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India/Pakistan



SRI LANKA: THE UNTOLD STORY
Chapter 43: Aftermath of the Indian withdrawal

By K T Rajasingham

Indian interference in Sri Lankan politics came to a final halt when the last of the Indian Peacekeeping Forces (IPKF) left the territorial waters of Sri Lanka on March 24, 1990. Maverick Indian Prime Minister Viswanath Pratab Singh, the Machiavellian External Affairs Minister Inder Kumar Gujral and the macabre Muthuvel Karunanidhi, the Chief Minister of Tamil Nadu, contributed their bits individually and collectively to end the regional aspirations of India, cultured, nurtured and propagated by Jawaharlal Nehru, Inidra Gandhi and Rajiv Gandhi. The idea of Indian regional supremacy was decimated by the newly emerged trio in the Indian international political arena.

On March 6, 1990, two chartered ships, the Hrshavardan and the Tipu Sultan arrived at the port of Madras, with 1,375 members and supporters of the EPRLF, but Karunanidhi refused them entry, because they carried anti-LTTE Tamils. The ships were subsequently diverted to Vishakapatnam in Andhara Pradesh and Biju Patnaik, the Congress party Chief Minister of Orissa, agreed to take them as refugees in his state. They were sent to Makangiri by road from Vishakapatnam.

On March 11, Mahabaharat - an Il-76 Soviet-made aircraft - carried from Trincomalee 275 persons, including the EPRLF General Secretary, K Patmanabah and the two Tamil ministers of the North-East Provincial Government and others, to Bhubaneswar, in Orissa state.

IN 32 months in Sri Lanka, the IPKF lost 1,115 soldiers and 2,984 were injured. From July 29, 1987, the IPKF operations in Sri Lanka were also a big drain on the Indian Exchequer. Nearly 50 million Indian rupees were spent a day. Further, it was estimated that the IPKF killed more than 5,000 Tamil civilians, some accidentally, but often deliberately and mostly as reprisals, during their stay in the North and East of Sri Lanka. When they left, the IPKF claimed that they had released nearly 472 LTTE cadres captured and held in their custody, but they failed to reveal the details of those who died in their captivity.

According to some independent sources, which could not be confirmed, it was reported that, the LTTE lost nearly 2,500 of its cadres, and 1,500 were wounded.

When the IPKF reached India, they returned unnoticed, a sad end to India's biggest-ever military overseas expedition. At the port of Madras, Dr P C Alexander, the Tamil Nadu Governor, Dr Raja Ramanna, the Minister of State for Defence, and a small number of civilians were present.

Karunanidhi and the DMK (Dravida Munnetra Kalagam) political leaders boycotted the welcome ceremony, saying that their presence would jeopardize their political position with the Tamils in the state. "The humiliation was not in Sri Lanka, but in India," said Lieutenant-General A S Kalkat, the IPKF Commanding Officer in an interview given to rediff.com - an Indian news website. "India's Vietnam: IPKF in Sri Lanka 10 years on. Yes. There was some feeling in my soldiers. The humiliation was not in Sri Lanka, because there was no humiliation. The humiliation came when we came back to India. The question people asked was, Why did we go there, what were you doing there? When you send soldiers to such an area, you don't ask them these questions, you don't ask them what were you doing there. Those are things that you should have sorted out earlier.

"No, never. But when the public started saying this, and the soldier starts hearing it, he gets hurt. And the main thing was the so-called boycott of IPKF soldiers, when they arrived at Madras port. I think that was a needless act. It was no good. I think the DMK was [then in power in Tamil Nadu] the one, they boycotted it. The Government in India did the right thing, they said if they will not participate in the welcome, fine, we will send our people from here.

"So the Defense Minister that time, Raja Ramanna, came from Delhi and others came from Delhi. Governor of the state Dr [P C] Alexander was there. But that leaves a bad taste. It could have been avoided because it was not conveying anything to me."

Earlier, George Fernandes, the present Defence Minister of India, who was then a Member of Parliament, a firebrand, warned of "India's Vietnam". He said, "When in early August 1987, I had said that Mr Rajiv Gandhi's military adventure in Sri Lanka would be India's Vietnam I had not anticipated that India's Vietnam would also have its own My Lai."

Meanwhile, it was alleged that the reason that Karunanidhi turned hostile towards the IPKF when they arrived in Madras was to please his LTTE patrons in Sri Lanka. Karunanidhi, born on June 3, 1924, at Thiruvarur, Tamil Nadu, was first elected as a member of the Legislative Assembly, Tamil Nadu, on the DMK ticket, to represent Kulithalai, in 1957. After that, he had never been defeated in any assembly elections. In 1967, when C N Annadurai, the erstwhile leader of the DMK, formed the first DMK Government, Karunanidhi was sworn in as the Minister for Public Works. In 1969, when Annadurai succumbed to cancer, Karunanidhi succeeded him as Chief Minister. He held this position in 1969-71; 1971-1976 and from January 1989. It was alleged that Karunanidhi received, for election expenses, 40,000,000 Indian rupees from the LTTE.

According to Rohan Gunaratna, in his Indian Intervention Sri Lanka,he writes, "With the death of the godfather, Ramachandran's rival Karunanidhi filled the void in Tamil Nadu. In July 1983, Karunanidhi, who had always advocated Eelam, had resigned his seat in the Legislative Assembly to draw attention to the 'genocides of the Tamils'. Initially, he was a strong supporter of Sri Sabaratnam, the leader of TELO and used TELO cadres as his private army. Following Sri Sabaratnam's assassination in May 1986, by the LTTE, Karunanidhi said, 'After this, I will not speak about Sri Lankan Tamils'. The manner in which the LTTE befriended Karunanidhi, who was already sympathetic towards Tamil militants and the cause of Eelam, but not all that well disposed towards Prabakaran, is no more a secret. The LTTE leadership donated Indian rupees 40,000,000 [Indian Rs 4 crore] for the patron. Karunanidhi accepted the money and thereafter even opened the half closed doors of Tamil Nadu to the LTTE. The fact that LTTE was a private army of Ramachandran, his former political opponent, or that they were warring with the Indian army and that so many Indians had been killed or maimed by the LTTE did not matter to Karunanidhi. In return LTTE supported him, both politically and personally.

"When the author interviewed Karunanidhi in Madras on the eve of the IPKF offensive on the LTTE, he was bitter with the LTTE for having obliterated TELO, but made no attempt to hide the fact that he was totally for Eelam. But, within an year, Karunanidhi who was a strong supporter of TELO, EROS and EPRLF, extended his whole-hearted cooperation to the LTTE. The man changed primarily after the LTTE financed his election campaign. Karunanidhi also thought that his association with Prabakaran would be more profitable than his association with the other militant leaders. Even Indian intelligence reported that Karunanidhi's election campaign, which made him the Chief Minister of Tamil Nadu, was financed by LTTE funds and LTTE gold reserves. For Prabakaran and LTTE, it was a profitable investment. Indian intelligence also reported that, today Karunanidhi as under obligation to the LTTE. Later, Prabakaran was to say that any government in power should have a good relationship with LTTE." - page 420.

