By Frederica Jansz
The Board of Investment Sri Lanka has been slapped with a whopping Rs. 19 billion claim by Asia Pacific Golf Courses Limited for its investment made at Waters Edge, Battaramulla.
Sumal Perera, Chairman, Asia Pacific Golf Courses (APGC) is demanding a sum of Rs. 19,191,380,000.00 (Rupees Nineteen Billion One Hundred and Ninety One Million Three Hundred and Eighty Thousand) as damages from the BOI for its violation of the BOI-APGC Agreement.
Dilip Samarasinghe, Director, Media and Publicity for the BOI confirmed that they had received the Letter of Demand. “We have received the letter. We are in consultation with the Attorney General’s Department on the matter. Beyond that we can make no further comment,” Samarasinghe said.
APGC has given the BOI 60 days to pay the sum asked for or face arbitration proceedings.
Commenting on the Letter of Demand Sumal Perera said, “The legal counsel are confident that we have a prima facie case.”
The Letter of Demand to the BOI dated April 5, 2010, has been signed and sent by Anil Changaroth of Aequitas Law Firm – Singapore, on behalf of APGC.
The letter states that in February 1997, based on an invitation and promotion by the BOI for investors, including APGC, to make an investment in a golf course development project of international standards a proposal was submitted by the company to set up an 18-hole golf course of international standards and in addition to develop a park, a football pitch, a cricket pitch and a hawker centre. This proposal was approved by the BOI on May 14, 1997.
Subsequently, on February 9, 1998, the Cabinet of Ministers approved a cabinet memorandum to alienate state land on a 99 year lease for APGC to proceed with the special development project in Battaramulla.
The letter to the BOI adds that thereafter, the BOI along with the Urban Development Authority (UDA) exercising all its executive and administrative powers entered into the agreements which resulted in APGC developing the project, making an investment and putting in every effort to make the project a success.
However, the Supreme Court in response to a Fundamental Rights application made in October 2007 (seven years after APGC had entered into the said agreement) in its decision on October 8, 2008 held that the State was guilty of violating the fundamental rights of the Petitioners by wrongful, administrative action in the alienation of the land to APGC. The court also directed that the land along with all its improvements and buildings should be vested in the State.
By subsequent orders the Court also directed that all movable assets of APGC and its business along with all its employees be transferred to a state owned company which was to continue with the business of APGC using the same trade name “Waters Edge.”
The claim made to the BOI states that in these circumstances APGC lost the benefits arising out of the agreement and lost the capital appreciation and profit that it would otherwise have received. APGC values the losses at Rs. 1.8 billion for the 18-hole golf course, driving range, roads, bridges, development and maintenance of a scientific flood retention system, dredging and reclamation and public playgrounds.
Rs. 750 million for movable and operational assets. Rs. 4.2 billion for 105 freehold villa plots. Over rupees one billion for 240 perches of freehold land based on the villa plots valued at Rs. 480 million and the cost of improvement made thereafter valued at Rs. 600 million.
Rs. 2.7 billion being the loss of expected profit from the sale of an apartment complex of 117 apartments and 8 penthouses. In addition, the loss of expected profits from the operation of the golf course, driving range membership facilities, gym and spa facilities, restaurant, conference and banqueting facilities and the operation of 108 single room service apartments has been valued at Rs. 7.5 billion..