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Buyers ditched as developer abandons proposed ‘CM Towers’ condominium project

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‘A Rs. 600mn rip-off’

by SURESH PERERA

Scores of prospective buyers of housing units at a proposed condominium project in the outskirts of Colombo have been ripped off for at least Rs. 600 million in, what was been described, as a “major scam” by a developer whose company now remains shut.

In the backdrop of a private sector bank announcing moves to auction the 42-perch site of the envisaged condominium complex as the developer had raised Rs. 120 million in capital financing against the property, distraught victims of the swindle bemoaned that they have now “lost all their hard-earned savings”.

“There are around 52 prospective buyers, most of whom dished out anything between Rs. 5 and 10 million each as downpayment for the apartments”, says Gehan Samaranayake, president of ‘Ramanathan Avenue CM Condo Buyers’ Association’.

He said the developer M/s Civi-Mec Construction (Pvt) Ltd., started selling apartment units for the proposed CM Towers condominium project at No. 14, Ramanathan Avenue, Dehiwala, in 2014 and began construction the same year with the approval of the Dehiwala Mount Lavinia Municipal Council.

At that juncture, approval was given to the developer for a G+17 storied housing complex encompassing 112 middle class apartment units with four floors for parking vehicles. The developer of the project, M/s Civi-Mec Construction, had only one director with a registered office at W. A. Silva Mawatha, Colombo 6. The land earmarked for the housing project was mortgaged to a private sector bank to raise funds for the proposed condominium, Samaranayake noted.

“After entering into sales agreements, we paid a considerable downpayment and continued honoring the subsequent monthly installments to meet the balance as the developer laid the foundation with piling in line with the approved G+17 floor building’, he recalled.

“However, with the change of government in 2015, we were told the new administration restricted the number to nine residential floors, and the reason adduced was that some officials responsible for granting approvals were demanding substantial inducements to give the green light for the original plan of G+17 floors”, the Association’s president asserted.

He said at that point, the private bank, which agreed to finance the 112-housing unit project, stopped further funding as it was considered non-viable to invest on heavy foundations and have only nine residential floors with 64 condominium units, instead of 17 floors.

The developer abandoned the project at this stage in 2018 and stopped paying the loan installments to the bank, closed his office and went into hiding. The desperate buyers made complaints to the Police, CID and the Fraud Bureau, with some opting for civil cases as well. Subsequently, the CID arrested the director of Civi-Mec, who was remanded and later released on bail by the Mount Lavinia Magistrate’s Courts, Samaranayake noted.

“There are many of us in the Association, who have paid more than Rs. 10 million each for apartments and according to our records, the developer has collected from the known buyers alone Rs. 600 million, without any interest calculated”, he claimed.

He further said that the bank, citing the default of Rs. 120 million loaned towards the project, exercised the powers vested on its board of directors and initiated the process of recovering the loan by auctioning the property by the end of this month.

Vacating an earlier stay order, the Commercial High Court has allowed the bank to auction the property to recover an accumulated Rs. 160 million, inclusive of other costs, he said, while adding that the bank has already given notice of the auction on October 28, 2020.

“Most of the prospective buyers of this proposed middle-class condominium complex are retirees, who had invested their life’s savings on what they thought would be their ‘dream home’. All their hopes have now been shattered”, Samaranayake stressed.

Repeated attempts by The Sunday Island to contact the

director of Civi-Mec Construction on the phone number listed on its website were futile as there was no response.

As indicated by the ‘Ramanathan Avenue CM Condo Buyers’ Association’, the developer’s office in Colombo 6 remained closed. As a result, there was no possibility of contacting the director concerned for comment on the issues raised by those who have now been left in the lurch after forking out millions of rupees.

“If the buyers of the condominiums had entered into sales agreements, we can initiate legal action against the developer”, says Sarana Karunarathna, Chairman, Condominium Management Authority.

“They can write to the Authority so that we can pursue the matter”, he noted, while adding that he was unaware of the developments until The Sunday Island brought the matter to his notice.

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Police want to catch those who fled WP to escape curfew

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By Pradeep Prasanna Samarakoon

Police had launched a special operation to apprehend persons who left the Western Province hours before the imposition of the weekend quarantine curfew in the province, Western Province Senior DIG Deshabandu Thennakoon said.

The SDIG said that police had received information that large numbers had left the province. “Many people have gone on trips and some to their native places to avoid the curfew. We have found that some had booked holiday resorts, hotels and guest houses outside the province soon after the announcement that the curfew would come into force from midnight Thursday.” The SDIG said that the special operation would focus on guest houses and hotels and other such places outside the Western Province. “We appealed to the people not to leave the Western Province. A special operation was launched to identify if people have travelled out of Colombo, circumventing Police road blocks, and to obtain information on such persons.”

The SDIG said that action would be taken against people who had travelled out of Colombo in violation of the Quarantine and Prevention of Diseases Ordinance. 

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Parliament sittings limited to one day next week

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Party leaders, who met on Thursday, at the Parliament Complex, decided to limit next week’s sittings of Parliament to one day due to the COVID -19 pandemic, the Pparliament Communication Division said.

Accordingly, Parliament will convene on Nov 03 from 10.00 am to 12.00 noon only and on that day, two regulations to the Medical Ordinance submitted by the Minister of Health Pavithra Wanniarachchi will be taken up for debate. Also, no time will be allotted for the Questions for Oral Answers.

The meeting, chaired by Speaker Mahinda Yapa Abeywardena, decided to meet on Nov 12 and pass the Appropriation Bill presented by the Minister of Finance for the service expenditure for the financial year 2020 following the second and third reading.

