Sep 18, 2019 (LBO) – Sri Lanka’s ex-President Mahinda Rajapaksa says that the China National Electronics Corporation and ALIT were nominated by the Chinese government since contractors for projects financed by the Exim Bank of China are usually nominated by the Chinese government.
Issuing a media release, the Opposition Leader says that the TRC had credited 15 million US Dollars (Rs2bn) to the account of the main contractor China National Electronics Corporation on 9 October 2012.
“The advance payment of Rs. two billion was never paid to the other contractor ALIT,” Rajapaksa said.
“The relevant documentation will show that from day one all payments had been made to the account of China National Electronics Corporation.
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According to Rajapaksa, the two contractors recommended for the Lotus Tower project are 100 percent Chinese government-owned conglomerates.
"To say that a major Chinese government-owned conglomerate had disappeared with Rs. two billion belonging to the Sri Lankan government, is a horrendous insult to China," he said.
"This insulting statement was moreover made in the presence of the Chinese Ambassador.
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Full statement
Allegation regarding the disappearance of Rs. two billion in the construction of the Colombo Lotus Tower
Speaking at the opening ceremony of the Colombo Lotus Tower, the President made a statement to the effect that back in 2012, one of the Chinese contractors involved in the project - a company named ALIT - had taken the advance payment of Rs two billion (Around 15 million USD at that time) made by the Telecommunications Regulatory Authority (TRC) and disappeared. The President also stated that the government had sent the Sri Lankan Ambassador in Beijing to the address given by ALIT and discovered that there was no such company at that address.
This allegation was flashed around the world by international news agencies including Reuters and it became a major news story in many Asian countries.
At the time that this payment was made in 2012, the TRC which was in charge of this project was directly under me as the President.
Therefore I wish to make a clarification regarding this matter.
In 2012, the total cost of the Lotus Tower project was estimated at 104.3 million US Dollars. The Exim Bank of China agreed to provide a loan facility of 88.6 million USD or up to 85% of the total project cost.
The remaining 15% of the cost had to be borne by the TRC. The contractors for projects financed by the Exim Bank of China are nominated by the Chinese government. Accordingly, the China National Electronics Corporation and ALIT were nominated by the Chinese government.
The Lotus Tower was due to be completed by 2015, but due to the yahapalana government causing delays in the project and due to lapses on the part of the contractor, it could not be completed according to schedule.
In projects of this nature the 15% ‘local component’ has to be paid to the contractor upfront as an advance payment.
Documents confirm that on 9 October 2012, the TRC had credited 15 million USD (Rs. two billion) to the account of the main contractor China National Electronics Corporation. The latter company is still the main contractor of the project. The advance payment of Rs. two billion was never paid to the other contractor ALIT. The relevant documentation will show that from day one all payments had been made to the account of China National Electronics Corporation.
The two contractors recommended for the Lotus Tower projects are 100% Chinese government owned conglomerates. The active party doing the contract was always the China National Electronics Corporation and not ALIT. To say that a major Chinese government owned conglomerate had disappeared with Rs. two billion belonging to the Sri Lankan government, is a horrendous insult to China. This insulting statement was moreover made in the presence of the Chinese Ambassador. We can understand why the government would want to sling mud at the political opposition on the eve of a decisive presidential election. But to publicly insult a major world power that has always been friendly and helpful to Sri Lanka, is unconscionable.
From the time the present yahapalana government came into power, all they have done is to declare open the projects started by my government.
The Colombo Lotus Tower is also one such project. The Lotus Tower can generate enormous revenues for the government by providing telephone, television and radio broadcasting services and also by attracting local and foreign tourists.
But its cost has been less than a seventh of the cost for example of the privately owned Shangri La hotel project in Colombo. The Lotus Tower is therefore, an excellent investment. This is also an edifice that will symbolise Sri Lanka, much like the Eifel Tower in France.
This unfounded allegation of a Rs. two billion fraud in the construction of the Lotus Tower was made at its opening ceremony in order to prevent the credit for constructing such a national asset from going to the SLPP and the Joint Opposition. What we saw happening was no different to throwing stones at a neighbour’s new car out of sheer jealousy. For more than five years we have heard a lot about golden horses, Lamborghinis and bank accounts with a balance of 18 billion USD, but this is the first time that anybody heard of a Chinese company that had disappeared with Rs.
two billion belonging to the TRC. In April 2019, the Auditor General published a 670 page special report on the Lotus Tower project, but it makes no mention at all of a Chinese contractor who disappeared with Rs. two billion.
What this indicates is the remarkable ability that the yahapalana leaders have to concoct complete falsehoods in a manner that suits the occasion. If this statement was made due to wrong information being conveyed, I expect the relevant individuals to move quickly to issue a correction. Since all documents pertaining to the Lotus Tower project are available with the TRC and the Auditor General, ascertaining the truth with regard to this matter is not a difficult task at all.
Mahinda Rajapaksa
Leader of the Opposition