It came to light that, during that period, the LTTE managed to buy off many politicians and senior bureaucrats and it had unlimited power and authority from the judiciary to the Chief Minister's secretariat. If a Sri Lankan youth was arrested for carrying lethal weapons and if the youth was an LTTEer, immediately an order would come for his release. Whenever an LTTE cadre was apprehended and subsequently released, it became the unwritten edict for the police officer to apologize to the LTTE cadre before being released. Gradually, the police and customs officials knew that they had to apologize to the LTTE cadres, otherwise they would be transferred to another station or to an inactive post and victimized in many other ways.

J N Dixit in his book Assignment Colombo wrote, "The last contingent of the IPKF which reached Madras was subjected to extraordinary ungrateful treatment by the Tamil Nadu government of Karunanidhi. Our forces which had loyally taken up the thankless tasks in the larger interest of India and Sri Lanka, which had fought a war in which they were subjected to inhibitions and restraints and in which they had sacrificed several hundreds of their members in fatal and other causalities was not given any welcome by Karunanidhi. The pro-LTTE elements had gone to the extent of describing the IPKF as the 'Indian Tamil Killing Force;' and accused it of all sorts of unacceptable behavior without any reason. It showed the kind of people we are that who cannot even honor and respect their soldiers whom their own elected Government had sent on a mission, at short notice, without even giving the force time enough to prepare itself fully for the task to which it was assigned. The LTTE brought out a publicity monograph titled 'The Indian Satanic Force' against the IPKF. It contained scurrilous and baseless allegations against the Indian army which were bandied about in Tamil Nadu." - pages 292-293.

The Jain Commission in its report was also critical of the Karunanidhi-LTTE nexus. It states in its "Political Criticism of the Militant Activities in Tamil Nadu: Jan-June 1990":

"55.2 The continuing unhindered activities of the LTTE came under persistent criticism from various quarters and were increasingly becoming a cause of embarrassment to the political leadership of Tamil Nadu.

"In the State Assembly, the LTTE activities and allegations of state inaction dominated the debates where the DMK party came under severe indictment for allowing the LTTE activities in Tamil Nadu which were disturbing the peace of the state and causing hardships, particularly to the fishermen on Tamil Nadu coastal belt.

"The stand of the DMK president and the Chief Minister of Tamil Nadu, Shri M Karunanidhi in the State Assembly, castigating the role of the IPKF in Sri Lanka, came under fire in the assembly. Shri Karunanidhi had declined to attend a function organized for welcoming the IPKF and in the assembly he announced that he was not prepared to receive any army that had killed 5,000 Tamils. The ruling party also came under severe criticism for not being able to protect the Indian Tamil fishermen in the waters of the Palk Straits. A larger number of fishermen were regularly reported to have been abducted by the LTTE who would issue warnings to them before releasing them. There were also reports of constant harassment of fishermen by the LTTE and even information regarding the existence of an LTTE-controlled extortion racket.

"This was an issue where Indian citizens of Tamil Nadu were being held at ransom by the LTTE right under the nose of the Tamil Nadu administration and the State Government, in turn, was justifying LTTE action and warning its own citizens to desist from returning into the sea in pursuit of their only livelihood.

"The refusal of Shri Karunanidhi to allow non-LTTE Sri Lankan Tamil refugees to enter Tamil Nadu was a cause for further criticism; MLAs of the opposition parties castigated the callousness of the Chief Minister in refusing succor and hospitality for other Tamil militants.

"The AIADMK (All India Anna Dravida Munnetra Kalagam) and the Congress (I) were not the only parties who raised the issue of LTTE-DMK nexus in the assembly. Members of the assembly belonging to the Communist Party of India (Marxist) were equally vociferous.

"The CPI (M) in the assembly is reported to have stated that it was alleged in parliament that the LTTE had taken control of the coastal areas and was terrorizing the local customs officials, police and fisherman. CPI (M) MLA Shri W R Varadarajan said that an impression was gaining ground that the LTTE men were roaming about in the state and urged the Chief Minister to explain the actual position.

"Faced with such strident criticism in the State Assembly, Sri Karunanidhi, on May 8, 1990, on the floor of the assembly, is reported to have accused the Research and Analysis wing (R&AW) of trying to create a rift between the center and the state and appealed to the Prime Minister to take appropriate action. He alleged that the R&AW, which was responsible in the past for creating divisions among various Tamil groups of Sri Lanka, was doing the same between the center and the state.

"However, this allegation of Shri Karunanidhi was denied by the then Prime Minister Shri V P Singh, who, in a press conference held on May 11, 1990, reportedly stated that the R&AW was not engaged in any such activity.

"55.2.1 Even in the parliament, it appears, the issue was causing concern and had been taken up by various political parties. This development appears to have caused further apprehension in the mind of Shri M Karunanidhi, the Chief Minister of Tamil Nadu, who, as per the intelligence reports, made efforts to ensure that his point of view could be projected before the parliament forcefully. It appears that Shri M Karunanidhi was tipped off by Union Minister P Upendra on May 14, 1990 that the Lok Sabha was likely to discuss notices served by Congress-I and BJP MPs regarding the alleged activities of the LTTE in Tamil Nadu and the DMK's support to the LTTE. Reports indicate that Shri M Karunanidhi continued denying the allegations that, the LTTE was giving arms training to DK/DMK youths in Tamil Nadu and that the LTTE was behind the law and order problems in Tamil Nadu. He continued to propagate the view that these allegations were baseless and were aimed to create a wedge between the center and the DMK government. He also explained to Shri P Upendra the alleged atrocities committed by the IPKF on the LTTE and innocent Tamils, particularly at Velvettithurai during the IPKF operations on August 2-4, 1989 and justified his absence from participating in the reception to the IPKF at Madras. To substantiate his argument he presented Shri P Upendra a copy of the Tamil booklet prepared in December 1989 by the LTTE under the caption "Massacre at Velvettithurai", with a foreword by George Fernandes.

"55.3 While the political compulsions forced Shri M Karunanidhi to take an anti-LTTE anti-militancy stance in public, reports of the period indicate that this posture of Shri Karunanidhi caused serious apprehensions among the LTTE leadership. Intelligence reports of the period suggest that the LTTE, at this stage, sought to seek assurances from the chief minister that their activities in Tamil Nadu shall not come under the state crackdown.

"Contemporaneous reports of the Intelligence Bureau specifically state that after the announcement of the Tamil Nadu Chief Minister in the assembly that he would not allow LTTE propaganda in the state, Subramaniam alias Baby, an important LTTE leader in Tamil Nadu, met Shri M Karunanidhi and sought a clarification on this. Shri Karunanidhi reportedly assured him that his announcement in the assembly regarding a ban on propaganda would apply only to people like P Nedumaran (TNM) and Nagaimugam, who were trying to entwine Sri Lankan politics with Tamil Nadu.

"The reports also suggest that the LTTE operatives in Tamil Nadu were also given reassurances by some officers of the "Q" Branch, CID of the state police, that they could continue to carry out their propaganda activities unhindered.

