Cabinet approved USD 480 mn US Compact  ignoring President Sirisena’s objections

By Shamindra Ferdinando-August 19, 2020

The yahapalana Cabinet approved the Millennium Challenge Corporation (MCC) USD 480 mn Compact in the run-up to 2019 presidential election amidst strong objections by then President Maithrilpala Sirisena, according to highly placed sources..

The Cabinet decision followed the Board of Directors of the MCC endorsing the compact with the government of Sri Lanka on April 25, 2019. 

Sources told The Island that there had been five cabinet papers submitted by President Sirisena in that regard, beginning March 10, 2017. Having underscored the requirement to study the USD 480 mn compact in his first Cabinet paper on the matter, President Sirisena submitted four subsequent Cabinet papers on April 1, 2019, July 17, 2019, July 29, 2019 and August 23, 2019, sources said.

Responding to another query, sources said that the Cabinet had given the go ahead disregarding President Sirisena’s call to put off the finalisation of the agreement by six months pending a comprehensive study. Sirisena cited legal complications as the reason for his request.

President Sirisena’s Cabinet papers came to light following an inquiry conducted by a four member committee comprising Dr. Lalithasiri Gunaruwan, Architect Nalaka Jayaweera, former Secretary to the Transport Ministry D S Jayaweera and President’s Counsel Nihal Jayawardhana. Prof. Gunaruwan led the committee which was appointed in the wake of Gotabaya Rajapaksa’s victory at the November 2019 presidential election.

The yahapalana government went ahead with the project on the basis of approval from the Attorney General’s department. Asked whether the Committee had obtained the opinion of the Attorney General, in writing in that regard, sources said that several attempts had been made to get the AG’s Department opinion before the finalization of the interim report as well as the final report. The Committee requested the Attorney General’s opinion through the Office of the Prime Minister. Having failed in their attempt, the Committee requested that the Attorney General’s Department be represented at meetings. Subsequently, the Attorney General was represented initially by an officer, relatively junior before they upgraded representation.

The Gunaruwan Committee handed over its interim report in Feb 2020 and the final report on June 23, 2020. Sources said that President Sirisena’s cabinet papers had been submitted along with the final report though they weren’t made public.

The Attorney General’s Department is now in the process of studying the report before making its position on the agreement, according to sources.

President Sirisena, in his April 1, 2019 cabinet paper objected to approving the agreement pending parliamentary endorsement later.

In addition to a letter dated Oct 10, 2018 on Attorney General’s Department letter head now in the public domain, there were several opinions expressed by the same institution in respect of the USD 480 mn Compact. Sources said that as the draft agreement finally approved by the cabinet had been amended subsequent to that letter dated Oct 10, 2018, all available written documents had to be taken into consideration.

Finance Ministry is on record as having said that the Attorney General didn’t find fault with USD 480 mn Compact. It issued the statement at the behest of the then Minister Mangala Samaraweera immediately after Prime Minister Wickremesinghe confirmed the decision to finalise the agreement before Nov 16, 2019 presidential election.

Gunaruwan Committee in its report suggests that perhaps the government should seek the Attorney General’s opinion on USD 480 mn Compact. The suggestion as Attorney General Department did not respond to issues raised by the Gunaruwan Committee.

The Attorney General’s Department recently said that in addition to the Gunaruwan Committee report, several others, including the Land Commissioner, the Survey General and Director General of the External Resources Department were to be called.

Controversy surrounds a claim that Sri Lanka received USD 10 mn in advance on two separate occasions during the previous administration, but both the donor and recipient have denied the transactions. Perhaps, Director General of External Resources could set the record straight, sources said.

President Gotabaya Rajapaksa’s government is yet to announce its stand on the agreement.

The US embassy during the previous administration said that the US expected Sri Lanka parliament to decide on the USD 480 mn Compact.