Financial Times

Post divestiture – litigation against government agencies

The recent Supreme Court judgment in the Lanka Marine Services Ltd (LMSL) case and the impending judgment in the Sri Lanka Insurance privatisation case shows how much the privatisation process in Sri Lanka is under attack. Several post-privatizations under the now defunct Public Enterprises Reform Commission (PERC) have ended up in litigation against the government or its agencies. According to the information available, 14 privatizations starting from 1992 have ended up in court and judgments on the most controversial and contentious have been handed down by the Supreme Court, most recently the 2002 Lanka Marine Services Limited (LMSL) divestiture.

Starting from June 1986 to March 2004, there were a total of 98 divestitures. The former PERC had commenced carrying out a review/survey of all divestitures with a view to examining, evaluating and assessing their impact and also assessing the successes and failures and causes. To undertake this endeavour, PERC had established a 'Monitoring & Evaluation Unit' on 1 November 2004, headed by a Director and supported by a team of professionals. The following is a list of post-divestitures that have gone into litigation which had been previously posted on the PERC website:

Ceylon Port Services Ltd – December 1992; Acland Insurance Ltd – February 1993; Lanka Canneries Ltd – November 1993; Lanka Tractors Ltd – January 1994; Colombo Commercial Co. (Engineers) Ltd – December 1997; Pussellawa Plantations Co. Ltd – December 1997; Lanka Marine Services Ltd – August 2002; Sri Lanka Insurance Corporation Ltd – April 2003; Galaboda Estate; Deltota Estate; Cluster Bus Sector – Aborted Divestiture; and Colombo Commercial Co. (Teas) Ltd – Liquidation.

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