Sources of LTTE Funds: A Profile

Like any activity, terrorism requires resources for recruitment, training and upkeep of its members, purchase of arms, propaganda, social welfare programmes, and so on. Indeed, terrorist acts can be committed on small budgets, but sustained terrorist movements require large financial resources and support. A close examination of financial sources of the LTTE reveals that it operates like a multi-national corporation, whose sources of funds can be broadly classified into internal (collected from within the Island) and external (international sources).

Internal Sources

The internal sources constitute less than 20 percent of LTTE’s total revenues. These include sales tax on goods sold by merchants, tax on individual households in LTTE dominated areas, extortion and protection money paid by businessmen, and voluntary donations from sympathizers. Taxes vary from place to place and the income of the payer.

Farmers are required to pay taxes depending on their produce and land holdings, which varies from Rs 300 to Rs 3000 per term of produce. A tractor owner must pay Rs 30,000 every six months and also commit to offer his vehicle in case of need to the LTTE. A tax rate of eight per cent of their income applies to government employees. Sales tax of up to 24 per cent is levied on goods sold by merchants. Rs 5 per kilo is collected from fishermen for fish transported outside LTTE-controlled areas. On coconut, the rate is Re 1 per piece; the cess on one litre of petrol/ diesel is 0.5 Re.

The tax can be paid either in cash or in kind. Thus, both direct and indirect tax regimes are in place. Ironically, double or triple taxation is a common phenomenon for goods coming from government-controlled areas. For instance, a commodity entering LTTE entry point draws custom duty; after coming to the market there is a sales tax; also, businessmen are required to pay a portion of their periodic income to the Tigers. There is a special unit to collect taxes from Tamil businessmen from even

Colombo. Apart from taxation and extortion, there are commercial ventures like farms, groves and transport services that Tigers have entered into to marginally augment their revenues.

External Sources

It is the huge volume of funds from overseas that sustains Tiger activities. These funds, constituting about four-fifths of the total revenue of the LTTE, come from three main sources: Diaspora contributions, profits from commercial ventures, and proceeds from drug trafficking. Contributions from the Sri Lankan Tamil diaspora spread across Canada, United States, UK, France, Switzerland, Australia, Sweden, Finland, Norway and India constitute the major sources. It is estimated that the LTTE raises about $2 mn from the diaspora monthly; a quarter of which comes from Canadian Tamil expatriates. Two groups of diaspora contribute funds to the LTTE:

1. the more established expatriates who believe in the Eelam and the Tigers' mode of fighting;

2. illegal Tamil migrants who rely on the LTTE to facilitate their integration into the host society through forged identity papers, jobs and housing.

While the contribution from the above two categories comes voluntarily, extortion too common. The contribution is fixed according to the income of the family, which varies from $40 to $80 a month. Major front organizations like World Tamil Movement, Federation of Associations of Canadian Tamils, World Tamil Association, United Tamils Organisation, Tamil Eelam Economic Development Organization etc collect funds in a sophisticated manner. Tamil media abroad is extensively used for this purpose. The LTTE International Secretariat based in

Europe is responsible for the overall global coordination of fund collection and transfer. Money is usually routed through donations given to pro-LTTE Tamil cultural, human rights, or humanitarian agencies. This helps evade legal and political counter-measures being taken by the international community. The main problem in checking financial flows to terrorist organisations by governments is the difficulty in proving that the funds collected are being used for terrorist activities.

The LTTE has commercial ventures in

Kuala Lampur, Singapore, Yangon, Dhaka, and Chittagong, apart from many Western countries. These ventures range from running ocean liners to maintaining restaurants. The LTTE, which was using chartered ships for transporting its arms and goods, acquired its own fleet during 1985-86. It is believed to have around ten freighters, generally registered under Panamanian, Honduran or Liberian flags (known as "Pan-Ho-Lib"). While arms are shipped to the LTTE base in northern Sri Lanka, goods are transported for commercial purposes. Thus, the LTTE uses its fleet for dual purposes. The fleet is also used for human/refugee smuggling to Western countries for a charge. 'KP' (Kumaran Pathmanathan) Department is in charge of international freight and investments abroad. Businesses are usually run through proxies. While the LTTE makes an initial investment, trusted people run business ventures and profits are split on an agreed basis.

Money is also generated through counterfeiting passports and visas, money laundering, arms trafficking and other organized criminal activities. The LTTE may not be directly involved in these activities, but it has linkages with Tamil gangs who contribute a share to the Tigers. The LTTE's reliance on drug trafficking for its 'National Defence Fund' is very evident. Because of its vast international clandestine network the militant group is adept in smuggling drugs, raw or processed, from the 'Golden Triangle' and the 'Golden Crescent' to any destination of the world. The main drugs involved are 'mandrax' (methaqualone) and heroin. There is a strong nexus between the LTTE and narcotics cartels and other militant groups involved in narco-terrorism. Migrants and asylum seekers are also used to smuggle drugs, apart from using the LTTE's sophisticated transport network. It is estimated that the annual smuggling of drug cartels linked to the LTTE is about 1000 kg (worth $250 million in the international market).

Due to the diplomatic initiatives of the Sri Lankan government, the LTTE has now been listed as a terrorist organisation in many important countries like

India, USA, EU, Australia, Canada and South Africa. Contributions to the LTTE are, therefore, a criminal offence and fund raising is prohibited. Also, the UN Security Council, through its resolutions 1269 (19 October 1999), 1368 (12 September 2001) and 1373 (28 September 2001), has called upon all States to cooperate in not providing support to terrorist groups, including their financing. Of late, Sinhalese expatriates are also involved in successfully lobbying with their respective host countries to impose stringent government restrictions against LTTE financial networks. All these measures have partially affected external financial flows to the Tigers. But, the LTTE's continued economic prosperity indicates that these counter-measures are not adequate.