Lyca ventures further into Sri Lanka as French court issues €10 million fine

The Tamil-owned telecoms company Lycamobile has had its former CEO convicted and was ordered to pay a fine of €10 million after being found guilty of money laundering and fraud by a French court last month, just weeks after the company launched a Sri Lankan production arm looking to boost Sinhala-language cinema.

The verdict in the Parisian court comes after years of controversial practices by the multimillion-dollar company, which is reported to have links with the war crimes accused Rajapaksa family in Sri Lanka. The group’s former chief executive officer Christopher Tooley received the prison sentence, alognside Alain Jochimek, managing director of Lycamobile France and Lycamobile Services. The Lyca group said that the accusations of money laundering “concern the activities of two salespeople who were laid off and dismissed upon the discovery of this parallel activity,” according to Le Monde, with reports it may appeal the decision.

In 2016, Lycamobile’s Paris offices were raided and 19 people were arrested on suspicion of money laundering and tax fraud. BuzzFeed reported at the time that “Lycamobile’s own auditors declared over the past two years that they could not account for a total of £646 million that moved through ten companies in its complex corporate network”. In the UK, BuzzFeed reported on how rucksacks stuffed with millions of pounds in cash would be deposited at Post Offices all over London in 2015. At the time the company was one of the Conservative Party’s largest donors. A formal investigation was never opened by British authorities. 

See more from BuzzFeed here and here.

‘A key milestone for Sinhala cinema’

The French decision comes after the company’s movie making wing, Lyca Productions, launched its own arm in Sri Lanka. Lyca Group Chairman Allirajah Subaskaran, a Tamil born on the island, was present alongside other senior executives at a launch event held in Colombo in August.   

“This is indeed a key milestone for Sinhala cinema,” said Sinhala actor and UNP politician Ranjan Ramanayake, who spoke at the event. “The extension of the facilities of Lyca Productions to Sri Lanka will be a major boost for the local film industry. We look forward to many new Sri Lankan movies in the future.” 

An initial six movies were announced to be produced: five in Sinhala and one in Tamil. 

“Every film we have announced to release today has come with heavy investments on our part, which cannot be recovered in the Sri Lankan market,” added Janaki Wijeratne, Vice President of Lyca Productions Sri Lanka, noting that the company would ensure the films are broadcast to a global market.

One of the movies is about Sri Lankan cricketer Lasith Malinga, a close Rajapaksa ally who was also a guest at the launch event, alongside media state minister Shantha Bandara. 

Lyca Productions is already a massive player in the Indian cinema industry, behind the production and distribution of some of the biggest budget Tamil and Hindi films in history.

Business interests in Sri Lanka 

This is not Subaskaran’s first venture into Sri Lanka. The multimillionaire already owns a cricket team in the Lanka Premier League, alongside substantial other business interests on the island.

Key amongst these is a 40 percent stake of EAP Broadcasting Limited. EAP’s media arm owns two television stations and three radio stations including Swarnawahini, Shree FM, RanOne and E FM.

Earlier this year Sri Lanka’s Information Minister Bandula Gunawardana said the state-run Rupavahini Corporation will also be leasing airtime of its Channel Eye to the Lyca group in order to recoup a series of losses. “A few hours of airtime would be leased to Lyca group for cricket broadcasts for which 25 million rupees would be charged for a month,” Gunawardana said. “At the moment it is making losses and cannot even pay the electricity bill.”

The Lyca group’s growing foray into Sri Lanka seems to have caught the attention of many, including the leaders of the extremist Sinhala Buddhist organisation ‘Sinha Le’. The group, which is linked to hate speech and racist attacks, claimed that Subaskaran funded the LTTE during the armed conflict and stood firmly against allowing the Tamil entrepreneur to do business on the island.

Accused of links to the Rajapaksa regime

More controversially, the Lyca group has also been accused of holding close ties to the Rajapaksa clan. Mahinda Rajapaksa and his brother Gotabaya oversaw an offensive that slaughtered tens of thousands of Tamil civilians in 2009, a series of massacres that have increasingly been recognised as a genocide. Despite being owned by a Tamil born on the island, Lycamobile went on to forge links with the accused war criminals.  

