by Rohan Pethiyagoda

In 2012, the Department of Immigration & Emigration (DIE) contracted Mobitel, which is in effect a state-owned enterprise, to establish and operate an online gateway for foreigners wishing to apply for visas to Sri Lanka. For the next twelve years, from 2012 to 2024, the system operated flawlessly. Better still, Mobitel offered the service free of charge to the DIE while recovering part of its costs from advertising and promoting its services to tourists. In all those 12 years, Mobitel didn’t receive a single letter from DIE complaining that the service was in any way less than perfect.

By 2018, however, it became clear to Mobitel that in order to keep up with technology and also the growing number of tourists, both the hardware and software of the system needed upgrading. Finally, after protracted negotiations with DIE, on December 14, 2020, Mobitel submitted a proposal offering to invest in upgrading the system as required by DIE. All it asked in return was US$ 1 per applicant. Thereafter, Mobitel and DIE engaged in technical discussions to precisely define the new system and finally, on August 23, 2023, submitted a final, comprehensive proposal. Meanwhile, the system continued to work perfectly, entirely for free.

Divorce Proceedings

At 3.07 p.m. on April 5, 2024, Mobitel’s management was astonished to receive an email from the Assistant Director (Information Technology) of DIE, a junior fourth-rung officer, directing Mobitel to cease processing applications from 11:59 pm on 5 April 2024. No reason was given. However, at 3.30 pm the same day, Mobitel received another email from DIE cancelling the former email. Again, no explanation. To this day, despite repeated requests from Mobitel, DIE has never explained what was going on.

Finally, at 2:32 pm on 16 April 2024, DIE’s Assistant Controller (IT) sent a further email directing Mobitel to switch of the system at midnight. Mobitel responded by asking for a written direction from the Commissioner General of DIE, which was received shortly thereafter. At midnight on April 16, the 12-year collaboration between Mobitel and DIE came to an end. The reasons for the termination remained a mystery until finally, on July 12, Harsha de Silva, the chairman of the Parliamentary Committee on Public Finance issued a damning 640-page report: “Outsourcing Online Visa and Passport Application Services between the Consortium and the Department of Immigration and Emigration of Sri Lanka”. By ‘consortium’, it meant GBS Technology Services & IVS Global-FZCO (IVS-GBS) and VF Worldwide Holdings LTD (VFS Global). While the beneficial owners of these companies remain shrouded in mystery, the companies themselves are located in Dubai, notoriously a tax haven. Here, for short, I will refer to these entities collectively as VFS, which is the largest and best known among them.

Opaque Process

Unknown to Mobitel, in June 2023 a Dubai-based entity known as IVS-GBS Global Services had submitted to the Ministry of Public Security an unsolicited proposal titled “Comprehensive Proposal on E-Visa, Consular Services, Visa Services, Biometric Services and Tourism Promotion”.

VFS’s unsolicited proposal gave the fee structure as $30 for the ETA plus a $25 fee for IVS-GBS-VFS, basically for providing the same service that Mobitel provided free of charge from 2012 to 2024. What is surprising is that the service fee demanded by IVS was staggering 83% of the revenue that the government would get from visa fees.

Cabinet Approval

Nevertheless, Tiran Alles, the Minister of Public Security, submitted the IVS-GBS proposal to cabinet on September 8, 2023, noting “I observe that this Institution is an internationally renowned company” even though, for practical purposes, it essentially services only India. By way of justification for abandoning the $1 Mobitel system and transferring to the very expensive IVS system, the Minister provided several ‘justifications’. First is that because the IVS user interface is “designed in the languages of each country, foreigners may provide more opportunities to apply for visa to visit this country”. This, however, is not true: the site operates entirely in English. You can check for yourself: https://online.srilankaevisa.lk/

The Minister goes on to state, without any justification, that IVS will charge a service fee of USD 18.50 from each visa applicant. Finally, he adds, “the Government does not have to bear any cost in implementing this Programme”. However, given that the USD 18.50 paid to IVS is a mandatory condition of applying for a Sri Lankan visa, it is in effect a levy made by the government and paid to IVS, though bypassing the Consolidated Fund and without any transparent procurement procedure. This is arguably a violation of Article 148 of the Constitution.

$200 million ‘evaporates’

The cabinet memorandum continues, “IVS -GBS global Services has proposed to invest a sum of 200 million USD to provide the relevant technical equipment, software and knowledge for the system integration to be made with the Department of Immigration and Emigration in rendering the relevant services by this Company.” Nowhere in the final Outsourcing Agreement signed between Controller General of DIE and IVS-GBS-VHS is this $200 million mentioned. It has simply evaporated.

