By Sugeewara Senadheera/Daily News

Colombo, February 21- With the signing of the agreement on the Hambantota oil refinery project during the President Anura Kumara Dissanayake’s visit to China last month Sri Lanka will not only gain a huge foreign investment, but also will somewhat act as a massive damage control exercise because Sri Lanka has been mired in controversy, with allegations of corruption, misinformation, and potential money laundering.

During the previous government, this project was initiated as the largest foreign direct investment in Sri Lankan history – US$ 3.85 billion -, but it had faced scrutiny due to inconsistencies in government statements and doubts about the legitimacy of its investors.

The controversies surrounding the Hambantota Oil Refinery project have raised concerns about corruption, transparency, and the potential for money laundering, which had damaged Sri Lanka’s reputation and hinder its efforts to attract foreign investment

Official Involvement

In 2016, the government initially claimed that Oman was investing in the project. However, in March 2019, the Omani government denied any official involvement, contradicting Sri Lankan claim. The Board of Investment (BOI) then clarified that Oman had only expressed interest in participating with an equity of up to 30%, pending an agreement. The main investor was introduced as a controversial Indian political figure who admitted that he had only submitted a preliminary proposal and had not finalised any terms.

Transparency International Sri Lanka (TISL) raised concerns that the project could be a front for illicit financial activities. The refinery deal came under scrutiny for a lack of due diligence, raising fears that funds linked to corruption could be funneled through the project.

The company, Silver Park International, which spearheaded the project initially in 2016 was registered in Singapore only in 2017—one year after the Sri Lankan government had already approved it. This led to suspicions that the company was set up solely for the project, without a prior track record in refinery development.

Silver Park International, the main investor, is controlled by the family of Tamil Nadu politician Dr. S. Jagathrakshakan, who has allegedly been involved in multiple corruption scandals. This raised concerns about the legitimacy of the investment.

Agreements have been signed, but the project could not be implemented, and there were concerns about environmental issues and the need for amendments to the Ceylon Petroleum Act.

Politically Motivated Scam

Given these concerns, many critics argue that the Hambantota refinery deal was a politically motivated scam aimed at misleading the public and securing financial benefits for select individuals. The lack of transparency and shifting narratives have only fueled suspicions that the project was never intended to be a genuine economic development initiative.

Multiple officials of the then government provided conflicting statements about the project’s legitimacy. While some Ministers claimed it was a genuine investment, others called it a hoax, comparing it to previous failed investment promises.

Then Minister of Development Strategies and International Trade Malik Samarawickrama announced in July 2018, during the Parliamentary Debate on the Sri Lanka-Singapore Free Trade Agreement (SLSFTA) that, “thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In principle approval has already been granted by the BOI and theinvestors are awaiting the release of land and environmental approvals to commence the project.”

However, Deputy Minister NalinBandara and technical advisor to the Ministry, Mangala Yapa announced at a media briefing on March 19, 2019 that the construction of US $3.85 billion oil refinery in the Mirijjawila Export Processing Zone in Hambantota will begin shortly by a Singapore-based Silver Park International (Pte) Ltd with Oman’s Oil and Gas Ministry. The project was a joint venture between Silver Park International, with 70 percent stake in the company, and the Ministry of Oil and Gas of Sultanate of Oman, with 30 percent shares. The investment was billed as Sri Lanka’s largest Foreign Direct Investment (FDI), ever. The oil refinery with the capacity to refine 200,000 barrels of crude oil per day, was expected to generate additional US $7 billion of exports per annum when it becomes fully operational in 2023, by exporting a minimum of 9 million metric tons of petroleum products per year.

Media Exposure

But Oman denied its involvement. “No one on this side of the panel is aware of this investment in Sri Lanka” announced officials of Oman’s Oil and Gas Ministry addressing a news conference in Muscat.I don’t know who is signing the cheque for $3.8 billion,” Salim al-Aufi, under secretary of Oman’s Ministry of Oil and Gas told Reuters.

In spite of the Omani government’s denial and the media exposure of questionable credentials of the Singaporean Investor, Sri Lanka’s Board of Investments (BOI) decided to go ahead with the project. The foundation stone for the petroleum refinery was ceremoniously laid by the Prime Minister Ranil Wickremesinghe at the Mirijjawila Export Processing Zone on March 24, 2019, with the attendance of Omani Minister of Oil and Gas Mohammed bin Hamad Al Rumhy, a number of Ministers including Sajith Premadasa and several local parliamentarians.

