ICIJ releases full investigation report on Nirupama Rajapaksa

The International Consortium of Investigative Journalists (ICIJ) has issued its full investigation report into the incident where former parliamentarian Nirupama Rajapaksa and her husband Thirukumar Nadesan being listed in the Pandora Papers for having hidden wealth stashed away in offshore companies.

Full report:

In early 2018, workers in a London warehouse carefully loaded an oil painting of Lakshmi, the Hindu deity of wealth, onto a van bound for Switzerland.

The painting, by 19th-century Indian master Raja Ravi Varma, depicts the four-armed goddess clad in a red sari with gold ornaments and standing atop a lotus flower. It was one of 31 works of art, altogether worth nearly $1 million, that were being shipped to the Geneva Freeport in Switzerland. That vast, ultra-secure warehouse complex, larger than 20 soccer fields, stores among its many treasures what the BBC once called “the greatest art collection no one can see.”

The owner of “Goddess Lakshmi,” and the artworks in transit with it, as recorded on the packing slip, was a Samoan-registered shell company with an unremarkable name, Pacific Commodities Ltd. But a cache of leaked documents from Asiaciti Trust, a Singapore-based financial services provider, indicates that a politically connected Sri Lankan, Thirukumar Nadesan, secretly controls the company and thus is the true owner of the 31 pieces of art. His wife, Nirupama Rajapaksa, is a former member of Sri Lanka’s Parliament and a scion of the powerful Rajapaksa clan, which has dominated the Indian Ocean island nation’s politics for decades.

The confidential documents, obtained by the International Consortium of Investigative Journalists, show that as the country was ravaged by a bloody, decades-long civil war, the couple set up anonymous offshore trusts and shell companies to acquire artwork and luxury apartments and to store cash, securities and other assets in secret. They were able to amass and hide their fortune in secrecy jurisdictions with the assistance of financial services providers, lawyers and other white-collar professionals who asked few questions about the source of their wealth – even after Nadesan became a target of a well-publicized corruption investigation by Sri Lankan authorities.

As of 2017, Rajapaksa and Nadesan’s offshore holdings, which haven’t previously been made public, had a value of about $18 million, according to an ICIJ analysis of a Nadesan trust’s financial statements. The median annual income in Sri Lanka is less than $4,000.

In emails to Asiaciti, a longtime adviser of Nadesan’s put his overall wealth in 2011 at more than $160 million. ICIJ couldn’t independently verify the figure.

The records describing the financial machinations of Nadesan and Nirupama Rajapaksa are among more than 11.9 million records from Asiaciti and 13 other offshore service providers obtained by ICIJ and shared with global media partners as part of the Pandora Papers investigation. The two-year investigation found billions pouring out of impoverished and autocratic nations and into private accounts listed under the names of shell companies and trusts, often hidden from courts, creditors and law enforcement.

Among the results: Governments around the world are starved of desperately needed resources, and global wealth is concentrated into ever fewer hands. In Sri Lanka, where economists say the income gap between the poor and the rich continues to increase, lax tax regulations have been a boon for the wealthy and powerful. The rest of the country which is still recovering from the civil war, has been left with little to invest in schools, health care and other social programs.

Piyadasa Edirisuriya, a former Sri Lankan finance ministry official and now a lecturer at Australia’s Monash University, says that offshore financial services firms could stop illicit money flows by conducting due diligence on clients and monitoring their transactions. “But in international financial centers, many don’t do that,” he said.  “That is why people in countries like Sri Lanka can earn money in corrupt ways and easily use these tax havens to send them overseas.”

Sri Lanka’s president is Gotabaya Rajapaksa. Nirupama Rajapaksa’s late father was his cousin. The president’s older brother, Mahinda Rajapaksa, is prime minister. Human rights groups have accused the brothers of war crimes. Former government officials have alleged that the family has amassed a multibillion-dollar fortune and hidden part of it in bank accounts in Dubai, Seychelles and St. Martin. At least eight family members and loyalists have been investigated by authorities and some have been charged with crimes including fraud, corruption and embezzlement, according to media reports.

Nirupama Rajapaksa’s husband, Nadesan, faces allegations that he secretly helped one of his in-laws, a government minister, build a posh villa with government funds.

In a 2015 affidavit, Gotabaya Rajapaksa claimed that he and some members of his family had been the targets of a “vindictive and vicious campaign.”

