Mihintale project: Crisis in LECO; intimidation forces top officers to keep away

The Lanka Electricity Company's board has not approved the Rs 275 million donation ordered by the Prime Minister’s office for “development” of the sacred site of Mihintale.

But an ex- military man in the personal staff of Power and Energy Minister Ravi Karunanayake has visited the LECO office several times demanding the cheque and his intimidation has caused the Chief Financial Officer to flee, authoritative sources said. The General Manager has also not reported to work.

The attempt to suck out Rs 275 million-- many years worth of LECO corporate social responsibility ( CSR) projects-- in a single instant was first exposed by the Sunday Times last week. The company is owned by the Ceylon Electricity Board (CEB), the Urban

Development Authority ( UDA), the Treasury and four local authorities.

The Finance Ministry opposed the initiative saying there was no provision in law to allocate such a large sum to a hand-picked entity--SMI Engineering Company (Pvt) Ltd--without tender, unless under exceptional circumstances.

But the Cabinet last week accepted a note from the Prime Minister’s office that expressed intention to take the money from LECO. The list of decisions read: “The Cabinet noted the information provided by the Prime Minister that the development of the Mihintale World Heritage Site, its renovation and lighting up could be undertaken as a corporate social responsibility (CSR) Project of the Lanka Electricity Company (Private) Limited under an expenditure of Rs 275 million (without tax).”

The proposal did not come from LECO and board members are reportedly strongly opposed to the initiative. “There is no decision by the board to give this money,” an official source said. CSR projects are usually selected internally based on mutual benefit to the company and beneficiary.

Efforts to extract the funds are far from over, the Sunday Times learns. A “progress review” meeting in relation to the development of Mihintale is scheduled to take place tomorrow at Temple Trees.

LECO unions, in particular, are strongly against these moves suspecting them to be part of a ploy to gather resources before the presidential election. “A few weeks ago, all LECO divisions and branches were asked for a list of their assets,” a union source said. “The head office fed the information to the Ministry. They also looked at revenue and we feel they are looking for a way to get some money out.”

The source did not wish to be named because, after 13 out of 16 LECO unions staged a demonstration on August 1 this year, some leaders were transferred while others had explanations called from them. The protest was against an attempt to get Rs 200 million from LECO funds to acquire a new building for the Ministry of Power and Energy.

Unions-- including the United National Party- aligned Jathika Sevaka Sangamaya (JSS) and the Sri Lanka Freedom Party- aligned Sri Lanka Nidahas Sevaka Sangamaya (SLNSS)-- also objected to the creation of a special marketing division for LECO with an allocation of Rs 50 million; and failure to take disciplinary action against officials named in an inquiry report that allegedly exposed waste and corruption. About 800 out of the LECO’s 16,000 workforce participated.

The unions are also against the latest bid to siphon out money. If the ministry required LECO input to develop Mihintale, engineering and other expertise could be provided in kind, officials said. They questioned why such a large lump sum was being sought to be allocated to a single external party.

The Prime Minister’s note to the Cabinet reveals that, during a recent meeting he convened to discuss the development, renovation and electrification of the Mihintale World Heritage Site, Minister Karunanayake said he had received a project proposal and that LECO had estimated the implementation cost to be Rs 275 million.

The minister insisted this initiative could be carried out by LECO as a CSR project without burdening the Treasury. The project is of national importance and will benefit foreign and local tourists, the note asserts. By electrifying Mihintale, they would be able to visit the site at night.

“Therefore, it was decided at the meeting that the project will be carried out as a CSR project of LECO,” the Prime Minister informs Cabinet.

More details are revealed in a Cabinet paper subsequently submitted by Minister Karunanayake. He says the project entails setting up a solar-powered lighting system; introducing backup generators and decorative electric bulbs; installing a hi-fi sound system; and setting up a security camera network at the Mihintale site. It is also necessary to paint and renovate the temple and surrounding buildings in a culturally appropriate manner.

An entity named SMI Engineering Company submitted the proposal, he says. The Sunday Times contacted the Chairman cum Managing Director of SMI Engineering. “We did a design proposal for the Mihintale temple,” Chaminda Wickramarathne said. “We handed it over to the temple and we were told it will be carried out via a grant given to the temple.”

SMI Engineering was set up in 2005 and has only two directors-- Mr Wickramarathne and a woman from Heiyanthuduwa named Dayawathie Weerasinghe Rajapakse. The company has not been promised the project.

Minister Karunanayake has told the Cabinet: “The Board of Directors of Lanka Electricity Company Private Ltd has granted approval to this task as a corporate social responsibility project.” It is confirmed that no such sanction was given.

“In keeping with the declaration the Honourable Prime Minister made at the Mihintale Temple in 2019, this task must be completed before September 20, 2019,” the Cabinet paper states. It then maintains that, given this deadline--which nobody but the Power and Energy Minister appears to be enforcing--there is not enough time to implement the Government tender procedure.

The minister, therefore, recommends handing over the task to a hand-picked entity under section 3.8.1 (a)(ii) of the Gove r nment Procurement Guidelines of 2006. But, under these provisions, such procedure (handpicking rather than going for open tenders) is only used to “meet unforeseen social obligations and such other similar situations which shall be determined and declared by the GoSL [Government of Sri Lanka] as being an emergency situation which warrants Procurements under the provisions contained herein”.

The Cabinet paper seeks approval to obtain a detailed costing from SMI Engineering and to appoint a technical evaluation committee and a negotiation committee.

LECO sources said the board did not discuss the proposal. There was “no proper board paper”. And LECO “never prepared a cost estimate... LECO didn’t know”.

As an institution, LECO also cannot release funds to a single supplier without calling for quotations. But there are attempts now to have the money donated to a trust, as a means of avoiding such procedure, sources said.

The total sum spent on CSR by LECO in the three years from 2015 to 2017 was just Rs 22.1 million— forty percent of what is now being sought for a single project.