According to Corporate Watch, Hastings Trading e Serviços Lda, a company listed as being 90.5% owned Allirajah’s wife Premantharshini Subaskaran, bought a 95% share in a dormant firm registered with Rajapaksa’s nephew, Himal Lalindra Hettiarachchi in 2007. The purchase of the company, Sky Network, came as hostilities between the Sri Lankan government and Liberation Tigers of Tamil Eelam (LTTE) began to escalate.  

The company went on to receive a key license to operate cutting-edge wireless broadband frequencies, forcing the state telecom firm that failed to get the licence to merge with it at a cost of US$100 million. 

Sri Lanka Telecom reportedly poured US$10 million into the company, yet former chief executive Greg Young told BuzzFeed that it was “never able to successfully capture a customer”. “It was a company that effectively had no assets, had no operations, and had no value – so effectively SLT bought something, paid for it, and it had no value,” he claimed.  

Rajapaksa’s nephew Hettiarachchi however secured a lucrative salary of several thousand dollars per month alongside “an office, a car, a driver, an expense allowance,” and more. His contract was reportedly renewed following pressure from Rajapaksa’s wife Shirianthi, who would call Young directly. After Mahinda Rajapaksa lost presidential elections in 2015, senior government and police officials in Colombo told BuzzFeed News a probe was being launched into the deal which they suspect was a “shell company” that the former president’s nephew used to enrich himself through a “shady transaction”. Then cabinet spokesman Rajitha Senaratne told BuzzFeed that once out of office, the Rajapaksa family had gone to great lengths to conceal at least US$10 billion through offshore accounts and shell companies.  

In 2013, as Eelam Tamils called on world leaders to boycott the 2013 Commonwealth Heads of Government (CHOGM) summit that was taking place in Colombo and being hosted by Rajapaksa, Lyca was one of the Gold Sponsors of the Commonwealth Business Forum that was taking place on the side lines. Deals worth more than $2bn were expected to be signed during the forum, according to the Sri Lankan government.

Backlash over the incident came to the fore the following year, as students across Tamil Nadu staged a boycott of the Lyca produced film ‘Kaththi‘ over the Rajapaksa connection. In response the producers of the film, Subaskaran included, held a press conference in Chennai denying any links to the Rajapaksa regime.

“Kaththi’s production budget is two days’ turnover for us,” claimed the Lyca group chariman. “Why should Rajapaksa give us any money?”

In the years since, Subaskaran has travelled to the island several times, having been pictured on several occasions travelling aboard Sri Lankan military helicopters.

Charitable work in the Tamil homeland

Alongside his business interests and despite his reported links to the Rajapaksas, Subaskaran has also been involved in several Eelam Tamil focused projects over the years. His family set up a charity, the Gnanam foundation, which operates mainly in the North-East. Several projects over the years have donated hundreds of millions of rupees to causes across the Tamil homeland, from rain water harvesting projects to sanitation and housing.

One such project saw the construction of 150 houses for displaced Eelam Tamils in 2015. Subaskaran was pictured at the ceremony alongside former Sri Lankan president Chandrika Kumaratunga and Tamil National Alliance leader R Sampanthan.

The foundation also donated a stipend of Rs 25 lakh each to a group of 26 Tamil political prisoners who were released from Sri Lankan prisons earlier this year. The release of the prisoners came after Subaskaran met with Sri Lanka’s current president Ranil Wickremesinghe, both in Colombo and in London this year.

The latest Lyca-backed project on the island was the ‘Yaazh Gaanam’ concert, headlined by the acclaimed Tamil music maestro Santhosh Narayanan, in Jaffna last month.

The future for Lyca

Though a significant blow, the latest court ruling may only have an impact on the Lyca group’s French operations. The Indian production wing has proven to be a commercial success, bringing in big names and even bigger crowds to the box office. However, the sentence will have brought attention to the organisation’s more controversial aspects with UK authorities once more being urged to investigate Lyca’s finances.

On the island, there are reports that Lyca may be expanding its footprint further. Sri Lanka’s loss making state carrier, SriLankan Airlines, has recently invited bids as Colombo continues to grapple with an economic crisis that has left it relying on an International Monetary Fund (IMF) bailout. Lyca was reportedly in the running, much to the ire of Sinhala trade unions.

For many Tamils, it will be the company’s activities in Sri Lanka and the Tamil homeland that will be more closely watched.

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