SRI LANKA: TEXT ON GSL REPORTS ON LTTE FINANCING

UNCLAS COLOMBO 001679 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR SCA/INS, S/CT AND EB/ESC/TFS E.O. 12958: N/A TAGS: PTER PREL CE SUBJECT: SRI LANKA: TEXT ON GSL REPORTS ON LTTE FINANCING REF: COLOMBO 1568 ¶1. (SBU) Summary: During reftel discussion to prepare for the initial meeting of the Contact Group, Government of Sri Lanka (GSL) officials gave Post copies of reports they had produced regarding Liberation Tigers of Tamil Eelam (LTTE) financing. The following are excerpts from two of those reports, each of which also included graphs and organization charts which could not be reproduced in cable format. Two additional reports, marked "TOP SECRET (EYES ONLY)" by the GSL, addressed LTTE fundraising and procurement and LTTE shipping networks. These contained even more extensive diagrams and notes which could not be compiled into cable format. If Department and Washington agencies find the following information useful, Post could pouch acomplete set of the reports to the Department fo dissemination as appropriate. End Summary. 2 (SBU) Begin text of Central Bank Financial Intellience Unit report (no GSL classification): The Tamil Rehabilitation Organization (TRO) The TRO is a registered non-governmental organization in terms of the Certificate of Registration of Voluntary Social Services-Non Governmental Organization under Voluntary Social Services Organizations (Registration and Supervision) Act No.31 of 1980 as amended by Act No.8 of 1998 bearing registration No.50706. Its registered office is at 410/112 Bullers Road, Colombo 7. Since 2003, the TRO has maintained bank accounts at 7 systematically important banks in the country, namely, People's Bank, the Bank of Ceylon, HNB, Commercial Bank, Seylan Bank, PABC Bank and the Standard Chartered Bank, though which banking network it has been in receipt of large foreign remittances from across the world. To date it has a network of 153 accounts at the above-named banks, 139 of which are in the North and East. The breakdown of bank accounts per Bank is given bellow:- Bank of Ceylon, 10 accounts in Killinochchi, Vavuniya, Mannar, Trincomalee, Mutur and Mullaviativu; etc People's Bank, 22 accounts in Killinochchi, Mullaitivu, Akkaipattu, Karaitivu, etc. Hatton National Bank 26 accounts in Vavuniya, Mannar, Trincomalee, Jaffna, Batticaola, Wellawatte, etc. Seylan Bank 82 accounts in Vavuniya, Trincomalee, Batticaloa, Jaffna, First City Office, and Free Trade Zone; ;PABC Bank 6 accounts in Old Motor Street and in the Colombo metropolitan Area; Commercial Bank 7 accounts in Batticaloa, Kotahena and in the North and East. During the period January 2003 to March, 2006 the TRO has received direct foreign remittances amounting to the Sri Lanka rupee equivalent of Rs.2.2 billion. These remittances have been received from the TRO offices in 9 countries consisting of 6 major European countries, Australia, Canada and the U.S.A. and from affiliated organizations and individuals abroad and international NGOs. Up to the last quarter 2005, 50 percent of these remittances were received trough TRO Accounts maintained by the Standard Chartered Bank. However, in view of stringent anti money-laundering requirements and know-your-costumer rules imposed by the Central Bank of Sri Lanka with regard to concerns on the conduct of the account, the TRO account was closed by SCB. The account was transferred from the SCB to the Seylan Bank, Vavuniya on September, 2nd 2005. The largest number of TRO accounts are maintained at the Seylan Bank which operates 66 accounts for the TRO. On inquiries made about the need for such large number of accounts for a single organization, the Bank said that each account was in respect of identified projects. The Bank was, however, able to submit only 10 project reports. Post - tsunami funds received by TRO Of total post-tsunami funds received through the banking system, the TRO received the largest sum of a total of Rs.4 billion or 10 percent of all tsunami funds received through the banking system in Sri Lanka, for the period January 2005 to June 2006. This figure includes domestic transfers-credits to the TRO accounts from NGOs and other banks amounting to Rs.2.6 billion. 