Sunday Observer Online


Sunday, 29 March 2015





Marriage Proposals
Government Gazette

MiG 27 deal crash lands

Udayanga Weeratunga missing:

Former SLAF Commander grilled on massive financial losses to the State:

Two-pronged investigation into questionable procurement:

The government is to launch an international probe to verify the whereabouts of the island's former envoy to Russia, Udayanga Weeratunga, who is now reported missing, while a special inquiry is already underway to ascertain the financial loss caused to the State by the purchasing of four MIG aircraft in 2006.

While the former ambassador whose involvement in a highly questionable sale of four Ukraine- built MIG 27 aircraft to the Sri Lanka Air Force(SLAF) now forms the basis of a special investigation, the SLAF Commander at that time, Air Marshal Roshan Gunathilake was questioned for over six hours by the Financial Fraud Investigation Division (FFID)on Friday (27) over the extent of financial loss to the country due to purchasing of the four MiG Flogger-D fighter-bomber aircraft, at a staggering US$ 14,676,000.

In his capacity as chairman of a technical body that assessed the validity of the purchase, Gunathilake had earlier ruled against the purchase, though the deal went through in 2006.

Top police sources said, Gunathilake, the former Chief of Defence Staff answered questions on the technical evaluations involved in the procurement process and the basis on which aircraft that were over 20 years, were purchased by the SLAF.

Meanwhile, the Anti Corruption Committee Secretariat (ACCS) conducting preliminary investigations on serious frauds allegedly committed during the previous regime, has quantified the loss caused to the State by three deals alone, to be a colossal US$ 515 million. Police Spokesman, ASP Ruwan Gunasekara, said that the MiG 27 deal is now under investigation and there will soon be a ' two-pronged investigation,' looking into local and international components of the highly questionable procurement.

Meanwhile, investigators are said to be taken aback by the damning evidence now available with regard to the purchase of four MiG Flogger-D fighter-bomber aircraft, purchased in 2006 at a staggering US$ 14,676,000.

The deal included the purchasing of three units, rejected by a SLAF technical evaluation committee in 2000, headed by Air Marshal Roshan Gunathilake, who had reportedly ruled against the purchases.

The MiG Flogger D Fighter-Bomber Aircraft Manual 2006 states that the MiG 27 (NATO reporting names Flogger - D and J) and Indian Air Force name Bahadur (Valiant), is designed for action against stationary and mobile, ground and sea enemy units. They have not been used in combat actions (excluding Afghanistan).

Contractual conditions

The contract contained a questionable condition that stipulated that the End User Certificate should be issued to a third party, defying all norms and procedures of government to government contracting, which was strangely made to a London-based company that was not registered with the British Ministry of Defence. Nevertheless, Sri Lanka purchased the life-expired aircraft and it had transpired that the money had been transferred to a designated third party with no bank guarantee or performance bond.

The requirement of a performance bond was waived off by the Sri Lankan Ministry of Defence at that time, reportedly for the reason that the Sri Lankan Government did treat it as a government to government transaction.

One of the aspects seriously objected to by that technical evaluators at that time were the fact that the MIG 27 particular model was no longer in production, thus causing serious depreciation in value.

A unit price was US$ 2.462,000, well above the purchase price when Sri Lanka purchased the first four MiGs in the year 2000.

It is now documented fact that three out of the four MIGs, purchased in 2006, had been ruled out by SLAF TEC in 2000 as being unsuitable.

The rejected aviation products were offered in two different parts.

The three MiG 27 aircraft that were rejected by the SLAF TEC bore serial numbers, 8371534688, 83712518044 and 83712518009.

It was soon brought to light that the contract had not been a government to government transaction as claimed, as it recognised a third party referred to as 'designated party' - a London- based company named Bellimissa Holdings Ltd; which was authorised to collect the payments on behalf of the seller, Ukrinmash, a subsidiary of a Ukrainian State company named, UKRSPETSEXPORT of Ukraine.

The current investigations by the FFID are looking into the reasons behind a purchase that had been blatantly one-sided and beneficial to the seller and not the buyer, top sources said. In addition, questions are being raised as to why Sri Lanka's air defence was undermined in that manner; with a contract that was manifestly one-sided and very much to the detriment to the buyer, Sri Lanka.

Top SLAF sources confirmed that the SLAF procurement history required a performance bond and a bank guarantee at all times, except in one instance.

The bank guarantee requirement had been waived off, according to top sources, when the SLAF purchased C 130s from the British Ministry of Defence at which point the government of UK issued a letter to the Sri Lankan government guaranteeing the approval of a bank loan.

The MiG27s however, came with no such guarantee and the Sri Lankan Government had released funds to Belimissa Holdings in the UK, without qualms.

Bellimissa Holdings Ltd at the time of entering into the contract was not registered with the British Ministry of Defence and was not traceable in the UK Company Register.

At that time, all it had was an office on the 2nd Floor, 145-157, St. John Street, London ECIV4PY, included in the contract with the SLAF.

