HIDDEN AGENDA REVEALED IN PRE-FABRICATED HOUSE DEAL

Speculation is rife that there is a hidden agenda behind the Rehabilitation and Resettlement Ministry’s proposed plan to award the much debated contract to a French company to install pre-fabricated houses. There is concern that these houses are to be installed at a high cost using low quality pre-fabricated material to resettle conflict affected families in the north and east.   

 Questions have been raised as to why the Rehabilitation and Resettlement Ministry is so ‘interested’ in providing families with pre-fabricated houses, which have poor ventilation, rather than opting for low cost brick and mortar houses. According to the preliminary findings of a study done on model houses by Civil Engineer and Chartered Structural Engineer Prof. Priyan Dias, Civil Engineer and Chartered Engineer Dr. Rangika Halwatura and Chartered Architect Varuna de Silva of the University of Moratuwa, they came to a common conclusion that pre-fabricated houses will not have proper ventilation as there are no grills between the roofs, the doors and windows. The report states that these houses are poorly designed for hot climates as they don’t allow hot air to escape. The report also states that such a design suits a cold climate or air conditioned rooms in a tropical climate.   
In 2015, the Rehabilitation and Resettlement Ministry called for bids from interested parties to construct houses in the north and east. More than 35 bidders forwarded quotations, but due to huge bid bonds the Government was demanding only two parties were able to offer the said bonds. They were ArcelorMittal from France and EPI-OCPL Consortium, an Indian joint venture.   

Sources further stated as to how the former Rehabilitation and Resettlement Ministry Secretary did all the paperwork to grant the contract to the French company leaving no stone unturned in its attempts to get all other parties, that initially bid for the tender, to withdraw their applications.

   Bids submitted 

“Initially tenders were called to construct 65, 000 houses for the war-affected families in the north and east where 35 parties submitted bids. For the 65, 000 houses, the requested bid bond was Rs.650 million. As such a huge bid bond was requested from the bidders, other than two parties, the rest withdrew their applications. Later, once the number of housing units was reduced to 6, 000, Tamil National Alliance (TNA) Parliamentarian M.A. Sumanthiran requested the Rehabilitation and Resettlement Ministry to call for fresh bids with a lower bid bond. This was because there were so many interested parties wishing to send their bids for lower cost brick and mortar houses, but it was to no avail. But, the ministry still wants to go ahead with ArcelorMittal as its local logistic agent. It is alleged that this agent is a close associate of the Minister. The second company EPI-OCPL Consortium, which had submitted a lower price compared to ArcelorMittal, too had to withdraw its bid for reasons best known to ministry officials. A senior official of the Rehabilitation and Resettlement Ministry claimed that this company failed to submit the necessary financial facilities.   

High pressure 

According to realiable sources, the local partner of the rejected Indian joint venture is said to have connections with Minister Daya Gamage. However, due to the high pressure mounted on them, the Indian joint venture had to withdraw from the project. “Knowing how rich Minister Gamage’s family is, no one accepts the Ministry’s version of the story. It was the Cabinet Economic Committee, chaired by Minister of Special Assignments Sarath Amunugama, the then Defence Secretary, Resettlement Minister D.M. Swaminathan and Advisor to the Prime Minister R. Paskaralingam who recommended 6, 000 pre-fabricated houses in 2016 from the initial plan of 65, 000 houses,” sources who wished to remain anonymous said.   

When contacted Minister Daya Gamage to find out why the Indian joint venture withdrew its application, the Minister refused to comment, but said that the company wasn’t owned by him, but was owned by a family member.   

When asked why the ministry failed to call for tenders after the cabinet economic committee decided to bring down the number of houses to 6, 000 the sources alleged that the decision was taken to ensure personal gains for selected politicians.   

Expert group 

Meanwhile a group comprising multi disciplinary individuals from Jaffna and Colombo, possessing expert knowledge in engineering, architecture, planning, community housing, financing, economics, law, community organization and project management had submitted an alternative proposal to the proposed pre-fabricated housing project to Minister Malik Samarawickrema on May 19, 2015. Minister Samarawickrema wanted them to re-submit the proposal with a formal financing proposal and a detailed implementation modality.   

“As requested, we submitted a formal financing proposal together with report to which Minister Samarawickrema and Charitha Ratwatte had given their recommendations. However later, at another cabinet appointed committee, it had been decided to go for the 6, 000 pre-fabricated houses disregarding our proposals for unknown reasons,” Niyanthini Kadirgarmar a Researcher in the north, told the .   

