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 Post subject: Sandagiri's billion-rupee gun deal
 Post Posted: Sat Jan 07, 2006 3:50 pm 
Sandagiri's billion-rupee gun deal fired down
But country might lose as much as Rs. 400 million

@ Sunday Times / Sunday, January 01, 2006

The Government has cancelled an over a billion rupee deal where former Commander of the Navy and now Chief of Defence Staff, Admiral Daya Sandagiri, ordered 20-year-old guns for the Navy's Fast Attack Craft (FAC) fleet on the grounds they were "brand new" and made an advance payment running into millions for the weapons that were not in production. The move follows a full report the Commander of the Navy, Vice Admiral Wasantha Karannagoda, has sent Defence Secretary Gothabaya Rajapakse just three weeks ago.

An agreement was signed in December 2004 with an Israeli supplier. The first shipment was due in June 2005 and a handsome down payment was made as advance. But no follow up action has been taken for more than a year to settle the balance and take delivery of the weapons. The reason, according to Vice Admiral Karannagoda, is shocking. "This appears to have been done deliberately in order to give time for the contractor to find the guns since they were not in production. Possibility exists that this was done to buy time until the Royal Navy (United Kingdom) started removing their 20-year-old guns from their vessels.

"If the deal went through, Sri Lanka Navy craft would have been fighting with weapons of outdated technology against the Liberation Tigers of Tamil Eelam (LTTE). This would have had a serious bearing on national security," Vice Admiral Karannagoda has warned.

Admiral Sandagiri had concluded a deal with the Israeli firm Rafael to procure 15 nos of 30 mm guns. This was to upgrade existing gun systems in the Navy's fleet of Fast Attack Craft (FACs). They are currently fitted with 23 mm equivalents. The 30 mm guns were meant to be used for surface-to-surface warfare as well as in anti-aircraft roles. For the FACs that patrol the country's territorial waters and intercept guerrilla weapons smuggling, the need to have an effective gun system has been long felt. The lives of personnel who manned the FACs depended on an efficient gun system to repel enemy attacks. How Admiral Sandagiri addressed this issue has now begun to unravel.

With the Israeli deal secure, or so he thought, Admiral Sandagiri also tried to conclude another deal with the United Kingdom's Royal Ordnance, mid last year, to purchase two more 30 mm guns. This is despite the supplier having provided defective weapons systems. But he failed to win approval from two successive governments.

As exclusively revealed in The Sunday Times of July 17, 2005, in 1997, the Navy purchased ten 30 mm Oerlikon guns at a cost of over Rs 703.9 million. They were regularly rendered non-operational due to frequent failures, particularly in the HPTU or Hydraulic Power Transmission Unit. Despite this, Admiral Sandagiri went on pressing the then United National Front Government (UNF) and thereafter the United People's Freedom Alliance (UPFA) for five long years to purchase more guns from this supplier on the grounds that the procurement was "very urgent". As pointed out then, the Navy did not want to call for fresh tenders and seek a new supplier.

Although these issues were highlighted in The Sunday Times, President Chandrika Bandaranaike Kumaratunga, who was then Minister of Defence and Commander-in-chief, initiated no action.

She only accused this newspaper of disclosing "sensitive information". But this deal, like all others, was preceded by the call for world-wide tenders - a measure that is intended to ensure transparency in military procurements. Thus, planned procurements by the military were public knowledge not only in Sri Lanka but the world over. However, during this procurement process, it has now become clear, several lapses had occurred.

Before signing the deal in December 2003, Admiral Sandagiri had despatched a Navy delegation to Israel. This was to carry out "Factory Acceptance Trials (FAT)" for the 15 guns which Admiral Sandagiri had decided to procure from the Israeli firm. A borrowed gun has been used in these trials contravening provisions of the agreement. The total cost of these weapons is US $ 10.7 million or a staggering Rs 1,070 million (or Rs 1.7 billion). Admiral Sandagiri had seen to it that an advance payment of US $ 2.14 million (Rs 218.28 million with various charges) was paid to the Israeli firm Rafael on a bank guarantee. In terms of the agreement, the Navy is entitled to demand a refund of this advance under certain circumstances.

