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One underperforming enterprise and under utilised assets of 36 institutions to be acquired by state

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by Hasantha W ~ courtesy: lakbimanews.lk

By Namini Wijedasa

Hello Friends

It was only a few days ago that I tweeted about the Rajapaksa governments attempt to revive legislation enabling the state to acquire underperforming enterprises and under utilized assets.

These tweets posted on twitter were also posted on my blog as a bundle of tweets.

The legislation was drafted in secret through a private legal firm instead of following the usual procedure of utilizing the Legal Draftmans dept.

The draft was submitted as urgent legislation to the Supreme Court by President Rajapaksa for perusal. The Govt is yet to release the Supreme Court ruling on this matter

The secrecy, urgency and questionable procedures adopted by the Rajapaksa regime in this regard has sent alarm bells ringing in Sri Lanka

Senior journalist Namini Wijedasa has in an insightful piece published in the weekly “Lakbima News” focused on this controversial legislation and its ramifications after unearthing more information about the subject.

One such revelation is that the Govt at present intends acquiring One “underperforming” enterprise and the “under utilized” assets of 36 other Institutions. Ms. Wijedasa has also named most of the targeted enterprises and institutions

I am reproducing Namini Wijedasa’s article in “Lkbima News” in full on my blog for the benefit of readers

Here it is friends-DBS Jeyaraj

Underutilized private properties to be acquired by the state
Drafted in utmost secrecy

By Namini Wijedasa

The business community was alarmed last week over an urgent bill that the government sent for determination to the Supreme Court. But for a few short newspaper reports, the public would not even have known about the Revival of Underperforming Enterprises and Underutilized Assets.

It remains unclear why cabinet wants to rush the legislation through parliament as an urgent bill.

Moreover, the government took extraordinary efforts to prevent the bill from being accessed by anybody before the 48 hour deadline for the Supreme Court determination lapsed. The Supreme Court registrar refused to release a certified copy until the court’s decision was conveyed to the president. A draft was sent to parliament and to the opposition leader only on Friday evening, well after the determination would have been made and communicated.

All this effectively prevented the raising of any objections, if at all. It also led to serious concerns that the government, in introducing this bill, intended to take over private institutions at will.

The bill was drafted by a private company in a move that some lawyers described as “bizarre.” Laws are usually drawn up by the Legal Draftsman’s Office. The secrecy surrounding the legislation prompted strong speculation that the government intended to acquire, among other things, lands from previously privatised estates that are not profitably used. It would seem that these fears are for the moment unfounded.

LAKBIMAnEWS obtained a copy of the bill. The legislation pertains solely to one underperforming enterprise and the underutilized assets of 36 other institutions, including private companies. These are named in two schedules that are attached to the bill. Once passed, the law will free up thousands of acres of land around the country for development, including prime plots in Colombo and its suburbs.

The underperforming enterprise named is Hotel Developers (Lanka) PLC, the owning company of Colombo Hilton. The underutilized assets named are the Pettah property of Charmers Granaries; the Badulla properties of Colombo Commercial Company; the Pettah and Narahenpita properties of Lanka Tractors Ltd; land belonging to Pelwatte Sugar Industries Ltd; and land owned by Sevanagala Sugar Industries Ltd.

In line for acquisition

Also in line for acquisition is the property of Sinotex (Lanka) Ltd; Jaqalanka Ltd; Plymouth Industries (Pvt) Ltd; Cosmos Macky Industries Ltd; Kabool Lace (Pvt) Ltd; former Cashew Corporation land; Intertrade Lanka (Pvt) Ltd; Suchir NEB Projects (Pvt) Ltd; Ceylinco Leisure Properties Ltd; Seetha’s Fashion (Pvt) Ltd; D.C. Apparel (Pvt) Ltd; Needle Crafts (Pvt) Ltd; HY Fashion Garments (Pvt) Ltd; Collins Garment (Pvt) Ltd; Ruhunu Putha Apparels (Pvt) Ltd; Sanjaya Garments (Pvt) Ltd; Macfa Apparel (Pvt) Ltd; Yobeedha Associates (Pvt) Ltd; Dynamic Clothing (Pvt) Ltd; 609 Polymers Exports (Pvt) Ltd; Cosco Polymer Lanka (Pvt) Ltd; Great Wall Thread Manufacturing (Pvt) Ltd; Adamjee Extractions (Pvt) Ltd; Data Food (Pvt) Ltd; Tendon Lanka (Pvt) Ltd; Rican Lanka (Pvt) Ltd; Composite Tower Solutions (Pvt) Ltd; Health Food Products (Pvt) Ltd; Sri Chirag (Pvt) Ltd; Royale Exports (Pvt) Ltd; and Continental Vanaspathi (Pvt) Ltd.

