Australian companies linked to bribe scandals with Sri Lankan President

Two Australian companies are embroiled in bribery scandals that reach into the offices of the presidents of Sri Lanka and the Republic of Congo, as the firms sought to secure multimillion-dollar contracts. reports ‘The Age’- Australia’s daily newspaper.

Coming in the wake of foreign bribery allegations implicating Tabcorp, Leighton Holdings and BHP Billiton, the revelations will put pressure on the Turnbull government to reform Australia’s failing anti-corruption framework.

A Fairfax Media investigation has uncovered evidence – which is the subject of a major AFP probe – involving the iconic Snowy Mountains Engineering Company (SMEC).

The firm’s overseas staff allegedly bribed officials to secure a $2.3 million aid-funded sewerage project in Sri Lanka in 2011 and, in partnership with a Canadian company, a $2.2 million power plant project in Bangladesh in 2007.

Company emails also reveal Sri Lankan President Maithripala Sirisena and his adviser allegedly demanded a political “donation” to be paid by SMEC when Mr Sirisena was a cabinet minister.

The emails show a plot to skim the money off a World Bank-funded dam project in 2009. In return, Mr Sirisena was to approve the awarding of the dam contract to SMEC, worth $1.82 million .

SMEC’s Sri Lankan manager, who was recently sacked, wrote in emails to two Australian colleagues that he wanted to “inform the minister/co-ordinating secretary” of the size of an alleged kickback to be paid and that he needed to “prioritise” certain payments to unnamed parties “since the signing of the contract would depend” on it.

SMEC has confirmed a “request for a political donation”, but insists an internal investigation found no donation was made and the firm “continues to fully co-operate with the AFP.”

In a statement overnight, Sri Lanka’s President Sirisena said he had “no knowledge of the incident” and requested further details to “ascertain the involvement of any of his office staff.

The president also said he would co-operate “in any investigation” in Australia and “will also instruct the relevant local authorities to investigate”.

On September 12, 2013 World Bank investigators sent a confidential file to the federal police alleging the SMEC was engaged in suspected “fraud and corruption” in connection to a power plant project in Bangladesh in 2007.

This prompted a secret federal police probe, which dug up another bribery allegation involving SMEC’s involvement in an aid-funded sewerage project in Colombo in 2011.

In addition to the World Bank inquiry, internal company emails reveal bribery allegations involving a second Sri Lankan contract, a dam project also funded by the World Bank. Emails from SMEC’s recently sacked Sri Lankan manager to two Australian colleagues detail an alleged meeting in 2009 with Sri Lanka’s president Sirisena, who at the time was minister for Agriculture, Development and Agrarian Services.

SMEC’s manager wrote on June 3 that Sirisena, who was also “secretary of the ruling party – a powerful man in the present administration”, may request “something out of the way – funds for the party”.

SMEC needed Mr Sirisena to sign off on cabinet papers approving the award of the $1.82 million dam project. Two days later, SMEC’s manager wrote another email to his colleagues about his meeting with Mr Sirisena.

“He said there will be elections in the near future and he wants to know whether SMEC could make a donation for the elections. He [Mr Siresena] detailed me to discuss this with his Co-ordinating Secretary. Co-ordinating-Secretary said this is the way it goes prior to signing the cabinet papers. He wants us to propose an amount/percentage on the contract value. If you could advise me on an amount of percentage based on the financial figures I could inform the minister/ Co-ordinating Sec …”

Twelve days later, the manager wrote another email saying that unnamed “key people” had asked for approximately “1%… of the total contract.”

“The key people have now disclosed their cost as 2.5m LKR [Sri Lankan Rupees, a sum worth about $A27,000]”.

“Since the signing of the contract would depend on our agreement to honour the cost of 2.5 M LKR, we have to prioritise that.”

Company accounts reveal that $A27,000 – a large amount of money in Sri Lanka- was withdrawn in cash by the manager, who appeared to agree to pay kickbacks to an unnamed “party”.

“I think this is a good opportunity for us to build up relationship with this party since they directly approached… us,” he wrote.

“Once we win their confidence… we could work with their blessings in future opportunities.”

In a statement, SMEC said the company’s internal investigation this year found no “payment to any person in response to the request for a political donation” and that any payments made were not improper. SMEC has referred its internal inquiry to the AFP.

Mr Sirisena did not respond to detailed questions.

(Modified from ‘The Age’)