The Sunday Leader

Urban Development Authority Loses Rs. 330 Million

Due to unscupulous act of Chairman

by Nirmala Kannangara

  • Leaving the entire UDA, Board of Directors in complete darkness, Munasinghe had signed a 50 year lease agreement with Lake Leisure Holding (Pvt) Ltd for a mixed development project giving a concession of Rs.330 million to the lessee 
  • According to the lease agreement if the lessee fails to pay the balance 80% within three months from the time the two parties signed the agreement the advance payment could be forfeited, and the ownership of the land is once again vested with the Lessor- UDA.
  • Had the UDA followed government procurement guidelines this land which is boarding D.R. Wijewardena Mawatha and Sir Chittampalam A. Gardiner Mawatha in Colombo would have given to a property developer for a higher price than that of the government valuation.

Astonishing revelations have come to the fore how the Urban Development Authority (UDA) has incurred losses over Rs.330 million due an unscrupulous act of its present Chairman Jagath Nandana Munasinghe.

Munasinghe who is holding the post of Chairman UDA is on sabbatical leave from the University of Moratuwa and also holds the post of Director General National Physical Planning Department and had so far failed to carry out his duties by the state. Munasinghe  is accused of continuing to bring losses to the UDA similar to his predecessor and questions have been raised as to why the Minister of Megapolis and Western Development Patali Champika Ranawaka has turned  a blind eye to this scam allowing Munasinghe to make further losses to the Authority.

Leaving the entire UDA, Board of Directors in complete darkness, Munasinghe had signed a 50 year lease agreement with Lake Leisure Holding (Pvt) Ltd for a mixed development project giving a concession of Rs.330 million to the lessee.  Lake Leisure Holding was earlier known as Rank Entertainment Holding Limited and subsequently got the name changed to Rank Car Park Lanka (Pvt) Limited.

The Cabinet Sub Committee on Investment Facilitation in the last regime had given its approval to the UDA on March 23, 2007 to hand over a 2 Acre, 01 Rood and 21.40 Perches land at D.R. Wijewardena Mawatha to Rank Entertainment Holding Limited owned by Ravi Wijeratne of Star Dust Casino fame for a multi storied car park, a hotel and a shopping complex. Later the name of the company changed to Rank Car Park Lanka (Pvt) Limited and the approval given for a 30 year lease through cabinet memorandum no: 09/ 1391/ 320/ 064 by the then Finance Minister Mahinda Rajapaksa was cancelled and a cabinet approval was given to Lake Leisure Holding (Pvt) Ltd owned by the same owner of the two former companies for a mixed development project on a 50 year lease.

“According to the cabinet approval, the lessee had to pay the government valuation at once but the then UDA Chairman failed to implement the directives and signed the MoU giving time for the Lake Leisure Holdings to pay the valuation,” highly reliable UDA sources said.

The government valuation for this land in 2009 was Rs.2, 785 million and 20% of the valuation (Rs.577 million) had to be paid before entering into the agreement as per the government rules and regulations and the rest within three months from the date of signing the agreement, although the cabinet of ministers directed the UDA to lease out the land after obtaining the full value which directives were never implemented according to the sources who wished to remain anonymous.

The audit querry dated March 16, 2017 that confirms the scam and Jagath Munasinghe’s letter to Ravi Wijeratne giving concessions

According to the documents this newspaper is in possession, Rs. 100 million had been paid on August 4, 2009, Rs.25 million on February 3, 2010, Rs.5 million on November 18, 2010, Rs. 100 million on December 24, 2012, Rs.48 million on February 26, 2013, Rs.500, 000 on February 28, 2013 and Rs.278.5 million on September 25, 2013.

“The Company took four years and six months to pay Twenty percent of the total value (Rs. 557 million) but after entering into the lease agreement the lessee failed to pay the balance 80%  (Rs.2, 208 million) and VAT, NBT and Valuation charges amounting to Rs.6.461 million although many reminders were sent to Ravi Wijeratne. According to the lease agreement if the lessee fails to pay the balance 80% within three months from the time the two parties signed the agreement the advance payment could be forfeited, and the ownership of the land is once again vested with the Lessor- UDA. However despite of the clauses of the lease agreement, the then Chairman and the Board of Directors still allowed Lake Leisure Holdings (Pvt) Ltd to use the UDA land in Fort as a car park allowing them to make millions of rupees as parking fees. This was because of Ravi Wijeratne’s friendship with the Rajapaksa siblings,” UDA sources said on condition of anonymity.