The bill envisages the vesting of this enterprise and assets in the state “in order to ensure the effective administration, management or revival of such enterprises or assets, through alternate methods of utilization, such as restructuring or entering into management contracts.”

It states: “With effect from the date of coming into operation of this Act, where any Underperforming Enterprises or Underutilized Assets specified in Schedule I or Schedule II to this Act, are having an adverse impact on the national economy and thereby on the public interest such Enterprises and assets shall with effect from the date of coming into operation of this Act, stand vested in the Secretary to the Treasury for and on behalf of the Government of Sri Lanka.”

A Competent Authority (CA) would be appointed to control, administer and manage or otherwise ensure the revival of these institutions and assets in keeping with government policy through “alternate methods of utilization, such as restructuring or entering into management contracts…”

Such CAs would be selected by cabinet in respect of each one or more of the underperforming enterprise or underutilized asset. The CA shall take possession of the underutilized assets and of all movable and immovable property belonging to the underperforming enterprise.

CA vested with vast powers

The act endows the CA with vast powers. Wherever appropriate, he shall exercise, perform and discharge all the powers, duties and functions conferred or imposed on, or assigned to, the board of directors or any other body that managed the entities; continue with or recommence any business activities of such enterprise or asset; restructure such enterprise or asset so as to enhance its commercial viability; make available to such enterprise or asset the necessary resources; ensure the maintenance of proper accounting; secure the due payment of wages to workers; meet all costs and expenses incurred in the management and administration of affairs of such enterprise or asset, etc.

The shares held by all shareholders of any underperforming enterprise or underutilized asset will vest in the Treasury Secretary for and on behalf of the government. The shareholders would be promptly, adequately and effectively compensated. All claims will be directed to a cabinet appointed Compensation Tribunal.

Any person who refuses or fails to deliver possession to the Competent Authority of any property movable or immovable including any building, plant, machinery or any fittings or fixtures; wilfully or negligently destroys, damages or disables, or causes to be destroyed or damaged or disabled, or wilfully conceals or puts away or causes to be concealed or put away any property; prevents or obstructs, or directly or indirectly causes any other person to prevent or obstruct the Competent Authority of taking over the management or taking possession or control of any building or property shall be guilty of an offence. He shall, on conviction after summary trial before a magistrate, be liable to imprisonment for a period not exceeding ten years or to a fine not exceeding Rs. 10,000 or to both.

The law defines ‘underutilized asset’ as land that was once owned by the government but alienated to any person by outright sale, lease or through a divestiture on the basis this would result in generating employment, foreign exchange earnings or savings or economic activities beneficial to the public, but where such benefits have not accrued.

It could also be land owned by a person who had been granted tax incentives, incentives under the Board of Investment Law or regulations framed there under, or any government guarantee, but where the desired benefits have not accrued. courtesy: LAKBIMAnEWS

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22 Comments

  1. What we strongly suspected and greatly feared has come to pass.

    You were quick to see the dangers in this move and expose it Mr.Jeyaraj

    Ms. Wijedasa has ably followed it up with this fine article

  2. Very excellent article telling real truth behind this new move by Govt.

    Thank you Namini for writing

    Thank you DBS for posting it here

  3. Pingback: kottuCopy › Assets The Government Is Grabbing

  4. What about Mihin Air and all the other under-productive institutions already run by the Rajapakse bros and their relatives? Why not make these profitable first? The fact is that the GoSL is going broke and investors are loosing confidence and there will be a run on the rupee (the IMF has also queried the exchange rate). Thus Rajapakse Bros. INc now hopes to sell off public assets because Nivard Cabral has bankrupted the country and accumulated huge foreign debt while borrowing at commercial interest rates which he cannot pay off.
    What about the jumbo cabinet of under-educated Ministers that Rajapkse has which also amount to under utilized assets?
    The Colombo public library which is under the Mayor and UDA which is under the Defense Ministry does not have computers or a computerized card catalog and is a disgrace and never mind about Lanka being a “knowledge hub”. Why don’t they first sort out what they’ve got?
    The decennial National Census, which would be the first in the whole county after war ended and should be a national priority for knowledge-based development planning which is due this year has been postponed because of understaffing and other problems. City beautification it seems is skin deep the real issue is institutional de-development if not outright decay that these jokers are promoting in the name of development!

