Government defaults Rs.15 billion owed to Harry J Group
Sri Lanka’s Treasury owes over Rs.15 billion to a consortium consisting five companies belonging to businessman Harry Jayawardena due to the takeover of Sri Lanka Insurance Corporation (SLIC) and Distilleries Corp of Sri Lanka (DCSL) belonging to the Group during in 2009 and 2011 respectively, Chairman of Melstacorp Plc, the parent company of this consortium, told the Business Times.
Melstacorp PLC is now a diversified company encompassing many industries such as beverages, tea and rubber plantations, telecommunication, financial services, power generation, logistics, textiles and hospitality.
Group turnover reached Rs. 110 billion, while the profit after tax for the year was Rs. 6.25 billion. The group contributed Rs. 70 billion in taxes during this financial year, he reveled.
According to the Supreme Court judgment, the Treasury is expected to repay over Rs.6 billion which was spent by Milford Holdings Ltd headed by Mr. Jayawardena, part of the consortium of five companies that bought the 90 per cent stake in Sri Lanka Insurance Corporation (SLIC) in the 2003 privatisation deal.
The consortium consisting of Milford Holdings (Pvt) Ltd, Greenfield Pacific EM Holdings Ltd, DCSL and Aitken Spence Insurance (Pvt) Ltd, entered into an agreement on the sale and purchase of the entire issued share capital of SLIC on April 11, 2003 at a price of over Rs.6. billion.
The Supreme Court also ordered the Treasury to issue Treasury bonds to the value of over Rs. 6 billion shelled out for the purchase of SLIC shares in the name of Milford Holdings by the Treasury Secretary with a maturity period of five years.
The Treasury has to refund this money in 2014 following the maturity of Treasury bonds but so far it has failed to do so, Mr. Jayawardena said refuting claims that state authorities had returned the money to him.
He said that he has sent several letters to the President, Prime Minister, and the Finance Minister urging them to direct the Treasury to redeem the Treasury bills on maturity, but it was unheeded.
Meanwhile 3000 shareholders have been in distress since the government’s acquisition of DCSL PLC owned Pelwatte Sugar Industries in November 2011 and no action has been taken to pay any compensation to them, Mr. .Jayawardena said pointing out that the Treasury has to pay compensation of around Rs.9 billion to his company.
A tribunal committee has been appointed by the government to look into the matter of shareholders. “We’re awaiting the committee’s decision,” he disclosed.
The DCSL Group is among the leading corporate conglomerates in Sri Lanka with assets in excess of Rs. 94 billion and an annual turnover of approximately Rs. 63 billion.
The company’s profitability dropped in the first three quarters but it managed to recover and record a net profit after tax of Rs. 4.35 billion, Mr. Jayawardena said.