In response to questions from ICIJ, Nirupama Rajapaksa and Nadesan said that their “private matters are dealt with by [the couple] properly with their advisers” and did not comment on their companies and trusts.

Nadesan added that the 2016 charges against him are “spurious and politically motivated.”

Asiaciti said that the firm is “committed to the highest business standards, including ensuring that our operations fully comply with all laws and regulations.”

It did not comment on the services it provided to Nadesan and Nirupama Rajapaksa.

A dynasty rises amid civil war

Civil war ravaged Sri Lanka for a quarter-century. The seeds of the conflict go back to 1948, when nationalists, led by Don Alwin Rajapaksa, granted certain citizenship privileges to the Sinhalese majority, alienating the country’s ethnic Tamil minority. Animosity boiled over into open conflict in 1983, when the Liberation Tigers of Tamil Eelam, an insurgent group, killed 13 government soldiers.

The years that followed were marred by torture, abductions, arbitrary arrests and the massacre of civilians, by the separatists and by government forces. One of the army chiefs leading the fight against the Tigers was Gotabaya Rajapaksa – Don Alwin’s son. Gotabaya was nicknamed “The Terminator” because of his reputation for ruthlessness.

The leaked records show that as the conflict intensified, Nirupama Rajapaksa, now 59 years old, and her husband, Nadesan, were establishing shell companies and trusts in offshore jurisdictions. The reasons, according to a client review in the leaked files: “confidentiality and estate planning.” Other powerful elites in the region, including relatives of Indonesian and Filipino autocrats Suharto and Ferdinand Marcos, have followed the same playbook.

In 1990, Nadesan, a British-educated businessman and trustee of several Sri Lankan Hindu charities and temples, set up a trust and a shell company in the Channel Islands, British crown dependencies off the coast of France.

The company, Pacific Commodities Ltd., would collect millions of dollars, an internal document shows, advising foreign companies doing business with the Sri Lankan government. One client was Contrac GmbH, a German manufacturer that supplied airfield buses for a project involving the country’s national airline company, now SriLankan Airlines.

Contrac said the company was not able to comment on the project. The case is “31 years old and therewith far too old for our physical and data archive,” a spokesperson said..

As the civil war escalated in May 1991, Rajapaksa and Nadesan set up Rosetti Ltd., another shell company, on the Channel Island of Jersey. It would provide consulting services “mainly in relation to inward investment into Sri Lanka,” according to confidential documents.

The couple used Rosetti to buy a luxury apartment in Sydney, near Darling Harbour. They used the same shell company to buy three apartments in London, one by the Thames River that they resold a few years later for $850,000, and two worth more than $4 million that were rented out “on a commercial basis.”

The properties have not been previously linked to the couple. Buying them through the Channel Islands company virtually ensured as much.  The jurisdiction allows companies incorporated there to shield their true owners from public view while paying relatively little if any taxes.

As the offshore fortune continued to grow, Nirupama Rajapaksa entered politics. In 1994, she was elected to the Sri Lankan Parliament.

Power couple

In 2009, the Sri Lankan army killed Tamil chief Velupillai Prabhakaran, effectively ending the quarter century-long civil war.

Mahinda Rajapaksa – Gotabaya’s brother – was hailed as the leader who had defeated the rebels. Despite war crime allegations by European Union officials and other foreign observers,he won a second term in the 2010 presidential election.

Rajapaksa assigned himself the defense, finance, ports, aviation and highways portfolios and retained Gotabaya as secretary of the Ministry of Defence and Urban Development. He named another brother, Basil, minister of economic development and yet another, Chamal, became speaker of Parliament.

Nirupama Rajapaksa got a government post, too: deputy minister of water supply and drainage.

Altogether, the Rajapaksa family controlled up to 70% of the national budget, the Al Jazeera news channel reported.

In the world of international finance, government officials like Nirupama Rajapaksa and their families are considered “politically exposed persons,” or PEPs, and are supposed to be subjected to extra scrutiny – in case, for example, they are exploiting their positions for financial gain. Financial services providers are required to alert authorities if they suspect clients are involved in illegal activity.

Asiaciti began to include Nadesan in a special register for PEP clients. After 2010, Nirupama Rajapaksa’s proper name rarely appeared in the leaked documents related to her family’s offshore holdings, and she was sometimes mentioned only as “wife of the settlor,”