Shocking revelations of deep security state within

the State

By Our Political Editor-Sunday, January 25,

2015
Defence Ministry-sponsored private
army links up with private maritime
company supplying arms
Huge armouries of private firms kept
in Galle Navy camp and at BMICH;
potential threat to Cwealth leaders
and Pope
President calls for explanation
from new Defence Secretary
for trying to defend
predecessors actions
Revelations of corruption, abuse of
power and a multitude of other illegal
acts under the reign of the previous
UPFA Government are unfolding day
by day.
In this midst, the role of a private
security company which ran a
veritable army in a controversial tieup with a Defence Ministry
sponsored security agency, is now
under investigation by the Police and
has raised some alarming questions.
Police sought the advice of the Attorney General as several aspects were uncovered.

They were told last week that the legal issues arising from the tie-up between Rakna Arakshaka
Lanka Limited (RALL) and the privately owned Avant Garde Maritime Services Ltd.
(AGMSL) needed very close and careful study. Hence, the Attorney General has said that a
team of State Attorneys have been appointed to go into all aspects of the matter and advice on
the follow-up action required. The teams task will begin next week. Among matters to be
examined is the legality of the operation and whether the Government of Sri Lanka had the
legal right to transfer weapons in its possession to a private security company. That too without
the approval of the Cabinet of Ministers and without any calls for international tenders
thereafter.
The AGMSL website notes that the companys role is provision of Sri Lanka Government
Owned Weapons and Associated equipment to PMSCs (private maritime security companies)
which is returnable to ports in Muscat and Mauritius, both as is clear, outside Sri Lanka.
Among the weapons are Chinese made T-56, Russian Kalashnikovs (AK 47s) assault rifles,
7.62 ammunition for these weapons, Light Machine Guns (LMGs), ballistic helmets, body
armour, Night Vision Goggles, Radio Sets (for communications) and flashlights.
RALL questioned by COPE
The RALL was the brainchild of former Defence Secretary, Gotabaya Rajapaksa. The company
is registered with the Registrar of Companies and is not answerable to Parliament. It is yet a
Government undertaking. This is what last years report by the Parliamentary Committee on
Public Enterprises (COPE) had to say:
The Committee enquired about the category of personnel who were recruited to the Company
It was stated that the ex-security personnel, those who have retired or legally resigned from the
Sri Lankan Armed Forces and Police Service were recruited and they were being paid a salary
in addition to their pensions.
It was enquired whether the Company, as a unit of providing maritime security, has taken any
action on the threat caused to Sri Lanka Fishermen by the Indian Fishermen in the Northern
Sea: It was stated that this matter has not yet been considered by the Company.
It was questioned about the matter pointed out at the last Committee meeting that the Company
has invested funds without obtaining Treasury approval It was stated that being a private
company, it was not required to obtain Treasury approval and the problem had been regularised
by obtaining the approval of the Board of Directors.
It is not clear whether RALL declared dividends to the State. After all it has not only used state
funds entirely but all other state assets including weapons belonging to the Government.
Among those who were on the board of directors was Mohan Peiris, the Chief Justice, who is
now at the centre of a heightening controversy. RALL has won contracts to provide security in
different state institutions and state-backed institutions ousting other private operators. Many
lost employment opportunities in the latter. RALL also operates catering services and
restaurants competing with the private sector. RALLs strength at present is 4,000.
The AGMSL is a subsidiary company of Avant Garde Security Services (Pvt.) Ltd. located in
Kotte. The prime mover in this private venture is a former commando, retired Major Nissanka

Senadipathy and the companys website boasts of an employee strength of 6,500 which is
almost a quarter of the strength of the Sri Lanka Air Force. It is also six and half times bigger
than the Sri Lanka Coast Guard. On Friday, Senadipathy was banned from leaving Sri Lanka by
Colombos Chief Magistrate Gihan Pilapitiya. Top armed forces and Police officials who are
retired, including at least two former Navy Commanders, have been employed by this company
for whopping wages. Senadipathy is a strong supporter of the UPFA and campaigned for
former President Mahinda Rajapaksa at the January 8 presidential election. He is also
considered a close confidant of former Defence Secretary Gotabaya Rajapaksa.

