by Nirmala Kannangara

After the Volkswagen Company in Germany claimed that they have not invested in an vehicle assembly plant in Sri Lanka nor have any intention to do so even in future, it had now come to limelight as to how the Board of Investments (BOI) not only duped the President and Prime Minister but also the entire country to show that they were able to attract Foreign Direct Investment (FDI) for a vehicle assembling plant in Sri Lanka.

It was soon after President Maithripala Sirisena’s victory and the new government was formed in 2015, Prime Minister Ranil Wickremasinghe said that he had received a proposal from Volkswagen AG to start an assembly plant in Sri Lanka and accused the former regime for not granting approval for the same company when they first wanted to invest on the same project in 2012.

However, The Sunday Leader is in possession of documents, to prove that neither during the Rajapaksa regime nor during the present regime did Volkswagen AG submitted applications to invest in a venture here but only a local businessman had submitted an application with the Volkswagen name.

The BOI document in 2015 that shows the investment of Senok Automobile is 110% higher than that of the foreign investment and The BOI document in 2012 that has no trace to Volkswagen involvement in the vehicle assembly plant but only Senok Group

“It is not the Prime Minister that lied on this matter, it is the BOI that put him in great embarrassment by giving him wrong information. The Prime Minister cannot go through these documents but it is the responsibility of the BOI to give him the correct information,” BOI sources said.

The sources who wished to remain anonymous said that in order to show that the BOI is now getting FDI, for no reason stated that they signed an agreement with Volkswagen local agent Senok Automobile (Pvt) Ltd to establish a vehicle assembly plant (Volkswagen) in Kuliyapitiya in the Kurunegala district.

According to the documents this newspaper is in possession, the application for the Kuliyapitiya vehicle assembling plant (Volkswagen) had been submitted to the BOI on July 10, 2015. The investors are Senok Automobile (Pvt) Ltd, No: 3, R.A. de Mel Mawatha, Colombo 5 and Volkswagen AG, D 38436, Wolfsburg, Germany. Although it was announced that the Volkswagen was the investor at that time and because their stock has crashed and had to sack nearly 30,000 employees after US Environment Protection Authority went public after Volkswagen confessed to the US Environment Protection Authority in September 2015 that they cheated on emission tests on some of its diesel vehicle sold to the USA, they (Volkswagen AG) pulled out from investing in the proposed project in Sri Lanka, it was Senok Automobile that was the major investor in the vehicle assembly plant but not the Volkswagen AG.

As claimed by the BOI or the politicians, that only after Volkswagen issue cropped up in USA, they decided to withdrew from the Kuliyapitiya vehicle assembling project and Senok Automobile representing Volkswagen in order to save the agreement decided to continue with the investment as planned, the BOI documents clearly shows that from the time the application for the proposed project was submitted the main investor was the local partner not the foreign investor.

According to the document, the Board approval had been given to the project on August 12, 2015 and the Agreement had been signed the following day -on August 13, 2015 while the date of implementation was given as January 3, 2017.

The local investor- Senok Automobile was to invest Rs. 3531.97 million while the foreign investor was to invest only Rs.32.28 million.

“In such an event, how can the BOI say that this project is a Foreign Direct Investment? Although Prime Minister on an earlier occasion said that 2000 employment would be generated through this project, according to the official BOI document, 100 local employment and five foreign employments would be created through this project,” sources added.

Although the Prime Minister soon after he came into power in 2015 said that the Volkswagen wanted to start a vehicle assembly plant in Sri Lanka but later they had to go back empty handed, there again, the BOI had misled the politicians. According to the BOI documents, there was no foreign investor in the first application that was submitted on December 20, 2015 but two local investors – Senok Tea Ceylon (Pvt) Ltd of No: 3, R.A. de Mel Mawatha, Colombo 3 and Selvanayagam C.N.V. of No: 3, R.A. de Mel Mawatha Colombo 3 and both parties are one and the same.

According to the previous application, there was no FDI involved in the rejected project but only a local investment to the tune of Rs.1566 million.

Meanwhile BOI sources said as to why the politicians and even the BOI officials still want to show that the Volkswagen AG was involved in setting up a Volkswagen assembling plant claiming that the German Ambassador Dr. Michael Dohmen was present when the scandalous agreement was signed on August 13, 2015. “You can invite anyone to the signing in ceremony which does not show that it was an agreement with the BOI and a German investor. Unlike earlier it was the then BOI Director General Dhammika Perera that introduced a one page application. Earlier the application was a small booklet where all details of the investors, their bank credentials, the project report and investment approval from the investors.

Although these details are not necessary for the present one page application, the officer who handles the project should obtain all these details and documents.

If the BOI had an Analyse Department, all these documents could have analysed,” sources added.

Although the government and the BOI now claim as such, websites of the Ministry of National Policies and Economic Affairs at the time the foundation stone was laid on January three, 2017 carried a news item with the Volkswagen logo about the vehicle assembling plant project.

It was also same with the BOI website as well. Meanwhile it is now understood how the BOI granted permission to Senok Automobile to import used or new vehicle spare parts to the country with a marginal excise duty being levied to assemble vehicles which is a money spinning project but in return a huge losses to the country. “The BOI few decades ago granted another local party to assemble vehicles with used motor spare parts to the local market. He violated the agreement by importing complete vehicles without few parts instead of spare parts which was a huge loss to the country as he paid the least duty for the full vehicle. Meanwhile BOI officials by their letter dated 30.05.2006 confirmed that the said party had failed to comply with the requirements as per the agreement entered with BOI. According to the BOI agreement, the project should give employments to 100 locals where only 40 were given employment and although the capital investment should be Rs.500 million only half a million rupees had been invested.

