Preference given to buyers who made 100% payment
by Suresh Perera
In what was described as “shocking official apathy”, prospective buyers of Sea View Residencies at Lunawa complained that they have been left out in the cold despite making the 25% down-payment plus other “related charges” five months ago to procure a flat.
The 356-unit housing complex was developed by the Urban Settlement Development Authority (USDA) targeting “low and middle income families”, but in what appears to be a mix-up in priorities, those who had the financial strength to make 100% payment upfront were given preference, they asserted.
Applicants who settled the full payment on outright purchases have already moved into occupation, while those who made the required 25% down-payment five to six months ago are still left kicking their heels until a monthly repayment plan on the balance due is worked out by the USDA with a financial institution, they said.
“I made a down-payment of one million rupees plus an additional Rs. 140,000 as “related charges” to acquire a unit under a price range of Rs. 4.56 million to Rs. 5.58 million each. Despite the payment made in February 2021, there’s still no word of the promised repayment scheme being finalized so that I can occupy the flat”, a prospective buyer said.
Apart from the standard “we will get back to you soon” response from a USDA officer handling the project, there’s still no hope of occupying the flat, he noted.
“It’s a double whammy because for the past five months, I have to pay rent on the house I am occupying in addition to servicing the bank facility raised to make the one million rupee down-payment”, he further said.
“It’s so convenient for them to blame their lackadaisical attitude on Covid-19 when they had two full months to sort out the matter before the pandemic situation worsened”, he pointed out.
Even during the travel restrictions in the Western province in May, banks were operational and government officers were supposed to ‘work from home’. However, it appears that USDA officials handling the housing project had been twiddling their thumbs without pushing through the repayment plan, he continued.
He said that it’s a joke to call Sea View Residencies a housing project for “low and middle income families” when those who had the financial capacity to make 100% payment upfront are already occupying the flats, while lesser beings continue to be pushed around.
“That’s correct, we have already given the units to those who have made the payment in full”, says USDA’s Chairman, M. L. Subasinghe Arachchi.
He said the 100% payment factor was based on a Cabinet decision.
Asked about “low and middle income families” who have made the down-payment, but are still kept waiting, he replied, “they can arrange a bank loan, and if necessary, we can give a letter to facilitate it”.
“If we had the collateral to raise millions of rupees as a loan from a financial institution, we wouldn’t have opted for a flat meant for low income families”, a prospective buyer protested.
A USDA officer familiar with the subject said a scheme to work out a monthly repayment facility on behalf of the considerable segment of prospective buyers who had made the 25% down-payment has been forwarded to HDFC Bank.
“We have to submit the deed of the land certified by the Land Registry to finalize the process”, he further said.
“When I made inquiries about the inordinate delay, I was told that the Land Registry had earlier rejected the application because Lunawa (Moratuwa) had been identified by a USDA officer as an area within the purview of ‘Southern Province’ instead of Western Province”, the buyer claimed.
“With such ‘competent’ people around, I cannot imagine how much longer we will be kept waiting to take possession of our flats”, he laughed.
“Anyway, we hope to sort out matters within the next two weeks”, the officer assured.
He admitted that the general practice earlier when selling units in housing complexes specifically meant for low income families was for the government institution concerned to arrange a feasible credit facility through a government financial institution on reasonable interest.
Application forms were initially issued to interested buyers on a non-refundable deposit of Rs. 2,000 each. After shortlisting applicants, interviews were called, where they were assured that after the 25% down-payment on the total value of each unit was made, a credit facility would be arranged through the Bank of Ceylon under a monthly repayment plan at 6.25% per annum.
The applicants were shortlisted on the basis of a monthly household income of Rs. 75,000. The availability of a bank facility was also clearly outlined in letters sent to buyers shortlisted as “eligible applicants” to purchase the flats.
Asked why buyers who made the full payment were given preference, while low income families who sought a repayment plan have been kept waiting for more than five months, the officer explained that some issues that cropped up had to be ironed out.
Pandora Papers disclosure: Int’l cooperation essential to hold wrongdoers accountable – TISL
Three RTI applications filed calling for information about asset declarations submitted by Nirupama Rajapaksa
Transparency International Sri Lanka (TISL) says international cooperation through diplomatic channels is essential to hold offshore enablers and asset destinations accountable.
TISL has said that in addition to a complaint filed with the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), three RTI (Right to Information) applications have been filed seeking asset declarations submitted by Nirupama Rajapaksa. TISL has also written to the FIU (Financial Investigation Unit) calling for immediate investigation into potential money laundering claims.
