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The history of the 1962 oil takeover by the Sirima B government

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by Charitha. P. de Silva

(This piece has been excerpted from business leader Charitha. P. de Silva’s Memoirs published in 2018 in the context of the impending Trincomalee Oil Tank Farm deal which is today a hotly discussed topic. De Silva who retired as Chairman of Aitken Spence in a professional accountant who began his post qualification working life at Caltex, one of the three multinational oil giants running the petroleum import and distribution business in then Ceylon nationalized in 1962 by the Sirima Bandaranaike government.)

To get back to my Caltex days: danger was looming for us in the form of the powerful Leftist group in Mrs Bandaranaike’s cabinet. Minister T.B. Ilangeratne and two leftist officials, Sam Silva (Civil Servant) and G.V.S. de Silva (brilliant economist and a former classmate of mine at Royal) had convinced Mrs B that it was very much in the interests of the country to nationalise the Oil Industry that was run by three foreign oil companies, Shell, Esso and Caltex.

GVS and Co. had been publishing articles showing how much foreign exchange would be saved if Sri Lanka imported crude from sources such as Russia and refined it herself. I saw very clearly that the writing was on the wall, and tried to persuade my Managing Director, Harry Bernard, to allow me to refute some of the fallacious arguments that GVS and Co were putting forward.

Bernard was a very cautious, mild man and was loath to write anything that might antagonize the government. In this frustrating situation our Intelligence man, Douglas Kelly (former senior policeman) informed us on a Monday that a gazette was already printed to take over the Caltex Oil Installation at Bloemendhal on the Friday!

I walked into Bernard’s room and asked him “Harry, can I write something now?” Deeply depressed he told me to go ahead and write whatever I wanted. I immediately sat down and wrote a strong article refuting many of the claims made by GVS. I pointed out, among other things, that in trying to save about Rs 14 million per annum by expropriating Oil company assets and nationalizing the Oil Industry the Government was running the risk of enraging America thereby jeopardizing a Rs 140 million tea market to the US. I also pointed out that the oil companies were giving the consumers of the country a very good service through their competition and concentration on quality and service. All this would be lost when a Government monopoly took over.

Bernard read the article, blanched, and asked me to go across to Shell (they were on the first floor of the Chartered Bank building, and we were on the third) and show it to Blarney, the boss of Shell, the leader of the oil oligopoly with 60% of the market. As the article would be under Bernard’s name Harry was understandably nervous.

I walked across to Blarney’s office and showed him the article. He read it with close attention. At one point a smile stole across his face. Mrs B had gone to great pains to point out that it was not her intention to get rid of the Oil Companies from the local scene. All she wanted to do was to bring down the cost of imports by taking advantage of an attractive offer made by Russia.

She could not understand why we could not reduce the cost of our imports. She did not realize that the market in the entire Indian subcontinent would be affected if the price to Sri Lanka was reduced; and our imports were miniscule comapared to India’s and Pakistan’s who would all be compelled to fall in line. In the body of my article I had written “For Mrs B to say that it was not her intention to get rid of the oil companies but only to reduce the cost of oil imports is like cutting a ladder from under a man’s feet and claiming that the intention is not to bring him down but to collect some firewood!”

Blarney totally approved of the article (he must have been relieved that it was to be signed by Bernard and not himself) and urged me to walk 50 yards down the street to the office of Mason, the MD of Esso, and show it to him. I did so, and found to my delight that Mason was so thrilled with it that he provided me with an office and stationery, and insisted that I write an article for him too!

I did so, and thus it came about that both articles appeared on the centre page of the Ceylon Daily News (CDN) on Wednesday, Cabinet day. For information on what happened thereafter I am indebted to my cousin Percy Peiris, who was Cabinet Secretary at the time and told me the story some years after he had retired by which time the question of the confidentiality of cabinet discussions was no longer important.

Mrs B had stormed into the Cabinet Office waving the CDN in her hand. She had screamed at Ilangeratne “TB, what are you trying to do? Are you trying to bring our Government down? This whole plan of taking over the Caltex Terminal is Phillip’s idea (Phillip being her political enemy, Phillip Gunawardena, who was a dyed-in-the-wool Marxist). GVS de Silva and Sam Silva are his men. Get rid of them within a month. And stop the takeover of the Caltex plant.”

History will record that the gazette was canceled and Caltex was saved for the nonce. From this extraordinary experience I learnt a lesson that I never forgot. It is vital that when an injustice or wrong is threatened, good men must stand up and fight against it, as Burke pointed out in the 18th Century. Also, the one thing that Governments fear is the written word -particularly in their own newspaper!