According to the sources, had the UDA followed government procurement guidelines this land which is boarding D.R. Wijewardena Mawatha and Sir Chittampalam A. Gardiner Mawatha Colombo (in front of Lake House where the Government Supplies Department was earlier located) would have given to a property developer for a higher price than that of the government valuation.

Although Deputy Director General (Finance), UDA by letter dated January 31, 2014 to Ravi Wijeratne informed that according to clause 12 of the lease agreement, unless the remaining 80%  and 12% annual interest for Rs.2, 208 is paid with immediate effect, the advance payment would be forfeited and the land will be taken back to UDA, the lessee still failed to adhere the instruction thus violating the agreement and  the previous Board of Directors UDA,  did  not take any action.

Be that as it may, it is surprising as to how the new Chairman Jagath Munasighe after assuming duties under Minister Patali Champika Ranawaka entered into yet another agreement with the Lake Leisure Holding on February 6, 2017 despite of clear instructions given by Minister Ranawaka to take over the land in question back to UDA and lease it out to a new developer.

“Minister Ranawaka gave instruction to the UDA to take this land back but to an unknown reason, Chairman Jagath Munasinghe after obtaining a new government valuation for the land, signed an MoU with Ravi Wijeratne giving the same land on a 50 year lease. Although by this time, the advance payment this company made from 2009 to 2013 should have been forfeited and the lessee has to make the full payment, Munasinghe for personal favours not only deducted the previously paid advance but calculated Rs.330 million as an attribution to the above advance and deducted from the 2016 government valuation. Instead of this eye brow raising calculation which was beneficial for the lessee but a loss to the lessor, what Munasighe should have done was to recover a penalty from Lake Leisure Holdings for the loss the UDA had incurred by way of interest for the 80% which was Rs.2, 208 million for the period from 2013 to 2016,” sources said.

In a letter dated November 17, 2016, Munasinghe wrote to Ravi Wijeratne deducting the interest for the 20% advance paid amounting to Rs.330 million.

 

The letter further states as follows:-

Mr. Ravi Wijeratne,

 Lake Leisure Holdings (Pvt) Ltd,

No: 30, 14th lane,

Colombo 3

 

Allocation of the land extent of 02A, 01R 21.40 P, former Government Supplies Department Premises situated boardering D.R. Wijewardena Mawatha and Sir Chittampalam A. Gardiner Mawatha, Colombo 02 to M/S Lake Leisure Holdings (Pvt) Ltd, on 50 year lease basis for mixed development project.

This has reference to your letter dated November 15, 2016 addressed to the Chairman UDA and also to the previous discussions and correspondence had with you regarding the above matter.

As you would appreciate, the above matter has been referred to the Cabinet Committee on Economic Management and had decided that the above property can only be alienated to the identified buyer only after obtaining the present value from the Government Chief Valuer and also negotiating the same with the relevant party.

Based on the above directive, valuation was obtained from the Government Chief Valuer for a lease period of 50 years. Accordingly the valuation was Rs. 3620 million.

Since M/s Lake Leisure Holdings has made several advance payments in relation to the above totaling to Rs.577 million and also Rs.20. 085 million in respect of NBT and VAT during the period from August 2009 to September 2013and based on the request made this Authority have calculated the total interest that could have been attributed to the above advance made. Accordingly the estimated interest attributed to the advances have been worked up to end November 2016 is Rs.330.249 million.

Hence the valuation obtained from the government valuer for the above property which is marginally higher than agreed the amount and the interest attributable to the advances made thereon, which totaling approximately up to Rs.3, 604 million, this Authority has now decided to conclude this transaction provided that M/s Lake Leisure agrees to settle the balance outstanding prior to the end of this financial year.

We also noted from the discussions although the possession and the usage of the land has been passed on to your company in 2009, no substantial income has been generated from the usage of the said property. Therefore no adjustments of income generated from this property have been considered in to the following calculations.