According to Kadirgarmar, the key drawbacks of the pre-fabricated houses are poor ventilation, risk of steel corrosion despite the coating provided, insufficient roof support, inadequate foundation and the absence of a hearth and chimney amongst the many other shortcomings.   

“Brick houses with tiled roofs and grills on doors and windows allow the hot air to escape, but the steel houses don’t have grills, which models have been designed for cold climates. We understand that the Government has planned to obtain a foreign loan to pay off the money to the contractor. If the country is facing an economic crisis as claimed by the Finance Ministry, due to the foreign debt the country has obtained, the economic crisis would deepen if another foreign loan is obtained. Our proposal included a domestic financing option where a formal term sheet from a leading local investment Bank has been secured. This demonstrates that raising domestic resources through a Rupee bond is more beneficial and indeed a viable option. Why does the Government opt for imported prefab houses, when brick houses, built locally, will generate employment, boost local enterprises and benefit the economy? From what the Government is going to spend on the 6, 000 steel houses, more than 15, 000 houses can be constructed. The Rehabilitation and Resettlement Ministry built 10, 000 houses in the north and the east last year at a cost of Rs.850, 000 per house. What is the reason for them to spend Rs.650, 000 extra for a house which is not durable which the potential recipients would not like, but will accept as they don’t have any other option,” Kadirgarmar queried.   

Kadirgarmar further said that she had the opportunity to visit the two model houses on display, one which was furnished and the other not. “Although Government claims that a fully furnished steel house would cost Rs.2.1 million and a non furnished house Rs.1.5 million, the furnished house consists of plastic furniture. The furniture and the other equipment provided in furnished houses will not cost more than Rs.600, 000 as the quality of furniture seems to be inferior,” Kadirgarmar claimed.   

Close confidant 

Meanwhile allegations have been leveled against the decision to offer the contract to a single multinational company, ArcelorMittal of France. The contract was offered to this company solely because the Chairman of their local agent, who also handles the logistic part of the project, is said to be a close confidant of not only Prison Reforms, Rehabilitation, Resettlement and Hindu Religious Affairs Minister D.M. Swaminadan, but also many high-profile ministers and MPs in the good governance administration.   

“Ravindra Buddhadasa Wettasinghe alias Ravi Wettasinghe is alleged to have links with few powerful ministers in the Government. With a questionable past record, Wettasinghe has three cases against him in courts including an indictment relating to criminal breach of trust and another custom related case.   

With such a controversial track record, some officials of the Rehabilitation and Resettlement Ministry are worried that the quality of the planned 6,000 steel houses would be substandard,” sources added.   

Court documents 

The logistic company in question, that handles the shipping, clearing of cargo , transport, recruitment for the project, supply of local items, selecting sub contractors and overall supervision of the pre-fabricated housing project, is Kumarka Engineering and Management (Pvt) Limited (Company registration number PV 109103). This newspaper is in possession of the Company Registrar document attested by the Additional Company Registrar which was obtained on May 26, 2017, which states that the address of the company and the names of the Board of Directors mentioned in the company’s annual reports are inaccurate.   

The  is also in possession of court documents to prove that Ravi Wettasinghe was allegedly absconding and living abroad during the former regime and returned to the country only after the present Government assumed power.   

“During the previous UNP regime, from 2001 to 2004, Wettasinghe was in charge of the Sri Lanka Transport Board (SLTB) workshops in Werahera, Keppettipola and Kahagolla. There are pending court cases against him for not returning 143 SLTB buses worth of Rs. 75 million and for the non-payment of EPF and ETF (case no: 5647/ 05) for the workers at these workshops. The case against Wettasinghe for not returning 143 buses to the state (HC 3604/2007) is befor the Colombo High Court and the case relating to defrauding EPF and ETF payments was heard in the Bandarawela Magistrate court. These cases were also heard in his absence. The court had  earlier issued warrants for his arrest ,” sources said.   

Warrant withdrawn 

According to these sources, Wettasinghe has also allegedly defrauded the Sri Lanka Customs to the tune of Rs.176 million by exporting scrapped brass, which is a restricted item, declaring the consignment as plastic hangers.   

