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China firm faces scrutiny after corruption allegations by Sri Lanka president

2019-11-29 15:48 Friday

Chinese state-run company Aerospace Long-March International Trade Co (ALIT) has become involved in a corruption scandal in Sri Lanka after the country's premier made a public announcement earlier this month alleging that it misappropriated funds in a high-profile construction project.


Sri Lanka President Maithripala Sirisena made the comments accusing ALIT of failing to account for U.S.$ 11m in funds as part of the deal to work on the building of the 356-meter-tall Lotus Tower, South Asia’s tallest self-supported structure.

The Chinese company denied the allegations. Meanwhile, a Sri Lankan parliamentary anti-corruption panel are planning to investigate the claims.

President Sirisena made the comments at the inauguration ceremony for the tower, which stands next to Beira Lake in central Colombo. The tower is expected to become a major tourist attraction in the capital.

The accusation of corruption by the firm sparked a political row in the nation, which has heavily relied on Chinese financing for many large-scale projects.

Sirisena alleges that ALIT vanished, taking with it millions of dollars of funds deposited by Sri Lanka's state-run Telecommunication Regulatory Commission (TRC).

Sirisena's predecessor Mahinda Rajapaksa, was in power when the alleged incident took place seven years ago. He said in a statement that ALIT and China National Electronics Corporation had been put forward by the Chinese government.

He said China National Electronics Corporation had been the active party in the contract but not ALIT.

Rajapaksa commented: "To say that a major Chinese government-owned conglomerate disappeared with 2 billion rupees belonging to the Sri Lanka government is a horrendous insult to China… If this statement was made due to the wrong information being conveyed, I expect the relevant individuals to move quickly to issue a correction."

The director-general of TRC when the agreement was signed in 2012 was Anusha Palpita, gave a statement to media soon after denying the allegation that money had gone missing. He said it was Sirisena who had been misled.

Sri Lanka's Committee on Public Enterprises (COPE) will probe the allegation since the department specializes in compliance in financial discipline for public corporations.

"COPE will conduct a full-scale probe into the construction of the tower. We’ll call TRC officials and other relevant parties before COPE soon," Sunil Handunnetti, the committee’s chairman and an opposition legislator.

When he came to power in 2015, Sirisena had suspended most of the Chinese-backed infrastructure projects started under his predecessor over allegations of corruption, overpricing and the flouting of standard government procedures.

But more than 12 months later, the Sirisena government gave the green light for Chinese projects to carry on after making a few changes to some of the details of the contracts.

Chinese investment has become a controversial issue in Sri Lanka, which is struggling with expensive external debt. Growth is expected to slump to its lowest level since a contraction in 2001.

The Lotus Tower allegation comes ahead of a presidential election later this year, in which Rajapaksa's brother Gotabaya Rajapaksa is expected to stand.

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