Cablegate: Sri Lanka: Text On Gsl Reports On Ltte Financing

VZCZCXYZ0000
RR RUEHWEB

DE RUEHLM #1679/01 2860539
ZNR UUUUU ZZH
R 130539Z OCT 06
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC 4460
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCNFB/FBI WASHINGTON DC
RHEFHLC/HOMELAND SECURITY CENTER WASHINGTON DC
RHHMUNA/USCINCPAC HONOLULU HI

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

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