“At one of the above cases, Wettasinghe’s attorney told courts that his client was willing to return to Sri Lanka and appear in courts. The attorney had requested the court to withdraw the warrant issued against him. Although the warrant against him was withdrawn by the High Court, Wettasinghe didn’t appear before court. When he was trying to slip away from the country, a few days before he was requested to be present in court, he was arrested at the airport on the arrest warrant issued in case number 5647/05 and was produced in Bandarawela MC. Later the High Court refused to grant bail to Wettasinghe. Although alleged attempts were made to mislead the court claiming that he is suffering from a serious sickness, the Chief Judicial Medical Officer of Colombo Dr. Ajith Tennakoon, on April 28, 2015, informed the courts that the accused had no such a serious sickness and there is no urgency to give him immediate medication. Later, he was granted bail under several conditions among which one was to report to the CID on the last Sunday of every month,” sources added.   

Meanwhile it is learned that Wettasinghe had stayed away from the Customs inquiry as well, claiming he was unwell.   

“Since scrap brass is a restricted item, if there is a need to export such items, there is a requirement to possess an export control license and also pay a Cess Duty equal to 50% of the value of  consignment to the customs. In order to export scrap brass, Wettasinghe, who was in Singapore evading arrest during the previous regime, allegedly got his kith and kin in Sri Lanka to get a reputed logistic company to export the consignment in the guise of plastic hangers to Singapore. By the time, the customs nabbed the racket, eight containers had already been sent to Singapore. The two containers were to be shipped to Bahrain and Hong Kong. Although the consignment had been declared in Sri Lanka as plastic hangers, on the shipping documents being checked in Singapore it was revealed that the contents were scrap brass. After the calculation was made as to how much Wettasinghe had defrauded the customs, including Cess duty, the figure came to Rs.176 million.Wettasinghe was ordered to pay by the inquiring team. The suspect had then gone to Court of Appeal and a directive had been obtained to inquire the case once again. The Customs officials are ready and possess all the necessary documents,” sources claimed.   

“There are many instances where items not related to stipulated projects are brought to the country to evade paying customs duty. Considering how the Rehabilitation and Resettlement Ministry has disregarded TNA’s call to re-tender the 6, 000 housing project and even the civil societies viable proposals given to the Government, which were accepted by Minister Malik Samarawickrema, it is doubtful whether the ministry wants to ‘help out’ the local logistic company which is now in the midst of a financial crisis over his alleged questionable conduct,” sources alleged.   

When contacted, Ravi Wettasinghe promised to name a convenient time and a place to meet this reporter, but was not reachable after that. When this writer attempted to contact Wettasinghe last week, one of his officials said that he was out of the country. 

Minister refutes allegations 

However we met the Rehabilitation and Resettlement Minister D.M. Swaminathan at his Ministry a few weeks ago, he refuted the allegations leveled. “We are going to sign the contract with the French Company which would be an environmental friendly project. We can save the environment as there is no necessity to purchase sand and timber to build these houses. We have followed the Government procurement guidelines and selected the best company in the world. We aren’t going to offer the contract to a mushroom company. We didn’t want to go for 65, 000 houses given the country’s financial situation. These houses would have a well fitted pantry, toilets with water service,” Swaminathan said.   

When asked as to why his ministry failed to re-tender after it was decided to construct 6, 000 houses as there are more parties willing to submit bids, Swaminathan said that they are going ahead with the company they selected initially as the Cabinet approval has already been given to go ahead with the selected party. 

When asked how sure he is with the local agent of ArcelorMittal who has a bad track record when dealing with several parties, including Government institutions, Swaminathan said there is no hidden agenda involved with regard to this project.   

“We called for tenders through the local and foreign media and the Sri Lankan Missions abroad and received quotations from 35 interested parties out of which 15 were selected based on their financial capacity. Thirteen parties paid the non refundable deposit and eight companies submitted their proposals. After evaluating the eight companies the Cabinet Appointed Negotiating Committee and Project Committee selected two companies who could submit acceptable bid securities fulfilling the criteria as set out in the proposal request document. Out of these two, only ArcelorMittal was able to submit confirmed comprehensive finance facility to which all plans are now set to offer the contract to the successful bidder,” Swaminathan said. However the Minister wasn’t pleased when asked what his friendship with Wettasinghe was. It is alleged that Wettasinghe is in the Minister’s Office most of the time. “I don’t know who this Wettasinghe is. He may have come to my office for official work, but he has not come everyday to meet me personally,” the Minister said.