By Gagani Weerakoon Courtesy Ceylon Today

A Cabinet Paper forwarded by Minister of Finance, Ravi Karunanayake, seeking Cabinet approval to compensate an individual, paying Rs 300 million from government coffers was put on hold by President Maithripala Sirisena during the Cabinet meeting on Wednesday (23).

This Cabinet Paper which sought paying Rs 300 million to Professional Consultant Nihal Sri Ameresekere seeking an amicable settlement over the long-drawn Hotel Developers Lanka Ltd. case, popularly referred to as the Colombo Hilton case, not only raised many eyebrows of Karunanayake’s Cabinet colleagues but utterly provoked Minister Kabir Hashim.

Karunanayake seemed to have attempted another mischief by presenting this Cabinet Paper keeping Hashim in complete darkness as the latter, under whom the subject falls, had no idea until President Sirisena put the matter on the table.
The Cabinet of Ministers also raised concerns on the matter as the Cabinet Paper was presented at a time when complaints were lodged against Ameresekere at the Financial Crimes Investigation Division (FCID) and with the Commission to Investigate Allegations of Bribery or Corruption for obtaining an overdraft of Rs 100 million from the Bank of Ceylon (BoC) just one month before the 8 January 2015 Presidential Election.

Ameresekere in fact, had convinced the BoC management that he was in position to recover Rs 100 million within a month, with monies the Treasury owed him, but has not been settled thus far even after one year.
Janatha Vimukthi Peramuna (JVP) Western Provincial Councillor, Asoka Ranwala, turned the spotlight on this questionable request for a Rs 100 million overdraft facility from the Bank of Ceylon.

Ameresekere had said that the overdraft facility “will be regularized before a period of one month with the release of certain monies being paid to me by the Treasury, which is now in the final processing stage.”
The JVP Provincial Councillor had questioned the timing of the payment and facility by BOC, the backing by the Treasury for a loan by an individual, the modus operandi, lack of transparency on the part of the Treasury, HDL as well as Ameresekera.
He had also asked the authorities to probe whether there were any political reasons for the payment.

Cabinet Memorandum
Claims regarding Hotel Developers Lanka Ltd. (HDL)
1. Introduction
Mr. Nihal Sri Ameresekere, a Professional Consultant, had been a main Promoter, Director and Subscriber of Hotel Developers (Lanka) PLC (HDL), which had promoted and developed the Hilton Hotel, immediately after the ethnic riots of July 1983.
1(a) Upon having discovered a fraud in the construction of the Hilton Hotel, Mr. Ameresekere, as a shareholder of HDLL, had filed in 1990 a derivative action in law, in the right and on behalf of HDLL, D.C. Colombo Case No. 3155/Spl, preventing any payments being made to the Japanese Consortium, Mitsui and Taisei, who constructed and developed the Hilton Hotel, as and by way of Loans to HDLL, which had been guaranteed by the Government.

2. Subsequently, in the context of Japan at that time having been the major aid provider to Sri Lanka, the Secretary to the Treasury and the Hon. Attorney General had intervened with Mr. Ameresekere urging that his Cases be amicably settled.
3. Accordingly, draft Settlement Agreements had been formulated by the Hon. Attorney General, in concurrence with the Treasury, and which had been forwarded to Mr. Ameresekere in June 1993. These Settlement Agreements, on the insistence of Mr. Ameresekere had provided for defaulted interest for 9 years on these Japanese Loans and 30% of Loan Capital to the written-off, with the balance unwritten -off Loans to be re-scheduled over period of 13 years at 6% p.a.

4. For such benefit gained by the Government, as the Guarantor of the Loans, the Government had agreed to adequately compensate Mr. Ameresekere for his professional time and efforts, and to afford him representation on the Board of Directors of HDL, as per the Clauses in the draft Settlement Agreements.

5. The Settlement which had been initiated during the tenure of President R. Premadasa had been endeavoured to be concluded in 1994 by President D.B. Wijetunga, together with Hon. Attorney General and Mr. Ameresekere. However, with the Japanese Consortium having insisted upon Promissory Notes from the Government, in addition to the Government Guarantees, Mr. Ameresekere had declined to conclude the Settlement.