The RALL-AGMSL vessel MV Mahanuwara, the floating armoury at the Galle

Harbour during the police inspection. Pic by Sajeeva Wijeweera
It was a top Sri Lanka Navy officer who once recommended that the tasks now being carried
out by Avant Garde Maritime Services could not be handled by his institution. The move did
surprise senior Navy officers then. Some alleged this was pre-arranged but this could not be
confirmed. Their concerns were heightened by the fact that the Navy had been equipped; its
strength multiplied and better organised professionally to cope with a terrorist threat when
RALL was formed in October 2006. This not only paved the way for the RALL-AGMSL tie-up
but also led to the officer concerned being recruited to a top slot after retirement. He is
receiving a six figure monthly salary, a luxury SUV and other perks.
The probe itself began by chance after the discovery of weapons on board the fully airconditioned MV Mahanuwara, a vessel owned by AGMSL, when it was at the Galle Harbour. It
came on a tipoff to the Harbour Police. The new Defence Secretary, B.M.U.D Basnayake, told
the media last week that it was a legitimate project with the military hardware found on this
vessel described as a floating armoury. Police investigations were still under way when he
made those remarks. In a separate statement, Basnayake also said that a bank account of the
MoD, opened by his predecessor Gotabaya Rajapaksa is not a personal account and has been
operated by the Ministry within legal parameters. In effect, Basnayake was publicly
contradicting Finance Minister Ravi Karunanayake who made the disclosure to the media.
Karunanayake was wrong when he said it was a personal account but a question about
legality remained.
Basnayakes assertions became the subject of a lengthy discussion at the first meeting of the

Cabinet of ministers of the National Unity Government last Wednesday evening. It was
revealed by Finance Minister Karunanayake that the account in the Taprobane Branch of the
Bank of Ceylon was registered as that of Gotabaya Rajapaksa, Secretary, Ministry of
Defence He said in terms of Financial Regulations, no Ministry Secretary was allowed to
open accounts and deposit proceeds from the sale of state property. They have to be deposited
in the Consolidated Fund in The Treasury, he said. The monies had accrued after the outright
sale of land adjoining Army Headquarters including the sale of the Armys former playground
to Shangri La Hotels.
Instructions to secretaries
The ministers decided that Public Administration Minister Karu Jayasuriya should send out
instructions that Secretaries to Ministries should strictly follow the rules and regulations under
the Establishment Code in issuing Press Releases by State Officials. In other words, the new
Government which assured greater transparency and media freedom (besides a Right to
Information law) has now gagged State officials from speaking to the media. This is just after
only eleven days in office. Ironically, it was not for the fault of the media. It is only because
one of the state officials, obviously inexperienced, unaware and more importantly ignorant
about the Governments own policies made the wrong remarks while holding a highly
responsible position. On top of that, President Maithripala Sirisenas official Government
spokesman, Minister Rajitha Senaratne, revealed at a media briefing on Thursday that he (the
President) had called for Basnayakes explanation. An official of the Department of
Information was to interject to say that even the proceeds from the sale of its publication
Desathiya (fortnightly) were being periodically deposited in the Consolidated Fund with the
Treasury.
Finance Minister Karunanayake claimed at a news conference last week that Rs 7.5 billion was
found in a bank account in the name of former Defence Secretary Gotabaya Rajapaksa. He said
that the money had since been transferred to the Treasury. Gotabaya Rajapaksa, however,
strongly rebutted claims that it was a personal account and charged that the remarks were
grossly misleading and an attempt to discredit him. At Wednesdays meeting, ministers
pointed out that no prior approval had been obtained from the Cabinet of ministers to hold the
funds in a separate account and that aspect should be probed further. If every minister sells
state property and deposits the proceeds in separate bank accounts, there is no need for a
Treasury, said a minister commenting on the move. It has to be probed in detail to ensure such
irregular practices do not occur in the future, he said speaking on grounds of anonymity. The
Cabinet of ministers decided that the subject should be taken up at a two-day debate in
Parliament. Party leaders, who meet the Speaker, Chamal Rajapaksa, are to fix the dates. The
Minister added that similarly the role played by RALL and AGMSL should be fully probed.
The Sunday Times is able to reveal exclusively today that Avant Garde Maritime Services held
three container loads of arms and ammunition in the Sri Lanka Navy Camp SLNS Dakshina
in Kaluwella, Galle. Rear Admiral D.E.C. Jayakody, Commander, Southern Naval Area told
K.D.A. Weerasinghe, Senior Superintendent of Police, Galle, that AGMSL, the owner of MV
Mahanuwara though the armoury was inside the Navy camp, that neither those in the armed
forces nor the Police had any control. They could not even check on the armoury. They were
not provided details of what had been stored. The only proof there was a private armoury inside

