Thursday, September 17, 2009

Another Rs. 100 million defrauded by Keheliya Rambukwella



Last week The Sunday Leader reported that Defence Spokesman and Minister of Foreign Employment Promotion Keheliya Rambukwella was implicated in a massive fraud at the Sri Lanka Foreign Employment Agency (SLFEA).

A court case has now been filed by employees at the SLFEA accusing Rambukwella amongst other things; of allocating vehicles to his personal aides and family members, engineering unnecessary transactions — the purchase, through the SLFEA, of a hugely overvalued Rs.60 million piece of land to benefit his brother, and using SLFEA funds to print posters used in the Central Provincial Council election campaign.
It is further alleged that Rambukwella stuffed the once profitable and efficient SLFEA with senior aides and cronies who drew large allowances, and that he drove an illegal and fraudulent payment of over $150 000 to Korea.
It is ultimately claimed that the transactions and frauds driven by Rambukwella had the effect of bankrupting a once profitable state owned company that in 2008 held over Rs.160 million worth of fixed deposits.
The allegations against Rambukwella are extremely serious particularly given his status of a senior government official. The amounts of money involved are large, totalling over Rs.100 million and the alleged involvement of Rambukwella’s family members makes this a clear case of venality and corruption.

Certainly the documents in The Leader’s possession will make uncomfortable reading for the Minister.
However the allegations of massive fraud at the SLFEA, it appears, are not the end of the matter.
Last week’s expose drew a large and largely positive response from the public. However The Leader received responses not only from the general public but also from various parties involved in the foreign employment industry which claimed that Rambukwella has been involved in a number of additional and equally massive frauds.
By R. Wijewardene
An extraordinary case involving Keheliya Rambukwella has already been brought to light by the Association of Licensed Foreign Employment Agencies (ALFEA), a statutory body to which all licensed foreign employment agents must belong.
ALFEA which represents every foreign employment agency operating in Sri Lanka uncovered evidence of a massive fraud carried out by the Sri Lanka Bureau of Foreign Employment (SLBFE), which falls under Rambukwella’s purview.
Through a complex insurance fraud senior officials at the SLBFE and the Ministry of Foreign Employment Promotion were able defraud thousands of domestic workers and their employers, of millions of rupees.
The case is particularly shocking as the victims in this instance seem to have been the domestic servants who toil in the Middle East to provide the foreign exchange this country desperately needs to continue to maintain any sort of financial solvency.
Compulsory insurance scheme
In August 2006 the SLBFE announced that a compulsory employer sponsored insurance scheme for domestic workers seeking employment in Kuwait was to be introduced.
Ostensibly the suggestion of compulsory insurance for workers travelling to Kuwait was a sensible one in light of the number of accidents and cases of abuse, suffered by maids employed in Kuwaiti households.
In order to implement the insurance scheme the SLBFE then called for tenders; asking Kuwaiti insurance companies to submit proposal for a specialised insurance scheme catering specifically to Sri Lankan workers.
Two companies — the Warba Insurance Company of Kuwait and Al Haqooq International a Jordanian company submitted proposals. It must be noted however that the original tender had specified that only insurance companies registered in Kuwait could bid for the tender and al Haqooq a Jordanian company — which was later discovered not to be an insurance company at all was not in fact eligible to bid.
Lodged an objection

Before the tender process was completed however the Foreign Ministry lodged an objection to the manner in which the insurance scheme was being implemented and at that point — in September 2006 the compulsory insurance scheme was suspended. Further in a letter the Sri Lanka ambassador to Kuwait and Foreign Ministry suggested an alternative, more organised and more transparent means through which the compulsory insurance scheme could be introduced.
However the Ministry of Foreign Employment and the SLBFE failed to take into account the suggestions made by the Foreign Ministry and in 2008 the project recommenced with the SLBFE again announcing that insurance would be compulsory for all domestic workers employed in Kuwait.
Despite effectively restarting the scheme from scratch after a two year hiatus no new tenders were called and on May 15 the SLBFE announced that al Haqooq the unregistered Jordanian company was “accepted in principle by the SLBFE and the Ministry after a thorough evaluation.”