6. Thereafter, in June 1995, the Settlement Agreements on the lines of the above drafts, had been executed, with the Hon. Attorney General having approved the same, after having adduced and obtained approval therefore from the Special Presidential Commission inquiring into this fraud, and with Cabinet approval.

7. On the insistence of Mr. Ameresekere, the Japanese Consortium had agreed to write-off 10 years’ defaulted interest and 30% of Loan Capital, and to reschedule the balance unwritten-off loans over a period of 16 years, at a reduced rate of interest, and had agreed to receive Promissory Notes from HDL, and not from the Government, which conditions were further improvements on those in June 1993.

Thus by the settlement entered into in June 1995, the Japanese Consortium wrote-off Jap. Yen 17,586 million, i.e. then US$ 207 million,/SL Rs 10,200 million, on the Government Guarantees, and re-scheduled the unwritten-off balance over a further period of 16 years up to 2010 (originally fully payable by 1999) at a reduced rate of interest of 5.25% p.a. (originally of 6.00% p.a.), with a grace period of one year, to further financially re-structure HDL.

8. In view of the immense benefit gained by the Government, as had been contained in the Draft Settlement Agreements of June 1993, the Government had agreed to compensate Mr. Ameresekere for his professional time and efforts, and to afford him representation on the Board of Directors of HDL, as per the Clauses in the signed settlement agreements of June 1995.
9. The compensation to be paid by the Government for Mr. Ameresekere’s professional time and efforts for the write-offs, reductions and re-scheduling of the Government Guaranteed Loans had been agreed to determine by an independent financial/merchant banking institution, in terms of a schedule to the signed settlement agreements. Apart from the financial claims Mr. Ameresekere has requested three board members to be nominated by him to the HDL Board. To settle that matter amicably he has agreed to one seat to be nominated by him in the HDL Board.

10. As noted in several communications sent by Mr. Nihal Sri Ameresekere, he has contributed towards resolution of HDL related issues. Attention is drawn to the report dated 19.07.2006 titled – Report on the amount payable to Mr. Nihal Sri Ameresekere for the service rendered by him re – Hotel Developers (Lanka) Ltd.” (HDL) – Examination of the MBSL Report and updating therefore for discussions with the Government by Jayaweera & Co., Chartered Accountants.

11. After several endeavours towards reaching a settlement, Mr. Ameresekere by his letter dated 12.12.2014, addressed to
Mr. Lalith Weeratunga, Secretary to President Mahinda Rajapaksa and copied to Dr. P.B. Jayasundera, Secretary to the Treasury and General Manager – Bank of Ceylon has confirmed that he is agreeable to a full and final settlement of Rupees Three Hundred Million (Rs 300 million) against his claims with Rs 100 million thereof being immediately advanced as an overdraft facility through the Bank of Ceylon.

12. In this background, the Treasury by a letter dated 15.12.2014, has communicated to the General Manager Bank of Ceylon with a copy to Secretary to the President and the Competent Authority that the Treasury has no objection to granting an advance of
Rs 100 million to Mr. Ameresekere in view of the proposed final settlement in lieu of all the claims with respect to HDL, which may be finalized in consultation with the Competent Authority appointed under the Revival of Underperforming Enterprises or Underutilized Assets Act No. 43 of 2011 and that the final claim amount will be remitted to him upon the finalization of the claims. This, without hesitation, would certainly have had the concurrent approval of the then President, Finance Minister Mahinda Rajapaksa.

13. As this is a matter that is pending with regard to HDL which is an enterprise that has vested with the Government in terms of Revival of Underperforming Enterprises or Underutilized Assets Act No. 43 of 2011. In this backdrop and considering the fact that Mr. Ameresekere’s claims are on account of services rendered with regard to Hilton Hotel, this matter was deliberated by me and the Secretary to the Treasury with officials.
14. Until a final decision was made to honour the undertaking given to Mr. Ameresekere, Rs 100 million overdraft facility was augmented by further Rs 125 million in June 2015.