the Navy camp came in the form of a letter retired Army Major General Palitha Fernando
signed on behalf of the former Defence Secretary.
He is Military Liaison Officer in the Ministry of Defence and is not legally authorised to issue
letters to military camps to locate private armouries in their premises. Nor has he said under
which provisions of the law he was acting when he issued those orders. Making the situation
worse is the fact that he is also Chairman of the RALL. His letter only conferred powers on the
Southern Naval Area Commander to maintain the armoury but did not say what it meant.
Ironically, other than taking note that such an armoury existed, the area commander was not
authorised to inspect or conduct regular checks. The keys were not in his possession. The
purpose of the letter, a Navy source said, was only to facilitate the setting up of the armoury.
The source claimed no payments were made to the Navy but this could not be verified. The
AGMSL has been charging clients a fee for every weapon issued. However, the Navy was not
able to determine how many such weapons were in the armoury in its base because the Navy
was not allowed to check the armoury or given a list.
A similar situation existed even in a secret armoury held by RALL at the Bandaranaike
Memorial International Conference Hall (BMICH) for some years. Ironically, the
Commonwealth Heads of Government Meeting (CHOGM) was held there in November 2013
with the security staff accompanying leaders blissfully unaware they were close to a secret
arsenal of weapons. An intelligence source said even advanced security teams that visited
ahead of the summit were not told about the existence of the secret armoury. This was out of
fear that they would have sought the removal of the weapons in view of the danger it may pose
to those of whom they were protecting. Similarly, when Pope Francis visited Sri Lanka last
week, his advance security team, a Police source said, was unaware. The Pope went to the
BMICH to address an inter-religious event. When a Police raid was conducted, only 152
weapons were found. A total of 3,322 weapons had gone missing. Officials told the Police they
had been issued to different parties. Police now want to ascertain who granted permission for a
private party to have an armoury in the BMICH and whether any payment was made for the
purpose.
The AGMSL website confirms that Weapons are owned by Sri Lanka Government. Hence
origins of weapons are indisputable. Each of these will be accompanied by an End User
Certificate issued by the Ministry of Defence. They will always be accompanied by a Sri
Lankan Sea Marshal of Rakna Arakshaka Lanka (RALL) as Custodian during passage of the
ship When the Government of Sri Lanka procures military hardware from a foreign
supplier, it is required to declare who is the end user. It is to such a party that an End User
Certificate is issued. In this instance it is the Government of Sri Lanka. Re-issuing of such a
certificate by the Ministry of Defence to a private party, it is pointed out, violates the assurance
given to the supplier. It is not clear whether payments have been made to the Ministry of
Defence for the weapons by the AGMSL. It has also come to light that the diplomatic
machinery of the Government has been used vigorously to obtain recognition for the AGMSL
from international bodies. They were unaware that there were local irregularities. An official
source said before arrangements between RALL and AGMS were worked out, the Attorney
Generals Department had not been consulted to determine legal positions.

