Financial Times

No decision yet on Rs 2 bln Harry J SLIC privatization claim
The Attorney General’s Department is yet to take a decision on its threat to sue tycoon Harry Jayawardena and auditors PricewaterhouseCoopers over a Rs 2 billion claim and counter-claim pertaining to the privatization of Sri Lanka Insurance Corporation Ltd.

The dispute arose over different interpretations between the government and the buying consortium led by Harry Jayawardena owned firms, including Milford Holdings. The privatization took place in April 2003 but issues over the purchase price adjustment remain outstanding.

The government and Jayawardena have clashed over details of the privatisation agreement such as which assets and liabilities are current, interpretation of the term consolidated accounts, and calculation of net working capital. Other issues outstanding are whether the purchase price is based on unaudited accounts of SLIC and the inclusion of funds in the life insurance fund. Jayawardena is demanding Rs 2,059,436,000 from the government which has rejected his claim and made a counter claim of the same amount which it says is the net working capital adjustment justly owing to the government. A consortium led by Jayawardena-owned firms paid Rs 6.05 billion for a 90 percent stake of SLIC.

Part of the dispute arises out of the need to adjust the purchase price consideration as provided for in the sale and purchase agreement of April 14, 2003, which ought to have been completed by June 11, 2003. The AG’s department also threatened to sue PWC which advised the government on the deal.

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