Draconian act to serve national interest

The Expropriation Act:


A government minister says a new act (Expropriation Act) passed to law recently whereby the government will seek to take control of underperforming or underutilised assets, mostly land, of 37 enterprises including 2 companies listed on the Colombo Stock Exchange, was of national interest while an opposition MP says the bill was draconian and the government has crossed the line and was at risk of further denting the country’s credibility.

The government would pay compensation but failure to handover assets to the government would constitute a criminal offence carrying a jail term not exceeding 10 years.

Economic Development Minister Basil Rajapaksa speaking to The Island Financial Review yesterday said this measure was proposed in the 2010 Budget.

"A competent authority would be appointed for each enterprise and the state will soon take over the assets of these companies. Many of them have closed down their operations. The government also seeks to reclaim the underperforming and underutilised land. We would then give them over to other investors. This legitimate and is practiced in other countries," Rajapaksa said.

According to a draft obtained by The Island Financial Review the bill is deemed "urgent in the national interest". The majority of the companies are garment factories.

UNP MP Dr. Harsha De Silva speaking to The Island Financial Review said the new bill was draconian.

"It is unbelievable that the state could act in this way. This is no different from the Mugabe administration. We are slowly but surely losing our economic freedom in the land that is supposed to be free," he said.

"This is an Urgent Bill: meaning no discussion. No one had seen the bill until it was ‘approved’ by the SC within 48 hours. We assume it will be brought to Parliament on 7 November, the next sitting day. It is wrong to legislate this way. Surely it violates the constitution and the rights of the people.  With the government having its 2/3rd majority any bill can be passed to become an Act," he said. 

"The bill gives a unilateral definition of ‘under-performing enterprise’ and ‘under-utilized asset’. No objective criteria is given; only some subjective and opaque nonsense written up including ‘prejudicial to the national economy’.  There is no way for owners to prove their assets have performed to the maximum; given the various conditions (local, global, political etc.). They are given no fair hearing.

"For instance, how can Chalmers Granary perform when the lease holder had not been given the property for some 17 years?  Is there any particular high-flier interested in the land?" Dr. De Silva asked.

" If ‘under-performing’ and ‘under-utilized’ are defined, why do we need two schedules to list ‘identified’ companies? Clearly, there is more than one company that has ‘under-performed’ as per Schedule I according to the lame criteria in the Bill and there are numerous other ‘underutilized assets’ other than the ones listed in Schedule II.  How come only some have been listed while some others have been spared. Who evaluated the performance? Were the companies involved requested to participate in the evaluation? Did the evaluators even visit the factories to see if the assets were utilized? Did the powers-that-be even go through the accounts? What is going on? Our Constitution says every person is equal before the law (presumably with the exception of HE the President) but this clearly does not reflect that equality. 

" Funny why Harry Jayawardene’s Pelwatte (who purchased it from Ariyaseela Wickremeratne recently), a listed company that shows increasing profitability and good signs of turning around and Daya and Anoma Gamage’s (UNP politicians who have done a pretty good job in alleviating poverty in the East through their many private enterprises) Sevenagala, who say that the utter loss making operation has now become the most profitable sugar company with thousands of jobs created, have been identified to be taken over (assume by the 7th of November or as soon as the now SC cleared Bill becomes and Act of Parliament) when recent Brown’s deal (LOLC, Ajith Devasurendra, Kapila Jayawardene) Hingurana which was closed down for some 16 years and continue to be in trouble has been spared? What is the logic?

"If we continue down this path Sri Lanka will lose all our credibility with decent foreign and local investors. In fact where are these investors 2 1/2 years on? Where are the big names? Or even small names? Even the Shangri La, the sole investor, has run in to trouble. The dubious CATIC had to be cancelled. There was no way to proceed with it as I had pointed out that the government was trying to sell the land on an invalid agreement. It was a sham. Expropriation like the current case will be a deadly blow to foreign investment. I wonder sometimes if that is actually what is desired. Why? Because that opens the way for Chinese loan-funded projects with absolutely no transparency; roads, bridges, ports and airports.

"It can be Hotel Developers and Sevenagala Sugar today; but who is to say it cannot be any other private company tomorrow. The mere availing one self to BOI tax breaks qualifies a company to be expropriated by the State. The State has crossed the line with this bill. Who is to say that tomorrow the state cant bring in a Bill to take over your house and mine? Just like they are doing with the poor man’s dwelling with no respect for the law?  When I got up and asked from the government if they even knew the existence of the ‘National Policy on Involuntary Resettlement’ and the answer was only dropped jaws.  I think the time has come for every citizen to stand up and say this cannot be done. This is a fundamental violation of our rights," Dr. De Silva said.

The 37 companies and properties highlighted in the bill are: Hotel Developers Lanka PLC, Charmers Granaries (Pettah), Colombo Commercial Company (Badulla), Lanka Tractors Ltd (Pettah and Narahenpita), Pelwatte Sugar Industries (Moneragala and Uva Province), a listed company, Sevanagala Sugar Industries, Sinotex Lanka, Jaqalanka Ltd, Plymouth Industries, Cosmos Macky Industries, Kabool Lace, Former Cashew Corporation land, Intertrade Lanka, Suchir Neb Projects, Ceylinco Leisure Properties, Seetha’s Fashion, D. C. Apparel, Needle Craft, HY Fashion Garments, Collins Garments, Ruhunu Putha Apparels, Sanjaya Garments, Macfa Apparels, Yobeedha Associates, Dynamic Clothing, 609 Polymers Exports, Cosco Polymer Lanka, Great Well Thread Manuacturing, Adamjee Extractions, Data Food, Tendon Lanka, Rican Lanka, Composite Tower Solutions, Health Food Products, Sri Chirag, Royale Exporters and Continental Vanaspathi.

animated gif
Processing Request
Please Wait...