Accordingly the balance amount payable is – Lease value Rs. 3620 million after deducting the 20% advance payment in 2013 of Rs.557 million and the attributed interest of Rs.330 million the balance to be paid is Rs.2, 732 million. In addition Rs.538 million as VAT and Rs.69. 83 million NBT, valuation charges Rs. 11.449 million and the total payable amount Rs. 3, 352 million.

Hence please make arrangements to settle the total outstanding amount on or before December 31, 2016 enabling this Authority to execute the above lease agreement.

 

Dr. Jagath Munasinghe Chairman

Urban Development Authority.  

 

Meanwhile government audit query dated March 16, 2017 Ref. No: HUD/ B/ UDA/ V03 reveals how Munasinghe has signed the MoU without the Board approval and the Board of Directors have been kept in total darkness.

Meanwhile the sources said as to how Munasinghe informed the Board of Directors at the managerial meetings held in January and February 2017 that he will inform about this lease at the next managerial meeting, the lease agreement had been signed on February 16, 2017 in secret, without the knowledge of the UDA director board.

“The Chairman has openly flouted government financial regulations and had made a huge loss to the UDA. Knowing that the government auditors have sent an audit query in this regard, Chairman Munasinghe without mentioning about the audit query had presented the agreement to the Board of Directors to obtain their approval for an agreement signed before. The Treasury representative Miss Nandani brought to the notice of other Board Members about the audit query, and did not give their approval. When the Minister is well aware of this scam- as to how the lessee was given Rs.330 million ‘concession’ and how Munasinghe had signed the MoU arbitrary without getting the Board approval, it is surprising as to why Minister Ranawaka is still allowing a fraudster to continue work in one of the most important institutions in the country without replacing with an honest and dedicated officer,” sources alleged.

 The Sunday Leader was unable to contact Minister Ranawaka.

Chairman’s Comment

When contacted Chairman UDA, Jagath Munasinghe to find out as to why the controversial MoU was signed between the UDA and Lake Leisure Holdings (Pvt) Ltd giving doubious concessions without the Board approval, Munasinghe said that the Board of Directors were informed well ahead before the agreement was signed.

When asked what made him to pay Lake Leisure Holdings the interest for the 20% advance they paid in 2013 and why he did not recover the interest the UDA lost because this company did not pay the 80% within three months after signing the agreement, Munasinghe said that since the UDA used the 20% advance (Rs.557 million) there was nothing wrong in paying the interest.

“The company wanted us to pay the interest at a rate of 12% but we paid only at 11% which came to Rs.330 million. Instead of re-paying that money to this company we deducted that amount from the total payable amount,” Munasinghe said.

When asked who gave permission for him to pay this interest to the developer, Munasinghe said that the Cabinet Sub Committee and the Board of Directors UDA gave the approval.

4 Comments for “Urban Development Authority Loses Rs. 330 Million”

  1. ed

    the URBAN Development Minister is INVOLVED IN THIS MEGA SCAM AND CORRUPTION with Mr. MUNASINGHE This has to be investigated by the President’s Special Commission and bring ALL CORRUPT ANS SCAM OFFICERS AND MINISTERS to face ALL LEGAL CHARGES and the relevant Officers and Ministers to PUNISHED under this YAPALANAYA Government . These Officers and Ministers HAVE BANKRUPTED THE COUNTRY IN MANY WAYS: Just imagine if they are found GUILTY THE COMMERCIAL CITY WHICH HAS TO BE BUILT COULD BE SAVED FROM THESE CORRUPTED OFFICERS AND MINISTERS.

  2. kudson

    champika is making millions fraudulently through his henchmen like munasinghe
    crooked and corrupt is the way to go in sri-lanka today

  3. Mahen

    One begins to wonder, whether these officials work for the Government or for private individuals? Then the question arises what personal benefits these guys receive for such expensive favours, that too from casino owners?
    If this is the behaviour of academics in this country can you blame an ordinary Government servant earning paltry wages with so much life pressures, succumbing to temptation?

  4. gamarala

    It is total graft under total chaos in financial dealings by a top public servant.
    He should be interdicted and charges framed, for an inquiry.

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