  5. Such draconian powers once allowed are likely to be misused to harrass and blackmail the opponents of the Govt. If it is just for Hotel developers then isnt there an ongoing court action. Such actions indicate the bankruptcy of the govt and desperate financial condition of the country.

  6. What’s next? Underutilized ‘whatsit’? or is it already being implemented without a need for a law being passed?

  7. To quote from the news report: “The law defines ‘underutilized asset’ as land that was once owned by the government but alienated to any person by outright sale, lease or through a divestiture on the basis this would result in generating employment, foreign exchange earnings or savings or economic activities beneficial to the public, but where such benefits have not accrued”..isn’t it in the best interests of the country to do so?

  8. Next should be the confiscation of land owned by supporters of LTTE. Sinhalaize the entire North and East in a systematic way, and the ‘all Tamil’ mindset of the aging some eelam Tamils will surely fade away.

    Let’s all of us wow to pick the pockets of eelam Tamils.

  9. Dear Kiribamuna, dear Kakka, you can`t say it`s excellent it`s “BRILLIANT” journalism.
    Shall we dissolve every thing and rename it as JOB BANK

  10. the impunity with which this sorta crap happens is incredible. waiting to see how the kiss-ass types like the Alberts of this world try to justify this latest undemocratic law?! we sure are a banana republic, almost there! what say Dayan?

  11. If you read the article, it is nicely written. What is more interesting is, in a country where everyone is complaining about, lack of media freedom and independence, people seems to have no problem of being critical about government. Namini’s article is a testimony to this. I have no problem people being critical about the government but must stop the cry that they have no media feedom. As anyone can see, there are a number of major news papers who can’t see anything good about the government are having a field day almost every day of the week writing against the interest of the country and criticising the goevt at every corner. Yet, certaing groups are still complaining about not having meedia freedom. That is what I can’t understand.

    Onthe otehr hand, if the govt is taking over underperforming enterprises to make them viable, I can’t see, why it is wrong. The problem is, it is hard to accept that, public sector in Sri Lanka has not yet proven that they are any better.

  12. “Onthe otehr hand, if the govt is taking over underperforming enterprises to make them viable, I can’t see, why it is wrong. The problem is, it is hard to accept that, public sector in Sri Lanka has not yet proven that they are any better.”

    Can you tell me at least ONE performing asset that the Government has?

  13. Karu, you need to live in some of the relatively ‘civilized’ countries to understand what True media-freedom is. The sort of media freedom we have here is a bloody joke if you see the level of threats and abuse journalists/ editors go through on a regular basis. A couple of articles appearing on the web/sunday-leader is no test of media freedom by any means! Mervyn’s treatment of the media and the govt.’s inability to deal with it appropriately is ample testimony to this, along with the way Lasantha was murdered in a very high-security zone in broad daylight!

    The west/civilized world have their own issues and modern materialistic values have caused a decay in their morals and ethics, however, there is much SL can draw from them on the “media freedom” front- if we genuinely want to transfer best practice. For a mere eye-wash, what we have now will do. End of the day, to think that we have voted near scum of society into parliament only goes to show that “the People get the Government they deserve” – thanks to the brand of democracy we have!

  14. underperforming enterprise No. 1 is GOSL. now boss of the same going to collect some more. GODBLESS this family.

  15. Here is another great Mahinda chinthana invention.But a very dangerous one for the ruling family.This can back fire sooner than later.This stupid law can be the beginning of the end!!

    Sri Lankans are fundamentally capitalists, they are used to buy & sell anything under the sun to make ends meet.Just ask anybody on the street what their job is………..most will say business! Even people who have a steady job do” side business” to add some butter to their daily piece of bread.
    What this means is the Srilankans, especially hard working & business minded Southern people will see the first light of a Stalinist law, one that will be sharpened and used to cut any business enterprise to the size the ruler wants.If the owners are acolytes of the rulers, they will be spared, if not …….???!!!
    Wait & see.
    Already Dr.Harsha de Silva has asked the civil society to protest, when it come to this sort of protests there is no party, race or religious barrier. People will find here a perfect cause to show the ruling troika their discontent without compromising their fear of out side hand meddling in a local affair.
    One thing is crystal clear, if this law passes without a fight , then we are all……..goners.

  16. We can fight to the cows come home but there is only one day allocated for this in Parliament and it is possible that this law will pass on November 9th no matter what anyone does.

    We can only blame the electorate for giving this government the power to do almost anything. You reap what you sow. Let us hope that at the next tilling, we sow some better seed, not tainted with corruption and malpractice.

  17. What this country need is a bill to “recall” underperforming political leaders in both the government and the opposition!

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