50 percent of foreign remittances were received from the U.S.A. of which the TRO U.S.A. accounted for 50 percent. All these funds have been withdrawn for use in projects purporting to be for tsunami purposes. In effect 106 percent of bank funds have been withdrawn. It is evident that these funds have been utilized for whatever post-tsunami humanitarian work they were meant for which is deemed to have been undertaken by the TRO and should have been completed during a period of over one and a half years. The balances reported by 6 banks as at the date the freezing order, viz. Rs.113.8 million, are only a mere fraction of the funds received by the TRO, particularly during the post-tsunami period. It is therefore deemed that the funds coming through the banking system in the hands of the TRO. Several international NGO are carrying out humanitarian projects in the LTTE controlled areas purporting to be for Tsunami purposes with funds received for this purpose through SIPDIS the banking system. INGOs such as UNDP, UNICEF, Save the Children, Actionaid, ILO have transferred funds directly to the TRO for humanitarian projects. These INGOs may be requested to account for these funds. The TRO/USA connection The TRO Sri Lanka has received almost 10 million U.S. dollars in foreign currency remittances from the USA during the period January 2003 to March 2006 through the commercial banks in Sri Lanka. This represents the largest component of foreign currency remittances received by the TRO accounting for 41 percent. The TRO-USA is the largest contributor to the TRO Sri Lanka. In August alone this year, a total of U.S.566,000, or LKR 60 million, was remitted by the TRO USA to the TRO and various affiliated organizations in North and East. These funds have been received from TRO office registered in Cumberland in State of Maryland in the U.S.A. which is the entity that is presentlybeing investigated by the U.S. authorities with egard to arms purchases for LTTE. TRO Front orgnizations and transfers from International NGOs INGOs) Several front organizations of the TRO purporting to be NGOs in their own right have been identified. The following are some of them:- -White Pigeon-registered as a Charity in the UK but now delisted by the Charity Comissioner. -The Ghandi Seva Sangam - in receipt of funds from TRO -Social Economic Development Organization for Tamils (SEDOT) -The Bank of Tamil Eelam, in Killinochchi with branches in the North and East. -The Economic Consultancy House -The Dry Zone Development Foundation. The following the INGOs have direct dealings with TRO and regular transfers from the following INGO accounts have taken place purporting to be for projects handled by the TRO, many of which are in the uncleared areas under the LTTE administration:- -The ILO -Save the Children -Actionaid International Sri Lanka which has signed an MOU with the TRO -UNICEF (End text) ¶3. (SBU) Begin text of Ministry of Foreign Affairs report (no GSL classification): Remittances received by Tamil Rehabilitation Organization (TRO) Sri Lanka from United States of America - 2003 - March 2006 TRO Sri Lanka (TROSL) has received USD 9.09 Mn of foreign currency remittances from the United States of America (USA) during the period January 2003 to March 2006 through the commercial banking system in Sri Lanka. Of total remittances received by the TROSL, remittances from the USA represent the largest at around 40.72 percent of total foreign currency remittances received by the TROSL. 2004 recorded the highest inflow with 38 percent of total remittances from the USA received amounting to USD 3.48 Mn., with USD 3.16 Mn or 35 percent and 2.06 Mn. or 23 percent in 2003 and 2005, respectively. USD 0.39Mn has been received in the first quarter of 2006 representing a significant decline. According to a data available, TRO - USA is the largest contributor to the TROSL, remitting USD 5.01 Mn or 55.15 percent of total remittances from the USA to Sri Lanka. Of these remittances from the US, the Raj Rathnam Family represent 3.3 Mn or 36.31 percent. These two remitting parties together have remitted USD 8.31 Mn. To the TROSL, representing 91.5 percent of total remittances from the USA. (End text) MOORE