"The plausibility of the above events becomes credible when seen in the light of the deposition of Shri Karunanidhi before the commission where he admitted that he was supporting the LTTE and withdrew his support only after the LTTE killed Padmanabha, the Secretary General, EPRLF, at Madras on June 19, 1990."
(Deposition of Shri M Karunanidhi, dated 17-1-97)

The latest Tamil Nadu-LTTE connection is given at the end of this chapter as an annex, which also serves as a follow-up to the annex to Chapter 42.

Meanwhile, on March 28, 1990, Sri Lankan Prime Minister D B Wijetunga resigned with effect from March 30, thus dissolving the Cabinet and by law, paving the way for the President to appoint a 26-member cabinet along with 23 project ministers and 29 ministers of state on 30 March.

President Ranasinghe Premadasa got rid of Gamini Dissanayake and instead, made Ranjan Wijeratne Plantation Industries Minister, and he continued to hold the post of Minister of State for Defence and Harold Heart, a newcomer and had earlier been a minister without cabinet status, was sworn in as Minister of Foreign Affairs.

A C S Hameed was allotted the Justice portfolio and he also retained higher education, which was a ministerial portfolio without cabinet status. At the same time, Vincent Perera was relieved of justice, but he retained parliamentary affairs and remained the Chief Government Whip, but in addition he was given environment.

Lalith Athulathmudali, who had earlier been in charge of agriculture, food and cooperatives, was given Education and Higher Education and Agriculture and Research was given to R M Dharmasena Banda. Food and Cooperatives went to Weerasinghe Mallimarachchi, who had been the District Minister of Colombo. W J M Locku Bandara, who was earlier the Minister of Education, Cultural affairs and Information, was relieved of education but retained the other two portfolios.

S Thondaman was given the additional charge of Tourism along with Rural Industrial Development, but his Textiles went to U B Wijekoon, along with Handloom Industries, while his Public Administration, Provincial Councils and Home Affairs went to Festus Perera in the new shake-up, but Power and Energy went to K D M C. Bandara. Those ministers who retained their portfolios were: President Ranasinghe Premadasa - Minister of Buddha Sasana, Policy Planning and Implementation and Defense. D B Wijetunge - Prime Minister and Minister of Finance. Ranil Wickremasinghe - Industries, Science and Technology and Leader of the House. Srisena Coorey - Housing and Construction; Mrs. Renuka Herath - Health and Women's Affairs; C Nanda Mathew - Youth Affairs and Sports; Wijepala Mendis - Transport and Highways; M Joseph Michael Perera - Fisheries and Aquatic Research and P Dayaratne - Land, Irrigation and Mahaweli Development.

Meanwhile, Abdul Razak Munsoor was given, along with Trade, Commerce portfolios, but, Port along with Shipping was assigned to Rupasena Karunatilake.

Despite these changes, A C S Hameed remained as the leader of the Government delegation that was negotiating with the Liberation Tigers of Tamil Eelam. The entire ground situation had changed, once the IPKF left Sri Lanka. The LTTE decimated its opponents, the Tamil National Army (TNA), and was ensconced in the North and East.

A C S Hameed flew to Palaly airport, Jaffna, to meet the LTTE delegation for talks. And Yogaratnam Yogi was at the airport to meet him. But, a Sri Lankan soldier, at the sight of Yogi, opened fire at him. Yogi managed to escape unscathed and the soldier was immediately arrested. Later, Hameed met the LTTE delegation, which told him, "Our leader wants to meet you."

Hameed went with his security officer for the meeting with the LTTE delegation led by Prabakaran, the Tiger Supremo. Subsequently, Prabakaran suggested to Hameed that he stay over in Jaffna a few more days, as the LTTE leader was very keen meet him more often. Later, Hameed said, "Prabakaran was charming and did not give the impression of being rough or unreasonable. Nevertheless, Prabakaran dominated the conversation. One made the decision and the finality was his own monopoly."

Hameed misunderstood the position of Prabakaran, when he remarked, "One made the decision and the finality was his own monopoly." Prabakaran was the leader of a militant organization which functioned like an army. LTTE cadres always carried out orders when "General" Prabakaran gave them. The LTTE was not a political organization and it did not believe in the democratic forms and structure. As it was a militant outfit, "the decision and finality was his monopoly".

Hameed made conciliatory overtures to Prabakaran to visit Colombo, but his advisers cautioned him against such a visit. Bradman Weerakoon states that, it was this inaccessibility to Prabakaran that led the "irascible Ranjan Wijeratne to opine that Prabakaran in fact was dead - killed in a duel by his deputy Mahatahya and A C S Hameed has only met Prabakaran's double in Jaffna".

Furthermore, reflecting Premadasa's thinking on the reclusive LTTE leader, Weerakoon states, "Be that as it may - and Prabakaran was to reappear several times thereafter - this elusive quality added to his charisma and image as a ruthless and implacable military leader whose battle strategies were imaginative and daring."

Earlier, on September 26, 1989, the new women's military unit of the LTTE had been inaugurated. This took place on the second death anniversary of Thileepan, who had fasted to death at the Nallur Kandaswamy temple in 1987. Sothia was made the first leader of the women fighters unit. The new office and training complex was given the name "Vidyal", which translated as dawn. It was anticipated that a new dawn would break for Tamil women. But Sothia was struck down with a virulent illness and she was moved out of the jungle base to an urban medical center, but she succumbed on January 11, 1990, when she was just 26 years old.

The political unit for women, the Women's Front of the LTTE, met in May 1990, at Windsor Theater, Jaffna, presided over by Sundari, the Front's Assistant Secretary, and resolved as follows:
1. The dowry system, which is the bane of the Tamil society and slur on the dignity of the Tamils, should be abolished.
2. The front is to fight all forms of injustice, oppression and sex discrimination in the fields of employment opportunities, education and social integration.
3. Economic plans to rehabilitate widows, orphans and other women affected by military operations.
4. Social and political awareness to be created among Tamil women to lead a crusade against social and political injustices.
5. The prevalent misconception of the role of women in society to be changed and women given equal status with men in all spheres of human activity.
6. Colonization of Tamil areas by Sinhalese and the repatriation of one lakh of hill country Tamils to India should be stopped forthwith.

The LTTE was in control of the entire North and East. At a press conference in Jaffna on April 1, 1990, the Tiger Supremo issued a statement which reflected the direction of the LTTE.

"Today our liberation struggle is facing a new historical turning point. We have successfully foiled the Indian military intervention. Now, the Indian occupation forces have completely withdrawn from our homeland. The termination of the Indian invasion is a grand victory to our struggle. The Indian forces were sent here specifically to crush our liberation struggle and to annihilate our organization which embodied the spirit of the struggle. It is for this specific reason, India unleashed a full fledged war against us. This war is a monumental event in the history of the world. For more than two years we fought a ruthless war shedding our blood against a formidable military force, a mighty power in Asia. The supreme sacrifice made by our fighters and by our people in this armed conflict has become a historical epic of heroism and courage. Our victory in this war has set an excellent example that the legitimate struggle of an oppressed people and their yearning for freedom could not be crushed by military force, however formidable it may be.

