Sinolanka deal of Celestial Residencies opens can of worms
The deal involving the takeover of ownership of Celestial Residencies, one of the valuable and iconic properties of the failed Ceylinco Group, three years ago from the then government by Sinolanka Hotels and Spa (Pvt) Ltd has opened a can of worms, following a complaint lodged by Deputy Minister of Planning and Economic Affairs Harsha de Silva at the Bribery or Corruption Investigation Commission this week.
Dr.de Silva in his complaint made a request from the Bribery Commission to investigate the corrupt incident of the previous government taking over the massive 47 story building being constructed opposite Temple Trees from the collapsed Ceylinco Group and selling it to Sino Lanka for a bid of Rs. 375 million while Ceylinco Shriram, another failed entity of Ceylinco, had already received a bid for Rs. 7.5 billion.
Sinolanka has given a 20-year management contract to Hyatt International under the Hyatt Regency brand and the terms of engagement have been concluded.
The Business Times revealing details of the deal in several articles published in the months of June and July 2012 reported that Sinolanka Hotels and Spa (Pvt) Ltd was formed by four top officials of the then government with close connections to former Pesident Mahinda Rajapaksa with an initial capital of just Rs. 40.
These four officials are former Chief of Staff, Presidential Secretariat Gamini Senarath, Sri Lanka Insurance Corporation (SLIC) former Executive Director Piyadasa Kudabalage, SLIC former Managing Director and Chief Executive Officer Mohan de Alwis and H.K.D.W. Neel Bandara Hapuhinna.
Mr. Senarath who held the chairmanship of People’s Bank, Litro Gas Company, Litro Gas Terminal Lanka Ltd. Canwill Holdings Ltd, and People’s Leasing and Finance PLC and Mr. Kudabalage, who served as director in 22 companies, were close confidants of the former president.
The most startling factor in the administrative structure of this company was the appointment of former CEO Ceylinco Shriram Hiran de Silva as the project chairman of the company. He was remanded earlier by the Fort Magistrate in connection with alleged criminal breach of trust and cheating of Rs. 7 billion belonging to Shriram depositors, a disgruntled depositor told Business Times.
Several Shriram depositors said that the authorities should prevent these persons from leaving the country and record their statements to find answers to questions like, “Who owns the Sino Lanka company? Where has it been registered? What do they have to do with Litro Gas? When the agreement was signed, the value of the company was 40 rupees. How was it that a company worth Rs. 40 was given the contract to build a 47 storey hotel?
According to official sources, 85 apartments with a total sale price of Rs.3.8 billion had been reserved and sales advances amounting to Rs.2.3 billion had been paid to the failed Ceylinco Group by prospective buyers. A loan facility of Rs.2.6 billion was obtained from Seylan Bank PLC and Ceylinco Shriram made an investment of Rs.1 billion.No compensation or refunds were made to these buyers of apartments by the Sinolanka company which took over the property acquired by the then government under the Revival of Underperforming Enterprises and Underutilized Assets Act as an underperforming asset, the official sources revealed.