Amazingly, on 11 September 2023, the Cabinet passed the proposal through on the nod, appointing an Evaluation Committee comprising of five individuals drawn from the administrative service who evidently have no background in IT. They were T.V.D. Damayanthi S. Karunaratne (Additional Secretary, Development & Planning of the Ministry of Public Security); I.S.H.J. Ilukpitiya, Commissioner General of Immigration & Emigration; Mr Champika Ramawickrema, Senior Assistant Secretary, Ministry of Public Administration, Home Affairs, Provincial Councils and Local Government; M.P.D.P. Pathirana, Chief Financial Officer, Ministry of Public Security; and Mr M.R.G.A. Muthukuda, Additional Director General, Department of Fiscal Policy (representing the Secretary to the Treasury). Given that none of these people is a software expert (this is, after all, a software services procurement), it is astonishing that no Technical Committee was appointed. Neither was there a Cabinet Appointed Negotiating Committee, to assess whether the $18.50 fee was reasonable. It was simply passed through on the nod.

It seems astonishing that President Ranil Wickremesinghe did not suggest that before farming this massive project out to a foreign entity who had submitted an unsolicited bid, a local tender should be floated. After all, Mobitel had already demonstrated its ability to design and operate the necessary system not just flawlessly but at just $1 per applicant. Besides, Sri Lankan software companies are outstanding by even world standards. It is their software that drives the stock exchanges of London, Italy and South Africa, among others. More importantly, perhaps, the president himself has been endlessly touting the need to “enrich, empower and enable” Sri Lankans to develop local IT capacity, going on and on about “the importance of digitalization”, the “digital public economy”, “creating a Digital Transformation Agency” with a budget of Rs 1 billion, etc etc (see this release by the President’s Media Division: https://pmd.gov.lk/news/president-wickremesinghe-pledges-digital-transformation-for-poverty-reduction-and-educational-reform/). Clearly, Wickremesinghe is better at talking the talk than walking the walk.

The ‘Evaluation’

Amazingly for an ‘evaluation committee’, the committee made no evaluation of the most crucial factor in the VFS proposal, namely, the $18.50 service fee. How was this calculated? Was it justified? Was it competitive? No comment. With 1.4 million tourists coming into Sri Lanka, this adds up to a staggering $26 million, or Rs 8 billion per year. And the contract is for 16 years, with provision for 10% hike every two years. Someone is laughing all the way to the bank.

As it happened, the Evaluation Committee made no comment on, or comparison of Mobitel’s $1 offer against VFS’s $18.50 price. It acted purely as a rubber stamp. Indeed, it is open to question as to whether its members had the technical or negotiating skills needed to effectively evaluate VFS’s unsolicited offer.

Attorney General

Agreements signed by government agencies are usually vetted by the Attorney General, and this one was no exception. On 15.11.2023, the AG’s observations, signed by Senior Deputy Solicitor General Mahen Gopallawa, were issued. These were confined to purely semantic issues, with no recommendations on process. A disclaimer at the end makes this explicit: “It is assumed that the financial and technical implications of the agreement have been carefully considered and that all necessary approvals have been or will be obtained prior to its execution.” That, however, was an assumption too far. Neither the cabinet nor the Evaluation Committee had paid the slightest attention to the biggest financial implication, namely, the exorbitant fee of $18.50 being charged by IVS-GBS-VFS. In fact, there is no mention in any document that the USD 18.50 service charge was ever justified or even queried.

Cabinet Approval

Then, with the reports of the Evaluation Committee and the Attorney General in hand, on 4 December 2023 the Minister of Public Security sought cabinet approval to sign the contract with the consortium. In his capacity as Minister of Finance, President Wickremesinghe endorsed the Evaluation Committee’s report, noting only that “Prior to entering into an Agreement, the Ministry of Public Security must ensure strict compliance with all the recommendations made by the Attorney General’s Department on the Agreement.” Astonishingly, he made no mention of the USD 18.50 service charge, which both the Evaluation Committee and the Attorney General had deftly sidestepped. Thus it was that the elephant sneaked into the room with the Evaluation Committee, the Attorney General, the minister and the president all studiously looking the other way even as $18.50 per tourist came to be siphoned into an offshore account. This is money that should properly come into the Consolidated Fund.

Tourism on the Rocks

What is more, the activity of promoting inbound tourism to Sri Lanka has now been awarded to this consortium on an exclusive basis, in effect making the Sri Lanka Tourism Promotion Bureau and its staff redundant. DIE Controller General Harsha Ilukpitiya, with no authority from cabinet, with no consultation with the tourism industry, and possibly without the consent of Tourism Minister Harin Fernando, signed away the rights to tourism promotion in Sri Lanka for the next 16 years to GBS-IVS-VFS, which has no known capacity in this highly specialized field. In this context, it is noteworthy that a co-owner of VFS is the giant tourism operator Kuoni, with immediate conflict-of-interest issues. So much for the zeal of the Evaluation Committee.

