Q: Last week the PA Parliamentary Group blamed the UNP for the Puttalam cement scandal. As Minister of Housing and Construction during the period of privatisation of the cement company were you responsible for the deal with the Tawakkals of Pakistan?
A: At that time the government was implementing the privatisation policy. The Cement Corporation was valued at 20 million dollars, but the Tawakkal Group was offering a stupendous 41.1 million dollars for a 90 percent of stake of the company. That is double the value. Hence, government and the Evaluation Committee readily accepted the Tawakkal offer. My role was not a personal one. As Minister of Housing and Construction I merely tabled the Evaluation Report at the Cabinet. From that point onwards it was the Treasury that dealt with it, working out the modalities. As I see it, there was then no hanky panky. Personally I was against the privatisation of the Puttalam Cement Corporation. It was a paying concern. It paid Rs. one million as income tax but I had, as a Minister of the Cabinet, to go along with privatisation as it was the government policy.
Q: One of the conditions of the sale of the Puttalam Cement Corporation was that all money be paid in foreign currency. Later however after the award was given, Tawakkals wanted the government to accept half the money in Sri Lankan currency. The Cabinet approved this. This facility was not afforded to the second contender Holders Bank or the other bidders. The playing field was not level, what is your view? You were there too.
A: What you say is not quite correct. The Treasury naturally did not want to refuse since the offer was 41 million dollars and for ninety per cent of the shares. Holders Bank, the second in line, offered only 22 million dollars. I grant though, that the procedure later was wrong. I must also tell you that the Holders Bank people did a study of the Puttalam Cement Corporation. After that they offered to become partners on a profit sharing basis. This was an unbelievably astonishing offer since the Holders Bank is the foremost cement factory owners in the world.
Q: What was your role in the privatisation of the Cement Company?
A: Though the Puttalam Cement Corporation was under my Ministry, the privatisation as such did not come under me. The procedure is intricate. It first starts with a draft advertisement approved by the Commercialisation Division of the Treasury. Next an Evaluation Committee is appointed not by me but by the Treasury and there is a further Divestiture Committee appointed by the Cabinet. My ministry was concerned with it indirectly in that the Secretary to the Ministry of Housing and Construction, W.D. Ailapperuma was appointed as Chairman of the Divestiture Committee. This Divestiture Committee prepared certain recommendations, which I as the Minister of Housing brought before the Cabinet.
Q: The strange thing is that the Tawakkals were declared bankrupt by some banks in Pakistan but we let them come here and take over our cement factory in Puttalam. How did that happen?
A: Personally, I would not have recommended the Tawakkals under such circumstances. The plus points were the high price offered and the payment of 20 million dollars at once.
Q: As a senior Minister what do you think about the PA Cabinet reversing a decision on the Puttalam Cement deal without anything being recorded?
A: It's strange. Cabinet decisions can be revoked or changed, but that has to be recorded. The record must be straight.