There is a curious footnote to this affair. GVS who was one of the key thinkers behind the Nationalization visited me in my home down Maya Avenue during the early days when the Ceylon Petroleum Corporation (CPC) was being set up. He was a mild, innocuous looking, extremely clever individual who evidently had a high regard for his one-time classmate. He told me that the oil companies were doomed, and he offered me the top financial job at the CPC (when I was only a Deputy Chief Accountant at Caltex).

When I explained to him that I was by temperament a private-sector man who would never fit into the public sector he told me very earnestly, that in five years’ time there would be no private sector left in the country as every key industry would be in the hands of the Government. I remember telling him how much I appreciated his offer (I really did) but I would regretfully resign myself to my fate.

It was therefore ironic that as a direct result of my two articles he himself lost his job at the CPC. Fate works in strange ways. I wonder whether he ever realized that it was I who had written the articles that had cost him his job. No one in the private sector, and certainly none of my colleagues, were aware of it. I kept it a close secret as I had no desire to let down my Managing Director, Harry Bernard (under whose name my article was written) who was a charming man.

My next memorable experience at Caltex was after Government passed legislation to take over the assets of the oil companies. The thinkers behind the legislation drafted the law so that the companies would get very little compensation. They stipulated that compensation would be the purchase price of the assets less depreciation. They knew that the Terminal installations and service stations were well over ten years old and would have been written off in the books of account.

At Caltex I had been placed in charge of the compensation claim because the Chief Accountant, a charming Englishman called Geoffrey Gardiner was far more interested in producing plays at the Lionel Wendt (he was a producer and actor) than getting involved in the nitty-gritty of the Compensation Claim. A brilliant American called Jim Wollahan (California-Texas Oil Corporation) came down to Colombo, sized up the situation, and sat down with me to figure out our strategy.

Our first move was to visit our lawyers, Messrs Julius & Creasy, whose head was a very clever lawyer called Byrnell. Byrnell studied the relevant section together with us and told us regretfully that there was no way we could expect market value for our assets because the legislation was shrewdly drafted to prevent it. It would be “purchase price less depreciation” even though they had as a sop to international opinion added a proviso that “if purchase price was not determinable” it would be market value. They knew full well that oil company accounting would be so meticulous that every purchase would be correctly recorded.

Wollahan and I returned crestfallen and deeply disappointed to my office and thrashed the matter out from every angle. After a couple of hours of the most intensive devil’s advocacy on the part of both of us, Wollahan suddenly cried out “Chari, it will be market value!”. His point was that we did not know the purchase price of our installations and service stations. We had not purchased them from anyone. We had built them. It was a brilliant concept that was later confirmed as legally sound by H.V. Perera QC, the last word on law in Sri Lanka.

I was entrusted the task of writing the Memorandum on “Why Purchase Price was not determinable”. Once the basis of compensation became market value, we included Goodwill in our Claim because Market Value was the price that a willing buyer (say Phillips Petroleum) would pay a willing seller, and that would certainly include Goodwill.

I was put in charge of preparing our Compensation Claim (Gardiner was delighted to be relieved of that responsibility) and did so with the help of my able assistant Bertie Casie Chetty. It ended up literally with millions of dollars more than the leftists behind the legislation had ever anticipated.

This experience taught me one of the most valuable lessons of my life. Never since that day did I accept unquestioningly the opinion of a lawyer on a matter that had business or moral implications. I tended from that day onward to make all business decisions myself and use lawyers for their expertise to prepare the legal documentation. I had always had a legal bent, and from then onward gave it full reign. The culmination of this attitude was when I sued Aitken Spence & Co Ltd in 2007 (16 years after my retirement) on the grounds of Oppression. But that is another story. (I won that case; pp. 123 to 127).

During the compilation of the Compensation Claim, in 1962, Mike Thornton of Aitken Spence sent for me. This was the second time I was interviewed by Aitken Spence for a job. The first time was when R.P. Gaddum offered me the job of accountant shortly after I had passed out as a Chartered Accountant in 1955. Thornton offered me the job of Chief Accountant.

I told him that unfortunately I was heavily involved in the Compensation Claim for Caltex and could not let them down. We parted and he wrote me a charming letter. After this experience I got Bertie Casie Chetty to sign all the documents that would be used in the case.

