News
Maga Neguma company spent nearly Rs 100mn in legal fees: Audit report
View(s):By Namini Wijedasa
The Maga Neguma Road Construction Equipment Company (Pvt) Ltd – incorporated under the Road Development Authority (RDA) in 2004 – has spent nearly Rs 100mn in legal fees to private counsel, largely fighting cases filed by building contractors claiming unsettled dues, documents show.
The evidence is supported by a recent National Audit Office (NAO) report revealing that 12 ongoing cases filed by the company’s employees and officers, as well as “other parties,” had cost Maga Neguma over Rs 95.76mn in lawyer fees by February this year.
The Sunday Times obtained a breakdown of payments made to private attorneys – including one President’s Counsel (PC) – between September 7, 2023, and November 11, 2024. The disbursed amount totaled Rs 63.23mn, minus withholding tax. Maga Neguma is a state-owned enterprise (SOE) founded during the Mahinda Rajapaksa administration.
Minutes of an RDA special board meeting held in July 2024 confirm that Maga Neguma spent Rs 2mn on counsels each calling date. It also paid around Rs 2mn a month for a court-appointed provisional liquidator who has since been dismissed. These details now constitute public record as they were filed in court.
Some of the legal actions are contempt of court cases related to Maga Neguma not adhering to a mediation agreement sanctioned by the Commercial High Court of Colombo to pay contractors their dues dating back several years. The cases are ongoing but a new counsel has represented Maga Neguma since July 2025.
According to the breakdown seen by The Sunday Times, junior lawyers charged Maga Neguma a minimum of Rs 250,000 per appearance in the Commercial High Court while the PC billed Rs 750,000 for the same (going up to Rs 2mn for “drafting motion, supporting affidavit”). His appearance fee on August 27 last year was Rs 1.2mn.
The costs for September 1, 2023, alone, for “drafting motion, supporting affidavit” were Rs 5.6mn, for the PC and four junior lawyers.
Even mention dates – brief court appearances where judges receive updates on cases, provide directions to the parties and set the next steps for cases to progress through the court system – cost Maga Neguma hundreds of thousands of rupees.
According to the minutes, the RDA Chairman had said “the company finds it difficult to make these payments without income”. However, the matter of settling the dues of three contractors remains unresolved (while some other entities have received their payments).
In 2023, it was announced that the government had decided to shut down Maga Neguma and four affiliated entities owing to a lack of funds to maintain them. Another option being examined was to consolidate the five into a single company. However, neither was done. It is unclear whether the company is on the list of SOEs shortlisted for liquidation by the current government.
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