Will confidential letter on Vauxhall Street land deal boomerang on Kabir?
Mar 23, 2016
A letter sent by state enterprise minister Kabir Hashim to adviser to the prime minister R. Paskaralingam has led to a problematic situation with regard to the handover of a plot of land located at Vauxhall Street, Colombo 02, owned by the Janatha Estate Development Board (JEDB), to a private investor.
‘Ceylon Today’ reported last week in its front page main article that a Rs. 02 billion financial irregularity would take place in this deal. That relates to certain content in Hashim’s letter to Paskaralingam. The plot of land in question has already been obtained by Mr. Paint Lanka, an affiliate of Kandy Tyre House, on 33-year lease until 2033. At present, a vehicle repair facility is run at the place.
The company had asked JEDB to provide the land on 99-year lease for a mixed project along with Japan’s Procon Development (Hong Kong) company. That project will see the construction of a 37-storey building with 500-houses, offices and a shopping complex. State land is not given on 33-year lease for housing projects, and the duration is 99 years. The investor is ready to invest 200 million US dollars on the project and the money is already deposited in a local bank.
The preliminary discussion on this land deal took place in 2013 during the previous Rajapaksa regime, and cabinet approval was given in 2014. Owing to the deals rampant with irregularities during that administration, this project too, was deemed to be so.
However, the estimated value for the land was Rs. 4.2 million per perch, and the investor had agreed to the sum, which amounted to Rs. 1.15 billion in total.
However, the estimated value for the land was Rs. 4.2 million per perch, and the investor had agreed to the sum, which amounted to Rs. 1.15 billion in total.
However, the present government suspended all major projects, and the 100-day cabinet too, sanctioned it. This matter continued to be discussed at the cabinet subcommittee on economic management. At those meetings, JEDB chairman Kennedy Gunawardena opposed the Rs. 4.2 million rate, and said that that amount would not help the institution to pay its loans and taxes, and wanted the rate fixed at Rs. 8 million per perch, for which, he said, there were buyers. However, Paskaralingam pointed out to him the regulations governing the leasing or sale of state properties and said this deal should not take place in a fraudulent manner similar to the sale of the Galle Face land during the Rajapaksa regime. The government valuer has given a report which values the land at Rs. 06 million per perch. According to reports reaching us, the Japanese investor has agreed to that price. However, it is to abandon the project if government approval is not received by March 30.
Hashim says in his letter to Paskaralingam that it will be a big irregularity to grant the land at Rs. 4.2 million per perch, as there were two buyers who are willing to buy at Rs. 08 million per perch, and that this could be a deal struck on political friendships. He has expressed his displeasure over taking the decision at a meeting not attended by him.
At present, the minister is overseas. On behalf of him, his secretary, who is also his brother-in-law, is looking into this matter. The prime minister has scolded this secretary for having given false information to the media that an irregularity is involved in this land deal.
On the 17th, the JEDB chairman informed the cabinet subcommittee that the board’s directors have agreed to handover the land to the investor at the newly evaluated rate, that is Rs. 6 million per perch. This 200 million dollar project is a major investment received by the country and an Italian architectural firm is designing the project.
Subhash Jayawardena – Sathhanda
