Sri Lanka to probe ‘corruption’ in handling of 2021 cargo ship disaster

Colombo, Sri Lanka – Sri Lanka’s new government, led by left-leaning President Anura Kumara Dissanayake, will launch a fresh investigation into the handling of the MV X-Press Pearl cargo ship disaster that devastated marine life along swaths of the island nation’s coastline three years ago, a senior minister has told Al Jazeera.

The announcement came amid allegations of corruption, delay tactics and mismanagement in dealing with the aftermath of the disaster, and a lack of compensation for the affected fishermen.

In May 2021, the Singapore-registered cargo ship caught fire near Negombo, a popular tourist destination off the Sri Lankan west coast, spilling tonnes of hazardous substances, including nitric acid and microplastic granules, into the Indian Ocean.

The fire on the ship, heading to Sri Lanka’s main city of Colombo from the Indian state of Gujarat, was believed to have been caused by a nitric acid leak. The toxic leak from the ship killed a large number of fish, turtles and other marine mammals, and devastated the livelihoods of more than 20,000 fishing families.

Three years after the fire and oil leak on the ship, people are still awaiting justice in the form of compensation and accountability.

Dissanayake’s government now plans to investigate the incident after the country’s parliamentary elections conclude on November 14. His National People’s Power (NPP) is expected to win the vote.

“There are many allegations about the X-Press Pearl disaster,” Vijitha Herath, the country’s public security minister told Al Jazeera and Watershed Investigations, a United Kingdom-based nonprofit investigative journalism organisation focusing on water issues.

“I am personally committed to finding out the truth. We will leave no stone unturned.”

‘Risk of money laundering’

Based on an estimate by a 40-member committee of experts appointed by the country’s Marine Environmental Protection Authority (MEPA) soon after the disaster, Sri Lanka is seeking $6.4bn from London P&I Club, the UK-based insurers of the X-Press Pearl, as compensation for the environmental damage caused by the disaster. The lawsuit was filed in Singapore in April 2023 under the then government, headed by President Ranil Wickremesinghe.

In September this year, a report by the country’s Parliamentary Select Committee (PSC), formed to investigate the handling of the cargo ship disaster and mitigate future risks, said Sri Lanka has so far received nearly $12.5m from London P&I Club.

In addition to that, over the last three years, the MEPA received 3.5m rupees ($11,945), while the Department of Fisheries and Aquatic Resources accepted about 3bn rupees ($10.5m) from London P&I Club – all in local currency, a fact that has raised suspicions of corruption and will now be investigated by the new government.

Darshani Lahandapura, the former head of MEPA, had led the beach cleaning operations following the disaster. She told Al Jazeera that she had come under government pressure to accept the compensation payments in local currency at a time when the country was going through its worst economic crisis as inflation had soared and the Sri Lankan rupee was depreciating.

“Government officials [from Wickremesinghe’s administration] exerted pressure on me several times to accept the payment in Sri Lankan rupees,” Lahandapura said.

By asking to pay the compensation in local currency, “I believe the shipowners were trying to take an undue advantage of the economic crisis and some government officials were supporting their demand,” she added. The value of the Sri Lankan rupee slumped by almost 50 percent against the US dollar in 2022 when the economic crisis started.

Lahandapura told the PSC she had “strongly resisted” accepting payments in rupees. But the insurers still made two payments in the local currency.

“In her view, accepting payments in rupees might pose a risk of money laundering,” the PSC said in its report, referring to Lahandapura’s statement.

Al Jazeera reached out to the London P&I Club to comment on the allegations, but did not receive any response.

Alleged delay in demanding compensation

The PSC report concluded that the disaster “exposed critical gaps in the country’s ability to prevent and manage maritime pollution incidents”.

“The Committee found that delays in legal proceedings and inadequate coordination between government agencies had exacerbated the environmental and economic damage,” it said.

