By Nirmala Kannangara
Despite claims being made by Kurunegala District UPFA candidate Mahinda Rajapaksa that government institutions had not been privatized, startling revelations have come to light as to how a Rajapaksa supporter was allowed to control the Maga Neguma Emulsion Production Company, which was one of the three subsidiaries of the Road Development Authority (RDA).
After the fall of the UNP regime in 2004, the then Highways Minister Mahinda Rajapaksa decided to set up three liable entities under the RDA – Maga Neguma Road Construction Equipment Company, Maga Neguma Consultancy and Project Management Company and Maga Neguma Emulsion Production Company, which were incorporated under the Companies Act of Sri Lanka. These three companies have been incorporated pursuant to a decision by the cabinet of ministers and RDA holds one share each in the three companies and the other share was given to one or several private parties on behalf of the RDA. Although these companies were to be joint ventures with private sector participants, it had not materialised and the initial and working capital had been provided by the RDA.
As these entities were set up under the Companies Act, they are run by Boards of Directors. It is only when the new government came into power after January 8, it came to light as to how the Chairman of the Maga Neguma Emulsion Production Company, B. R. Perera was not giving its profits to the RDA and had retained the profits claiming that 50% shares belong to him, the Working Director of the RDA, Keith Bernard alleged.
According to Bernard, after the new government came into power, the Highways Minister had wanted to remove all three Boards and appoint new members.
“Although Maga Neguma Road Construction Equipment Company and Maga Neguma Consultancy and Project Management Company Board of Directors resigned paving way for the new government to appoint new Boards, Maga Neguma Emulsion Production Company board headed by Perera said that since the company comes under the Companies Act, the Minister had no authority to remove the Board members as Perera had 50% shares,” Bernard said.
“This company was given to Perera by Mahinda Rajapaksa as they were school friends. It is reliably understood that Rajapaksa never asked Perera to pay the dividends to RDA,” Bernard alleged.
Bernard further said that Maga Neguma Emulsion Production Company is occupying RDA properties and using RDA machinery and equipment and added that this company cannot claim that this is a private company when the Attorney General once gave a ruling that the shares held by the private individual are held on behalf of the RDA – technically it is the RDA that owns the company.
“When the COPE once wanted these three companies to come before them, Perera said that he will not go before COPE as it is a private company. However, the Attorney General ruled that these companies are under the control and management of the RDA, which is a public corporation and hence these companies should come under the COPE,” Bernard said.
However, when contacted, Perera first said that he has 50% shares of Maga Neguma Emulsion Production Company and added that the RDA never invested money to start the project nor he (Perera) invested money on it. When asked how he could start a project when both share holders have not invested, Perera said that although he wanted Rs 2 million from the RDA, only Rs.1 million was given.
“Mahinda Rajapksa wanted me to take over this company in 2004 when he was the Highways Minister and never asked for dividends till the new government that came into power after January 8, raised all these issues.
“Although I supplied emulsion up to April this year, the RDA did not pay me the money which amounts to Rs. 141 million. RDA never attends the AGM and if they come and ask for dividends, I will pay them,” Perera added.
Meanwhile, Bernard accused the then Highways Minister for drafting Articles of Association of the Companies in favour of private individuals holding shares.
“They should have written the Articles of Association clearly specifying the Board structure – on how boards are appointed and how meetings should be conducted ensuring that the public trust on interest is served,” Bernard claimed.