Here again Vice Admiral Karannagoda has made a shocking revelation. He has said that the 30 mm KCB gun manufacturing facility has not been in existence (in Israel) for a considerable time. According to records available, he has said, the last guns manufactured were in 1984 for UK's Royal Navy. The Royal Navy is in the process of phasing out the 30 mm KCB guns which are already installed in its (Type 23) frigates. Therefore, was Vice Admiral Sandagiri trying to obtain through the Israeli firm the weapons which the Royal Navy was discarding as obsolete? In fact the reputed Jane's Defence Weekly (September 7, 2005) has reported that a new Defence System has been selected to provide a new automated 30 mm small calibre gun to replace the guns on board the Royal Navy's Type 23 frigates.

The Israeli firm Rafael had insisted that it was supplying "brand new" guns in terms of the agreement it entered with the Navy (via Admiral Sandagiri) though it bore the manufacturing date as 1985. The move prompted Vice Admiral Karannagoda to seek an opinion from the Attorney General.

The Attorney General's Department has ruled after studying the contract conditions that the 20-year-old guns cannot be accepted as "brand new". It has, therefore, recommended that the deal could be rejected and a refund of the advance claimed. But, Rafael has asserted during a discussion with Navy officials in Colombo (after the suspension of the deal) that it had spent four million US dollars working on the project. The Navy is of the view that the figure is highly exaggerated.

The controversial deal led to Vice Admiral Karannagoda suspending the order. Thereafter, he appointed a five member Board of Inquiry headed by Rear Admiral Sarath Rathnakeerthi. He was then Commander, Western Naval Area. Since then he has assumed office as the Navy's Chief of Staff. This Board, in its findings, has listed Admiral Sandagiri as the first person responsible. But the Board has said, "Admiral Sandagiri had not been questioned by the board, considering the seniority and the position he holds. The Board has concluded their recommendations based on the documentary evidence and evidence of the witnesses where Admiral D.W.K. Sandagiri is concerned…"

Vice Admiral Karannagoda has said that Admiral Sandagiri's move to conclude a deal with the Israeli company violated specific instructions given when he first mooted this deal. Then Defence Secretary, Austin Fernando had directed Admiral Sandagiri to observe two important conditions. They were:

1 Obtain a certificate from the original manufacturer of Oerlikon Cannon to verify whether the ones offered by Rafael are new and to insist on a Direct Manufacturer's Certificate.

2 To obtain information on shelf life of barrels and the year of manufacture to ensure that refurbished and used guns are not imported as "brand new."

Vice Admiral Karannagoda, who said that these conditions have not been observed, has added that as a result of this deal the Government stands to lose Rs 400 million. This is if Rafael insists that the expenses incurred by them so far should be paid. On the other hand, procuring the outdated 20-year-old weapons, he has pointed out, would have serious effects on morale and the fighting efficiency of the Navy's FAC Squadron, thus endangering national security. He has recommended to the Ministry of Defence that fresh world-wide tenders be called to obtain a suitable weapons system. A refund of the advance paid is also being sought from Rafael.

It is now one year after a devastating tsunami where many thousands died. Among the many thousands who survived are those who are still homeless or are in makeshift shelters. As a New Year dawns today, their children have no means of purchasing their school books, leave alone securing three square meals a day.

For this reason and for many others, it is time President Mahinda Rajapakse takes a serious view of military procurements and conducts a full probe. Like former President Kumaratunga, he should not pay lip service to fighting corruption and malpractice at the expense of the nation's security and well being. It is no secret that during Ms Kumaratunga's eleven year regime, not one such case was investigated and those found guilty punished. Instead, she only directed a tirade against those exposing these acts. That is not all. In some instances she gave glowing promotions to those in uniform accused of such activity and national honours to others who operated hand in glove with them.

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