SCANDAL

   Government disowns Maga Neguma

By Mandana Ismail Abeywickrema 

The level of misappropriation of finances and misuse of public property at Maga Neguma Road Construction Equipment Company, which is a subsidiary of the Road Development Authority (RDA), has compelled the government to disown it, calling it a private entity.

The massive irregularities at the company were even taken up for debate at the last parliamentary sessions. In the face of many allegations levelled against it, government ministers claimed the institution was a private entity that was not under the purview of the state.

However, Maga Neguma Construction Equipment Company is a government-owned subsidiary of the RDA. A letter dated January 7, 2006 sent by the RDA to the Chairman of the Institute of Construction Training and Development, entitled “Registration of contractors – Maga Neguma Road Construction Equipment Company (Pvt) Ltd.,” clearly states that Maga Neguma Road Construction Equipment Company is a government-owned subsidiary of the RDA and has requested to be registered under M1 category.

Government connections

The letter further states that with the sudden closure of the Road Construction and Development Company (RC&DC), which was a 100 percent government-owned company registered as a road and bridges construction contractor with M1 grading, with effect from 2004 in pursuance to a cabinet decision taken the same year, the government was compelled to establish three companies under the names of  the Maga Neguma Road Construction Equipment Company (Pvt) Ltd., the Maga Neguma Emulsion Production Company (Pvt) Ltd., and the Maga Neguma Consultancy and Project Management Services Company (Pvt) Ltd.

The letter further states that the three companies are functionally inter-linked to each other and are subsidiaries of RDA, with an authorized share capital of Rs. 500 million each.

“In addition to the provision of financial, technical and human resources assistance to all these three companies by the RDA, all equipment and machinery owned by RC&DC and RDA worth more than Rs. 10 billion has been given to Maga Neguma Road Construction Equipment (Pvt) Ltd for the purpose of providing such equipment and machinery to the private sector, on hire, to enable private sector road construction contractors to undertake more road construction contracts from the government,” the letter adds.

The letter also states that the registration was necessary for the government to engage the company in mega road and bridge construction work of the government through the competitive bidding process.

Alleged mismanagement

However, since its establishment, Maga Neguma employees have made allegations about the mismanagement of the company and its finances.

In addition, the government has allegedly used resources of the company for election campaigns. During the North Central Provincial Council elections last year, Board Member Ranaweera Bandara and J.M.S. Jayasundera were sent to the North Central Province to look into the road development projects undertaken by Maga Neguma in the area.

The letters sent to Bandara and Jayasundera by Maga Neguma Chairman Jaliya Kulasekera stated that the officials would have to travel to the North Central Province to inspect the road development projects from July 1, 2008 until August 30, 2008. The Chairman provided each official with Rs. 105,000 for the trip. The North Central Provincial Council election was held on August 23, 2008.

Maga Neguma employees also allege that in another instance two double cabs belonging to Maga Neguma were used during the North Western Provincial Council election campaign this year.

On February 11 and 12, a Nissan double cab bearing number 50-8642 and Isuzu double cab bearing number 50-0446 were dispatched to the Peliyagoda transport unit from the Angulana yard.

The two double cabs had then been taken to the Hettipola vehicle yard on February 14.

However, Maga Neguma employees claim that there is no such vehicle yard in Hettipola and allege that the vehicles were taken for campaign work.

 Abuse of fees

Apart from the misuse of public property, the financial management at Maga Neguma Road Construction Equipment Company is in need of monitoring. It is alleged that while the stipulated fee for a board member attending a monthly board meeting is Rs. 4,000, almost every board member receives Rs. 10,000 for each sitting.

A document in the possession of The Sunday Leader on board members’ fees shows that members R.A.U Ranaweera, G.G. Bandula, Subasinghe, B.R. Ranaweera Bandara and Piyasena Wanniarachchi have each signed to receive Rs. 10,000 for a board meeting.

Also, the high-level officials at Maga Neguma also draw monthly salaries that exceed Rs. 100,000, inclusive of allowances.

The monthly salary of Deputy General Manager (Projects), inclusive of allowances, amounts to Rs. 113,000. The Deputy General Manager (Machinery) is paid Rs. 110,000, the Deputy General Manager (Finance) Rs. 108,000, the Project Manager Rs. 125,000, the Personnel Manager Rs. 100,000 and the Deputy General Manager (Machinery) Rs. 103,000.

Meanwhile, Maga Neguma Chairman Kulasekera is living the high life, residing at the Hilton Hotel, Colombo. Kulasekera has taken a room at the hotel on a permanent basis.

Kulasekera checks out

When The Sunday Leader contacted the Hilton Hotel and requested Kulasekera, hotel authorities informed us that he had checked out of his room on Wednesday, September 30. However, they confirmed that Kulasekera had been staying at the hotel for a long period. Interestingly, Kulasekera’s decision to check out from the Hilton Hotel coincided with reports of his extravagant lifestyle appearing in several news websites the day before.

Maga Neguma employees lament that the company’s management acts in total violation of all accepted administrative practices, and are calling for state intervention to streamline the institution.

“The Chairman gets directly involved in some financial transactions where monies are released directly to him,” they said.

Allegedly, Maga Neguma finances have been used freely by its officials. Even Sajin Vaas Gunawardena, who in 2004 was a General Manager of Maga Neguma, had in fact taken Rs. 2.5 million from the company’s account at People’s Bank. A letter sent by the Manager of the Katubedda Branch of People’s Bank to the Maga Neguma accountant has revealed Vaas Gunawardena’s act.

Given the government’s decision to disown Maga Neguma Road Construction Equipment Company, claiming it is a private company although it was established with public funds, the future of the company is now at stake.