Financial Times

LMSL-land clearly belonged to SLPA

By Natasha Gunaratne

The minutes of two board meetings of the Sri Lanka Ports Authority (SLPA), a respondent in the Lanka Marine Services Limited (LMSL) fundamental rights petition case, reveal that the then SLPA Chairman Parakrama Dissanayake had been pressurized by certain persons into signing the privatization agreement.

LMSL petitioner, Vasudeva Nanayakkara, in a letter dated 22 October 2008 and addressed to the Deputy Inspector General of Police in the Criminal Investigation Department (CID), writes that the former SLPA Chairman was under pressure to sign the agreement by 'one Mrs. Gunawardene of PERC, R. Paskaralingam, Advisor to the then Prime Minister, then Secretary to the Treasury Charitha Ratwatte whilst the Finance Minister was K.N. Choksy and the Prime Minister, Ranil Wickremasinghe.

The letter states that according to the minutes of an SLPA meeting held on 6 September 2002 in the board room of the SLPA, the agreement 'which had been signed previously by the Managing Director of SLPA on 20.08.2002 had been further signed by the Chairman only on 2.9.2002, consequent to the above undue pressure being exerted on him.'

Mr. Nanayakkara has further attached a copy of the Indenture of Transfer signed by former President Kumaratunga 'which was declared by the Supreme Court to be fraudulent and signed through a fraudulent process, in that, consideration stated therein to have been paid and received on 19.1.2005 had never been paid to the Treasury and never been received by the Treasury.' He goes on to state that 'the relevant file at the Presidential Secretariat will reveal as to who had been the persons who had caused this Instrument to be signed and which had been declared null and void by the Supreme Court.'
In the letter, Mr. Nanayakkara is asking the CID, in respect of the Supreme Court direction, to question and record the statements of all those persons above-named and those others, including those culpable of the private sector and take prompt action in terms of the Offences Against Public Property Act No. 12 of 1982 and the Penal Code.

According to the signature page of the agreement, a copy of which has been included with Mr. Nanayakkara's letter, the agreement was signed on 20 August 2002. The then SLPA Chairman's only signed the agreement on 2 September 2002.

Aug 2 . Board Meeting

According to minutes of an SLPA board meeting held on 23 August 2002, the then SLPA Chairman Mr. Dissanayake had stated at the outset that the special meeting of the Board was 'convened to keep the Board informed of the agreement relating to Lanka MarineServices Ltd.' The minutes show that he also stated that PERC had undertaken the sale of Lanka Marine Services Ltd and was having discussions with the Ceylon Petroleum Corporation on the privatization of bunkering services. Mr. G.P. Weerasinghe, Addl. Managing Director stated that the SLPA maintained that the land in question which is approximately 9 acres in Bloemendhal and the land on which the pipes are laid from the Port belong to the SLPA. The SLPA indicated that the throughput charge paid by Ceylon Petroleum Corporation (CPC) for the use of the Island Break Water dolphine berth and the pipe line upto the tunnel gate is US$3 per MT where the CPC operates and maintains this facility.

The minutes state that the Chairman pointed out that however, PERC indicated that CPC is of the view that they have paid for the land although the land has not been formally transferred. The SLPA's view was that such transfer is not possible as the land in question is reserved for the Port function of bunkering within the statutory obligation of the Port, whoever did those statutory duties.

The minutes further show the SLPA Chairman stated that on 8 August 2002, he along with the Addl. Managing Director met with Mr. Paskaralingam at the PERC office on their invitation to discuss matters of conflict between the tender floated by the SLPA for the use of 4 unused bulk oil tanks within the SLPA premises and the LMSL tender. At this meeting, a draft agreement relating to LMSL was given by the officer handling the subject at PERC with a request to approve it then and there as they were to sign it on the following day. He also stated that he requested time to study it and this was completed over the weekend and observations relating to land, throughput charges, refurbishment of infrastructure, price discrimination and national security were sent to PERC on 13 August 2002. PERC sent their counter observations in a letter dated 15th received on 16th August 2002.