"Our people have also learnt the bitter lesson as a consequence of the Indian military intervention and the colossal damage it brought about. We have learned that we have to be self-dependent and fight our own struggle to win our rights, rather than depending on foreign powers. I am sure that all the Tamil groups, who supported Indian intervention would have realized this political truth. We are not a hostile force to the Indian Government or to the Indian people. We opposed the misguided policies of the former Indian administration and resisted the military intervention. We do not want the Government of India to interfere, politically or militarily in our problems. The policy makers in Delhi should realize that legitimate struggle of our oppressed people will not in any way contravene the geo-political concerns of India nor it will undermine the internal stability of the Indian state. We fervently hope that on the basis of this understanding the new Indian administration would make sincere efforts to restore friendly ties with our Organization. We desire the Indian Government and the people of India should support and recognize the legitimate struggle of our people.

"For nearly a year, we have been involved in peace talks with the Government of Sri Lanka. I am very pleased to note that the talks have been cordial, constructive and have progressed on the basis of mutual trust and understanding. As a direct consequence of these talks there is peace and normality. The present Sri Lanka regime seems to have realized that the racist oppression and military suppression will not bring about solution to the problems of the Tamil-speaking people. I should say that the courageous and the radical approach enunciated by President Premadasa has resulted in the present climate of peace and conciliation. We sincerely desire that the present atmosphere of peace should continue and that our people should live a life of freedom, dignity and security.

"The future depends solely on the perceptions and approaches of the Sinhala political leaders and the Sinhala masses. The Sinhalese people should realize the blunders of the past and should be prepared and should be prepared to resolve our problems on the basis of human justice and righteousness. If on the other hand, justice is denied to our people and if oppression is unleashed against our people, we will not hesitate to resume the arm struggle to uphold the freedom of our people. For a long time we have been fighting an armed struggle to advance the cause of our people. But the forms of our struggle changed in accordance with the concrete conditions and historical compulsion. Such changes in the modalities of our struggle are inevitable.

"Now we have decided to build up our party structure and to embrace democratic politics as the mode of our struggle. We will expand our organization into a mass movement and prove to the world that the Liberation Tigers are the authentic representatives of the people. We are not opposed to democratic norms and practices. We have been fighting to secure the fundamental political liberties and the democratic rights of our people. Our political objective is to build a radical new society based on social democratic freedom.

"The Sri Lankan Government should eliminate all oppressive conditions pitted against our people, so that genuine democratic traditions can be best enhanced in the political mainstream offering us a substantial frame of work that would be basis for a permanent political settlement. As a consequence, a war broke out. Even though, the Government of India utilized all its military might against our movement, it miserably failed in achieving its objective of disarming us. It is a tragedy that the government of India completely disregarded the political aspirations, interest and security concerns of our people who have suffered long years of genocidal oppression, but was primarily concerned about our arms, which constituted the shield of security of our people.

"This was the Himalayan blunder made by India and she has learned a bitter historical lesson for such a misguided policy. We sincerely hope that Sri Lanka should not make such a disastrous mistake. There is peace and cessation of hostilities between the Sri Lankan armed forces and the LTTE fighters. But, the fundamental problems of our people have not been resolved. Our economy is in shambles. The towns and villages have been reduced to graveyards, as a consequence of a prolonged wars. The conditions of oppression perpetrated against our people have not been fully eradicated. The wounds of the state oppression have not been healed. Our people still live in fear and trepidation over their security in these circumstances.

"I feel sad to note that certain Sri Lankan newspapers are demanding that the LTTE should surrender arms. Instead of demanding the LTTE should surrender arms, one should objectively study and analyses as to why we took up arms and fought a protracted armed struggle for more than fifteen years. The Sinhala people should study and understand the genesis of the armed struggle of the LTTE and the concrete historical conditions that led to the growth and development of the armed resistance. We wish to say that once concrete actions are taken to remove the causes and conditions that led t the Tamil resistance, the question of arms will be settled for ever. It is a misconception to assume that the ethnic issue would be resolved once the LTTE hands over its weapons.

"It is the historical condition of oppression which created the struggle for liberation and the armed resistance became the revolutionary expression of that struggle. The question of arms cannot be resolved unless the ethnic issue is resolved amicably. I hope that the Sinhala people and the Sri Lanka Government will understand our position. Our movement will continue to struggle to secure for our people a life of freedom, peace and prosperous future. Our movement is the only light of hope of our people. I call upon the Tamil and Muslim people to rally round our movement to strengthen it in a powerful national force."- Sunday Times, April 8, 1990.

The LTTE by now had begun to entertain suspicions on the part of Premadasa's genuineness and honesty. According to Adele Balasingham, "During these times I enquired from Bala in private conversation as to whether it was against the committed policy of the LTTE to seek an alternative to political independence and statehood. Bala replied that there was no contradiction in the LTTE's political strategy. He explained to me that the ultimate objective of the LTTE was the creation of an independent state based on the right of self-determination of the Tamils, when all possible alternatives for coexistence with the Sinhala people were experimented and failed.

"He said that the LTTE was deeply serious about facing the Provincial Council elections in Northeast, if Premadasa cleared the hurdles ie, dissolving the council, repealing the sixth amendment and holding fresh elections. For the LTTE, it was a radical experiment to test the feasibility of the coexistence. By seeking this alternative, the LTTE would not lose anything. If the Tigers won the elections they would transform the concepts of Tamil homeland and Tamil nationhood into concrete realities, which were their declared political ideals, Bala clarified.

"Mr Premadasa had a different agenda, a scheme of his own for tackling the LTTE. Accordingly, he delayed the dissolution of the council and postponed the prospects of a fresh election. He showed little inclination on the crucial issue of repealing the sixth amendment, arguing that securing a two-thirds majority in parliament would be an impossible task. Ultimately, the private sessions with Premadasa now served little purpose in practical politics. With great patience we listened to his lengthy sermons, on one people and one nation, where all communities could live in peace and harmony under the tripartite principles of his famous three Cs." The Will to Freedom pages 256-257.

The national press of Sri Lanka was highlighting stories about LTTE atrocities in the North and East. The papers were full of revenge killings, extortion, heavy taxes on ordinary Tamils and the excesses of LTTE cadres. Addressing a May Day rally in Jaffna, Anton Balasingham said, "I am deeply disillusion at attempts by the opposition parties in parliament and sections of the media to distort reality by claiming there was anarchy and chaos in the northeast. What we are doing is organizing rallies, opening party branches and mobilizing the masses for a democratic election, as normalcy and stability has returned to the Northeast after a decade of violence. It is obvious that the people were happy and relieved. The Sinhalese have a 70,000 strong military for their protection. So why can't the Tamil speaking people have a similar armed forces for their defence?

"There is true peace in the Northeast, whether it is permanent or temporary cannot be definitely predicted by anyone. Despite the restoration of peace, due to cessation of hostilities, there is no attempt to remove the suspicion between the Tamils and the Sinhalese. Those who will benefit from the permanent peace in the Northeast will be not only for the Tamils and the Government, but for the Southern political parties as well. Southern political leaders and the people must have a genuine affection for the Tamil speaking people. They must grant their rights for the self-determination and decide on a political future without deceit, crookedness or craftiness. That will prevent communal discord and the destruction of the country. Southern politicians have still not displayed a desire for peace in the Northeast, because of the talks between the Tigers and the Government. Certain forces are all out to destroy the goodwill that has been created by demanding the LTTE for the surrender of arms. They are trying to create trouble for the Government, by accusing the Government of being unpatriotic and allowing the LTTE to run the administration in the Northeast."