Development Strategies and International Trade Malik Samarawickrama and Finance Minister Mangala Samaraweera that “The Sri Lankan government has given its approval to the Singaporean company Sugih Energy International (SEI) to build a $20 billion refinery at the port (of Hambantota). The project’s value exceeds the total of all foreign direct investment in Sri Lanka over the past forty year.” Mr. Samarawickrama also stated “The company will invest in two phases. In the first phase, they have committed an investment of $14.8 billion for the refinery, and further $4 to $5 billion for petrochemical and other projects.”

Eventually in August 2023 President Ranil Wickremesinghe in his capacity as the Minister of Investment Promotion to cancel the agreements with these two “Singapore based investors,” Silver Park International and “Sugih Energy International Pte Ltd”, due to their failure in implementing the projects. Although the “Silver Park” refinery was to become fully operational by 2023, it didn’t even progress beyond the foundation stone by then. The project by “Sugih Energy International Pte Ltd” couldn’t even reach that milestone.

Former Director General of Commerce, who investigated into the controversial deal found out that the Sugih Energy International claimed that “US $20 billion investment in an Oil refinery in Hambantota.” Then there is a reference to a company, based on data from Panama Papers, named Sugih Energy International registered in the British Virgin Islands (which is well-known for its offshore companies) with links to Singapore, in the “Offshore Leaks Database,”. There is also a reference to a Sugih Energy International in the Singapore Business Directory. However, this company had changed its name to Aeturnum Energy InternationalPvtLtd. On 10 August 2024. On the same day it had changed its Entity Status from “Live Company” to “In Liquidation – Compulsory Winding Up (Insolvency).”

The registered address of the Silver Park International (Pte) Ltd is 18, Roberts Lane, #03-01 Singapore, shows the building in Singapore’s Little India where this company is located. #03-01 could be a room number within that building. More interestingly, it reveals the names of nearly a hundred other companies which have 18, Roberts Lane, #03-01 Singapore (218297), as their registered address. This includes an entity specialising in setting up shell companies.

Though Sri Lankan authorities failed to carry out due diligence, after an explosive report by ‘The Hindu’ newspaper on ‘single largest foreign investment’ in Sri Lanka by a Singapore based investment company with links to an Indian politician’s family, the authorities across the Palk Strait started to investigate the Indian directors of Silver Park International (Pte) Ltd, namely, Mr S. Jagathrakshakan, a DMK Member of Indian Parliament and former union minister of state for information and Broadcasting, and his family members for their involvement money laundering activities. This was reported widely in the Indian media. And according to these reports in August 2024, Mr. Jagathrakshakan and his family members were fined 908 crore (SLRs 31 billion) for violation of India’s Foreign Exchange Management Act (FEMA) and the charges were related to “….an investment of 42 crore in a shell company, Silver Park International Pte Ltd, incorporated in Singapore in 2017, and an investment of 9 crore (SLRs 308 million) in a Sri Lankan company.”

After the cancellation of the deal by President Wickremesinghe, now the National People’s Power (NPP) government has signed a new agreement with Sinopec. Eng. Liu Yang Sloan of Global Investment Implementation Alliance (GLIIA), pointed out that is a very transparent deal and pointed out that Sinopec isone of the biggest petroleum companies in the world and with a revenue of $ 429.7 billion in 2023, is the fifth on Fortune Global 500 list. The cost of this project appears to have substantially reduced since it was first mooted in November 2023; from US$ 4.5 billion to US$ 3.7 billion.

Eng Sloan, who was with a senior public service team from Sri Lanka held a workshop in Beijing in parallel to the President Dissanayake’s visit to Beijing. He expressed confidence that the proposed “state-of-the-art oil refinery” oil refinery, with a capacity of 200,000 barrels, in Hambantota with Chinese state-run oil giant Sinopec is indeed an important achievement and will be highly beneficial to Sri Lanka’s economic revival.

https://www.dailynews.lk/2025/02/21/featured/728157/end-of-past-shady-deals

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