would have been useful. This is all too common too. At the UN General Assembly in September, President Dissanayake spoke in Sinhala and made a decent presentation.

The pertinent question is this; had Handunetti had the option of talking in Sinhala, would the interaction have been any better? That is extremely doubtful, barring the fluency of language use. This is because Handunnetti, like most other politicians past and present, are good at rhetoric but not convincing where substance is concerned, particularly when it comes to global issues. It is for this reason that such leaders need competent staff and consultants, and not mere party loyalists and yes men, which is an unfortunate situation that has engulfed the whole government.

What about the speech in parliament? Again, as in the WEF event, his presentation was crystal clear and, in this instance, contextually sensible. But he did not have to make that speech in English at all when decent simultaneous translation services were available. In so far as content was concerned, he made a sound argument considering local conditions which he knows well. The minister’s argument is about the need to ensure that young entrepreneurs be taught English so that they can deal with the world and bring investments into the country, among other things. This should actually be the norm, not only for young entrepreneurs, but for all who are interested in widening their employment and investment opportunities beyond this country and in accessing knowledge for which Sinhala and Tamil alone do not suffice.

As far as I am concerned, Handunetti’s argument is important because in parliament, it can be construed as a policy prerogative. Significantly, he asked the Minister of Education to make this possible in the educational reforms that the government is contemplating.

He went further, appealing to his detractors not to mock his struggle in learning English, and instead to become part of the solution. However, in my opinion, there is no need for the Minister to carry this chip on his shoulder. Why should the minister concern himself with being mocked for poor use of English? But there is a gap that his plea should have also addressed. What prevented him from mastering English in his youth goes far deeper than the lack of a privileged upbringing.

The fact of the matter is, the facilities that were available in schools and universities to learn English were not taken seriously and were often looked down upon as kaduwa by the political spectrum he represents and nationalist elements for whom the utilitarian value of English was not self-evident. I say this with responsibility because this was a considerable part of the reality in my time as an undergraduate and also throughout the time I taught in Sri Lanka.

Much earlier in my youth, swayed by the rhetoric of Sinhala language nationalism, my own mastery of English was also delayed even though my background is vastly different from the minister. I too was mocked, when two important schools in Kandy – Trinity College and St. Anthony’s College – refused to accept me to Grade 1 as my English was wanting. This was nearly 20 years after independence. I, however, opted to move on from the blatant discrimination, and mastered the language, although I probably had better opportunities and saw the world through a vastly different lens than the minister. If the minister’s commitment was also based on these social and political realities and the role people like him had played in negating our English language training particularly in universities, his plea would have sounded far more genuine.

If both these remarks and the contexts in which they were made say something about the way we can use English in our country, it is this: On one hand, the government needs to make sure it has a pragmatic policy in place when it sends representatives to international events which takes into account both a person’s language skills and his breadth of knowledge of the subject matter. On the other hand, it needs to find a way to ensure that English is taught to everyone successfully from kindergarten to university as a tool for inclusion, knowledge and communication and not a weapon of exclusion as is often the case.

This can only bear fruit if the failures, lapses and strengths of the country’s English language teaching efforts are taken into cognizance. Lamentably, division and discrimination are still the main emotional considerations on which English is being popularly used as the trolls of the minister’s English usage have shown. It is indeed regrettable that their small-mindedness prevents them from realizing that the Brits have long lost their long undisputed ownership over the English language along with the Empire itself. It is no longer in the hands of the colonial masters. So why allow it to be wielded by a privileged few mired in misplaced notions of elitism?

Continue Reading

Trending