Tuesday, March 3, 2015

Video - SUMAL PERERA ON HARD TALK WITH FAZL

By Muhammed Fazl
“There's enough on this planet for everyone's needs, but not for everyone's greed” - Mahatma Gandhi.
A visionary no doubt and very much in the news lately, Mr. Sumal Joseph Sanjiva Perera, the Chairman of Access Group, sitting with me few weeks ago at his plush office situated at Access Towers in Union Place and seen in the following video trying to explain his side of the story. Well, at least parts of it…,






Dreading the thought of having a local version of a Kenneth Lay or a Mikhail Khodorkovsky in our midst, in the interest of my country and my countrymen and having investigated Mr. Sumal Perera (SP) and his business operations to the best of my ability, I decided to share the following while extending Mr. Perera the right of reply,

1. Mr. Sumal Perera says he worships the ex-president Mr. Mahinda Rajapaksa (MR) for winning the war but denies being a confidante or making any campaign donations for the election campaigns of the ex-president.

2. Access Engineering, owning 84% of SML Frontier Automotive (Private) Limited with vehicles such as the Defender, Freelander, Discovery, Evoque, Range Rover Sport and the Range Rover Vogue in its range.

- Interestingly, to circumvent local customs duties in as many as 60 countries, Land Rover UK (http://www.landrover.com/index.html) appointed M/s Guava International Limited (http://landrover.guavauk.com/) to sell vehicles to countries like Sri Lanka and at under-valued prices in order to increase its sales volumes. While Land Rover UK is a Public Listed entity where all accounts are audited, M/s Guava International’s overseas transactions are not so much scrutinized.


- All the Range Rover Evoque models that entered the country under the US$ 35,000/- permit were in reality well over US$ 43,000/- CIF price (base model). Hence, the Evoque model couldn’t have been imported in the first place under the said permit. The Modus operandi of the local agent, M/s SML Frontier Automotive (Pvt) Limited (http://landrover.lk/) seems to be collecting a sum of Rs. 2,000,000/- as ‘Agent Fee’ and which I believe is to offset the undervalued amount. I also believe this ‘Agent Fee’ should be added to the CIF price at the time of placing the order. And now that hundreds if not thousands have been imported already, in order to compensate the loss of taxes arising out of under-valuations, I believe the end-user and the local agent should pay at least Rs. 1,000,000/- each to the Department of Customs.

- Allegations of under-valuations when importing Range Rogue Vogue and Sports models and declaring of false specifications at the time of clearing have surfaced too. As in the case of Evoques, a sum of Rs. 3,500,000/- has been collected by the local agent as ‘agent fees’ when Proforma Invoices were issued for the higher model. In this case, I believe a minimum amount of Rs. 5,000,000/- should be paid to the government by the agent and/or by the client for defrauding the Customs Department for under-valuing CIF prices. Finding a considerable disparity in prices when verifying selling prices of both M/s Guava International and M/s Land Rover UK should not come as a surprise either. Verifying Vehicle Identification Numbers (VIN) or Chassis Numbers with Land Rover UK for exact specifications and cross-checking it with entries made at the time of clearing at the Department of Customs may also reveal ‘interesting’ facts.

- Allegations of VAT Taxes totaling over Rs. 360,000,000/- not been paid by the agent to the Department of Customs for Defenders imported and sold for the CHOGM event.

3. Importing of pipes from China for the Eastern Province Water Supply Development Project (Japanese loan funded) at CIF US$ 4,500,000/- and selling it to the National Water Supply and Drainage Board (NWSDB) for US$ 5,500,000/- AND making the NWSDB pay additional fifty plus million rupees as customs duties for the US$ 1,000,000/- profit margin (only for importing) of M/s Access Engineering. Hence, the higher cost being passed on to the end-user, the public.

The million Dollar question is, why M/s Access Engineering did not clear it directly from the Department of Customs by paying the lower duty (based on the imported CIF value)? Was it to hide the profit margin? Even more intriguing is the fact that SP claiming that the Japanese funding agency ‘insisted’ on the deal in question being carried out by Access Engineering. Let us also assume the recently elected Chairman of Building Materials Corporation (BMC), Mr. Amal Wickrematunge http://www.ft.lk/2015/02/20/amal-wickrematunga-new-bmc-chairman/) who was the Deputy Chairman of Water Board at that time was unaware of the Rs. 133 million profit margin of Access Engineering (just for importing) on top of the Rs. 50 plus million paid as additional Customs Duty to shield SP’s profits.