Bradman Weerakoon clearly analyzed that the LTTE were seeking two basic demands - the dissolution of the North-East Provincial Council and the repeal of the Sixth Amendment to the Constitution. According to him, after the 1983 July holocaust, President J R Jayewardene promulgated the sixth amendment with the view to appeasing the Sinhala electorate that the unitary state would always be safeguarded. On the 1983 carnage of the Tamils, President Jayewardene chose to address thre nation on July 28, 1983 to make his first announcement of the cabinet decision to introduce the measure that was to effectively silence the voice of the Tamil people in parliament and in all other elected forums. In a brief address, Jayewardene blamed the violence exclusively on the reaction of the Sinhala people to the Tamil movement for a separate state The measure he announced was eventually to become the sixth amendment. This was later said by the International Commission of Jurists to be inconsistent with the Sri Lankan constitution itself, which guarantees the freedom of thought and conscience and freedom of speech and expression, the very fundamentals of democracy. According to the sixth amendment to the 1978 constitution:
1. This act may be cited as the sixth amendment to the constitution.
2. Article 101 of the constitution of the Democratic Socialist Republic of Sri Lanka (hereinafter referred to as the constitution) is hereby amended in sub-paragraph (h) of paragraph (1) of that article by the substitution for the words "by elections or otherwise; and", of the words and figures "by election or otherwise or where a recognized political party or independent group has been proscribed under Article 157A ; and."
3. The following article is hereby inserted after Article 157, and shall have the effect as Article 157A, of the constitution:-
17A (1) No person shall, directly or indirectly, in or outside Sri Lanka, support, espouse, promote, finance, encourage or advocate the establishment of a separate state within the territory of Sri Lanka.
(2) No political party or other association or organization shall have one of its aims or objects the establishment of a separate state within the territory of Sri Lanka.

It also set out extreme disabilities for anyone or any group that contravened this provision. It also specified that every member of a local authority, development councils etc, (Provincial Councils had not come into existence at that time) would also have to take an oath declaring that they would not support, promote, advocate etc, the establishment of a separate state. This would clearly preclude the LTTE from contesting for elected office in the Provincial Council or Parliament. In fact, earlier, the TULF, which was the opposition party with 17 seats, resigned its seats in 1984 due to the introduction of the sixth amendment.

Bradman Weerakoon points out that the priority given by the LTTE to the repeal of the sixth amendment was also interesting because it reflected their intention, at that time, of contesting elections at the national and sub-national levels within the framework of the existing political system. Their ultimate goal of a separate state notwithstanding, the willingness to try working within the system was indicative of the degree of trust Premadasa was able to engender in his initial relationship with the LTTE.

Bradman Weerakoon, who served as President Premadasa's adviser on international relations, who, when referring to the dissolution of the North-East Provincial Council, said that the LTTE laid great emphasis on the issue. Their position was that the EPRLF-led administration that had come in with the elections to the NEPC in 1988, which did not reflect the will of the electorate and which the EPRLF had won only because of the machinations of the IPKF, which had been in control of the North and East at the time.

The LTTE claimed that Varathrajah Perumal, the Chief Minister of the NEPC, was a puppet of the Indians. Their request to Premadasa was that the Council be dissolved and fresh elections called, at which point they would demonstrate that they, the LTTE, were the people's choice in the North and East. The real political negotiations with regard to the future nature of the Sri Lankan state would take place thereafter, after they had proved to Premadasa that they had the majority support in the North East.

Though Premadasa undertook to work on the two propositions, Bradman Weerakoon stated that both issues posed serious legal and political problems.

Regarding the repeal of the sixth amendment, while J R Jayewardene, with his five-sixth majority in parliament, had introduced it with ease, Premadasa's government did not even have the two-thirds majority necessary for a constitutional change. Much political work would have been necessary within parliament to secure such a majority. Furthermore, the important question was, would the Sinhala people have been agreeable to give a major bastion they had constitutionally secured against the break up of their state. Even Premadasa, who represented the core of Sinhala nationalism, was not certain that they would.

The constitutional amendment had been taken up in parliament in August 1983, and it was Premadasa, who was at that time prime minister, who had moved it as an urgent bill and delivered a lengthy speech. Premadasa said many times to the Sinhala people, "Trust me, I will never let you down."

The dissolution of the NEPC also had its share of problems. According to the Provincial Council Act of 1987, the central government could not, without adequate cause, dissolve a Provincial Council. This was one of the safeguards given to the devolution of power to the provinces in the discussions which led to the Indian-Lankan accord, and was thus included in the law. According to law, the dissolution had to be recommended by the Chief Minister of the Provincial Council. But, by a quirk of fate, Varatharajah Perumal provided an opportunity which Premadasa could have used, but delayed doing so. That was because of Varatharajah Perumal's hasty declaration of a Unilateral Declaration of Independence. The dissolution needed an amendment to the Provincial Council Law, which Premadasa would have adopted in parliament as his Government had the required simple majority.

Unfortunately, after delaying the adoption of an amendment to the Provincial Council law, Premadasa adopted it in the parliament on July 7 and dissolved the North East Provincial Council, but it was too late.

Adele Balasingham writes in her The Will to Freedom, "Mr Premadasa's secret agenda began to reveal itself when Mr Hameed paid a visit to our hotel room for a private session with Bala and opened discussion on de-commissioning the LTTE. It was very hot day in mid-May. The discussion also reached high temperature, as the subject of the discussion was very sensitive. Mr Hameed said that he was articulating the concerns and anxieties of the President. 'Mr Premadasa wants free and fair elections in which all parties and groups, including the EPRLF should be given the opportunity to participate in the elections. This is not possible as long as the LTTE possess arms and is exerting a dominant position in the Northeast. Therefore, the surrender of arms by the LTTE is a necessary factor to hold fresh elections. This is the view of the President and also some Ministers, particularly Ranjan Wijeratne', Mr Hameed said softly and firmly. Bala enquired as to why the President did not raise the issue of arms when he met the LTTE delegates during his private sessions. Bala also complained since the departure of the IPKF Mr Premadasa was holding private sessions with other Tamil groups hostile to the LTTE. He explained to Mr Hameed that the possession of arms should be viewed as a crucial element of a security arrangements for the Tamil people in the Northeast.

"The LTTE would be responsible for this security system if permanent peace was established through a permanent political solution. To maintain this security system and law and order, the LTTE should have trained security personnel possessing arms. The LTTE had the manpower, material and experience to provide an effective security system for the Tamil people, Bala told the perplexed chief negotiator, 'It is premature to raise the issue of de-commissioning of the LTTE when your President is not prepared to remove the obstacles for fresh elections, ie, dissolving the council and repealing the sixth amendment. Furthermore, the Provincial Council itself is not a sound basis for a permanent solution. The LTTE decided to face the Provincial Council elections as an interim arrangements, not as a permanent solution. We wanted peace and harmonious co-existence with the Sinhala people. We wanted to create democratic institutions and participate in democratic political practices. We will cooperate with the Government to hold free and fair elections providing the opportunity for all groups and parties to participate in the elections. Once we become the elected representatives of the people, we can negotiate for a permanent solution that will involve the crucial issues of a security arrangements for the Tamil people', Bala explained.

