SC rules LMSL share sales agreement illegal

Wasantha RAMANAYAKE

The Supreme Court yesterday allowing the rights application against the sale of 90 per cent of shares in the Government-owned Lanka Marine Service Limited (LMSL) to John Keells Holdings Limited (JKH) held that the rights of the petitioner and the public had been violated by the share transfer.

The court held that the share sales agreement was illegal on the basis of irregularities and lack of transparency. It was pointed out that the Share Sale and Transfer Agreement was signed on August 20, 2002, a day prior to the Cabinet of Ministers approving the share transfer.

The Court ordered former PERC Chairman and Secretary to the Treasury P.B. Jayasundara to pay Rs. 500,000 as compensation to the State. JKH Chairman Susantha Rathnayake was also ordered to pay Rs. 250,000 as costs to the petitioner, Secretary of the Democratic Left Front Vasudeva Nanayakkara.

The court held that the eighth respondent P.B. Jayasundara had acted beyond his authority favoring JKH and acted in collusion with the 20th respondent, JKH chairman Susantha Rathnayake in the process of transferring of the LMSL shares to the JKH.

The Bench comprised Chief Justice Sarath N. Silva PC with Justice Nimal Gamini Amaratunga and Justice Jagath Balapatabendi.

Chief Justice Sarath N. Silva PC delivering a 70 pages long judgment with other judges agreeing held that the transfer of the eight acre land with the fuel storage facility located at Bloemendhal Road, belonging to the Sri Lanka Ports Authority to the LMSL was illegal and void. The Chief Justice ordered the LMSL to revert the land to the SLPA.

The Court also set aside the BOI status granted to the LMSL and the Common User Facility agreement that had been entered into subsequently.

Petitioner Vasudeva Nanayakkara filed the rights application in the Supreme Court stated that the transfer of the 90% shares of LMSL to the JKH was violative of the rights of the petitioner as well as the public.

He stated that the LMSL was a fully owned subsidiary of the Ceylon Petroleum Corporation and supplied fuel to the ships. The LMSL enjoyed the monopoly of the billion rupee-bunkering business.

The petitioner stated that the he came to be aware of the transaction only through recent media reports on the investigations by COPE. The petitioner cited 31 respondents including former finance Minister K.N. Choksy, former Power and Energy Minister Karu Jayasuriya, former Prime Minister Ranil Wickremesinghe, former President Chandrika Bandaranaike Kumaratunga, former Economic Reforms Minister Milinda Moragoda, Former Public Enterprise Reform Minister Sripathy Sooriyaarchchi, former Secretary to the Treasury Charitha Ratwatte, former PERC Chairman P.B. Jayasundara, CPC, JKH, its Chairman Susantha Rathnayake, former PERC Chairman Nihal Sri Ameresekere, COPE Chairman Wijedasa Rajapaksha PC, IGP, Chairman of the Bribery Commission and the Attorney General.

M.A. Sumanthiran with Viran Corea appeared for the petitioner