The minutes state that the Managing Director stated that on 19 August 2002 about 16.30 hours, he received a telephone call from Mrs. Gunawardane of PERC requesting to call over at the General Treasury on the following day to sign an agreement relating to LMSL. He also stated that he informed that he was not aware of the agreement and he is not in a position to sign any such agreement without specific approval of the Ministry of Port Development and Shipping. He further stated that on the following day, 20 August 2002, Mr. Paskaralingam requested him to come and sign the agreement. Although he made attempts to contact the Chairman, he could not succeed. As a message was received to report at the Temple Trees at 16.30 hours to meet with the Prime Minister, he along with the Addl. Managing Director met with the Minister in Parliament with a note prepared by the Addl. Managing Director and briefed the Minister of the position.

According to the minutes, the Addl. Managing Director stated that when Mrs. Gunawardena of PERC requested again to come and sign the agreement, she was informed that this matter had been discussed with the Minister and without his instructions, he is unable to sign the agreement. He also stated that the Secretary to the Treasury informed him that he has discussed the matter with the Prime Minister and the Minister of Port Development and Shipping and requested to come and sign the agreement. However, he did not proceed to the Treasury until the Minister informed him that before signing the agreement, a clause should be incorporated with the condition that matters detrimental to the SLPA in the agreement will be negotiated subsequently. He further stated that this position was conveyed to the officials of the Treasury and the PERC. The Managing Director stated that he was informed that since the approval of the Cabinet of Ministers had been obtained, the SLPA can sign the agreement. When this position was conveyed to the Minister, he instructed to sign the agreement subject to the aforementioned conditions as there was no other option at that time. He pointed out that he was informed that the Prime Minister had instructed the Secretary to the Treasury and Mr. Paskaralingam to re-examine areas sensitive to the SLPA.

The minutes state that the board, whilst appreciating the necessity of following the policy of the government, observed that the agreement should have been signed after following the sequence of events such as obtaining the approval of the Board and the clearance of the Attorney General, etc. The Board also observed that the Draft Cabinet Paper has not been sent for the observations of the SLPA and to date have not received a communication of a Cabinet decision requesting the SLPA to enter into an agreement. The Board further observed that no written communication had been made by the Secretary to the Treasury requesting the SLPA to sign the agreement. It was further observed that transferring of land belonging to the SLPA should be made following the procedure adapted in this regard, in terms of the provisions of the SLPA Act.

According to the minutes, the Board considered the views expressed and decided to submit the following observations to Mr. Paskaralingam with a copy to the Secretary to the Treasury and request him to re-negotiate the following clauses in the agreement:

1. That land belongs to the Port and is identified for bunkering operations. The function of LMSL as presently defined is only importing and distributing marine fuel. Hence, defining of bunkering responsibilities towards fulfilling SLPA's statutory obligations are required to be included.

2. That the throughput rate of US$3 per ton will not be sufficient to maintain the facilities as well as upgrade the older pipelines and construct loading arms on the south jetty.

3. That the replacing of the old pipeline network will cost far in excess of the estimated Rs.50 million as many squatters need to be relocated. Hence replacing of the old pipeline network should be undertaken by LMSL immediately without waiting for the 2 year period where the provision for costs will not exceed Rs.50 million.

4. The provision for cancelling the agreement if the activities of the company are a threat to the national security should be included as in the SAGT agreement.

Second Board Meeting

According to the minutes of the 6 September 2002 SLPA board meeting, the then SLPA Chairman stated that action is being taken by the Minister of Port Development and Shipping, Eastern Development and Muslim Religious Affairs to intimate concerns of the SLPA in regard to the agreement relating to LMSL to the Prime Minister with a copy to Mr. Paskaralingam.

The Chairman also stated that Mr. Paskaralingam has agreed to look into the issues raised by the SLPA in this regard.

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