Major Generals letter

If the Navy did not have access to weaponry stored within its own premises by a private party,
there was more. Even the rooms in the Seva Vanitha building in the Navy camp in Galle were
given for storage of weapons and ammunition. Here again, the Navy had no access to these
rooms. They have been allocated after the Chairman of RALL, retired Major General Palitha
Fernando wrote to the Commander of the Southern Naval Area as far back as November 20,
2012. He has signed the letter as Army Co-ordinating Officer. What such a retired officer
from the Army had to do with the Navy is not made clear. Even worse, how he issued orders to
allow a private party to establish an armoury inside a security forces establishment is even
more intriguing. This is what his letter said:
1. Armed security officers belonging to the naval security division of Rakna Arakshaka Lanka
Company, established under the Ministry of Defence and Urban Development, have been
deployed with arms and live ammunition for the protection of cargo ships.
2. The CEO of Rakna Arakshaka Lanka has informed us that the armoury in the Galle Fort
that they have been provided with is insufficient as the company, due to the high quality of its
services, is facing higher demands.
3. I kindly require that the company be provided with an armoury in the Dakshina Navy Camp
in order for them to continue providing international-quality services.
Retired Major General Fernandos assertion clearly confirms that a naval security division
was functioning under RALL, a Government owned business undertaking. This raises an all
important question can there be another armed and equipped naval entity when the Sri Lanka
Navy, set up by statute, continues to function? Ironically, the Navy has been denied this task
that would have earned them large amounts in foreign exchange. Besides the Navy, which is
tasked to protect the countrys territorial waters among other responsibilities, a Coast Guard
was also set up. Instead, the Navy was allowed to carry on with a less lucrative whale watching
safaris in the south and operate restaurants. Naval personnel were assigned as drivers, cooks
and household help to VIPs. Female cadres were similarly assigned as escorts to female VIPs.
Besides posing the question of illegality, there are also constitutional issues. The President, as
Commander-in-Chief, has been designated as the head of the armed forces and the Police. True,
there are other ancillary units like the Coast Guard and the Civil Defence Force with a strength
of 35,000 tasked with maritime law enforcement, sometimes duplicating the role played by
the armed forces, but they are essentially with the state. They have come in as institutions
where retired officers successfully found employment. Here is an instance where a private
company has been delegated a role that should be played by the Navy and that too for
commercial gain.
The fact that an armoury was located inside a Navy camp raises a number of issues over how
national security could have been endangered. Though it has not happened, there was always
the likelihood of someone with access to a cargo vessel seeking weapons from the RALLAGMSL. There is nothing to prevent them from harming the Sea Marshal and carrying out a
terrorist attack or holding ships to ransom. Higher ups at Police Headquarters have come up
with a string of serious questions. Among them:

Who is empowered to authorise RALL-AGMSL to operate a maritime security service

extending from Sri Lankan waters to the Red Sea and under which laws has anyone given
authorisation to RALL-AGMSL to use weapons belonging to the State? Who authorised them
to collect monies for them?
Have weapons belonging to the Army, Navy and Air Force been given to RALL-AGMSL after
the Tiger guerrillas were militarily defeated? Who has the authority to do so?
Was any approval from the armed forces or the Police obtained before RALL-AGMSL was
allowed to set up an armoury? In this instance, was permission from Navy Headquarters
sought? Has the Commander of the Navy been consulted?
What happens if the property belonging to the Government of Sri Lanka (the weapons and
ammunition) is used against a friendly force or party? Who takes the responsibility for such
action? Who will pay compensation if demands are made?
Why could not the Sri Lanka Navy, relatively less busy after the defeat of Tiger guerrillas, have
undertaken this task? Did this not deny the Navy the possibility of earning millions of dollars in
foreign exchange? How much of funds have the private security company earned as a result of
this?
Who has the authority to transfer weapons obtained declaring the Sri Lanka Government as
End User to a third party? Are such licences issued to foreign vessels valid?
Who bears the responsibility of a floating armoury if it falls into the hands of unauthorised
persons? Is there insurance cover for the personnel?
Is there any agreement between RALL and the Government of Sri Lanka over sharing of profits
or other forms of revenue? Is there a similar agreement with AGMSL?
Four advisors to the Government
Besides delving on corrupt activity and other malpractices of the previous Government, the
first meeting the Cabinet of ministers which lasted nearly two hours last Wednesday also
decided to appoint four advisors to the Government. It came on a recommendation by Prime
Minister Ranil Wickremesinghe. The four are N.K. Weragoda, Charitha Ratwatte, Malik
Samarawickrema and Nirj Deva. The latter is a member of the European Parliament and was
earlier a staunch supporter of the UPFA Government. He was then a strong critic of the UNP
and made his feelings known through the state-run media. However, now switching his support
to the National Unity Government, he was a VIP guest at the swearing-in of ministers. He sat
just behind the ministers, deputies and state ministers at the ceremony at the Presidential
Secretariat. Premier Wickremesinghe also presented a Cabinet paper for the appointment of
Arjuna Mahendran as the Governor of the Central Bank. One minister pointed out that he was
not even a citizen of Sri Lanka. However, the Prime Minister said there are instances where
non-nationals of a country have been appointed heads of their respective Central Banks.
Moreover, he said, Mahendran would seek dual nationality by becoming a citizen of Sri Lanka.
During any other business, Minister Karu Jayasuriya moved that Elections Commissioner

