New Govt. clears Krrish deal: Preliminary work starts
The new government, largely controlled by the United National Party (UNP) whose parliamentarians were vociferous against the Krrish deal when they were in opposition, has given the go ahead to the Indian-based company to commence the long delayed and controversial Krrish Square mixed development project, a top official confirmed.
Friday’s view of the Krrish site. Pic by Amila Gamage
Urban Development Authority (UDA) Chairman Ranjith Fernando told the Business Times that preliminary work on the project at the prime 4.3 acre land which housed the Transwork House, a British era heritage building in Fort, has begun following the clearance given by the government despite the Krrish group still not paying the final due of Rs.589.7 million with accumulated interest at 12 per cent.
The Business Times photographer who visited the site on Friday morning didn’t find any signs of activity except for the presence of a few cars.
Mr. Fernando said Krrish Transworks Colombo (Pvt) Ltd, a subsidiary of Indian real estate company Krrish Group, will continue the first and second phases of the project as they have already paid Rs.4.4 billion out of the full lease payment of around Rs.5 billion.
The company has to pay for lease rental for the third portion of the 4.3 acre land but there was no clause in the 99 year lease agreement that prevents the construction work till the payment of full amount, he added.
Since March 2013, the project which was launched in September 2012 has been halted as the company had not honoured its payments to the UDA. The Indian investor had evaded five deadlines for the balance payment of Rs. 589.7 million which has now ballooned to over Rs. 800 million with interest.
Krrish officials have given an undertaking to settle the total payment due to UDA soon, he said adding that most of the payments had been paid and the final payment had been delayed for nearly two years.
The company is planning to build four towers – the tallest tower with 85 floors, the second 80 and the other two – 55 floors each, in five million square feet of residential, commercial space and a hotel.
The project has been downsized from its earlier grand status to two towers under the present circumstances, he revealed.
The Krrish project was marred with controversy with the allegation of secret payoffs to keep the window open for payment and for various approvals, which ended with some unfortunate incidents. Names of several powerful members of the former regime and their powerful financial backer figured in the alleged secret payoffs.
Prime Minister Ranil Wickremasinghe, Finance Minister Ravi Karunanayke, Deputy Ministers Dr. Harsha de Silva, Sujeewa Senasinghe and several UNP MPs were highly vociferous in and outside Parliament when they were in the opposition during 2013- 14 period against the complete lack of transparency in the ‘Krrish deal’.
A statement by Ranil Wickremesinghe, then Opposition leader in early November 2012 was given wide publicity in local media which quoted him as saying “even though Krrish Group was to have made a 20 per cent down payment of the total sum within seven days of establishing the company in Sri Lanka and the remaining 80 per cent on signing the lease agreement, these monies had not been deposited in any bank account of the Government”.
Finance Minister Ravi Karunannayake when he was an MP in July 2013 had called for a high level investigation into a complaint by an official that his life was under threat for accepting US$4 million on behalf of two powerful persons in the government in connection with the Krrish deal.
Deputy Minister Dr. Harsha de Silva making a statement in parliament in end August 2013 noted that names of several key figures including that of the then Chairman of the Securities and Exchange Commission Dr. Nalaka Godahewa had been linked in secret payments that have been allegedly paid to secure the legal rights to develop the land.
Dr. Godahewa’s Executive Secretary at the SEC, Janssi Kuhanesan, was also a consultant at Krrish, according to her profile on Linkin, the social networking website.
In October 2012, the Ministry of Investment Promotions through a Gazette notification suggested a 25-year tax benefit for the Krrish Square Colombo project.
According to the Gazette, the project was to be granted a 10 year income tax holiday and a concessionary 6 per cent tax rate for the following 15 years. Further, the firm was to be exempted from withholding tax on interest on foreign loans and capital expenditure and technical fees paid.