Rajapaksa loyalist Lokuvithana set to acquire Holcim for China using a state bank letter
Jul 12, 2016
Onyx, a company owned by Nandana Lokuwithana, is said to have Bid 400 million USD to buy the Holcim Lanka Ltd., the troubled cement company apparently only valued at 200 million USD. Lokuwithana’s bid comes in the wake of revelations of a Chinese Government attempt to secure access to the ports of Galle and Trincomalee (in addition to Colombo and Hambantota) via the purchase of Holcim Lanka Ltd., a subsidiary fully owned by the troubled global cement giant LafargeHolcim. That bid came from China Resources Cement Holdings Ltd, a subsidiary of the China Resources Group which in turn is a state-owned Chinese enterprise and is said to have less to do with commercial benefits than China's long term expansionary and strategic goals in the region.
Nandana Jayadewa Lokuwithana, is a Dubai based Sri Lankan businessman from Nattandiya who has been named in the Panama Papers released by the International Consortium of Investigative Journalists (ICIJ) where he is connected to an entity called ‘Nilona Fashions’ incorporated in December 2000 and is within the jurisdiction of Seychelles. His operations are also under investigated by the FCID and the Bribery Commission.
Lokuwithana has gained notoriety as a front man of former President Mahinda Rajapaksa and his then powerful brother Basil. He is popularly known as ‘The Sri Lankan who bought the Mariott Hotel in Dubai’. Lokuliwithana, tellingly, is supposed to have been first introduced to the Rajapaksas by Sajin Vass Gunawardena, another Rajapaksa loyalist currently under investigation.
Friendship with the then ‘Ruling Family’ saw Lokuwithana acquiring Ceylon Heavy Industries and Construction company (CHICO) (Sri Lanka’s former Ceylon Steel Corporation) for US$ 77 million, a purchase which is being investigated by FCID on the suspicion that he put up the money as a frontman for the Rajapaksas. Onyx Industries FZC is a company based in Sarjah. Onyx employs about 60 people at its Sharjah facility and mainly imports and trades steel products from China for the construction industry. Lokuwithana’s friendship with high ranking Chinese officials has raised speculation that the bid to acquire Holcim is an effort for China to get a foothold on the aforementioned ports without creating a diplomatic furor.
Reports of the Chinese bid have irked India which fears the current expansion of Chinese strategic interests in the region and especially in Sri Lanka.
Adding to the intrigue is the nature of Lokuwithana’s bid itself. Onyx has put in a bid to by Holcim Lanka for USD 400 million and it is said that he has already given a comfort letter from a State Bank of Sri Lanka. He has apparently deposited 200 million USD in the said Bank and taken the letter against that deposit and the money held for the Steel Corporation.
Piyadasa Kudabalage, former MD/CEO of Litro Gas a front man and close ally of Former Presidents Secretary Gamini Senarth is said to have been instrumental in organizing the Bank letter. Kudabalage was a member of many Boards in Government owned companies during the past regime.
Holcim entered into an agreement with the Sri Lanka Cement Corporation in 1993 to lease 5141 acres of cement quarry land in Aruwakkalu, Puttalam for a period of 50 years. Holcim thereby made massive profits from the extraction of limestone alone with little returns for Sri Lanka, according to a recent communication sent to the Company by the Secretary, Ministry of Industry and Trade.
The sale ran into trouble with accusations that Holcim had withheld important information from potential buyers including the nature of its agreement with the Cement Corporation and rent owed on properties leased.
The divestiture of Holcim Lanka Ltd is said to be part of LafargeHolcim'sdivestment plan to collect 3.7 billion CHF by the end of 2016..
