Similar to the persistent exposure in the newspapers of the LMS judgment and what public perceptions are based on the judgment of the former CJ and his colleagues, there is a need for more reports relating to Sri Lanka Insurance (SLI) judgment.
Based on the judgement it appears the government will lose a considerable amount of money.
Given below are some points extracted from the judgment. The comments given in quotes are from the judgment verbatim and I have referred to other facts in my own words to maintain brevity:
- Financial bids were received from two parties only- Commercial Bank/DFCC and Distilleries Company(DCSL) both of which were controlled by Harry Jayawardene. The bid by the first consortium was Rs. 3600 million (Rs.80 per share) and by the latter company Rs. 6050 million.(Rs. 134/- per share)
- The TEC on 25.3.2003 approved the transfer of 90% of the shares to DCSL at Rs. 6050 million. Greenfield Pacific EM Holdings (GPEM) was incorporated in Gibraltar only on the 28th March 2003 and registered in Sri Lanka only on 31st March 2003.
- Originally DCSL (24th Respondent) was not a company which expressed interest in the sale. The court says that they claimed they had made an application but could not produce evidence of it. A letter from DCSL also emphasizes that it is not representing any person or company domiciled in Sri Lanka or overseas. The court concludes that that the DCSL consortium had not made a proposal within the time specified.
- The court holds that the TEC and Tender Board had ‘manoeuvred’ the process to allow new parties in. If is clear that the court believed that such ‘manoeuvring’ had been done to help DCSL.
- A letter written by Damien Fernando, Finance Manager of DCSL sent on 29th November 2002, does not mention any foreign party involvement. This letter addressed to the Chairman of the Cabinet Appointed Tender Board through the Chairman PERC has been filed by the 24th respondent. The body of the letter reads as follows:
“We write to confirm that Distilleries Company of Sri Lanka Ltd is participating in the consortium with the Aitken Spence and Co.Ltd and Aitken Spence Insurance (Pvt) Ltd, to acquire shares of SLI on our own account as a principal. We confirm that we are not representing any company or a person whether in Sri Lanka or overseas.”
“The technical proposal also specifically reasserted the position set out in the earlier proposal that the ‘acquisition of SLI by the consortium will be funded through internally generated funds and debt”
The judgment says:” In the light of the facts set out above, the petitioners and the 13th respondent submitted at the hearing that the Distilleries Company had entered the bidding process through the backdoor. I have examined the written submissions filed on behalf of the 24th respondent Distilleries Co. The written submissions merely reiterate the position taken up by it that it submitted an EOI and a technical proposal within the stipulated time periods (which is clearly contradicted by the documentary evidence) without attempting to refute the allegation of ‘back door entry’.
“The buyers were strangers to the bidding process which culminated in the Cabinet decision of 2.4.2003.”
“The beneficial owner of the money brought into the country by Greenfield Pacific Ltd is concealed behind a series of corporate veils, thereby making it difficult to ascertain the real beneficial owner of the money”.
“When the SSPA was signed the 38th respondent DHS Jayawardene was the sole signatory on the side of the buyers, that is , the two purchasers and the three guarantors.”
Having come to a conclusion that there was a ‘back door’ entry by DCSL and a totally undisclosed entry by a foreign company which had been incorporated after the privatization had started, the Court has ordered that the consideration paid by the two parties Milford (which is made up of Mr. Jayawardene’s Companies such as DCSL) and GPEM registered in Gilbraltar, should be paid in its totality to Mr. Jayawardene because he signed for that company as well. In other words Mr. Jayawardene is being paid government money which includes money paid by GPEM for its 49% stake. The Court has stated quite categorically that they do not know who the ‘beneficial owner’ of the money is and we would feel that in those circumstances the money should be confiscated by the government.
We hope that the government which requires a great deal of money for reconstruction of the North and the East will take a stand similar to the hedging case and resist having to pay any part of the consideration back to the two companies concerned. After all this would be consistent with what happened to the investors in LMS and Waters Edge.
Concerned Citizen |
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