The FFID, it is learnt, had questioned the former SLAF Commander whether the credentials of this purported company which lacked a registration with the British MoD did not give rise to any concerns.

Further, there are also questions about the haste with which the purchase was made by Sri Lanka.

The obsolete aircraft, manufactured in the early '80s and therefore considered life expired after 25 years since manufacture, were purchased without an End User Certificate.

End User Certificates are considered extremely important in military purchases, as it seeks to legally prevent military purchases from reaching the wrong hands.

In the year 2000, when the first batch of procurements was made, the four aircraft on offer were as follows: aircraft bearing serial numbers 83712531385 (manufactured on 26.05.1982 with 746.33 flying hours available and 18 years old), 83712534657 (manufactured on 24.02.1983 with 745.40 flying hours available and 17 years old), 83712534709 (manufactured on 25.03.1983 with 746.33 flying hours available and 17 years old) and 8371253877 (manufactured on 1.01.1984 with 744.07 flying hours available and 16 years old).

The second offer included 83712520013 (manufactured on 13.05.1981 with 848 flying hours available and 19 years old), 83712545237 (manufactured on 07.06.1984 with 848 flying hours available and 16 years old) and a MiG 23 bearing serial number 49065315 (manufactured on 22.06.1984 with 529 flying hours available and 16 years old.)

By the time Sri Lanka procured her second batch of MiGs to add to the SLAF fleet, three out of the four aircraft had reached 25 years of age and hence 'technically dead'.

The 2006 procurements include aircraft bearing serial number 83712534688 (manufactured on 10.03.1983 with 850 flying hours available and 24 years old), 83712518044 (manufactured on 03.04.1981 with 850 flying hours available and 26 years old), 83712518022 (manufactured on 23.11.1980 with 850 flying hours available and 27 years old) and 83712518009 (manufactured on 28.11.1980 with 850 flying hours available and 27 years old).

The first two aircraft had been overhauled as far back as 1989, and the other two in 1991, making the risk factor high and the value, correspondingly much less.

Irrespective of all legal and technical concerns, on 7 July 2006, the Ministries of Defence, Public Security, Law and Order, wrote to SLAF Commander Air Marshal Roshan Goonetileke, granting approval for the purchase of four units of overhauled MiG 27 M aircraft, the overhaul of three units of MiG 27 M, and one unit of MiG 23 UB, of the SLAF.

According to Contract No. SLAF 2006/7/AIR (Order No. J45001) for the purchase of four aviation products, the contract brought in a third party, referred to as designated party, to which payments were to be made.

The buyer was the then SLAF Commander, Air Marshal W.D.R.M.J. Gunathilake of Colombo, Sri Lanka, and the seller was Ukrinmash, a Ukrainian state foreign trade and investment firm and a subsidiary of the state company 'UKRSPETSEXPORT' of Kiev, Ukraine, represented by its Director, D. A. Peregudov.

The contract also recognised the unregistered British company, Bellimissa Holdings Ltd, as the designated party to which payment had to be made, represented by M. I. Kuldyrkaev. The contract provided the purported company's address to be Bellimissa Holdings Ltd., 2nd Floor, 145-157, St John Street, London ECIV4PY.

And finally, the deal that made headlines during the time of purchasing had become one of the most questionable military deals, now under investigation for causing massive financial losses to the country, besides being tainted by alleged corruption.

[Flogged by MiGs]

The MiG 27 Flogger D is no longer in manufacture. The Russian Air Force retains its MiG 27 aircraft in the reserve with only Kazakhstan, India and Sri Lanka having continued their use. The Indian Air Force by then had already begun to phase out MiG 27 use and opted for a locally-designed aircraft, Tejo.

A TEC appointed in 2006 that analysed the country's security situation, recommended the purchase of four more MiG 27s and the overhaul of existing ones.

Ukraine did not produce the aircraft, but exported it through UKRSPETSEXPORT - a State company for the export of military products.

[Supply of weapons to be probed]

Deputy FM An international inquiry will soon investigate allegations of former Sri Lankan envoy to Russia, Udayanaga Weeratunga, being involved in the supplying of weapons to a rebel group in the Ukraine. Deputy Minister of Foreign Affairs, Ajith Perera said that an international level investigation committee will be appointed to inquire into the allegations levelled against Weeratunga of supplying weapons to a terrorist group in the Ukraine.

“It is a serious issue. The Ukraine Government has already made two complaints with regard to his alleged involvement. Though under a cloud, he has not returned to Sri Lanka or submitted his diplomatic passport to the authorities, subsequent to his removal from the post,” Perera said.

The Ukrainian Government had informed the Sri Lankan Foreign Ministry that Weeratunga, a nephew of former President Mahinda Rajapaksa, had supplied weapons to a terrorist group operating in Ukraine and had acted in violation of norms of diplomacy.

It is learnt that Weeratunga had reportedly been involved in the sale of assault rifles and other types of small arms, popular among rebel groups.

Weeratunga was recalled from the Moscow mission after a nine year stint, following Foreign Minister Mangala Samaraweera's directive to recall political appointees heading Sri Lankan missions abroad.


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