Moreover, the lawsuit demanding compensation from the London P&I Club was served by the Sri Lankan authorities 23 months after the disaster occurred, just days before the deadline, stipulated under international law, was set to expire. The law mandates that a claim for compensation in case of a marine accident must be made within two years of the incident. The lawsuit was filed under then-Attorney General Sanjay Rajaratnam.

“There seemed to be some lethargy or intentional delay from the Attorney General’s Department (AGD) in handling the X-Press Pearl vessel disaster case,” Lahandapura, the former head of MEPA, told the parliamentary committee.

However, the then minister of justice, Wijeyadasa Rajapakshe, blamed the MEPA for the delay in filing the lawsuit, saying the marine agency submitted its environmental impact report late.

According to an anonymous official source in the Sri Lankan government, the Attorney General’s Department responded promptly to requests from the shipowners, but took a long time to respond to MEPA’s queries.

“I don’t have evidence to suggest anyone at the AGD received any financial benefit, but if the country’s AGD was lethargic in handling such an important case, it certainly raises suspicion,” the source told Al Jazeera.

Al Jazeera reached out to the Attorney General’s Department for its response to the allegation, but it has not yet received a response. Al Jazeera also sought a response from Rajaratnam, under whom the lawsuit was filed, but he refused to comment.

Why Singapore?

Another contentious issue likely to be investigated is the decision for the compensation case to be heard in Singapore, where the ship was registered, instead of Sri Lanka, where the accident occurred.

“What we recommended was to litigate the legal case in Sri Lanka,” Dan Malika Gunasekara, a legal expert appointed by MEPA, told Al Jazeera. “However, the Attorney General’s decision to file it in Singapore raises severe questions as to how he arrived at such a decision considering all the surrounding circumstances, especially concerning the consequences.”

Gunasekara was referring to a problem, also highlighted in the PSC report, that due to Singapore being a signatory to the Convention of Limitation of Liability for Maritime Claims (LLMC Convention), the compensation could be limited to approximately 19 million GBP ($24.7m). As the government had estimated the legal costs could reach $10m, it would leave just about $14m for cleanup and compensation.

Critics say the decision to move the lawsuit to Singapore cost the government of Sri Lanka dearly.

“The cabinet of ministers had initially estimated $4.2m as legal costs in Singapore but it was later amended and now $10m has been allocated for the Attorney General’s Department,” said Asela Rekawa, who succeeded Lahandapura as MEPA chairman.

“We were told that we ended up spending precious foreign currency reserves at a time when Sri Lanka was facing bankruptcy because of the foreign currency deficit,” said Professor Ajith de Alwis, co-chair of the MEPA-appointed scientific committee. “In addition, precious little support was available to study the issue in many ways.”

However, according to the PSC report, the London P&I Club had expressed concerns about coming to Sri Lanka “due to the adverse publicity and security fears” and preferred to join the negotiations over the compensation in Singapore.

The then Sri Lankan minister of justice, Wijeyadasa Rajapakshe, also defended the choice of Singapore to litigate the issue.

“Singapore is home to thousands of shipping companies and no company would risk damaging their business by ignoring a ruling from a Singaporean court,” he told Al Jazeera, adding that the decision was made following advice from an Australian legal firm.

“In any case, it might have been difficult to enforce the judgement on a UK company by a Sri Lankan court,” he said.

According to the country’s Fisheries Department, nearly 20,000 fishermen have been paid a total of nearly $10m, but a leader of the fishing trade union said it was not enough.

“The fishermen received different amounts of money as per the area, between 10,000 rupees ($66) and 270,000 rupees ($900) but some had to submit appeals and nearly 2,000 ‘indirect’ fishermen are still hoping to get any compensation,” Roger Peiris, a leader of a fishing trade union, told Al Jazeera, referring to people who sell fish, own boats, or those involved in the dry fish industry.

“But I don’t even count this as compensation, it was just for lack of an immediate income. Compensation for fishermen is something that needs to be discussed separately. Fishermen would only get proper compensation after the legal issues are over.”

This report is part of a year-long investigation supported by the Pulitzer Center’s Ocean Reporting Network in partnership with Watershed Investigations.