Meanwhile Jim Wollahan, who had developed a huge regard for me, offered me employment as an expatriate. I declined it for a number of reasons. Firstly I had no great desire to live the life of a nomad abroad, traveling from one country to another. Secondly, I knew that it was quite likely that I would be posted to some Asian country like India or Malaysia. My colleagues in those countries, who would be as well qualified as I was, would be earning much less than I did (being an expatriate). In those circumstances it was unlikely that they would cooperate whole heartedly with me, or view me with great affection.

Around 1962 the government finally took over the assets of the oil companies. The employees were offered handsome severance packages and the staff at Caltex dwindled to a skeleton. At this point, I received my third offer to join Aitken Spence where Jack Reeves had taken over from Mike Thornton, and Ron Law the Chief Accountant had given notice of resignation. I evaluated the two choices before me: either become an expatriate with Caltex or the Chief Accountant of Aitken Spence.

I had already foreseen the problems I would be faced with as an expatriate. In any case three unsolicited offers from the same company within ten years seemed too much like Fate. I therefore accepted Aitken Spence’s offer after informing Harry Bernard and Geof Gardiner of my decision. They were sad about it but very understanding. They were also generous, because despite the fact that I was employed by Aitken Spence the day after I left Caltex they paid me the full Compensation Package!



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Features

Is it impossible to have hope?

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So, a woman has lost again to a man. I refer here to Matale District SJB MP Rohini Kaviratne having to concede her bid for Deputy Speaker of Parliament to some bod of the Pohottu Party, who, sad to say makes only a negative impression on Cass. Conversely, Kaviratne looks competent, capable, trustworthy, able to communicate and command, and most importantly speaks and conducts herself well balanced. So different from most of the MPs, particularly of the government side, who lack education, and in appearance and behaviour – decency. Please, take my word for the fact that I am not a party person. What I want in our representatives is education and decorum. And they should at least once in a while use their own heads and make decisions that are good for the country and not follow the leader through sheep like, sycophantic obedience. Of course, even more than this is self interest that prompts the way they act and decisions are taken, especially at voting times.

Rohini Kaviratne made a bold statement when, as Wednesday’s The Island noted, she told Parliament “the government was neither run by the President nor the Prime Minister but by a ‘crow.’” Utterly damning statement but totally believable. Deviousness as well as self-preservation is what motives action among most at the cost of even the entire country. And, of course, we know who the crow is – kaputu kak kak. Cass lacks words to express the contempt she feels for the black human kaputa, now apparently leading the family of kaputas. Why oh why does he not depart to his luxury nest in the US of A? No, he and his kith are the manifestation of Kuveni’s curse on the island. Strong condemnation, but justified.

You know Cass had a bold kaputa – the avian kind – coming to her balcony in front of her bedroom and cawing away this morning. Normally, she takes no notice, having developed sympathetic companionship towards these black birds as fellow creatures, after reading Elmo Jayawardena’s Kakiyan. She felt sorry for the crow who cawed to her because his name has been taken to epithet a politico who landed the entire country in such a mess. And he is bold enough to attend Parliament. Bravado in the face of detestation by the majority of Sri Lankans! Cass did not watch afternoon TV news but was told father and son, and probably elder brother and his son attended Parliamentary sessions today – Wednesday May 18. May their tribe decrease is the common prayer; may curses rain on them. Cass recognises the gravity of what she says, but reiterates it all.

I am sure Nihal Seneviratne, who recently and in 2019, shared with us readers his experiences in Parliament, moaned the fact that our legislature always lacked enough women representation. Now, he must be extra disappointed that political allegiance to a party deprived Sri Lanka of the chance of bringing to the forefront a capable woman. Women usually do better than men, judging by instances worldwide that show they are more honest and committed to country and society. The two examples of Heads of Government in our country were far from totally dedicated and commitment to country. But the first head did show allegiance to Ceylon/Sri Lanka in fair measure.

As my neighbour moaned recently: “They won’t allow an old person like me, after serving the country selflessly for long, to die in peace.” Heard of another woman in her late 80s needing medical treatment, mentally affected as she was with utter consternation at the state of the country. One wonders how long we can be resilient, beset on every side by dire problems. But our new Prime Minister was honest enough to voice his fears that we will have to go through much more hardship before life for all Sri Lankans improves.

Thus, my choice of pessimistic prediction as my title. Will we be able to hope for better times? Time will be taken but is it possible to have even a slight glimmer of hope for improvement?