4. Then Minister of Transport, Mr. Fowzi handing over the monopoly of producing number plates for vehicles to a subsidiary company of the Access Group under the name UTSCH (http://www.utsch.com/en/reference/projects/sri-lanka.html), and supposedly at the request of Deutsche Investitions- und Entwick­lungsgesellschaft mbH (DEG).

Though the MR government claimed to have called for international tenders, it was an open secret that specifications of the ‘tender process’ were tailored to suit only UTSCH. Operating in the premises of Land Transport Authority, considering the paltry income earned by the government in comparison to the hundreds of millions earned by the Access Group, it would be interesting to see concerned authorities ‘re-visiting’ the whole ‘arrangement’ and probably reclaiming the rightful share of the State.

Once again, SP is on record saying (on the video) that the Germans ‘insisted’ on giving HIS COMPANY the monopoly to issue the said number plates. It is also interesting to note that this habit of international aid/loan agencies ‘insisting’ on giving contracts to the Access Group becoming an accepted norm.

5. It is indeed noble of SP to make inroads in to the medical sector and as his website says “providing the latest in cutting edge technology and the best of quality products and solutions to the medical and health care sector”, I would assume M/s Access International (Pvt) Ltd., Medical Division, representing over 30 plus top-tier global principals including the following, made supplies to local government hospitals only through tender procedures and in a transparent manner,

• General Electric (GE) Diagnostic Imaging (DI) portfolio - USA

• TEVA Pharmaceuticals - Israel,

• TriLux - Germany

• Matachana (CSSD) - Spain

• AGFA (Radiology) – Belgium

• CANON (Subsidiary OPTOTEK – Ophthalmic) – Slovenia

• Smith & Nephew (Subsidiary ADLER– Orthopaedic) – India

• OPHTEC (Ophthalmology) – Netherlands

• Samsung Electronics Healthcare (LabGeo) – Korea
6. Positioning at the ‘right place and right time’, the Access Group chartering in unfamiliar territory once again and on behalf of the infamous Mr. Basil Rajapaksa’s Economic Development Ministry and acting as agents by opening a ‘fly-by-night’ company called Foresight, gets the government contract to import 22,500 young female cows (heifers) for US$ 100 million from Wellard Group in Australia.


Imported at a cost of Rs. 600,000/- (approx.) a head as against the availability of local cows which costs around Rs. 50,000/-, in order to justify the exorbitant costs in importing, I assume each imported cow would produce at least 40,000 more liters of milk than the local ones in its lifetime.

7. Road development projects totaling about Rs. 30,000,000,000/- done by the Access Group and one can only hope that estimates of engineers from the ‘Yaha Palanaya’ (good governance) division would not differ by huge margins,

- ‘Rehabilitation & improvements’ to the section from Kadawatha to Nittambuwa and costing Rs. 7,000,000,000/-.

- ‘Widening & improvement’ of a 1.5 Km stretch between Jaffna – Ponnali – Point Pedro Road, which is in front of the ex-President’s bungalow and costing Rs. 477,000,000/-

- ‘Rehabilitation and improvements’ to Mannar-Puttalam Road Project and costing Rs. 1,214,000,000/-
- ‘Improvement and rehabilitation’ Of Bangadeniya – Andigama Anamaduwa Road Project and costing Rs. 2,571,000,000/-

- ‘Rehabilitation and improvements’ to Ibbagamuwa Kubukgate Madagalle Road, and costing Rs. 2,861,800,000/-

- ‘Accessorizing’ a 21km length for A32 Road and ‘rehabilitation & improvement’ of 67km length of Navatkuli – Karaitivu – Mannar Road, and costing Rs. 1,012,600,000/-

- ‘Improvement & rehabilitation’ of a 18.5Km stretch between Galagedara – Rambukkana Road. And costing Rs. 1,250,000,000/-

- ‘Rehabilitation and improvements’ on Ambepussa – Kurunegala -Trincomalee & Kantale – Perathuweli Roads, and costing Rs. 864,700,000/-

- ‘Rehabilitation & improvement’ of Jaffna-Kankasanthurai Road, Puttur-Meesalai Road & Jaffna-Palali Road costing a total of Rs. 3,662,000,000/-

- Surface improvements to internal roads at Katunayake and Biyagama export processing zones costing Rs. 360,000,000/-