No formal tender process
The decision to award such a lucrative tender without the completion of a formal tender process is extraordinary. More unusual however is the fact that al Haqooq despite being selected to provide insurance was not an insurance company.
In fact the company was simply an employment agency/commission agent and in order to provide insurance it was acting as the agent for the legitimate Bahrain Kuwait Insurance Company.
Regardless of the obvious shortcomings of al Haqooq’s bid — the fact that it was patently ineligible under the terms of the original tender — the company was selected by the SLBFE as the sole provider of insurance to Sri Lankan domestic workers in Kuwait.
In January 2009 the compulsory insurance scheme was introduced and before being granted permission to leave for Kuwait by the SLBFE workers had to produce a certificate from al Haqooq proving that they had signed up for the insurance scheme.
Utter chaos
Significantly the cost of this insurance was 50 Kuwaiti Dinars or SLR 20,000 (1 Kuwaiti Dinar = SLR 400) much higher than the rate quoted by alternative insurance providers approached by ALFEA. And the sum was to be paid by the employers of the domestic workers.
In reality both ALFEA and the manpower association which represents Sri Lankan workers in Kuwait consistently alleged that employers usually deducted this amount from the salaries of the workers once they arrived in Kuwait.
The introduction of the scheme caused chaos with workers unable to travel to Kuwait until insurance certificates had been issued. A large backlog quickly developed with thousands of workers unable to leave Sri Lanka in time for their placements as there were delays in the receipt of their insurance certificates.
The fact that insurance was only available through a single provider was extremely unusual and in contravention of both accepted human rights and Kuwaiti law where those seeking insurance are free to do so through any licensed provider. Kuwaiti employers of Sri Lankan domestic workers were being compelled to buy insurance at an unusually high rate, 50 dirhams, from a single provider.

Complaints lodged
In view of the number of complaints lodged by Kuwaiti employers against the new insurance scheme the Kuwait government – through its Ministry of Commerce and Industry launched an investigation into the insurance provided by al Haqooq.
Extraordinarily the Kuwaiti investigation revealed that the al Haqooq Company was purchasing insurance policies from the Bahrain Kuwait Insurance Company for just 8 dinars but selling these policies though the SLBFE’s compulsory insurance scheme for 50 dinars
The discovery caused a sensation in Kuwait as thousands of employers learned they had been paying 50 dinars for an insurance policy worth just 8 dinars.