TISL has said in a media statement: “The Pandora Papers exposé provides clear evidence of how the offshore industry promotes corruption and demonstrates the importance of ensuring the transparency of beneficial ownership of entities. Particularly in Sri Lanka, the Pandora Papers refer to extensive assets held offshore by former Deputy Minister of Water Supply and Drainage, Nirupama Rajapaksa and her husband, Thirukumar Nadesan. TISL in its initial statement following the revelations, called on the Sri Lankan authorities to ensure that independent investigations are carried out expeditiously into the revelations made by tPandora Papers. Since then, the President has called on the Commission to Investigate Allegations of Bribery and Corruption (CIABOC) to investigate the claims made by Pandora Papers.
TISL has taken several steps since the initial statement, pertaining to the revelations made by Pandora Papers.
One 07 October 2021, TISL filed a complaint with CIABOC, calling for an investigation into the alleged unexplained assets of the former Deputy Minister and her husband who has been identified as Politically Exposed Persons (PEP). TISL noted that the transactions revealed through this exposé could amount to offences under Section 23A of the Bribery Act, Section 4(1) of the CIABOC Act, and relevant provisions of the Declaration of Assets and Liabilities Law, and requested the Commission to probe into the Declarations of Assets and Liabilities of Nirupama Rajapaksa relating to her tenure as a Member of Parliament. TISL requested CIABOC to investigate whether public funds have been embezzled and laundered to these foreign safe havens.
TISL also wrote to the Financial Intelligence Unit (FIU) of the Central Bank of Sri Lanka on 13th October, calling on them to coordinate with relevant law enforcement authorities at both local and international level to investigate potential money laundering allegedly committed by the former Member of Parliament and her spouse. The FIU, as the central independent body established in terms of the provisions of the Financial Transactions Reporting Act No. 06 of 2006 (FTRA), is empowered to facilitate the prevention, detection, investigation and prosecution of offences related to money laundering and terrorist financing.
Through the letter TISL requested the FIU to take further steps to furnish the authorities with evidence, examining the financial transactions that have flowed in and out of Sri Lanka by coordinating with local and foreign financial institutions connected to these two individuals.
TISL has also filed three Right to Information Requests to the Elections Commission, Parliament of Sri Lanka and the Presidential Secretariat, calling for the Declarations of Assets and Liabilities of Nirupama Rajapaksa as an election candidate, Member of Parliament and Deputy Minister respectively
The Declaration of Assets and Liabilities Law No 1 of 1975 makes it mandatory for Parliamentarians and senior public officials to annually submit a declaration of assets and liabilities, which includes the assets and liabilities of their spouse and dependent children. If the former Parliamentarian has not disclosed the overseas assets revealed through Pandora Papers, she will be in breach of the Declaration of Assets and Liabilities Law. Therefore, her asset declarations would be a key tool to identify whether the overseas assets of the deputy minister, her spouse and children revealed through Pandora Papers have been disclosed at the time.”
TISL Executive Director, Nadishani Perera, commenting on the matter stated “We urge the relevant authorities in the country to take immediate action to independently investigate the revelations made by Pandora Papers. It is important that the due process is followed without any interference, obstructions or delays. For the PEPs implicated, there remains a path to clearing their name, if they were to heed the call of the public by making the relevant asset declarations public. A thorough and impartial investigation will also bolster faith in the law enforcement agencies of the country and prove to be an important deterrent against perpetrators of white-collar crimes.”
The TISL Executive Director also noted that “while it is important to take stringent action to prevent foreign currency unlawfully flowing out of the country into secrecy jurisdictions, it is also imperative that countries like Sri Lanka take this issue up on a diplomatic level in order to ensure financial institutions in countries such as Singapore are also held accountable and that steps are taken to recover any proceeds of crime back to our country from these asset destinations.”
German flight delay caused by pilot’s credit card problem, says AASL chief
By Sirimanta Ratanasekera
Chairman of the Airport and Aviation Services Sri Lanka (AASL) Ltd, Maj Gen (Retd) G. A. Chandrasiri said that a false and malicious accusation had been levelled that the officials attached to the Bandaranaike International Airport had unnecessarily delayed a German charter flight that arrived at the airport for emergency landing with 226 passengers.
Maj Gen Chandrasiri denied the allegation.
A Condor flight with 226 passengers travelling from Germany to the Maldives made an emergency landing on 26 Sept at the BIA around 11.25 am due to inclement weather in the Maldivian air space.
However, when the flight attempted to leave Sri Lanka around 1 pm, officials of the German charter airline, Condor, faced delays of about one hour when paying landing fees, since their credit cards had not been activated to make international payments.
“Now some parties, with vested interests to tarnish the good name of our airport, are spreading false rumours that the credit machines at the airport were dysfunctional. This is a malicious accusation,” Maj Gen Chandrasiri said.