The Outsourcing Agreement also notes that VFS’s service fee of USD 18.50 per visa application “will be exclusive of any payment gateway, local taxes as applicable and other transaction fees”. All these are unspecified, and the consortium is therefore open to fleece tourists coming to Sri Lanka for as much as they want for the next 16 years.

AG vs COPF

On 9 May 2024, the Parliamentary Committee on Public Finance (COPF) requested the Attorney General to clarify whether the fees of USD 18.50 was a levy that would have to be authorised by Parliament under Article 148 of the Constitution. That is, whether like visa fees, this fee requires approval by parliament. The AG responded that no such parliamentary approval was needed. In doing so, the AG, no doubt unwittingly, misled COPF, writing, “The fee charged by the Service Providers (i.e. IVSGBS and VFS) is a “service fee” charged from applicants for on line visas for the service provided to them by the Service Provider and does not form part of the Visa Fees that are approved by Parliament. In the circumstances, Parliamentary approval for them does not arise”. The question then arises, if parliament does not approve the $18.50 fee, who does? It is entirely arbitrary.

The AG further justified this stance on the basis that it is not compulsory for foreigners to obtain their visas from IVS-GBS-VFS (if it were compulsory, the USD 18.50 would be a compulsory fee and hence subject to parliamentary approval), writing: “According to the Controller General, after the Outsourcing Agreement, an applicant has the following options: (a) Apply to the respective Sri Lankan Embassies; (b) Obtain visas through IVSGBS and VFS; (c) Obtain “on arrival” visas for 30 day tourist and business visas”.

Sadly, it appears that the Controller General of DIE had misled the AG. Any foreigner wishing to get a tourist visa to Sri Lanka and viewing the web portal of the Department of Immigration & Emigration (https://www.immigration.gov.lk/pages_e.php?id=14) gets the following message, in bold red letters: “IMPORTANT NOTICE: With effect from 17th April 2024, all Tourist or Business travelers to Sri Lanka must have e-Visa for entering in to Sri Lanka. Please visit https://www.srilankaevisa.lk for more information.” Nowhere on this site does it say that “on arrival” visas are available, or that Sri Lanka missions or embassies issue visas. In fact, nowhere on the page does the word ‘embassy’ even appear. Therefore, as far as tourists are concerned, it is compulsory that they get their visas from the IVS-GBS-VFS site https://www.srilankaevisa.lk/. What’s more, that site itself boldly announces, “ALL visitors MUST complete an eVisa application prior to their arrival in the country”. No doubt, after reading this article, DIE may seek to hastily amend their web page. If so, too late: I see that the entire DIE website has already been archived at https://web.archive.org/web/20240713021620/https://www.immigration.gov.lk/pages_e.php?id=14

It is now incontrovertible that, presumably because he himself was misled by the Controller General of DIE, the AG misled parliament.

Public Interest

Why should anyone care that VHS pockets a hefty $18.50 from every tourist who visits Sri Lanka? After all, it isn’t ‘our’ money. First off, it SHOULD be our money. This is money that the government of Sri Lanka forces every person wishing to visit Sri Lanka to pay to VFS. In fact, as the DIE and VFS websites make clear, if you don’t pay it, you can’t get a visa. Therefore, it is a levy charged by the government and siphoned off to VFS in Dubai without going through the Consolidated Fund and being subject to parliamentary oversight as required by Article 148 of the Constitution.

Second, the so-called service fee of $18.50 is arbitrary. It was not negotiated or evaluated by the Evaluation Committee, the Cabinet, the DIE or the Ministry of Public Security. What, if instead of $18.50 it was $1000? Whose job was it to say, ‘Hang on a minute, that’s too much’? No one, not the Evaluation Committee, the Cabinet or the DIE have said anywhere that that figure is reasonable.

COPF Chairman Harsha de Silva is already on record as saying that the Auditor General’s report on this matter should be handed over to the CID and the Bribery Commission. This is particularly apt because VFS is partly owned by Blackstone, a New York based financial giant. And thus, VFS falls under the purview of the US FCPA or Foreign Corrupt Practices Act. The FCPA requires companies whose securities are listed in the USA to meet stringent accounting and anti-bribery provisions. It remains to be seen whether COPF will forward the Auditor General’s report to the US Department of Justice, requesting an FCPA investigation. Who knows, Sri Lanka might just get enough compensation to pay off its national debt.