"Mr Hameed suggested the formation of a provincial police system as an element of the provincial administrative structure transforming the guerrillas into police officers. 'Even if that were possible, the LTTE would need more men and more arms to raise a police force of 10,000 men for the North-East,' Bala said. In that case, Bala told Mr Hameed sarcastically, the president had to provide even more arms to the LTTE police force. Thus, the discussion that started out on the issue of disarming the LTTE ended with the notion of re-arming the Tigers. Mr Hameed looked dejected when he left our hotel room." - pages 257-258.

Meanwhile, the EPRLF delegation led by Suresh Premachandra, a Member of Parliament, had a few rounds of negotiation with Ranjan Wijeratne, the Minister of State for Defence. Bradman Weerakoon, the International Affairs adviser to the President, assisted Ranjan Wijeratne in the negations. Other members of the EPRLF delegation included P Kirupakaran, the Minister of Finance in the EPRLF-dominated NEP government and V Yogasangari, the Jaffna district EPRLF MP.

On May 15, 1990, the Government agreed to place the 19 demands put forward by the EPRLF central committee in February before the All Party Conference. These were the same proposals that were also presented to M Karunanidhi, the Chief Minister of Tamil Nadu, and also mentioned by Varathrajah Perumal when he declared unilateral independence.

The LTTE expressed displeasure as the Government had initiated dialogue with the EPRLF. The LTTE believed that they were the sole representatives of the Tamils. It was said that the Government's initiative to have dialogue with the EPRLF was also one of the reasons attributed to the souring of the Government-LTTE relationship. In the meantime, the LTTE leadership branded the EPRLF as "traitors" and ordered their assassination.

On May 22, the LTTE demanded that the Government expedite the dissolution of the North-East Provincial Council and hold fresh elections. Also, the LTTE demanded that the Government repeal the sixth amendment.

As the LTTE's overtures became more virulent, on May 23, A C S Hameed arrived in Jaffna and met Ajit Mahattaya, Anton Balasingham, Yogaratnam Yogi, Bhanu and Jeya of the women's wing. The talks lasted for over five hours and they were said to have focused on bringing greater understanding between the LTTE and the law enforcement authorities, rehabilitation programs and also strengthening the administrative machinery of the North-Eastern Province.

The LTTE delegation expressed its displeasure at the Government for taking steps to talk with the EPRLF. The LTTE delegates explained to Hameed that, the EPRLF did not represent the aspirations of the Tamils. The Chief Negotiator of the Government, A C S Hameed, explained, "The Government of Premadasa is committed to resolving all issues through consultation, compromise and consensus, and for this purpose, consultation with all groups is essential." He added, "The Government talking to the EPRLF is in no way diminished or devalued the importance of the negotiations that the Government was having with the LTTE." However, it seemed that the LTTE was not convinced with the explanation and continued to express displeasure about the Government-EPRLF talks.

On May 24, Ranjan Wijeratne, Minister of State for Defense, told that fresh elections to the North-East Provincial Council would not be held unless the LTTE laid down its arms. At a post-Cabinet press briefing, Ranjan Wijeratne emphasized, "We are not prepared to hold elections at gun point. Free and fair elections could not be held unless they lay down their arms. If the LTTE claims that they are the sole representatives of the Tamil speaking people, then they should prove by contesting elections, which will be held after the surrender of arms."

He added, "There will be no further talks with the EPRLF with the Government. Instead, the EPRLF will participate in the All Party Conference and put forward their 19 point proposal." The LTTE had kept away from the previous two rounds of the All Party Conference.

Meanwhile, Nalin Senivaratne, the Governor of the North-East Provincial Council, submitted a report to the President on the dissolution of the Provincial Council, which the LTTE was demanding. The LTTE felt that it had been led into a "peace trap blind alley" by the Government. When the government put out feelers about the annulment of the sixth amendment, it became very clear that the opposition parties, including the Sri Lanka Freedom Party, were opposed to the annulment of the amendment.

Again, A C S Hameed flew to Jaffna on May 28, 1990 to meet the LTTE leaders. This time Hameed, on behalf of the Government, took up with the LTTE, issues ranging from collecting taxes, abducting Indian fishermen in the high seas and extorting ransom for their release, killing elephants for ivory, logging timber and issuing permits for the transport of such timber. The Government also told the LTTE not to arrest Indian fishermen in Sri Lankan territorial waters. The Sri Lankan Government directed the navy either to capture or destroy any unauthorized vessels which entered or attempted to leave Sri Lankan territorial waters. This directive was given to preempt gun running by militant groups and to prevent clashes between Indian fishermen and the LTTE.

On June 1, the LTTE delegation met President Premadasa at his Sucharitha residence. It consisted of Mahattaya, Anton Balasingham, Adele Balasingham, Yogaratnam Yogi and Jeya, the leader of the women's wing. Premadasa assured that "early action would be taken to fill the vacuum in the Northeast Provincial Council, enabling the public in the province to exercise their franchise and choose their representatives in a fair election." The LTTE delegation urged the President to take steps to dissolve the Provincial Council immediately and hold fresh elections so that the political machinery in the Northeast could be set in motion. They also pointed out to the President that the sixth amendment had so far helped to divide the country on ethnic lines, therefore they advocated that it had to be repealed forthwith to end any further divisions in the country. A C S Hameed was with the President when the LTTE delegation met him.

On June 2, Anton Balasingham and Yogaratnam Yogi met a Government delegation comprising A C S Hameed, General Cyril Ranatunge - Secretary for Defense, Walter Fernando - State Secretary for Defence, General Hamilton Wanasinghe - the Army Commander, Vice Marshal W S Gunawardene - Commodore, D S A Silva - Navy Commander, Earnest Perera - IGP at the Ministry of Higher Education. At this meeting it was reported that the LTTE delegation assured the Government that its cadres would not interfere in the working of the state law and order machinery in the North and East. It was also decided to hold meetings between the law enforcement authorities and the LTTE cadres, at district level, to sort out specific problems.

The ground situation continued to deteriorate. On June 4, the Government and a LTTE delegation visited Batticaloa. Hameed told Anton Balasingham and the other LTTE delegates and the LTTE leaders in Batticaloa that, "It is the bounden duty of the Government to protect all the people and nobody could be allowed to interfere with the law and order machinery." Hameed further emphasized "only an unhindered and unobstructed law and order system could ensure the full protection and security of the people."

Then, on June 7, the LTTE killed a Sri Lankan soldier and injured 10 others in Thandikulam, one mile north of Vavuniya. The incident took place when an army convoy failed to stop at a barrier manned by the LTTE. In the clash that ensued six LTTE cadres were wounded.