15. Having deliberated on the merits of Mr. Ameresekere’s total claim it appears that reaching a finalization on this long-drawn matter, on the basis of a Full and Final Settlement would be beneficial, since HDL could then proceed with its activities as a business enterprise, free from this long- drawn compensation payment committed by Mr. Lalith Weeratunga, Secretary to the President Mahinda Rajapaksa. The value of the write-off and rescheduling of the balance by Mr. Ameresekere amounts to
Rs 86,750 million.

16. Approval
As such, approval of the Cabinet of Ministers is sought;
i. To proceed with a settlement noted above as confirmed by Mr. Ameresekere, having paid a total of Rs 300 million plus the interest up to date of the Cabinet decision of the overdraft facility granted (Rs 225 million) to Mr. Ameresekere, on the basis that it will be the full and final settlement while also undertaking that Mr. Ameresekere would not seek any further redress in any Court or forum in this regard.

ii. To direct the Director General National Budget Department to provide necessary allocations for the above (i) payments.
Ravi Karunanayake, MP, Minister of Finance In question
Karunanayake insisted Ameresekere, a Professional Consultant, had been a main Promoter, Director and Subscriber of Hotel Developers (Lanka) PLC (HDL), which had promoted and developed the Hilton Hotel, is in rightful position for claims.
On the other hand, business tycoon Cornel Perera, who is known as the owner of the Hilton Colombo as the major shareholder (56%) had in fact run two-page paid advertisements in Sinhala, English and Tamil newspapers even after the 11 September, in 2012, 2013 and 2014 consecutively for the Colombo Hilton anniversary, even after the government acquired it under Expropriation Act 2011. No party has thus far disputed the content of these paid advertisements.

When Ceylon Today contacted Perera, he re-confirming what was published in newspapers said: “I am the owner of the Colombo Hilton, the main shareholder and promoter. I was the only one who put money to it and no one else paid a cent in addition to the loans from the Japanese Government.”
Perera, despite facing two terrorist wars, the LTTE and the JVP insurrection, had delivered the hotel to President J.R. Jayewardene in 1987 as promised.
“For Japan, President JR waslike God. For them Sri Lanka was JR. In 1987 two Japanese Ministers came down to invite President Jayewardene for the inaugural ceremony of Colombo Hilton. They had chosen the day as 17 September to coincide with JR’s birthday.”

Yet President JR’s response had caught them off-guard.
“He said, ‘thank you for considering my birthday and inviting me for this. But I want the date to be 11 September.’ And, that was my birthday. He said, if not for Cornel and his family taking the risk, my dream of having a Hilton in Colombo will be nothing but a dream. Therefore, I want the opening ceremony to be on his birthday and not mine,” Perera recalled.
Many attempts by two Japanese Ministers to convince the late President had gone in vain as he was adamant, thus the Colombo Hilton was finally opened on the birthday of Cornel Perera.

Meanwhile, on 4 December 2013
Dr. Harsha de Silva who was in the Opposition then went on record saying that the main shareholder of Hilton Colombo, Cornel Perera, wanted a compensation of
Rs 3.5 billion in March 2012. But his letter was not responded to until July 2013.
Why the rush
The first Cabinet Paper in this regard had been forwarded by Karunanayake weeks after the formation of 100-day yahapalana government, but the President had declined it asking Karunanayke to put forward a fresh memorandum as the previous one lacked details.

President Sirisena had in fact told Karunanayake to be specific on dates and time periods as it would imply the matter had entirely taken place during previous regime.
The Cabinet of Ministers have, meanwhile, questioned the rush Karunanayake is showing in settling this
Rs 300 million to Ameresekere, when the case in fact has not been settled yet.

We, in an earlier column on 13 December 2015 revealed that some are speculating that it was based on Ameresekere’s advice that Karunanayake was adamant on keeping those whom he appointed to key institutions, that earlier came under the Finance Ministry, to remain in their positions.
This decision meanwhile, created a rift between Minister Karunanayake and Minister Kabir Hashim under whom the institutions in question are now falling.

