Lanka Tractors Questions Acquisition
By Dinouk Colombage
Lanka Tractors, one of the companies which are to be acquired by the government under the new Act introduced recently, has stated that the government has no legal right in acquiring the land.
According to Lanka Tractors Chairman, Daya Wettasinghe, the properties targeted by the company had not been granted by the government but belonged to a public company before purchase. He explained that a controlling interest in, and management of, the public company known as Lanka Tractors Limited, was purchased by a consortium of foreign and local investors. He further added that the government had previously described the sale as having been conducted in “the most transparent and competitive manner”.
Wettasinghe told The Sunday Leader that the properties were not owned by the government or a government agency ‘within a period of twenty years prior to the date of this Act coming into operation’.
According to public records on September 20, 1991, Lanka Tractors Limited was registered as a public company and incorporated under the Companies Act, No. 17 of 1982.
In 1992, 60 percent of the shares of Lanka Tractors Limited were unsuccessfully offered for sale on the Colombo Stock Exchange. In 1993 the shares were re-offered for sale on tender, and on this occasion four offers were received.
After having examined the offers, the Cabinet-appointed Committee for the Divestiture of Shares of Lanka Tractors approved the sale to Messrs. Globe Commercial Trading Co. Ltd. In addition 10 percent of the shares were gifted to the company’s employees, while it was agreed that the remaining 30 percent of shares would be publicly sold.
In 1998, Lanka Tractors Ltd and Globe Commercial Trading Co. Ltd. instituted action in the Commercial High Court of Colombo against the Attorney General (as a representative of the state) for having failed to fulfill its obligations undertaken in the original agreement. The government had failed to publicly issue the remaining 30 percent of the company shares.
Lanka Tractors said that the purported expropriation of the properties described in the schedule constitutes an infringement of the terms of the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Democratic Socialist Republic of Sri Lanka for the Promotion and Protection of Investments.
The High Court ruled in favour of Lanka Tractors and awarded the company damages as appealed for.
Wettasinghe explained that ‘the Secretary to the Treasury had not complied with the court ruling, despite it being over a year and a half since the verdict’. He added that the prolonged litigation cost the company foreign investors who had proposed projects ranging from hospitals and housing schemes to universities.