Bradman Weerakoon, who was Premadasa's adviser on international relations, wrote about the available options for Premadasa to deal with the Tigers after the withdrawal of the IPKF, "His final option could have been straight out of Machiavelli or more likely to his idiom, Kautilya. That was, that after the IPKF was out of the way and out of the country, he would turn the refreshed and renewed Sri Lankan forces on the weary LTTE, rout them completely, eliminate Prabakaran and reestablish 'law and order, good governance, peace and prosperity' over the North and East and the whole of Sri Lanka.

"I am inclined to think that in his final grand design this last option would have been very appealing. It was certainly vigorously articulated by his Deputy Minister of Defense Mr Ranjan Wijeratne, soon after the war restarted in June 1990. 'No half way house with me,' he said. Now I am going all out for the LTTE. We will annihilate them." Negotiating Peace in Sri Lanka: Efforts, Failures and Lessons Edited by Dr Kumar Rupesinghe (former brother-in-law of Chandrika Kumaratunge, President Sri Lanka, and the Secretary General of International Alert) - page 155.

It was generally clear that the president was on a confrontation course. As Bradman Weerakoon had pointed out, Premadasa chose the military option to eliminate the LTTE. Without warning, it seems that, he had authorized the Sri Lankan armed forces to move freely and assert their authority in the country. After May 1990, fresh contingents of troops and additional police were moved to the districts in the East to strengthen and fortify military bases and police stations. As the Sri Lankan troops began to intensify patrolling, tension mounted between the Sri Lankan forces and the LTTE.

Premadasa favored a solution within the unitary state. As he was a strong nationalist he was of course opposed to any alternative models to unitary polity. Having crushed the JVP rebellion and secured the withdrawal of the IPKF, Premadasa faced a new dilemma. It was how to deal with the LTTE. Already, he had tactfully utilized them and put them under the peace trap. Premadasa knew that it could not go on for ever. A final decision on how to deal with the LTTE had to be taken. It was still possible to embrace the LTTE peacefully in the democratic political mainstream, but for which he would have to repeal the sixth amendment. He, as a Sinhala supremacist, was not keen on getting rid of the hold the Sinhala nationalists had on the Tamil separatists. Therefore he had to look for another alternative, and that was confrontation and the military suppression of the LTTE. Premadasa's hard-line ministers and the military establishment favored the confrontation option and he yielded to their pressure.

An interesting episode that foreboded the forthcoming period is worth recording. Major General Sarath Munasinghe, in his A Soldier's Version, wrote of the intimidating event that was to herald the period of war and bloodshed within a few days, as follows, "Major General Stanley Silva, the General Officer Commanding troops in the north traveled from Anuradhapura to Palaly by air on May 22, 1990. Lt Col Chula Senivaratne, the Commanding Officer of the 3rd Signal Regiment accompanied the General. The purpose was to hold a conference at Palaly. Brig Jaliya Nammuni, the Brigade Commander in Jaffna, received the General.

"The conference was over by noon, and the general was in a hurry to get back to Anuradhapura. Unfortunately for the general, the air force informed that there was no aircraft available. The general was adamant and decided to proceed by road. Accordingly, the general got into a jeep driven by Brig Nammuni. Chula Senivaratne was in the second vehicle driven by another officer. The vehicles were stopped by the LTTE at Vasavilan Junction, just outside Palaly army base. Kannan of the LTTE was quick to inform that permission was not granted for the military vehicles to proceed. Chula Senivaratne got off from his vehicle and explained matters to Kannan. Chula knew that Kannan could not have given permission without consulting Bhanu, the LTTE area leader. While this discussion was going on the first jeep carrying the general suddenly took off. Kannan started shouting at his cadres to open fire at the jeep. Chula Senivaratne managed to prevent a confrontation and convinced Kannan that they had to proceed towards Jaffna. The two jeeps proceeded.

"Having visited troops in Jaffna Fort, the General and party were on their way out of the Jaffna town. The LTTE had set up a roadblock near the Jaffna Kachcheri. One LTTE member shouted 'halt' and the jeeps stopped. Kannan was at the roadblock. Chula Senivaratne spoke to Kannan again. Kannan consulted his leader Bhanu over the radio. Quick came the answer. 'If Brigadier Nammuni is there, give them permission to proceed under escort'.

"A van load of LTTE cadres escorted the two jeeps up to Palai, along Jaffna- Kandy road. The two jeeps were close to Mankulam, when an SLAF helicopter landed to pick up the general. Although the general was reluctant, the other officers persuaded him to board the helicopter. The two jeeps carrying Brig Nammuni and others were escorted by the LTTE to Palai to Palaly on their return journey. Many officers discussed this episode. While the few were of the opinion that the General should not have traveled by road, the majority of officers were lamenting over the fact that the general had to obtain permission from the LTTE." - pages 98-100.

Annex: The Tamil Nadu-LTTE connection
Courtesy: Charu Lata Joshi in Outlook, June 4 1997
Source: Assignment Colombo by J N Dixit
It could turn out to be the most shocking fallout of the Rs1.336 crore Indian Bank scam - even shutting out the Congress and TMC (Tamil Manila Congress) links temporarily. The CBI, probing the multi-crore bungle, is now engaged in following strong leads suggesting that a significant chunk of the finances arbitrarily released by the bank under former CMD (Chairman and Managing Director) M Gopalakrishnan, may have been used to fund the Liberation Tigers of Tamil Eelam (LTTE).

Specific "information" currently in the process of being verified by the CBI indicates that Indian Bank's leading overseas defaulter, Singapore-based NRI and cashew nut exporter Muthukrishna Varatha Raja (MVR), whose liability to the bank totals Rs 375 crore, diverted money received from the bank to certain front companies allegedly belonging to the LTTE.

What is significant here is that not only did Indian Bank blatantly violate set norms in sanctioning advances to MVR's benami (front) companies - as brought out in the 10 cases that the CBI has so far registered against the MVR Group - but that it also did not monitor the manner in which these funds were mis-utilised.

For the CBI, the probe centers not so much around commercial losses incurred by the bank but in establishing criminal liability. The agency is verifying source information, backed up by intelligence records, to sharpen its focus on inquiry on the end-use of funds sanctioned by the bank to MVR. Leads under investigation by the CBI, which are available to Outlook, show that MVR extended financial support to individuals and companies belonging to the LTTE.

While MVR vehemently denies the charges, CBI insiders are confident of nailing the nexus. What has heightened suspicious is MVR's own background. His father, N P Muthukrishna Naidu- a former Thanjavur district Congress President - controlled an extensive textile trade in Sri Lanka. And as leads currently being probed by the CBI show, the links continue.

The CBI has in its records information which shows that MVR owns five benami companies in Rotterdam: Hamilton Ventures Pvt Ltd; Nutworld Trading; Globelnut; Richardson & Rogers Ltd.; and Dutch Flag Ltd. All transactions from these companies are conducted through Bank Mss Pierson, Rotterdam, and the CBI has received information that certain remittances from Dutch Flag. A shipping company registered in Rotterdam, have been made to an outfit called Marine Shipping & Trading Ltd. The investigating agency is trying to verify this information.

