Contradictory claims on USD 10 mn grant * MCC compact: * Expert Committee fails to obtain AG’s opinion
Posted on June 28th, 2020

by Shamindra Ferdinando Courtesy The Island

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Top MCC official Fatema Z. Sumar with Dr. Samaratunga at the signing of the first agreement (file photo)

Contrary to US embassy denial that funds required for preparatory activities related to controversial MCC (Millennium Challenge Corporation) project had not been disbursed or put off pending finalization of the decision, the US and Sri Lanka signed two agreements worth USD 10 mn in July 2017 and June 2018, according to authoritative sources.

US Embassy twitted on Thursday (25) that no MCC grant monies had been transferred to or spent by the Sri Lankan government under the proposed USD480 million grant. Funds for preparatory activities have been cancelled or indefinitely postponed, pending the Government’s decision whether to proceed with the grant.

The US Embassy was responding to Chairman of the Experts’ Committee Lalithasiri Gunaruwan, Professor of Economics of University of Colombo declaration that though USD 7.4 mn (Rs.1.1 bn) and USD 2.6 mn (Rs 413) had been received in 2017 and 2018 no accounts details were to be found anywhere.

Sources pointed out that the US Embassy, on July 27, 2017 and on June 13, 2018, had announced the finalization of two agreements (i) to develop a compact, including identification and analyzing of specific projects and (ii) to finalize compact development. According to the US Embassy statements, the funds allocated to the tune of USD 10 mn were in addition to the total MCC compact funding amount.

The final report of the Expert’s Committee appointed to review the proposed Millennium Challenge Corporation Compact (MCC) was handed over to President Gotabaya Rajapaksa at the Presidential Secretariat last Thursday.

The Expert Committee said that it stood by its report prepared over a period of six months.

On President Rajapaksa’s directive, the entire report was posted online within 48 hours after receiving it.

Sources pointed out that incumbent US Ambassador Alaina Teplitz, in an interview, in Dec 2018, which was posted on the US Embassy website confirmed the allocation of funds in 2017 and 2018. Ambassador Teplitz is on record as having said: “Via the Millennium Challenge Corporation (MCC), we are focusing on how to improve the infrastructure in Sri Lanka. MCC’s initial grant, worth Rs. 1.2 billion ($7.4 million), was provided in July 2016 to support feasibility studies needed to develop a high-quality, evidence-based, and sustainable programme, and in 2017, an agreement was signed to provide an additional Rs. 413 million ($ 2.6 million) grant to finalise compact development.”

The Ambassador is quoted as having further said: “All our assistance is grants, and not loans which have to be repaid. We do this because we want to be a friend and partner, where we share mutual interest. Unfortunately, the MCC has been paused for the moment, until the resolution of the political crisis.”

The Gunaruwan Committee included former Secretary to the Ministry of Transport Dr. D. S. Jayaweera, President’s Counsel Nihal Jayawardena and architect Nalaka Jayaweera.

The committee was formed in terms of a Cabinet decision taken on December 18, 2019, a month after the last presidential poll.

Sources pointed out that Ambassador Teplitz had inadvertently said that the two agreements were signed in 2016 and 2017 whereas the actual signing took place in 2017 and 2018.

On behalf of Sri Lanka, Secretary to the Treasury Dr. R.H.S. Samaratunga signed both agreements whereas Fatema Z. Sumar, Regional Deputy Vice President U.S. Government’s MCC and MCC’s Managing Director for Europe, Asia, Pacific, and Latin America Caroline Nguyen signed the 2017 and 2018 agreements, respectively.

The then Deputy Chief of US Embassy Robert Hilton was present on both occasions. Hilton in the run-up to the last presidential poll told media that the US expected Sri Lanka to honour finalised agreements whatever the outcome of the polls.

According to US Embassy statement, issued on June 13, 2018 following the signing of the second agreement, Caroline Nguyen met State Minister for Finance Eran Wickramaratne and the Minister for Highways and Roads, Kabir Hashim.

UNP leader Ranil Wickremesinghe, on Saturday, dismissed the Gunaruwan report while challenging President Gotabaya Rajapaksa’s government to reveal its stand on the MCC compact.

A few weeks before the signing of the first agreement, Mangala Samaraweera received the finance portfolio, which had been previously held by Ravi Karunanayake. Samaraweera and Karunanayake exchanged foreign and finance portfolios, respectively, in the wake of Treasury bond scams (Feb 2015 and March 2016) and Co-sponsorship of the Geneva Resolution (Oct 2015).

Government sources said that the Expert Committee hadn’t been successful in obtaining Attorney General’s Office response to a series of questions formulated to ascertain the status of the MCC compact. In spite of the set of questions made available to the AG’s Office, the Expert Committee had been deprived of the required information at the time the report was handed over to the President, sources said. Responding to another query, sources said that AG’s Office was contacted as the then Finance Minister Samaraweera in the run-up to the last presidential poll issued a statement titled ‘MCC agreement drafted with the consent of AG will be presented in Parliament’. Samaraweera said, “The whole process and the final agreements, were done under the guidance of the Attorney General and well within the legal framework. The Attorney General is of the opinion that the Agreements are in order and there exists no legal impediment to execute same.” The agreements, referred to were the Compact Agreement and the Programme Implementation Agreement.

Dappula de Livera, PC has been serving as the AG since April 29, 2019 following the appointment of his predecessor Jayantha Jayasuriya as the Chief Justice. 

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