There is much debate about the appointment of Ranil W as PM. We admire him for his knowledge and presence. But the greatest fear is he will defend wrong doers in the R family. Let him be wise, fair and put country before saving others’ skins. He has to be praised for taking on the responsibility of leading the country to solvency. He said he will see that every Sri Lankan has three meals a day. May all the devas help him! The SJB, though it refuses to serve under a R Prez, has offered itself to assist in rebuilding the nation. Eran, Harsha, and so many others must be given the chance to help turn poor wonderful Sri Lanka around. And the dedicated protestors, more so those in Gotagogama, still continue asking for changes in government. Bless them is all Cass can say at this moment.

Goodbye for another week. hoping things will turn less gloomy, if brightness is impossible as of now.

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Lives of journalists increasingly on the firing line

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Since the year 2000 some 45 journalists have been killed in the conflict-ridden regions of Palestine and senior Al Jazeera journalist Shireen Abu Akleh was the latest such victim. She was killed recently in a hail of bullets during an Israeli military raid in the contested West Bank. She was killed in cold blood even as she donned her jacket with the word ‘PRESS’ emblazoned on it.

While claims and counter-claims are being made on the Akleh killing among some of the main parties to the Middle East conflict, the Israeli police did not do their state any good by brutally assaulting scores of funeral mourners who were carrying the body of Akleh from the hospital where she was being treated to the location where her last rites were to be conducted in East Jerusalem.

The impartial observer could agree with the assessment that ‘disproportionate force’ was used on the mourning civilians. If the Israeli government’s position is that strong-arm tactics are not usually favoured by it in the resolution conflictual situations, the attack on the mourners tended to strongly belie such claims. TV footage of the incident made it plain that brazen, unprovoked force was used on the mourners. Such use of force is decried by the impartial commentator.

As for the killing of Akleh, the position taken by the UN Security Council could be accepted that “an immediate, thorough, transparent and impartial investigation” must be conducted on it. Hopefully, an international body acceptable to the Palestinian side and other relevant stakeholders would be entrusted this responsibility and the wrong-doers swiftly brought to justice.

Among other things, the relevant institution, may be the International Criminal Court, should aim at taking urgent steps to end the culture of impunity that has grown around the unleashing of state terror over the years. Journalists around the world are chief among those who have been killed in cold blood by state terrorists and other criminal elements who fear the truth.

The more a journalist is committed to revealing the truth on matters of crucial importance to publics, the more is she or he feared by those sections that have a vested interest in concealing such vital disclosures. This accounts for the killing of Shireen Abu Akleh, for instance.

Such killings are of course not unfamiliar to us in Sri Lanka. Over the decades quite a few local journalists have been killed or been caused to disappear by criminal elements usually acting in league with governments. The whole truth behind these killings is yet to be brought to light while the killers have been allowed to go scot-free and roam at large. These killings are further proof that Sri Lanka is at best a façade democracy.

It is doubtful whether the true value of a committed journalist has been fully realized by states and publics the world over. It cannot be stressed enough that the journalist on the spot, and she alone, writes ‘the first draft of history’. Commentaries that follow from other quarters on a crisis situation, for example, are usually elaborations that build on the foundational factual information revealed by the journalist. Minus the principal facts reported by the journalist no formal history-writing is ever possible.

Over the decades the journalists’ death toll has been increasingly staggering. Over the last 30 years, 2150 journalists and media workers have been killed in the world’s conflict and war zones. International media reports indicate that this figure includes the killing of 23 journalists in Ukraine, since the Russian invasion began, and the slaying of 11 journalists, reporting on the doings of drug cartels in Mexico.

Unfortunately, there has been no notable international public outcry against these killings of journalists. It is little realized that the world is the poorer for the killing of these truth-seekers who are putting their lives on the firing line for the greater good of peoples everywhere. It is inadequately realized that the public-spirited journalist too helps in saving lives; inasmuch as a duty-conscious physician does.

For example, when a journalist blows the lid off corrupt deals in public institutions, she contributes immeasurably towards the general good by helping to rid the public sector of irregularities, since the latter sector, when effectively operational, has a huge bearing on the wellbeing of the people. Accordingly, a public would be disempowering itself by turning a blind eye on the killing of journalists. Essentially, journalists everywhere need to be increasingly empowered and the world community is conscience-bound to consider ways of achieving this. Bringing offending states to justice is a pressing need that could no longer be neglected.

