Business

SLTDA denies Chairperson has conflict of interest

SLTDA Chairperson Kimarli Fernando

By Madhusha Thavapalakumar

The Sri Lanka Tourism Development Authority (SLTDA) termed the allegations of conflict of interest against their Chairperson by Lanka Realty Leisure (Pvt.) Ltd. as “mischievous”, before the Colombo District Court extended an enjoining order against the SLTDA.

The extension of the enjoining order was made by Colombo District Court (DC) Chief Judge Amali Ranaweera on 30 June, when the defendant SLTDA submitted arguments of their side in the Yala Palatupana land case. The enjoining order was initially issued on 16 June.

The land is owned by the SLTDA and was leased to Ascot Leisure Ltd. (as Lanka Realty was earlier known) in 2014. Lanka Realty Director Hisham (Hardy) Jamaldeen filed the case against the SLTDA last month, alleging that SLTDA Chairperson Kimarli Fernando is attempting to give the seven-acre plot of land in question to another investor arbitrarily.

The plaintiff company in the lawsuit alleged that Fernando was doing this to support her husband Malik Fernando’s hotel business, Wild Coast Tented Lodge Ltd., which is situated in a property adjoining the said land. The plaintiff stated that there was a conflict of interest.

According to the arguments from the plaintiff company, even though they were behind schedule in developing the land they leased for 99 years, the SLTDA was willing to provide another chance before the appointment of Fernando as the Chairperson.

The plaintiff has charged that Fernando then decided to terminate the contract arbitrarily.

However, the defendant SLTDA in their submission stated that the plaintiff’s allegation against the Chairperson of the defendant is “mischievous and devoid of clean hands for collateral purposes”.

The SLTDA stated that Lanka Realty maliciously, fraudulently, and wrongfully made the allegation and misrepresented to the court that the decision to terminate arose due to a conflict of interest in the Chairperson and stated that the SLTDA and the Chairperson reserve the right to seek appropriate remedy against the plaintiff for the damages caused.

According to the defendant’s submissions, the decision taken to terminate/cancel the leasing agreement the plaintiff entered with the SLTDA was prior to December 2019. The current Chairperson was appointed on 12 December 2019 and the appointment was accepted on 20 December 2019, and thus all decisions in any event pertaining to the cancellation and the subsequent decisions to grant the lease to another investor was done before her appointment, the SLTDA said.

The SLTDA further said that after the presidential election in November 2019, the President and the Cabinet of Ministers had not changed the previous Cabinet’s decisions to endorse the termination of the lease of Lanka Realty and award the lease to a foreign investor. Furthermore, they stated that the Board of the SLTDA and the Ministry of Tourism do not have faith in Lanka Realty and do not desire the company to be in possession of this land anymore.

Meanwhile, SLTDA Director General (DG) Dhammika Wijesinghe, defending the Chairperson, told The Sunday Morning Business a few days ago that this matter is beyond the control of Fernando and if there is a cabinet decision, the SLTDA is obliged to pursue it.

“The investor was supposed to commence commercial operations by 2018, within 24 months. All this time, they have been more or less silent. No development has commenced. They have gone to the court and said there is vested interest, but there is no vested interest. This decision was taken in 2019,” Wijesinghe noted.

Another allegation made by Lanka Realty is that Fernando should have kept completely out of this matter, considering her personal connection.

However, Wijesinghe noted that this was not possible as during the interim period between the resignation of former DG Chandani Werapitiya and the appointment of Dhammika Wijesinghe as the new DG in March, Fernando had to attend to matters which would otherwise have been handled by the DG.

Background

The seven-acre land plot in the Yala Palatupana Tourism Zone was leased to Lanka Realty (formerly known as Ascot Leisure Ltd.) for 99 years on 13 May 2014. Lanka Realty made a down payment of Rs. 29.3 million for the land and has settled taxes for the period until 20 December 2020 and has been paying an annual fee of Rs. 10,000 every year, according to the plaintiff.

However, a cabinet memorandum dated 18 July 2019 stated the company failed to pay any single monthly payment. Furthermore, even as of 26 February 2018, when the implementation time frame given for Lanka Realty by the SLTDA had expired, no construction work had begun on the site.

Due to the long delay in developing the land, a proposal was made by then Minister of Tourism Development, Wildlife, and Christian Religious Affairs John Amaratunga to lease this land to One Nature (Pvt.) Ltd., a Dubai-based wildlife hotel chain that has hotels in Tanzania. The proposal was approved by the Cabinet of Ministers on 9 August 2019.

Accordingly, the SLTDA Board at the time had terminated the lease agreement and taken physical possession of the property under Clause 12 of the agreement, which was given to One Nature in August 2019 for an investment of $ 15 million.

Nevertheless, Lanka Realty stated that its reasons for delay were duly communicated to the SLTDA. Lanka Realty has attributed the delay in commencing construction work to a dispute between the shareholders of the company, the Easter Sunday incidents, and the latest Covid-19 pandemic. As per what was communicated to the SLTDA, Lanka Realty had been under the impression that an extension to complete the project was acknowledged.

In a letter dated 13 November 2019, the SLTDA informed Lanka Realty that they are treating Lanka Realty’s project as abandoned due to the lack of progress.

In response to the letter mentioned above, Lanka Realty sent letters and had discussions with the then DG of the SLTDA and the Minister of Industrial Export and Investment Promotion, Tourism and Aviation Prasanna Ranatunga. Fernando was appointed the Chairperson of the SLTDA a few days after these meetings. On 3 February, Lanka Realty had a meeting with the Chairperson of SLTDA.

According to the lawsuit filed by the Lanka Realty, the SLTDA, without providing any response to their meetings with the Lanka Realty, had “fraudulently” taken steps to execute a deed of declaration for the cancellation of the lease deed. Subsequently, the SLTDA had lodged a complaint on 2 June 2020 with the Hambantota Police against Lanka Realty, stating that they had made an illegal construction at the site. An inquiry was held on 10 June 2020 at the Hambantota Police Station. It was recorded that this is a civil action and that the Police cannot intervene. The Police directed to settle the issue amicably or in court.

In the aforementioned circumstances, Lanka Realty sought action and an injunction preventing the SLTDA from cancelling the said lease and if such steps have been already taken, to make such action null and void ab initio and prevent the SLTDA from granting the rights of the land mentioned in the lease to another third party or taking any further steps to terminate the lease.