Mahinda Deshapriya and his officials should be commended for the impartial manner in which
they conducted the January 8 presidential election. He noted that ministers would not have been
able to sit at the Secretariat that day if that good conduct was not there. Ministers are to decide
shortly on how to pay tribute to them. The first measure to benefit all Sri Lankans came from
Power and Energy Minister, Champika Ranawaka who moved for the reduction of fuel prices.
The Government is to raise a standby loan of two million US dollars to offset shortfalls that
may arise when it announces relief measures to the public in the mini-budget on January 29.
Galle Face project
The ministers decided to review one of the UPFA Governments ambitious projects, an
unsolicited proposal allowing China a generous 25-year corporate tax holiday to Colombo Port
City, the Rs 172.4 billion (US$ 1.3 billion) project to reclaim more than 575 acres (233
hectares) of sea off Galle Face Green. The project company, CHEC Port City Colombo
(Private) Ltd, is to be exempt from tax on dividends for 25 years as well, as a host of other
levies for a lesser period of time. The concessions were Gazetted on January 24 last year under
Section 3 (2) of the Strategic Development Projects Act. The project is more expensive than the
Mattala Rajapaksa International Airport (US$ 210 million), Phase 1 of the Hambantota Port
(US$ 361 million) or the Colombo-Katunayake Expressway (US$ 350 Million) put together.
Among other concessions granted is an exemption from withholding tax payable on the interest
on foreign loans taken for capital expenditure and on technical fees paid to consultants; on
management fees and royalty payments, provided the total of such charges does not exceed 3%
of gross operating revenue; on marketing fees, provided the total of such fees does not exceed
1.5% of gross operating revenue; and on incentive management fees, provided the total of such
fees does not exceed 10% of gross operating profit. Up to 30 expatriate employees of the
project company are exempt from Pay as You Earn Tax. This will be applicable for project
implementation staff and project operational staff for a 10 years from the date commercial
operations begin. The Company is required to gradually replace expatriates with local
employees on a best efforts basis. The foundation stone for the project was laid by Chinese
President Xi Jinping when he visited Sri Lanka in September last year.
As first revealed exclusively in the Sunday Times (Political Commentary) of January 19 last
year, a significant feature of the project is the granting of a portion of the land area on a 99-year
lease to the Chinese firm which made the unsolicited proposal. It is just close to the Chinese
built International Container Terminal. The base price of the land is being estimated at US$ 24
million or more than three billion rupees. The project led to serious concerns in India.
Ministers decided that they should first determine whether an environmental assessment of the
project has been carried out. This is before determining whether they should go ahead with the
project. It was also decided that the Embassy of China in Colombo be kept informed of these
decisions.
Whilst mega projects are being reviewed for their costs and viability among other reasons, the
discovery by the Police of the floating private armoury has brought forth some disturbing
questions. If such weapons given to a private party fell into the hands of a group bent on
subverting democracy, there is no gainsaying that the damage would have been enormous. In

the past, other than Tiger guerrillas whose weaponry were regularly upgraded by Kumaran
Pathmanathan (KP) and his cohorts, in the south they were fought with crudely made Gal
Kattas (improvised pistols) and shot guns. KP has been allowed to roam freely in the north
and there is no guerrilla army for him to re-supply now. Yet, he has not been called upon to
answer his illegal and treacherous actions though the Rajapaksa Government had called those
who differed from their views as traitors. Floating as well as secret land based armouries in
the hands of private parties is a recipe for great disaster. That is why the National Unity
Government should conduct a fuller probe and reveal the findings to the public. They have a
right to know and the Establishment Code should not be made applicable to those who will
reveal information.