State audit exposes massive irregularities in Batticaloa Campus

COLOMBO (News1st): The auditor general has called for legal action against officers at the Bank of Ceylon and Mahaweli authority over a multitude of irregularities in establishing Batticaloa Campus Pvt. Ltd. The national audit office, in a report published last week, highlighted several flaws in registering, obtaining land, and financing the campus in which former deputy minister M.L.A.M. Hizbullah was chairman.

Registration mired in flaws

Hira Foundation, chaired by Hizbullah, had first set-up the University College of Batticaloa in 2013 to conduct vocational training courses. It later upgraded itself a degree-awarding institution under the name Batticaloa Campus Pvt. Ltd in 2015. The audit showed that the skills development ministry had permitted the establishment of the University College of Batticaloa during Hizbullah's tenure as a deputy minister. The ministry had also offered a full scholarship for five percent of the college students after it was declared open by the then minister Dullas Alahapperuma in 2014. This was although the vocational education commission had rejected its application after the college failed to meet the required qualifications. "...a Memorandum of Understanding (MoU) had been entered into with the Hira Foundation (by the ministry) for 03 years," the audit report published last week read. A three-member committee that studied the institution, five days after signing the MoU, had observed several issues including financial instability and the land area. But days later, the vocational education commission had permitted the establishment of the institution, after the committee chairman - that ruled the institution unfit - had sought approval himself.

Questions over illegality in obtaining land

The audit pointed out several errors committed by the Mahaweli authority while leasing out 80-acres of land to Batticaloa Campus, out of which 35 acres had been leased out for 30 years. The recommendations of the regional Physical Planning Committee and the Director (Land Use) had "not been obtained" before leasing out the 35-acre land, according to the report. The law states that a government-owned land cannot be released on annual lease in view of a long term lease provided later. But the Mahaweli authority had "transformed the annual lease into a long term lease, thus deliberately violating the said section of the State Lands Ordinance", the audit revealed. The leased area, originally a paddy land, had been "amended" as other lands "in a well-planned manner to release a paddy land to the Hira Foundation for a commercial activity". "Soil had been extracted from the nearby forest reserve for the said filling, but a license had not been obtained from the Geological Survey and Mines Bureau," the national audit office said. It added that approval had not been obtained to excavate at a reserve, to transport soil, and for the filling of paddy lands and low lands as well. "In addition....the lessee was observed to have constructed permanent buildings on lands over 09 acres in extent located beyond the boundaries of the leased property with no legal rights," according to the report. The agreement to provide the Mahaweli land to Batticaloa Campus signed on February 1, 2018, had been backdated to July 12, 2013 - although the campus had been registered only in 2015.

Board of Investment in hot water

The Board of Investment (BOI) had granted approval for the construction of the campus in "total disregard" for the environmental impact of the project. Although the campus had failed to comply with the laws to obtain BOI approval, the investment body had provided a tax exemption totalling Rs. 48.5 million on 143 occasions. "The total investment in the project...considered for registration had amounted to USD 4.7 million, but the company had invested a sum of USD 24.6 million in the project," the report pointed out.

Billions-worth transactions not reported to CBSL

"The Central Bank had not been informed on the 21 instances in which foreign exchange totalling Rs. 3.6 billion had been received through 04 (Bank of Ceylon) accounts by Batticaloa Campus," the audit report read. According to the law, the bank should obtain the approval of its Board of Governance if an individual applying for a business relationship is having a political background. "...the Bank of Ceylon had not obtained the approval of the Board of Governance," the audit noted. Foreign remittances totalling Rs 4.1 billion received by four bank accounts belonging to institutions managed by the Hizbullah family had not been regulated as well.

State buildings leased out at low rates

Two buildings of the Batticaloa Urban Council had been leased out to the University College of Batticaloa for eight years in 2014 at a monthly rent of Rs 5000. " (However), the assessed government lease rent for the used buildings was Rs 197,500 a month. Accordingly, the lease rent in arrears up to 30 June 2017 amounted to Rs 8.4 million, the report read. Other irregularities highlighted in the report showed that Hizbullah had acted on behalf of Hira Foundation using his capacity as deputy minister, sometimes using government letterheads in correspondence. The audit office has called for action to be taken against officials involved in committing these irregularities.