As a result BOI cancelled the agreement but they never took any steps to take back the land given for this project. The BOI very well know how the said investor when the customs department forfeited his consignments of full body parts, went to courts to get his consignments released but failed as the courts on several occasions gave judgments against him. When the court has clearly stated that the excise duty in importing used spare parts and assembling a vehicle in Sri Lanka and importing a full vehicle sans few items is a big different, it is surprising as to how the BOI and Customs Department is still allowing him to engage in the same racket without any restriction with the help of the politicians and their stooges in the present regime as well. With the new project in Kuliyapitiya in the months to come, in the event the Senok Automobile too follows the same footsteps country will further lose more money. Hence why does this government who came into power promising to put a stop for corruptions is allowing these scandalous investors to generate money at the expense of the tax payers,” sources added.

According to the sources, when the said vehicle assembler filed an appeal in the Court of Appeal (CA 1124/98) seeking to get the vehicles released, the Judge of the Court of Appeal, U de Z. Gunawardena in his order delivered in 2002 said that the petitioner knew rightly or wrongly, for certain, that he couldn’t have imported both parts together without paying the full duty that could be levied on the complete or perfected vehicle, as is clear from regulation II in Schedule “A” (Published in the Gazette Extraordinary dated 05.03.1996) and that it is worth pointing out that the import duty on parts of vehicles is comparatively low and by importing parts separately and assembling them locally into a finished motor car – one can avoid payment of prohibitive duties that are imposed on the import of the finished or complete motor car.

The order further said that the object of which was to circumvent the prohibition contained in Schedule B -wherein the things or goods that are prohibited from being imported are enumerated.

“The assembler then in 2004, lodged an appeal in Supreme Court to commence the vehicle assembling project by case No SC. FR/331/04 where the courts directed that a Committee of Professionals representing various Government Authorities to compile and furnish a definitive report to confirm whether a loss of revenue would be caused to the Government by this project. However this report did not address the matter at hand, which was the impact on Customs levies when importing vehicles in parts as opposed to importing the entire vehicle in its original form. Instead, the aforementioned Committee provided a misleading report concerning the difference in Customs Levies attributed to importing old vehicles as opposed to new vehicles, indicating that no difference in levies was evident. The misleading conclusion manipulated the report’s outcome in favour of the petitioner,” sources said.

The sources further said as to how the same party in 2012 obtained an approval to commence assembling project from Supreme Court (case No: SC/304/2011) by misleading courts. “In 2013 the then Treasury Secretary Dr. P.B. Jayasundara revealed how the petitioner had obtained the approval by misleading courts and instructed Customs to terminate the imports. In 2013 President of the Court of Appeal (case No: CA/Writ/ 57/2013) confirmed that the assembler is not entitled to import vehicle bodies as per the Court order of SC/304/2011. Court of Appeal rejected the appeal confirming that the company had obtained licenses for this project from Controller of Imports and Export by misrepresenting fact. Once again in 2013 appealed against the order (case No. CA/218/ 2013) and later withdrew the case.

“In 2014, Supreme Court (case No. SC.SPL.LA.76/2013), upheld the above order of the President Court of Appeal in case No CA/Writ/ 57/2013 and did not allow the petitioner – the owner of the vehicle assembler leave to proceed. When he went back to Court of Appeal last year Judge Malalgoda (case No; CA/Writ/446/2014) reaffirmed the above order of the Court of Appeal and instructed the petitioner to restrain from filing multiple suits on the case issue. However in May 2016 ignoring the Court orders the petitioner placed an advertisement in the news paper for the sale of assembled vehicle and still continuing to sell the assembled vehicles,” sources alleged.

When contacted Ms. Pancherine Dias of Senok Automobile, whose name has been given as the contact person for the projects in both 2012 and 2015 applications, she was not available for a comment as she was at a meeting according to her Secretary Michelle. Although a message was left for Dias with the Secretary together with this reporter’s contact details seeking a comment on the Kuliyapitiya project, till the paper went to press, there was no response from Dias.

All attempts taken to contact C.N.V. Selvanayagam of Senok Automobile on his mobile too failed as he did not answer any of the calls.

Meanwhile, Director Investment BOI, W.U.K.M.A. Wijegunathilake when contacted to find out as to why they duped the President, Prime Minister and the people of this country, Wijegunathilake said that he is not supposed to speak to the media and to call Director Media Dileep Samarasinghe for a comment.

When contacted Director Media BOI, Dileep Samarasinghe about the scandalous Volkswagen project, Samarasinghe first said that he was at a meeting and got this reporter’s mobile number to contact her after the meeting. Since Samarasinghe did not return the call, when he was contacted once again the following day, he (Samarasinghe) said that he cannot make any comment in this regard as higher authorities had already made several comments on this project.

“Since the President, Prime Minister and other higher officials have made several comments I don’t want to make yet another comment,” he said. When told that this newspaper does not want to repeat what the President or the Prime Minister had said but a comment from the BOI is necessary, as it is now clear that BOI knowing the fact duped the general public and even the politicians, Samarasinghe said that he does not want to contradict what Ranil Wickremasinghe or Maithripala Sirisena spoke about the project in question.

When told Samarasinghe, that this newspaper is going to publish what he said and since the BOI does not want to make any comment that we are going to write the story without the BOI comment, Samarasinghe asked whether the conversation is being recorded. When told that the conversation is being recorded, he accused this newspaper for recording the dialogue without his consent.

Courtesy:The Sunday Leader