The Akleh killing cannot be focused on in isolation from the wasting Middle East conflict. The latter has grown in brutality and inhumanity over the years and the cold-blooded slaying of the journalist needs to be seen as a disquieting by-product of this larger conflict. The need to turn Spears into Ploughshares in the Middle East is long overdue and unless and until ways are worked out by the principal antagonists to the conflict and the international community to better manage the conflict, the bloodletting in the region is unlikely to abate any time soon.

The perspective to be placed on the conflict is to view the principal parties to the problem, the Palestinians and the Israelis, as both having been wronged in the course of history. The Palestinians are a dispossessed and displaced community and so are the Israelis. The need is considerable to fine-hone the two-state solution. There is need for a new round of serious negotiations and the UN is duty-bound to initiate this process.

Meanwhile, Israel is doing well to normalize relations with some states of the Arab world and this is the way to go. Ostracization of Israel by Arab states and their backers has clearly failed to produce any positive results on the ground and the players concerned will be helping to ease the conflict by placing their relations on a pragmatic footing.

The US is duty-bound to enter into a closer rapport with Israel on the need for the latter to act with greater restraint in its treatment of the Palestinian community. A tough law and order approach by Israel, for instance, to issues in the Palestinian territories is clearly proving counter-productive. The central problem in the Middle East is political in nature and it calls for a negotiated political solution. This, Israel and the US would need to bear in mind.

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Doing it differently, as a dancer

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Dancing is an art, they say, and this could be developed further, only by an artist with a real artistic mind-set. He must be of an innovative mind – find new ways of doing things, and doing it differently

According to Stephanie Kothalawala – an extremely talented dancer herself – Haski Iddagoda, who has won the hearts of dance enthusiasts, could be introduced as a dancer right on top of this field.

Stephanie

had a chat with Haski, last week, and sent us the following interview:

* How did you start your dancing career?

Believe me, it was a girl, working with me, at office, who persuaded me to take to dancing, in a big way, and got me involved in events, connected with dancing. At the beginning, I never had an idea of what dancing, on stage, is all about. I was a bit shy, but I decided to take up the challenge, and I made my debut at an event, held at Bishop’s College.

* Did you attend dancing classes in order to fine-tune your movements?

Yes, of course, and the start was in 2010 – at dancing classes held at the Colombo Aesthetic Resort.

* What made you chose dancing as a career?

It all came to mind when I checked out the dancing programmes, on TV. After my first dancing programme, on a TV reality show, dancing became my passion. It gave me happiness, and freedom. Also, I got to know so many important people, around the country, via dancing.

* How is your dancing schedule progressing these days?

Due to the current situation, in the country, everything has been curtailed. However, we do a few programmes, and when the scene is back to normal, I’m sure there will be lots of dance happenings.

* What are your achievements, in the dancing scene, so far?

I have won a Sarasavi Award. I believe my top achievement is the repertoire of movements I have as a dancer. To be a top class dancer is not easy…it’s hard work. Let’s say my best achievement is that I’ve have made a name, for myself, as a dancer.

* What is your opinion about reality programmes?

Well, reality programmes give you the opportunity to showcase your talents – as a dancer, singer, etc. It’s an opportunity for you to hit the big time, but you’ve got to be talented, to be recognised. I danced with actress Chatu Rajapaksa at the Hiru Mega Star Season 3, on TV.

* Do you have your own dancing team?

Not yet, but I have performed with many dance troupes.

* What is your favourite dancing style?

I like the style of my first trainer, Sanjeewa Sampath, who was seen in Derana City of Dance. His style is called lyrical hip-hop. You need body flexibility for that type of dance.

* Why do you like this type of dancing?

I like to present a nice dancing act, something different, after studying it.

* How would you describe dancing?

To me, dancing is a valuable exercise for the body, and for giving happiness to your mind. I’m not referring to the kind of dance one does at a wedding, or party, but if you properly learn the art of dancing, it will certainly bring you lots of fun and excitement, and happiness, as well. I love dancing.

* Have you taught your dancing skills to others?

Yes, I have given my expertise to others and they have benefited a great deal. However, some of them seem to have forgotten my contribution towards their success.

* As a dancer, what has been your biggest weakness?

Let’s say, trusting people too much. In the end, I’m faced with obstacles and I cannot fulfill the end product.

* Are you a professional dancer?

Yes, I work as a professional dancer, but due to the current situation in the country, I want to now concentrate on my own fashion design and costume business.

* If you had not taken to dancing, what would have been your career now?

I followed a hotel management course, so, probably, I would have been involved in the hotel trade.

* What are your future plans where dancing is concerned?

To be Sri Lanka’s No.1 dancer, and to share my experience with the young generation.

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