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Wednesday, May 22, 2024

Takeover Bill under fire at Party Leaders meeting

The contentious Takeover Bill on underperforming State enterprises and underutilised assets had come under fire by the Opposition at the Party Leaders meeting yesterday in Parliament.  At the meeting, representatives of the UNP and TNA have vehemently opposed the bill, questioning why it was being introduced as an urgent bill and
stating that the Government should have had practiced basic democracy and common courtesy by having discussed it at the Parliament Consultative Committees.

The alleged draconian features of the proposed legislation, the short title of which is ‘Revival of Underperforming Enterprises and Underutilised Assets Act,’ whilst some refer to it as the Expropriation Act, had come under fire as well. UNP had stressed that the proposed Act was a violation of the fundamental rights of a citizen to engage in lawful occupation, profession, trade, business or enterprise

It had been pointed out that the Opposition wasn’t objecting to Government policy of reviving sick companies but that the selection of enterprises whose assets would be taken over were highly questionable.

Two examples were cited, namely Pelwatte Sugar Industries which is listed and now owned and managed by proven business leader Harry Jayawardena, as well as Sevenagala Sugar Industries owned by a company connected to UNP MP Daya Gamage.

It was alleged by the UNP that targeting Sevenagala Sugar Industries was furtherance of continued discrimination against the company owing to politics whereas several recommendations by the owners to revitalise the venture had been ignored by the Government authorities. Furthermore, the UNP had claimed that Hingurana Sugar Industries recently acquired by Browns and LOLC consortium was facing difficulties yet had been left out.

 With regard to Ceylinco Leisure Properties Limited under the Ceylinco Group of Companies it was pointed out that it is bound to be included in any compensation scheme that the courts finally draw up to pay back the Ceylinco depositors.

The UNP had also emphasised that the new legislation proposed was a bad one sans consultation, hence lacked transparency and integrity. “It implies that the act is a ruse to take over land of companies to sell back to cronies of the Government,” the UNP MPs had charged.

The Government representatives in defence had explained the objectives of the proposed act, which included deriving maximum socioeconomic benefits by better use of these underperforming enterprises and assets following restructuring or entering into new management contracts.

 The bill is to be tabled in Parliament on 9 November by the Government, but the Opposition had given an early warning that it would be opposed.

 Leader of the House Nimal Siripal de Silva and MP Dinesh Gunawardena were among Government representatives whilst Deputy Leader MP Karu Jayasuriya and MP and Chief Opposition Whip John Amaratunga John Amaratunga were among UNP representatives at the meeting chaired by the Deputy Speaker.

In a related development, vocal UNP MP and the party’s Chief Spokesman on the Economy Dr. Harsha de Silva is today scheduled to articulate the dangers of the proposed bill at a press conference. On Monday he claimed that the “State has crossed the line with this bill”.

As per the schedule attached to the proposed act, Colombo Hilton owning company Hotel Developers (Lanka) Plc is the only State enterprise classified as an underperforming enterprise given its precarious position with Rs. 10 billion accumulated loss and Rs. 4.7 billion negative net worth apart from being infested with multiple litigation and heavy debt.

Some analysts have welcomed the bill as far as resolving Hotel Developers’ crisis is concerned, whilst others noted that the Government has existing legislation to address issues concerning underutilised assets.

 Classified as underutilised assets are land of around 30 BOI approved but now defunct companies located mostly in industrial zones, Ceylinco Leisure, Lanka Tractors Ltd., Colombo Commercial Company and Charmers Granaries property in Pettah along with land of former Cashew Corporation. Land of Pelwatte Sugar and Sevanagala Sugar are also included. (See yesterday’s Daily FT for the full list).


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