Workers
protesting against the privatisation of Oruwela Steel Corporation
The controversy over the deal to privatize the Steel Corporation has run into hotter fire after comments made by the Director General of PERC alleging that the quality of CSC steel was not up to standard.
The Chairman of the Steel Corporation has written to PERC's Director General, Ananda Weerasinghe to withdraw the statement. CSC General Manager R. Yogaratnam confirmed that the Chairman had taken up the issue with PERC while adding that such statements could affect the Corporation.
The CSC has issued a statement to pacify the infuriated workers that all products of the corporation are still being produced keeping to the same high standards.
Mr. Weerasinghe when contacted, claimed that his statement had been misinterpreted. "What I said was that in a competitive world the quality of the work could be improved. I never said that the standard was bad, but always had room for improvement," he said.
The privatisation of the profit making Steel Corporation is a total sell out to a Korean firm with Sri Lanka losing hundres of millions of rupees, a trade union official has charged.
According to Somaweera Chandasiri who heads an organisation for the protection of the CSC, the privatisation of the corporation in which 90 per cent of the shares has been sold for Rs. 840 million to a Korean Company - Hanjung has raised many questions about the deal and the actual benefits of the transaction.
The Peole's Alliance which vehemently opposed the privatisation of the CSC when it was in the opposition now maintaining silence seems one of the main contradictions in the PA policies before and after the elections in 1994, says Mr. Chandrasiri who heads a leading trade union.
According to documents prepared by him the first move to privatise the CSC came as far back in 1991 when the UNP govt. launched the programme to "Peoplise" state ventures, but due to protests the move was shelved. It was some of the top SLFPers including premier Sirimavo Bandaranaike and a few others who are in the present Cabinet who spearheaded the protest campaign.
After the lapse of three more years tenders were called again for the CSC. The then Housing Minister, Sirisena Cooray submitted a Cabinet Paper dated March 25, 1994 recommending that the offer made by the highest bid of Rs. 962.5 million from the combined S. N. K. International Co., Ltd. of Japan, Godo Steel Ltd. of Japan and the Development Finance Corporation of Ceylon (DFCC) be accepted for the purchase of 55 per cent of the shares of CSC, documents reveal.
Mr. Cooray had pointed out that the valuation of 100 per cent of the Corporation was Rs. 1400 million and therefore Rs. 962.5 million for 55 per cent was well over the valuation.
The Cabinet approved Mr. Cooray's proposal on April 20, 1994. The successful bidders were informed and they wanted time to make the payments. But following the August 1994 elections the transaction could not be completed due to a change in the govt.
Among the present Cabinet Ministers who vowed not to go ahead with the privatization of the CSC was the present Housing Minister, Nimal Siripala de Silva who personally called over at the Corporation site and assured that the privatization would never take place.
Among several others who campaigned against the privatisation of the CSC were the present Cabinet Ministers Mahinda Rajapaksha and Indika Gunawardena. The protests included "Deva Poojas", Mr. Chandrairi said.
In september 1995 through the Public Enterprises Reform Commission (PERC) the govt. re-offered the CSC for sale and in August 1996 it was announced that bids for the sale of 90 per cent stake in the Corporation would be closed on August 30, 1996.
However before the deal was closed the South Korean President, Kim Young Sam during a visit by President Chandrika Kumaratunga said Korean Companies were willing to buy the CSC.
The only bidder for CSC the Korean Company Hunjung was awarded the tender and the agreement was signed with PERC raising many questions about the deal, Mr. Chandrasiri said.
Among the main issues arising from the deal was that compared to the previous offer of Rs. 962.5 million for 55 per cent of the shares the present price of Rs. 840 million for 90 per cent of the shares is a big loss to the country.
The present sale price is also much lower than even the 1994 valuation, according to which 90 percent would have been Rs. 1260 million. The present price is even less than the lowest offer of six bids received in the tender of the previous govt. according to which 90 per cent would have been Rs. 884 million, documents reveal.
The previous govt. had also granted approval for 10 per cent of the shares to be transferred to the employees of the Corporation which would have amounted to shares worth Rs. 175 million when calculated on the basis of the offer that had been selected at the time of the tender and Rs. 140 million according to the valuation of the assets in 1994.
However the value of 10 per cent of the shares calculated on the basis of the sale prices of the Korean Company under the present agreement amounts to only Rs. 84 million and thereby the entitlement of the employees has been devalued by Rs. 91 million in relation to the offer that had been selected by the former govt., union documents reveal.
Questions are also being raised by workers of the CSC about the decision to privatise the Corporation which has been producing some of the finest quality steel products. The Corporation has been making profits in the past several years and possesses valuable assets including the 183 acres on which the factory is situated at Oruwala, Mr. Chandrasiri says.
The Corporation had a fixed deposit of Rs. 300 million and other finished iron and material worth Rs. 625 million when the deal was signed, he says.
The Corporation since 1991 has been earning a profit of more than Rs. 100 million at an average every year after the payment of BTT, defence levy, income tax and contributions.
The profits of the Corporation in the past five years are as follows; In 1991 Rs. 116 million, 1992 - Rs. 119 milllion, 1993 - Rs. 130 million, 1994 - Rs. 200 million, 1995 - Rs. 158 million and in the first nine months of this year Rs. 110 million.
In a report submitted by the Chielf Valuer even before Mr. Cooray's proposal to the Cabinet in 1994, it had been recommended that Rs. 1400 million be quoted as the floor price in the event of transfer of ownership of the enterprise.
Many of the workers believe that the govt. should have looked for new investment than privatising the Corporation which has been running at a profit and has the potential of improving, Mr. Chandrasiri says.
A "Butterfly village" to provide shelter and education and recreation for children orphaned by the war has been launched by a Social Service League.
Dr .Brighty De Mel, Vice Chairman of the Organisation, said they hoped to provide for about 150 orphans at first and for more as funds come in.
According to a plan outlined at a news conference, a village named "The Butterfly Garden" will consist of homes where a mother and an aunt will take of all needs of the orphans.
Each home will consist of about eight children with provision for a pre- school, a primary school, recreation hall, a place of worship, a vocational training centre, with an SOS trained counselor for each home.
Magaret Dias another organiser said preference would be given to children who had lost both parents and those whose widowed mothers were unable to provide for their children.
It is in need of a piece of land within the reach of Colombo and funds for the construction and maintenance of this village.
A series of fund raising campaigns have been organized and the first of these will be a jazz concert held at the Hotel Lanka Oberoi on the 8 th of December.
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