He said that a three-member committee, led by a President’s Counsel, had been appointed to conduct an investigation and he would receive the investigation report within two days.
Maj Gen Chandrasiri said that the German charter airline so far had not raised any issue or made any complaint in the incident. He said that the AASL would inform the Condor airline of the situation after he received the report.
“As at 2020 January, the BIA had been an airport catering to around 20,000 passengers daily. This came to a halt following the pandemic. Now, it is coming back to its former situation. It is at this juncture those with malicious interests try to tarnish our name. If the flight in question made a normal landing it would have been our responsibility but it was an emergency,” Maj Gen Chandrasiri said.
AASL Operational Director Shehan Sumanasekera said that there had been some false media reports about the incident. “I myself monitored the entire scenario from CCTV and made inquiries from relevant officials. There were no lapses on the part of the airport or officials. It was a problem with the credit cards of the pilots of the flight.
State Minister of Aviation and Export Zones Development DV Chanaka said that he too had called for a report on the matter, which is due to be submitted tomorrow.
Verite shows how Lanka can achieve sustainable debt dynamics
Verité Research, a private think tank that provides strategic analysis for Asia, hosted the online discussion Steering out of the Debt Crisis: Recipe for Budget 2022 on Oct 14. The event was anchored around addressing Sri Lanka’s debt and USD liquidity crisis, and featured presentations by Executive Director, Nishan de Mel, Research Director, Deshal de Mel, and Analyst Anushan Kapilan. An expert panel included Dr. Shantayanan Devaranjan (Georgetown University), Dr. Nandalal Weerasinghe (former Senior Deputy Governor – CBSL) and Dr. Mick Moore (Institute of Development Studies – UK).
A press release issued by the think tank said: Verité Research presented analysis pertaining to debt management and fiscal measures, including specific proposals to increase government revenue and improve the allocation of expenditure.
The Verité Research analysis showed that Sri Lanka can achieve sustainable debt dynamics by meeting two conditions with regard to its domestic debt, and two further conditions with regard to its foreign debt. The presentation explained that, despite some challenges, achieving these conditions was feasible for Sri Lanka – provided policy-makers choose to do so.
The main challenges arise from poorly formulated fiscal/budget measures, coupled with the pandemic-induced setbacks which have resulted in successive downgrades of Sri Lanka’s credit ratings. As a result, Sri Lanka has been locked out of global capital markets, and rapidly depleted its foreign reserves, as it has continued to pay back foreign bondholders, at the expense of negative feedback on the local economy.
The Verité Research analysis showed that the worst is yet to come. Sri Lanka’s foreign reserve would be completely depleted by the end of 2022 if no surprise inflows materialise, and even if they did, the crisis would simply re-emerge in 2023. This means that even if Sri Lanka can claim to be technically solvent, it does not have the liquidity to sustainably pay back its foreign debt until the country credit rating is improved by at least two notches.
The current path of repaying debt offers a high return to bondholders at the expense of huge pain to domestic businesses and consumers, and makes the credit rating outlook even more precarious. The solution is to share the pain with bondholders by pre-emptively restructuring the debt. This can improve the foreign reserve position more quickly, and thereby improve the country’s credit rating more quickly as well. This alternative path is less painful to the local economy, offers a faster recovery, with a higher probability of success. It is a better path for the Sri Lankan economy than repaying foreign bondholders in full, even if it were able to do so.
A clear distinction needs to be made between a forced restructuring which would occur if a country were to default in a disorderly way without negotiating with creditors, and an orderly pre-emptive restructuring of debt following negotiations with creditors. The sooner Sri Lanka moves to an orderly pre-emptive debt restructure, the easier it would be to do so, and the more favourable it would be for the Sri Lankan economy. Delaying the decision is damaging and can result in outcomes that are highly disruptive.
Currently the primary deficit is at 7.4% of GDP. At the current GDP growth rate of a little under 4% (predicted by Verité Research), it is necessary to reduce the primary deficit to around 2% of GDP or less to help stabilise the debt.
The Verité Research analysis showed that in the base case scenario with no policy changes, the debt to GDP Ratio would increase to 123.08% by 2025, however with prudent fiscal measures it can be kept down to 108.8% by 2025.
The fiscal measures proposed included the reduction of the personal income threshold to LKR 1 Mn per Annum; the reintroduction of PAYE with a threshold of LKR 1.5Mn; reintroduction of WHT on interest income; increasing the VAT rate to 10% in 2022 and to 12% in 2023; reducing the VAT free thresholds from LKR 300 Mn to LKR 150 Mn in 2022; simplifying the corporate tax regime to a three-tier regime; and increasing the total taxes on cigarettes and alcohol in line with increases in inflation and GDP according to a tobacco taxation formula introduced in the 2019 budget.
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