In an email response that had also been copied to Ministers Karunanayake and Hashim, Ameresekera had said: “I refer to the penultimate paragraph of column two and the highlighted statement that – ‘unconfirmed sources suggested that it is Nihal Sri Ameresekere who is behind this legal advice’. I was overseas at the relevant time. Also, I am not a Lawyer, and hence not competent to give legal advice. Nor did the Hon. Minister of Finance seek any advice on the matter. I am sure he has Lawyers to seek legal advice.”

Karunanayke’s colleagues have in fact brought it to the notice of the President that the Treasury had taken steps to augment the overdraft facility by another RS 125 million in June 2015 despite the previous Rs 100 million not being settled.
They also questioned as to what motivated Deputy Secretary to the Treasury S.R. Attygalle to send a letter dated 15 December 2014. The Finance Ministry and the Treasury have had no objections to BOC granting, the Rs 100 million facility to Ameresekere.
According to Deputy Secretary to the Treasury Attygalle, this was in view of the proposed final settlement in lieu of all claims with respect to Hotel Developers Ltd. (HDL), which was acquired by the Treasury under the Expropriation Act of 2011. He had informed BoC that the final claim amount will be remitted to the Bank upon finalization of the claims.

Karunanayake also has mentioned: “….. In this background, the Treasury by a letter dated 15.12.2014, has communicated to the General Manager, Bank of Ceylon with a copy to Secretary to the President and the Competent Authority that the Treasury has no objection in granting an advance of Rs 100 million to Mr. Ameresekere in view of the proposed final settlement in lieu of all claims with respect to HDL, which may be finalized in consultation with the Competent Authority appointed under the Revival of Underperforming Enterprises or Underutilized Assets Act No. 43 of 2011 and that the final claim amount will be remitted to him upon the finalization of the claims. This without hesitation would certainly have had the concurrent approval of then President, Finance Minister, Mahinda Rajapaksa.”
However, the Competent Authority of HDL, Senaka Walgampaya PC had raised concerns about Treasury’s ‘no objection’ letter to BoC.

Walgampaya, in fact, wrote to the Treasury after receiving the letter addressed to the BoC General Manager and copied to him stating that there was absolutely ‘nothing’ due to Ameresekere.
He had made these observations based on the report by Merchant Bank of Sri Lanka on HDL commissioned in March 2006 and having consultations with then Director General of Public Enterprises, V. Kanagasabapathy.

Several ministers had voiced their concerns and had reportedly asked whether Karunanayke’s rush in compensating Ameresekere arises as tribute to the latter for backing him in legal cases on Shirani Bandaranayake and Raj Rajaratnam.
President Sirisena on the other hand put the matter on hold and said he will take a decision on the memorandum after having consultation with Prime Minister Ranil Wickremesinghe once he returned to the country. Both Wickremesinghe and Karunanayake were out of the country.

Kabir should intervene
Meanwhile, interested parties have opined that the government should not rush in paying any individual until the pending cases are settled at once.
Minister Kabir Hashim under whom the matter falls should form a committee where representations are made by lawyers representing Cornel Perera, Nihal Sri Ameresekere and all foreign shareholders who have initiated legal cases.
Compensating any party should be sought only after settling these cases at once and by selling shares in the open market, they said.

However, any payments should not be made without reporting to the Cabinet and if there are other commitments to any other parties those too shall be settled only after a final settlement and with the consent of all shareholders, including foreigners.

Maithri warns ministers
Following last week’s Cabinet meeting President Sirisena once again asked ministers to remain in the premises for a while, as he wanted to discuss an extremely important matter with them.
He had said that he had received some alarming intelligence reports that there will be an attempt to topple the government with the dawn of New Year.

The reports indicated that while there is a political leadership in this attempt it will come as a trade union move.
“I have been informed about who the political leader who is behind this move and the trade union action will be spearheaded by the doctors attached to the GMOA. They will first start it as a work-to-rule campaign but the matter could go out of control if ministers do not pay attention,” he had informed the ministers.

The President also said as he was aware about the political involvement he will take necessary steps at the right time to bring those under control.

“But everything else lie in your hands. Work closely with officials in your respective ministries and departments. Do not ignore issues that could lead to trade union action. If you work closely and listen to your subordinates we can face this successfully,” he advised Ministers.