Identifier
Created
Classification
Origin
03COLOMBO1529
2003-09-03 10:14:00
CONFIDENTIAL
Embassy Colombo
Cable title:  

Proposed weapons deal involving Israeli

Tags:  PGOV MASS PINS ECON CE IS 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 001529 

SIPDIS

DEPARTMENT FOR SA, SA/INS, PM, NEA
NSC FOR E. MILLARD

E.O. 12958: DECL: 09-03-13
TAGS: PGOV MASS PINS ECON CE IS
SUBJECT: Proposed weapons deal involving Israeli
company stirs controversy

Refs: (A) SA/INS-Colombo 09/02/03 class e-mail
- (B) Colombo 1522, and previous

(U) Classified by James F. Entwistle, Deputy Chief of
Mission. Reasons 1.5 (b, d).

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 001529

SIPDIS

DEPARTMENT FOR SA, SA/INS, PM, NEA
NSC FOR E. MILLARD

E.O. 12958: DECL: 09-03-13
TAGS: PGOV MASS PINS ECON CE IS
SUBJECT: Proposed weapons deal involving Israeli
company stirs controversy

Refs: (A) SA/INS-Colombo 09/02/03 class e-mail
- (B) Colombo 1522, and previous

(U) Classified by James F. Entwistle, Deputy Chief of
Mission. Reasons 1.5 (b, d).


1. (C) SUMMARY: A proposed weapons deal has sparked
public accusations that Sri Lanka's Defense Ministry
favors an Israeli bid because it has worked out
kickbacks with the company. The Defense Ministry denies
the charge. At this point, the proposed deal is
extremely tangled, as a potential U.S. FMS offer to
purchase the systems for the government undergoes
further review by the GSL. The case highlights the
continued mess in the GSL military procurement system
and the government's evolving relationship with Israel.
END SUMMARY.


2. (C) DISPUTE OVER PROPOSED WEAPONS DEAL: A proposed
weapons deal has stirred controversy in Sri Lanka. The
dispute revolves around an Israeli company's offer to
meet the requirements of a Sri Lankan Navy (SLN) tender
for cannons to fit onto the SLN's fast attack craft. As
Mission understands the situation, the Israeli company
in question, Rafael, is acting as agent for ATK Ordnance
and Ground Systems, a U.S. company based in Arizona that
manufactures the Bushmaster 30mm cannon. In the Cabinet
and in the press, the Defense Ministry has been
pilloried for publicly supporting the Israeli bid to the
exclusion of a possible U.S. FMS procurement, which
potentially would cost less. (Note: The Rafael offer
is said to be worth about USD 12 million. Various
figures have been bandied about in the press regarding a
possible U.S. FMS procurement, but the USG has not, in
fact, submitted a "price and availability" letter as of
yet.) Taking a lead in the criticism, Rajitha
Senaratne, Minister of Lands, has publicly accused the
SLN of supporting the Rafael offer, although it is
"inferior." Senaratne, who has taken a lead role in the
government as a sort of "Mr. Clean," has also directly
insinuated that Defense Ministry personnel and others in

the government stood to personally benefit from
kickbacks from Rafael. Feeding off Senaratne's
comments, there have also been several recent press
pieces accusing the Defense Ministry of corruption in
the proposed sale. Commenting on the accusations, D.K.
Dassanayake, a retired rear admiral, who sits on the
Cabinet board now reviewing the deal (see below),told
poloff that, in his estimation, Defense Ministry and
other GSL officials recommending the Israeli offer are
most likely doing so for personal benefit. Dassanayake
was not sure whether this included Defense Minister
Marapana himself.


3. (C) For its part, the Defense Ministry has
vociferously denied the charges. In a recent public
statement, Defense Minister Tilak Marapana stated that
the public is being misled and there has been no
impropriety on the part of his ministry or the SLN.
Marapana said the tender had been completely transparent
and there was no thought of corruption. He noted that
the GSL was continuing to review its options regarding
the sale.


4. (C) DEAL REMAINS TANGLED: As the political
controversy swirls, the deal itself remains extremely
tangled. Rafael is still believed to be in the ballgame
to sell the system. However, the political accusations
that are flying about may make it gun shy to go forward,
according to observers.


5. (C) At the same time, the potential U.S. FMS offer
to supply the ATK-manufactured Bushmaster cannons needs
further review by the GSL. The Sri Lankan Navy has told
the U.S. that the weapons system potentially being
offered is too heavy for SLN boats. During an August 29
meeting with Milinda Moragoda, the Minister of Economic
Reform, DATT corrected the GSL's misimpression that the
"too heavy" determination was a joint SLN-USN one, when
it was in fact only a SLN determination. DATT informed
Moragoda that the U.S. Navy does not have enough
technical information regarding the SLN's fast attack
craft to evaluate the technical feasibility of the U.S.
system. In reply, Moragoda has asked the U.S. to
determine the feasibility of the weapons system. DATT
replied that the USG would review this request, noting
that the GSL would be financially responsible for
undertaking the study.


6. (C) There are also other elements in the mix: The
U.S. manufacturer, ATK, has also recently submitted an
unsolicited offer to sell a MK 44 (Bushmaster 30mm
cannon on a "typhoon" mount) weapon system directly to
the GSL through their agent in Israel. The structure of
their proposal is aimed at keeping them from being in
direct competition with a potential USG FMS deal. There
are also reports that the GSL is looking into other 30mm
weapons systems from Israeli sources for its fast attack
craft.


7. (C) NEXT STEPS: At an August 25 Cabinet meeting,
Prime Minister Wickremesinghe deferred the MOD decision
in favor of the Rafael offer and ordered a total
reevaluation of the proposal. The PM also tasked a
board to report to the Cabinet on the proposal. Per
DATT's meeting reviewed above, we also understand that
Minister Moragoda has been asked by the Prime Minister
to look into the matter and try to untangle it.


8. (C) COMMENT: The case highlights the continued mess
that the GSL military procurement system is in. The
system has long been rife with corruption and other
inefficiencies. To his credit, the PM has made it a
priority to try to clear up the situation, but it is not
clear whether he has the political muscle to do so. In
the meantime, the ramifications of the procurement mess
for the Sri Lankan military are serious, and are hurting
the GSL's effort to maintain the balance of power with
the Tamil Tigers during the peace process.


9. (C) COMMENT (Continued): Re Israel, while the two
countries share long-standing diplomatic ties, the GSL-
GoI relationship has run hot and cold through the years.
There seems to have been some warming of relations of
late, however. In a rare event for a high-level Sri
Lankan official, Defense Minister Marapana visited
Israel earlier this year, for example. Marapana's
apparent connection to the controversial Rafael offer,
however, may complicate relations, and, as has happened
in the past, Sri Lanka's large Muslim population might
work to put a brake on closer ties. END COMMENT.

LUNSTEAD