In response the Kuwaiti government issued instructions forbidding Kuwaiti insurance companies from issuing foreign domestic workers insurance without the express approval of the Kuwaiti Ministry of Foreign Affairs.
The matter caused enormous damage to the reputation of Sri Lanka in Kuwait with the SLBFE and the Foreign Employment Promotions Ministry earning a reputation for dishonesty, corruption and outright fraud.
Reputation suffered
Sri Lanka’s reputation suffered further damage when it was discovered that the fraudulent al Haqooq Company even maintained an office on the Sri Lankan Embassy premises in violation of sections of the Vienna Convention governing the rights of embassies.
The damage done to Sri Lanka’s reputation is significant as Kuwait is the second largest destination for Sri Lankan migrant workers and remittances from Kuwait amount to hundreds of millions of dollars a year.
The cost to Sri Lanka in terms of damage to its reputation and a resulting reluctance on the part of Kuwaiti employers to hire Sri Lankan staff is immeasurable. However under the compulsory insurance scheme 6000 insurance policies purchased for 8 dirhams were sold for 50. Leaving 42x6000 or 252000 dirhams or over Rs.100 million unaccounted for.
The scale of the fraud therefore is enormous and the allegation is that this money was divided between the al Haqooq company and officials at the Sri Lanka Ministry of Foreign Employment.
Violation of tender procedure
As it was the SLBFE and Foreign Ministry that were violating all the stipulated tender procedures, selected al Haqooq and continued to work with the company despite suggestions and complaints from a number of parties, it seems clear that the Ministry was directly involved in the fraud.
It has been suggested that even the initial uncompleted tender process was a sham with al Haqooq having been selected before the tender was even called.
Documentary evidence reveals that several senior officials at the SLBFE were involved in dealings with al Haqooq. However as the SLBFE falls directly under the purview of the Ministry of Foreign Employment headed by Rambukwella it is ultimately the Minister who must take responsibility for the scandal.
Given the scale of the corruption required to authorise mandatory insurance by an illegitimate and fraudulent company the Minister is in allowing such a fraud to have taken place at the very least guilty of gross negligence, though it is of course alleged that he was in this case guilty of far more than simple negligence.
Rs.100 million fraudulently obtained is a lot of money and given last week’s report of massive fraud also implicating Rambukwella, the involvement of his Ministry in yet another equally massive fraud can only be deemed highly suspicious.
The curious case of Manil de Mel…While the value of the various frauds already reported to have been committed by companies and bureaus attached to the Ministry of Foreign Employment Promotion run into hundreds of millions of rupees, documentary evidence in the possession of The Sunday Leader indicate that our account of dirty dealings at the Ministry is still not complete.
The Sri Lanka Foreign Employment Agency SLFEA which we last week reported to have been the victim of several massive frauds allegedly perpetrated by its General Manager Mrs. Nanayakkara at the behest of Keheliya Rambukwella was, it appears, subject to yet another major fraud perpetrated by a confidant of the Minister.
Manil De Mel, a coordinator to the Ministry and a friend of Rambukwella’s is alleged to have cheated the SLFEA of almost Rs.15 million.
The SLFEA, a state owned employment agency provides jobs for Sri Lankans seeking work abroad.
To secure these placements the SLFEA works with a number of agencies and in relation to placements in Israel, Canada and the Turks and Caicos Islands it worked with an agency known as RMS Milestone Holdings represented by De Mel.
De Mel secured overseas job orders for the SLFEA and was paid a commission for each worker sent abroad. So close was his association with Rambukwella that he eventually obtained a position as consultant to the Minister.
De Mel claimed to have found vacancies for more than 100 workers in Canada. For these people to gain employment however he stated that they would have to pass the IELTS English test. De Mel claimed that the cost of training and taking IELTS would amount to Rs. 50 000 per worker and he offered to provide the relevant training in exchange for a Rs. 25000 per worker down payment.
However the Canadian job order allegedly found by De Mel never came to fruition and no workers were ultimately sent to Canada. As the order had fallen through the SLFEA requested that De Mel return the down payment he received. He however declined to do so.
Subsequently De Mel became involved in a scheme to send workers to the Turks and Caicos Islands, a British dependency in the Caribbean with high salary scales.
Having found jobs for several workers on the islands with a commission of Rs.200 000 per worker he claimed he would need a large down payment in order to cover the cost of placing the next batch of workers at hotels in the islands.
Having received several millions of rupees as down payment however De Mel failed to provide any additional jobs on the islands.
Again he declined to return the down payments despite overtures made by the SLFEA and in total it is alleged that De Mel owes Rs.14, 560,260 to the SLFEA.
The former Chairman of the SLFEA, Shaheid as attested to by a number of internal memos on several occasions suggested that legal action be taken against De Mel to recover the millions owed to the SLFEA. However on each occasion the suggestion of legal action was made it is alleged that Rambukwella intervened and attempted to dissuade the SLFEA from pursuing the matter in court.
It is further alleged that files relating to the transactions involving De Mel were removed from the SLFEA and taken into the Minister’s custody to prevent any action being taken against de Mel.
Thus the SLFEA was unable to begin legal proceedings against De Mel who was, in a separate case, subsequently investigated and remanded as a result of investigations made by the Colombo Fraud Bureau.
The allegation in this instance is that Rambukwella not only sheltered De Mel by dissuading the SLFEA from pursuing legal action but that he also played a part in concealing the documentary evidence regarding De Mel’s transactions.
As in the previous cases Rambukwella and his associates appear to have been acting against the interests of a state owned company that it was his responsibility as Foreign Employment Promotions Minister to oversee.
A serious breach of trust is therefore implied with Rambukwella using organisations falling under the purview of his Ministry exclusively to benefit himself and his personal aides.
The total value of the various frauds committed in companies associated with the Ministry of Foreign Employment stands at over Rs. 200 million. Where the various frauds within the SLFEA are concerned several allegations have been made regarding Rambukwella’s direct involvement.
It appears therefore that there is a strong case for the Honourable Minister to answer.
However despite seeking a response from Rambukwella for over a week The Sunday Leader has not been able to reach the Minister and has repeatedly been informed that that he is out of office or unable to come to the phone.

The Sunday Leader remains committed to publishing Rambukwella’s side of the story and we look forward to receiving a response from the Minister or the Ministry next week.
Source: http://www.thesundayleader.lk/20090913/investigation-1.HTM