Lanka Mineral Sands takes Industry and Commerce Ministry to court
In a rare case of one state entity at loggerheads with a government ministry, Lanka Mineral Sands Ltd (LMSL) has filed action in the Court of Appeal on September 22 against three key officials at the Industry and Commerce Ministry for alleged malpractices.
In this respect, the petitioner, LMSL Chairman Maithri Gunaratne has submitted a writ application requesting court to allow for interim relief for the sale of minerals, the continuation of appointments made to the institution and the continuation of all other matters. Former Industry and Commerce Ministry Secretary Chinthaka S. Lokuhetti, Industry and Commerce Ministry Acting Secretary E.M.M.R.K. Ekanayaka, Industry and Commerce Ministry Additional Secretary (Re-structuring) K. Priyantha, LMSL General Manager M.M.S.K. Bandara Mapa and LMSL have been cited as respondents.
Even though the LMSL is under the Ministry of Industry and Commerce there is no constitutional or statutory provision empowering former Industry and Commerce Ministry Secretary Chinthaka S. Lokuhetti, Industry and the Commerce Ministry Acting Secretary and Mr. Priyantha to give general or special directions with regard to the exercise of powers and /or duties of the Chairman/Competent Authority of LMS, or LMSL.
Upon assuming office as chairman, the LMSL’s liquidity position was Rs.213 million and only sufficient for meeting the expenses of the company only for two months, the application stated.
But a stock analysis and verification found that there were stock minerals worth Rs.2 billion lying unsold and even unaccounted for at the production plant in Pulmoddai, it was noted.
Through a letter dated February 21, 2017 a Departmental Procurement Committee was appointed after which 11 tenders were floated and 10 concluded with the net proceeds from the sale of rutile, zircon, hi ti ilmenite and ilmenite of LMS being Rs.1.2 billion. Of the sales proceeds Rs.900 million has been invested in fixed deposits at Seylan Bank in the name of LMSL accounts.
In relation to the tender of 9000 MT of ilmenite LMSL had received a bid that crossed the US$250 million mark triggering the Procurement Department to request the Ministry to obtain Cabinet approval for the sale of the minerals.
However, following the submission of a Cabinet paper in this regard by Minister Rishad Bathiudeen the sale of the ilmenite was denied and asked to sell the stock by calling for international tenders “taking into consideration the increasing trend of price of ilmenite in the international market”.
Thereafter in another letter dated July 3, 2017 from Mr. Priyantha the LMSL was asked not to go ahead with the sale of any ilmenite which the petitioner claimed was over and above the decision of the Cabinet as well as in other categories of mineral sands through a Departmental Tender Board of Ministerial Tender Board until further notice.
As a result LMSL has not been able to sell the minerals produced for a period of over two months worth Rs.4 billion that are at the Pulmoddai plant in Puttalam causing a “colossal loss of revenue” to the institution and the state.
Later the Acting Secretary of the ministry had reconstituted the Departmental Procurement Committee excluding the Chairman as head of the committee going against the procurement guidelines which was stated in a letter to the petitioner.
The petitioner had also levelled allegations against the Ministry secretary regarding the illegal directives issued pertaining to the appointment of persons to the Board of LMSL.