With suspension of VFS contract, Dissanayake signals it won’t be business as usual in Sri Lanka

Days after Anura Kumara Dissanayake’s swearing-in as president of Sri Lanka, media reports claim that India’s external affairs minister will visit Colombo later this week. This visit has not been officially confirmed by Delhi. 

When S Jaishankar does go, he may not directly experience the first change sweeping through Sri Lanka with the advent of the new government, right there at Bandaranaike International Airport, since he’ll be escorted through VIP gates. But the message from that charge will be hard to miss as India adjusts to the new political reality of its southern neighbour.

And the message is this: It’s not going to be business as usual – literally.

Among the first actions by President Dissanayake was to direct the Department of Immigration and Emigration to implement an August 2 court order and take back charge of the country’s Electronic Travel Authorisation, or e-visa, system. This had been outsourced to a consortium that included an Indian company, a Singapore-based company, and VF WorldWide Holdings. VF WorldWide is the parent company of VFS Global, an Indian-origin company that is now majority owned by Blackstone, an American investment management group.

The August 2 interim order by Sri Lanka’s Supreme Court suspended the contract to the consortium and its operations, and asked Sri Lankan immigration authorities to restore status quo ante. The Department of Immigration and Emigration did not implement the order. On September 25, the previous system of Electronic Travel Authorisation was restored on Dissanayake’s order and the DoIE head was arrested for contempt of court.

The outsourcing of visas had caused a furore in Sri Lanka. But it was only after an incident at the airport, which was captured on video and shared widely on social media, that the details of the deal came out soon after. 

In April, the DoIE switched to the controversial new visa portal outsourced to the consortium and operated by VFS Global. Within two weeks of the changeover, an angry Sri Lankan traveller was seen shouting at Bandaranaike airport that “Indians” were deciding visas for Sri Lankans. His wife, a foreign national, had been denied a visa. The video showed men in civilian clothes manning the counters to peruse documents and stamp visas on passports. One of them tried to pacify the angry man in English while long lines of travellers who had obtained their e-visas stood before the counters.

The video went viral and set off investigations by the Sri Lankan media. Fundamental rights petitions were filed in court by parliamentarians and the Sri Lankan chapter of Transparency International, an anti-corruption watchdog.

In a tweet at the time, the Indian High Commission in Colombo was at pains to point out that VFS was not an Indian company but was owned by international investment firms. Apart from Blackstone, a Swedish investment company has a minority holding even though VFS’s employees, from top management to junior staff, are overwhelmingly Indian.

As details of the contract came to light, more public outrage followed. The consortium – comprising GBS Technology Services and IVS Global-FZCO (IVS-GBS) and VF Worldwide Holdings Ltd – had been awarded the contract in December 2023 to provide “e-Visa, Consular Services, Visa Services, Bio Metric Services & Tourism Promotion”. The group was given the contract without the required process of tenders and competitive bidding. The Sri Lankan cabinet speedily approved the deal in December 2023, two months after an unsolicited proposal by IVS-GBS to Tiran Alles, then Minister of Public Security in the Ranil Wickremesinghe government.

At the time, the existing service provider for the system of visas on arrival, a Sri Lanka telecom company called Mobitel, had been in talks with the DoIE to upgrade the system. Mobitel, which had already invested enormous amounts in the upgradation of software, was abruptly told that its services were no longer required. This was days before the new visa scheme was to be implemented in April this year.

In the new system, the Sri Lankan visa doubled from $50 to nearly $100. What created more anger and suspicion was that while Mobitel’s service fee, even after the upgrade, was pitched at $1, the consortium charged $25 as “service plus convenience” fees. This had to be paid also by Indians and some other nationalities for whom the visa was made ‘free’ by the Sri Lankan government.

Sri Lanka’s tourism industry was up in arms at both the increase in visa tariff and the additional service fee, especially after the 2019 Easter bombings, the pandemic, and Sri Lanka’s economic meltdown shattered the tourist industry. It warned that the hike would cause a drop in tourist traffic, setting back the modest recovery of a national economic mainstay after several bad years.   

