China firm vanishes with billions in Sri Lanka Lotus Tower scam
ECONOMYNEXT – Sri Lanka’s President Maithripala Sirisena had bared a scam running into billions of rupees in building a massive tower by Chinese firms, draining funds from Sri Lanka’s cash rich telecom regulator.
One apparently non-existent Chinese company had vanished with two billion rupees in the process.
The contract to build the tower had been awarded in 2012 to China National Electronics Importers and Exporters Corporation (CEIEC) and Aerospace Long March International Trade Co. Ltd, (ALIT) by the Cabinet of ministers.
The Export Import Bank of China had agreed to finance the 104.3 million US dollar project (about 19 billion rupees) through a loan to be repaid in 14 years, according to the telecom regulator.
President Sirisena said a two billion rupee advance had been paid to the company called ALIT, which apparently did not exist.
“Investigations done in 2015 found no information on the company ALIT that was party to the agreement,” President Sirsena had said, opening the completed tower to the public.
Sri Lanka’s embassy in Beijing also had not been able to find any information on ALIT. Investigations could not find any such company either in China or elsewhere, a statement from his office said.
Documents relating to ALIT were found to be fake, the statement said.
ALIT had then been removed from the agreement between the Telecom Regulatory Commission and the contractor in 2017.
Exim Bank financing had ended, and the telecom regulator had forked out another four billion rupees to complete the project.
Sri Lanka was now paying 2.4 billion rupees a year as loan installments.
The 2018 loan installment had been paid. For 2019 1.2 billion had been paid so far.
President said 2.4 billion rupees had to be paid for another 10 years.
Because the TRC had part financed the project, some money had been saved, he said.
The telecom regulator had also paid 1.5 billion rupees to the Urban Development Authority for land given to build the tower. Another 9.4 billion was owed to the UDA in future lease payments according to TRC’s 2017 annual report.
Sri Lanka’s auditor general said in the report that the TRC had not submitted an audit report to the parliament’s Committee on Public Enterprises as of 2018, when he conducted the audit. A similar observation was made in the previous report.
The tower is expected to house transmitting and broadcasting facilities as well as entertainment.
It is not clear how the Telecommunications Regulatory Commission of Sri Lanka, which is supposed to be an independent regulator ended up running operating businesses and owning or controlling telecom or broadcast infrastructure. (Colombo/Sept16/2019- Update 11)