11th December 2009, www.island.lk, By Devan Daniel
Harry Jayawardena-controlled alcohol producer Distilleries Company of Sri Lanka, a public listed company, is planning to enter the insurance industry with its own company months after it lost control of Sri Lanka Insurance Corporation when the Supreme Court nullified the sale of the government-owned insurance corporation to Distilleries.
In a filing to the Colombo Stock Exchange, Distilleries said it plans to make an initial investment of Rs.500 million in a new insurance company.
The company said it has submitted an application to the industry regulator, the Insurance Board of Sri Lanka, to register a new insurance company fully owned by Distilleries.
"The initial investment is Rs.500 million and if necessary the provision will be increased to Rs.1 billion," the company told the stock exchange.
An official of the Insurance Board of Sri Lanka told the Island Financial Review that the application was being evaluated.
"Under the existing law the capital requirement for general insurance and life insurance lines is Rs.100 million each. Once the registration is approved then the public can know what exactly the company would have to offer," the official said.
Distilleries acquired state-owned Insurance Corporation in 2004, a deal the Supreme Court nullified earlier this year which saw the state regain control of the insurance company.
The court asked the government to pay back Rs.6 billion, for which five year bonds had been issued.
Distilleries is controlled by a private unlisted company, Stassens Group, which is controlled by business tycoon Harry Jayawardena who has large stakes in Hatton National Bank, Commercial Bank and National Development Bank.
Last June the Supreme Court nullified the privatisation of Sri Lanka Insurance. The lengthy Supreme Court ruling said: "It is sufficient to say this Court is shocked by the manner in which the senior public officers had handled the sale of a pivotal asset of the state which belongs to the people of this country."
Nihal Sri Ameresekere, former Chairman of the Public Enterprises Reform Commission, a man who believes in free markets and Vasudeva Nanayakkara, a left-wing politician, the duo responsible for taking the privatization deal before the Supreme Court, both said the case exposed how politicians, public officials and businessmen connived to fleece the public.
"Now it is up to the government, the CID, the bribery commission, Securities and Exchange Commission and the Chartered Institute of Accountants to carry out investigations and penalize wrong doers," Ameresekere told journalists soon after Supreme Court ruling.
"What we filed was a fundamental rights application. Now it is up to the government to take the matter up with the penal code where jail terms and fines will be the just deserves of those who let this fraud take place," he said.
Nanayakkara, however, was skeptical the wheels of justice would be moved any further.
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