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