- ‘Improvement’ of Padeniya-Anuradhapura road done costing Rs. 577,500,000/-

- AFD Project costing Rs. 1,400,000,000/-

- ‘Rehabilitation & improvements’ to roads in North Central Province for the Deyata Kirula in 2012, costing Rs. 473,300,000/-

- Another ‘Rehabilitation & improvements to roads in North Central Province for the Deyata Kirula 2012, and costing Rs. 380,200,000/-

- Access Road to Hambantota International Airport at a cost of Rs. 206,000,000/-

- Improvements to six roads in Killinochchi area and costing Rs. 134,500,000/-

- ‘Improvements’ of a stretch of around 10Km on the Negambo-Meerigama Road, and costing Rs.141,282,000/-

- ‘Improvements’ of another stretch of Negambo-Meerigama Road costing Rs. 143,415,000/-

- ‘Improvements’ to Badalkumbura-Buttala-Sellakatharagama Road and costing Rs. 141,800,000/-

- Southern Transport Development Project at a cost of Rs. 900,000,000/-

- ‘Improvements’ to the Medawachchiya-Mannar-Thalaimannar Road costing Rs. 533,000,000/-

- ‘Widening and Improvements’ to Colombo – Kandy Road at Kadawatha Town, and costing Rs.357,400,000/-

- ‘Improvements’ to Malabe-Kaduwela Road at a cost of Rs. 306,000,000/-

- Sammanthurai Deegavapi Road at a cost Rs. 167,000,000/-

- Widening and Improvement to Dehiwala – Maharagama road and costing Rs. 106,700,000/-

- ‘Rehabilitation’ of A – 9 Road at a cost of Rs. 170,000,000/-

8. Island-wide government water works contracts worth over Rs. 12,000,000,000/-

9. Island-wide government contracts to build flyovers and bridges worth over Rs. 7,000,000/-

10. Island-wide government contracts for irrigation & drainage works worth almost Rs. 2,000,000,000/-

11. Island-wide government contracts for harbors and marine work totaling Rs. 2,000,000,000/-

12. Island-wide government contracts for dredging and reclamation works worth Rs. 200,000,000/-

13. Island-wide government contracts for piling and waste management worth Rs. 500,000,000/-

14. Island-wide government contracts to construct buildings worth over Rs. 13,000,000,000/-

15. Government contract for the fuel hydrant project at Hambantota worth Rs. 700,000,000/-

He may be accused of stealing public funds for himself, for his company and for members of the previous regime, but SP being a Chartered Accountant, I believe he is an exceptionally talented individual who had also mastered the art of covering his tracks. I also believe the real reason behind the public listing of selected subsidiaries of the group was to escape strict scrutiny from regulators and to falsely portray a sense of transparency to the unsuspecting public.

With over Rs. 100 billion worth of government contracts under his belt and him claiming to be a God-fearing Christian, Mr. Sumal Perera needs to acknowledge that corruption costs ordinary citizens money and make them pay for services which should be free or minimal. Corruption also makes citizens lose trust and make them unwilling to participate in their societies. It also has links to criminal elements and thrives during conflicts and wars. May be that explains SP’s close association with Mr. Duminda Silva of ‘Kolonnawa Drug Cartel’ fame.

It is an open secret now that Access had direct access to the Rajapaksas when they were in power and the fact that Access Group appointing consultants (for government projects) indirectly in order to ‘customize’ requirements to suit that of the Group. In essence, occasional tender notifications were not worth the paper they were printed on.

With all kinds of manipulations and assuming SP and his Group of companies made a windfall of around 25% from a turnover of over Rs. 100 billion (in government contracts alone), moving forward and in the interest of all stake holders, I suggest that Sumal Perera’s Access Group pays regulators and anti-corruption forces an amount not less than Rs. 10 billion in order to get a ‘clean bill of health’. After all, Yaha Palanaya (good governance) is all about continuation of development projects and without a hitch while at it. Of course there will be due diligence practiced in the future, but my suggestion just might save the government a lot of money and resources while the fear/reality of victimization and bankruptcy may cease to exist in the minds of the Board of Directors of the Group.

At the end of the video interview above, Mr Sumal Perera says that businesses of his Access Group in the past 5 years performed much better than all his 20 previous years. Doubt I did not… and with that, I thanked him for his time and made my exit.

By Muhammed Fazl
The writer is an independent social/political activist and can be contacted at muhammedfazl@msn.com and through FB (Fazl Muhammed Nizar).

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