Expropriated Assets Need Reviving: Deputy Treasury Secretary

The government must bring closure to a controversial law enforced in 2011

A senior Treasury official wants the government to take a look at a controversial expropriation law with many of the assets taken over from the private sector idling in state control and settlement payments running into billions of rupees not made to former investors.

An entire structure that came about after the passage of the law in 2011 has fallen apart. Property assets of 37 companies were expropriated by the government with the aim of reviving underperforming enterprises and making underutilized assets more productive.

“We need to prepare a detailed update on these companies and assets, and submit this to the new Cabinet. There are several outstanding payments and disputes that need to be looked at,” Deputy Treasury Secretary S. R. Attygalle told Echelon two days after the August 17 elections.

He was the point man in the bureaucracy when the new act came into force as the Director General, Department of Public Enterprises of the Ministry of Finance and Planning.

The expropriation Act was made up in two schedules. One included companies that had operational issues and included only Hotel Developers (Lanka) PLC’s Hilton Colombo property. The other schedule included property assets of 36 companies, which the government felt were not utilising land entrusted to them efficiently and had misused tax holidays and concessions but not added value to the economy.

Of the lands taken over and vested with the BOI, Attygalle says finding new investors proved to be difficult.  BOIChairman Upul Jayasuriya says that these expropriated companies should be returned to their previous users

The expropriated assets were divided and vested with three institutions. Most of the land assets were vested with the BOI and the rest with the Urban Development Authority, a unit of the Ministry of Defence, a portfolio held by former President Mahinda Rajapaksa with his brother Gotabhaya Rajapaksa as Defence Secretary.

Accused of producing ethanol for the liquor industry and not sugar for consumption, the Pelwatta and Sevanagala sugar plantations were expropriated, and the Sri Lanka Sugar Company wasformed to take over the operations. Each of the three sections had a competent authority appointed to oversee the expropriation and were mandated to find new investors. A claims tribunal was also appointed to settle the previous investors. Attygalle claims that Hilton and the sugar company were doing well.

He said the management fee to Hilton Worldwide had been reduced from 37% to 11% and the property turned around to a profit. Most of the previous investors had been settled, but “maybe not everyone”. The Celestial Towers property of the Ceylinco Group, now the 100% govern-Agenda Governance ment owned Hyatt Grand property, is yet to settle Rs2.5 billion to Seylan Bank.

“This project was expedited for the Commonwealth heads of state meeting in Colombo. State-owned Sino Lanka Hotels had raised the funds but Seylan Bank could not be settled because the money was transferred into the consolidated fund at the year’s end according to law. The government did not re-allocate these funds to us in 2014. So this payment is still outstanding,” Attygalle said. He claims this is the only big ticket settlement outstanding.

Distilleries Company of Sri Lanka PLC controlled by Harry Jayawardena claims 3,000 shareholders of Pelwatta Sugar had not been settled by the state. Attygalle claims that no formal complaint had been made as far as he was aware. The Colombo property of Charmers Granaries had come under the purview of the former Defence Secretary but the Treasury is unaware what plans he had for this. Another Colombo property is held up by a court case, the state-takeover disputed by Lanka Tractors Limited. Of the lands taken over and vested with the BOI, Attygalle says finding new investors proved to be difficult. BOI Chairman Upul Jayasuriya says that these expropriated companies should be returned to their previous users.

“We need to revisit the entire thing and prepare a detailed report, and the Cabinet will have to revive the competent authorities and claims tribunal, and settle all previous investors and find new investors for some of the assets. This needs urgent attention,” Attygalle said.