Questions were asked as to why the service fee was being pocketed by the service providers and not accruing to the Sri Lankan government. A Commission of Public Finance enquiry also flagged concerns about the contract and ordered a forensic audit of the contract.

Questions over companies 

The petitions against the contract cited more objections and concerns, such as the violation of domestic laws in handing over sensitive immigration data to foreign service providers, the risk to national security, and the credentials of two of the three companies. 

A petition by Tamil MP MA Sumanthiran suggested that IVS Global Services and GBS Technology Services, which had made the proposal, were inexperienced and opaque in their dealings. Sumanthiran’s petition described IVS, which lists among its clients India’s Ministry of External Affairs, as a “wayside” apostilling, attestation and translation service provider. IVS is “not possessing the stature to contract with a sovereign State nor provide a service where [the company] will accept billions of United States dollars as visa fees from tourists during the term of the contract as an agent of the sovereign State”. 

The petition also flagged that IVS does not process e-visas for any sovereign state, making Sri Lanka the first to contract its services for the purpose. 

GBS, meanwhile, is a Singapore-based company that has a sole shareholder – a French national named Jean Joel Marcel Coster – and a paid-up capital of $1. Its primary activity is providing management consultancy services. 

The petition noted that Kaviraj Bhandari, listed on the company’s website as its managing director, does not appear in GBS’s registration documents issued by the Singaporean authorities. The petition flagged Bhandari’s role as suspect, saying the entire deal raised “serious concerns about the ultimate beneficial owners” of these entities. 

The proposal was submitted by IVS and GBS as a single entity called IVS-GBS Global Services “powered by VFS Global”. The contract, however, was awarded to GBS Technology Services & IVS Global FZCO, and VF WorldWide Holdings, which is the parent company of VFS Global. The petition accused the IVS-GBS proposal of misrepresentation.

Additionally, the proposal included a $200,000 investment plan but the final contract had no mention of this. 

The “e-visa scam”, as it’s now called, includes the handing over of the promotion of tourism in Sri Lanka to these three companies, undercutting the role of the Sri Lanka Tourism Development Authority and Sri Lanka Tourism Development Board. It was pointed out that VFS’s ownership includes Kuoni, a Swiss travel company, indicating a conflict of interest. 

On its part, VFS defended its services in Sri Lanka and said the company’s global reach would raise Sri LanKa’s tourism profile internationally. 

The Supreme Court’s final order in the matter is expected this month. But the episode, which has received little attention in the Indian media, is instructive about people’s expectations of Dissanayake, especially on his promises of taking stern action against corrupt politicians and officials who brought economic ruin on Sri Lanka. 

It also spotlights the role the courts might play in this process; last year, the Supreme Court held the Rajapaksas responsible for the economic crisis.

This month, hearings will begin on five petitions filed by NGOs and environmental groups against the more high-profile, $442 million Adani Green Energy’s wind farm project in Mannar in northwestern Sri Lanka. The agreement for this project was concluded similarly – secretively, speedily, and in disregard of due process. 

Signed in March 2022, in the midst of the country’s economic meltdown, the deal was mired in controversy and public opposition from the start. In June 2022, MMC Ferdinando, the chairman of the Ceylon Electricity Board, told a hearing of the Committee on Public Enterprises that President Rajapaksa had told him the project must be awarded to the Adani Group and that this was the wish of Prime Minister Narendra Modi.

Ferdinando later retracted the statement and resigned. Last year, the Wickremesinghe government was considering treating the project as a “government to government” deal. 

President Dissanayake had declared in the run up to the election that he would scrap the Adani project if he was elected. As of now the fate of the project is in the hands of the court, and it would be politically convenient for Dissanayake to abide by its verdict. 

One can only guess how conversations may go between Dissanayake and Jaishankar. The Indian minister will likely invite the new president to Delhi, a visit that Dissanayake will be able to schedule only after the parliamentary election on November 14. But the early message from Colombo’s new political climate is that Indian companies wanting to do business in Sri Lanka must be mindful of public mood. Secretive backroom deals tend to get exposed sooner rather than later. 

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