It is in this context that the information received from various intelligence agencies puts the CBI on the Tigers' trail. For, Marine Shipping & Trading Ltd is believed to be a front company of the LTTE. Records with the intelligence agencies show that Kumaran Padamanabha (KP) is a director of this company. KP, a Switzerland- based relative of LTTE Supremo V Prabhakaran, who is the chief arms procurer for the Tigers, was also suspected of having supplied explosives to Chennai from Singapore for Rajiv Gandhi's assassination. The company, incidentally, is registered at Le Pollet St, Peter Port, Guernsey, Channel Islands, and intelligence information shows that this company financed the purchase of various ships used for smuggling activities by the LTTE.

Mystifyingly, Indian Bank continued to extend credit facilities to Mountemount - which is yet another of MVR's benami companies in Singapore. In fact, in an affidavit filed before the Madras High Court recently, the Enforcement Directorate pointed out, "The quality claims made by MVR's company Mountemount were raised only during January and February 1996 for shipments made between 1991 and 1995. This was to enable fraudulent declarations so that the amounts due to be paid in settlement of quality claims were adjusted against export proceeds receivable by the Indian companies."

Further, information with the CBI shows that an overdraft of $28 million was released by Indian Bank to Mountemount for business payments to be made to the five benami companies. Curiously, the bank did not conduct any scrutiny on these companies in Rotterdam to establish whether the transactions were genuine or not.

What appears as a complex maze of transactions could have actually worked quite simply: MVR drew heavy loans from Indian Bank's Singapore branch, allegedly for payments to his own benami companies in Rotterdam. The bank released the funds without any verification. Money from one of these companies then found its way to an LTTE front company. But given the manner in which Indian Bank conducted its business under Gopalakrishnan, such violations are hardly surprising. A recent report submitted by the Reserve Bank of India (RBI) to the Banks Securities and Fraud Cell of the CBI shows how the Chairman made arbitrary donations to the tune of RS. 10 crore during 1991-96 alone.

Another aspect of the CBI's inquiry relates to MVR's association and allege transaction with P V Rajendran, a TMC MP who won the last Lok Sabha election from Mayalladuthurai. As per the agency's FIR, MVR's Chennai-based company, MVR Exports, illegally received credit and overdraft facilities to the tune of Rs 71 crore from Indian Bank's Chennai and Singapore branches. The CBI is verifying source information that MVR exports actually diverted funds to certain front companies maintained by Rajendran. While MVR says he knows Rajendran since both belong to Thanjavur, he denies any financial dealings with him. For his part, Rajendran told Outlook, "I received Rs 15 lakh for an aquaculture business from Indian Bank in 1993, which I am repaying. But I have had no financial dealing with MVR."

Incidentally, intelligence dossiers provide reasons to suspect Rajendran of having links with the LTTE. The Special Investigation Team (IST) handling the Rajiv Gandhi assassination case had listed him among suspects. Reasons: his reported closeness with Shanmugam, a resident of Vedaranyam, Tamil Nadu, and kingpin of LTTE's smuggling operations who committed suicide soon after he was arrested by the IST in November, 1991. Intelligence reports also give precise details of Rajendran's associates in Thanjavur district who are suspected to be LTTE members. Prominent among these are Sabapathy alias Chokkan, a suspect in the Rajiv case who thrived on the smuggling routes from Vedaranyam to the northern Sri Lanka coast. Rajendran, however denies the allegation but does admit: "I did support LTTE when Indira Gandhi and Rajiv Gandhi were doing so. Not anymore."

The CBI is trying to obtain details of MVR's precise financial transactions with other companies in India and abroad. But insiders in the agency suspect that such transactions were largely conducted through hawala channels and would not be represented in company records. Besides, the trial got murky well before the Rajiv assassination. Source information with the CBI indicates that in 1990 Rajendran received Rs 5 crore as a loan from Indian Bank to start a nuts and bolts factory. The charge, currently being probed, is that no company was started and that Rajendran could have used the funds o purchase ships for the LTTE. Rajendran, as said earlier, denies any linkages now.

The Bank Securities and Fraud Cells is verifying information that a Mumbai-based hawala operator has been diverting money belonging to MVR (received largely from Indian Bank), Adnan Khashoggi and Chadraswami to various accounts abroad. It has, in fact, verified the charge that Chadraswami was closely linked to the Singapore businessman and stayed at his penthouse at Peace Mansion, off Serangoon, on at least two occasions, during his visits to Singapore in 1992 and 1994.

Proximity to the powers that be is something MVR does not deny. It is perhaps to these factors that he owes his rise. In 1962, as a graduate from Pachaiyappa College in Chennai, he wound up his father's textile business to start a cashew export venture. The plans were grandiose: import raw cashews, process them in India and export the finished product to the same companies in South Africa, Europe and US. But it was only in 1985 that he got his first big break when Indian Bank sanctioned a Rs 123 crore loan to his company, MVR Export. This despite the fact that he had earlier defaulted on the repayment of two car loans from the same bank.

The get-rich-quick streak continued. For MVR, public sector banks became a convenient dipping pool. In '86 he touched the Bank of Baroda (Mumbai Main Branch), the Indian Overseas Bank (Janpath branch, New Delhi) and Canara Bank (Ambuchetty branch, Chennai) for a loan of Rs 2.86 crore, by pledging the same stock. The loans (now declared non-performing assets by the RBI) were granted without even a basic verification of the stock.

Funds continued to be raised by the MVR Group through its benami companies in blatant violation of banking rule and despite the fact that MVR had continued to default on repayment, not just from Indian Bank but from banks across the world. Strangely, these loans were advanced on specific recommendations made by Indian Bank's Singapore branch.

Consider this. On September 29, 1995, Indian Bank wrote to Mountemount asking for its audited accounts, securities and clearance of overdue bills. Exactly two months later, on November 29, Vijayaraghavan Parikasami, a director at Mountemount, wrote to Indian Bank's Singapore branch, asking them to furnish a letter of recommendation for the Project Funding Group, Dubai, which the MVR Group had approached for a loan. The bank obliged. The very same day, the bank's assistant credit manager, M. Nachiappan, wrote back forwarding a flattering letter of recommendation. In an intriguing sequence of events, the Dubai bank did not extend the facility, but Indian Bank's Chennai branch extended a loan of Rs 5 crore to Anderson Industries International Ltd, a benami company MVR set up in Chennai, on the basis of the same letter.

Insiders in banking circles link MVR's closeness to TMC leader G K Moopanar and Gopalakrishnan as the reasons behind his long financial reach. Recent investigations by the CBI too have brought the complicity of at least two cabinet ministers - both belonging to the TMC - to light. But what cannot be overlooked is the fact that Indian Bank's largesse cut across party lines. A report examining the reasons behind the eight extensions granted to Goplalkrishnan during 1993-95 is being prepared by a Committee of Secretaries under the chairmanship of the cabinet secretary. The initial findings show that neither the then finance minister, Manmohan Singh, nor the then cabinet secretary, Zafar Saifullah, was in favor of the extensions. Yet he got them. the orders on all occasions had come from the PMO. Which begs the question: will MVR'S friends in high places be able to bail him out?

Next: Eelam war

Chapter 42: Unilateral declaration of Eelam

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