It has been decided not to allow anyone other than Members of Parliament, invited officers, Security Personnel and the Parliament staff to enter the Parliament complex on the sitting days. The media will also not be allowed to enter the Parliament premises to cover parliamentary sittings. Leader of the House Dinesh Gunawardena, Chief Government Whip Johnston Fernando, Chief Opposition Whip Lakshman Kiriella, Prof. G.L Peiris, Dullas Alahapperuma, Mahinda Amaraweera, Vasudeva Nanayakkara, Prasanna Ranatunga, Ali Sabri and MPs Mahinda Samarasinghe, Rauff Hakeem, Dilan Perera, as well as the Secretary General of Parliament Dhammika Dasanayake and the Deputy Secretary General and Chief of Staff Neil Iddawela were present at the meeting on Thursday.

 

 

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State Minister Cabraal dispels fears about Sri Lanka’s debt service capacity

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State Minister of Money and Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal has said nobody should harbour fears of Sri Lanka’s ability to service its debt. Fears being expressed in some quartes are unfounded he has said, issuing a media statement.

Following is a statement issued by the State Minister of Money & Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal on 30th October 2020 “With the spread of the COVID-19 pandemic, all countries including Sri Lanka, observed a contraction in economic activity, reduction in foreign exchange earnings, decrease in revenue collection, and increase in health and welfare related expenditure. However, the prompt and measured policy support provided by the Government and the Central Bank enabled Sri Lanka to contain the unfavourable effects of Covid-19 to a great extent, and return the economy to near-normalcy by mid-May 2020. In fact, most economic activities have displayed a notable revival from May onwards, and this recovery is on-going. The recent detection of a new Covid cluster is now being decisively addressed by the Government, and this wave is also expected to be short-lived. Accordingly, the expansion of the fiscal deficit and the increase in debt levels in 2020, should not be generalised as a prolonged debt distress, but rather as a “one-off” deviation from the clear fiscal consolidation path that has been well articulated in the new Government’s policy framework.

“The election of a new President in mid November 2019 and the formation of a single-party Government with a sizable majority in August 2020, has enable the new Government to address the uncertainties in the political and policy spheres observed during the period 2015 to 2019. Consequently, Sri Lanka has been able to address public health concerns swiftly, as well as take difficult economic decisions with greater confidence. For example, when the Government was of the view that it was necessary to conserve forex, given the likelihood of low foreign exchange earnings due to the pandemic, and the need to prioritize foreign debt service obligations, the Sri Lankan authorities imposed restrictions on non-essential imports from March 2020. Such decisive and bold action, along with the reduction in global petroleum prices, resulted in a substantial saving of nearly US$ 3 billion in terms of expenditure on merchandise imports in the first nine months of the year, compared to the same period of the previous year. This saving, along with the better-than-expected outcomes in terms of merchandise exports, services exports other than tourism, and workers’ remittances, is now projected to compress the external current account deficit to below 1.5% of GDP in 2020.

“It would also be noted that capital flows and official reserves were also affected during the early months of the global outbreak of Covid-19. However, growing business confidence due to decisive action by the Government and the Central Bank has enabled the country to stabilize the exchange rate with only a marginal depreciation of around 1.5% so far this year, even while the Central Bank was able to purchase/absorb US$ 300 million from the domestic foreign exchange market during the year. As a result, official reserves remain close to US$ 6 billion, after settling foreign debt service repayments of around US$ 4 billion thus far during the year, including the repayment of the matured International Sovereign Bond of US$ 1 billion in October 2020. In the meantime, it would be further noted that the Sri Lankan authorities are presently negotiating a loan of USD 700 million from the China Development Bank which is expected to be at an interest rate and terms of repayment that are significantly more favourable than the USD 1 billion Sovereign Bond that was just re-paid. In addition, an attractive, exchange rate risk-free, Forex SWAP facility has been introduced for any foreign investor who invests in Sri Lankan government securities, which is expected to boost foreign exchange inflows particularly from the Middle-East, in the period ahead.

 

“In terms of growth performance, Sri Lanka is once again set to embark on a growth path, following the setback in the first half of 2020 caused by the pandemic. The formulation of the new Government Cabinet and State Ministerial structure, with clear performance indicators has been geared towards improving the efficiency and effectiveness of the economy. These new governance structures are bound to enhance agriculture and agro-based and mineral-based industries, increase export opportunities, as well as facilitate large projects within the Port City, Hambantota Port, and dedicated industrial zones. The expected revitalization of state owned enterprises, together with the private sector-led growth projects would also revert the Sri Lankan economy to the high growth path that was observed prior to 2015 whereby annual growth rates of over 6.5% were regularly recorded.

“In the meantime, Sri Lanka’s entire local debt stock of about Rs. 7.7 trillion (USD 42 billion) as at end July 2020 is being rolled-over and re-priced now at interest rates which are almost half of what was paid in 2019, while the Rupee remains stable. It may also be noted that a new trend has been established where greater reliance is being placed on domestic financing, and that strategy has already improved the “domestic: foreign” ratio of the debt from 51:49 at end 2019 to 56:44 now, which trend the authorities are keen to improve further in the period ahead. It is therefore clear that the Government’s commitment and support towards better debt management, both directly and indirectly, has already started to take effect.

“Sri Lanka is justifiably proud of its immaculate debt service record, without a single default. It would also be noted that Sri Lanka has experienced similar challenging circumstances previously, with high levels of debt. For instance, during 2001-2004, the country’s debt to GDP ratio was well over 100%, and by end 2005, it was at 91%. Nevertheless, Sri Lanka was able to gradually reduce the debt to GDP ratio to just 72% by end 2014 through decisive and innovative action.”

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