Nov 05, 2011 (LBO) - A sugar mill in Sri Lanka slated for expropriation has been blockaded by ruling party activists and there was no police protection its owner said, raising fresh questions about liberty, rule of law and justice for the island's citizens.

"As of now our factory is blockaded, a director was assaulted yesterday," Daya Gamage, head of Daya group which owns Sewanagala Sugar, a factory in the East of Sri Lanka, told reporters in Colombo, Friday.

"Two vehicles have been damaged."

Sewanagala Sugar is one of three dozen firms slated for expropriation in a secretly hatched law which is being rushed to parliament by the administration of President Mahinda Rajapaksa which commands a two third majority in parliament.

The draft law said 'underutilized' assets and under-performing assets of 37 enterprises would be expropriated and anyone who resisted would be jailed for 10 years after a summary trial.

Venezuela Style

Gamage said he believed Sri Lanka's President Mahinda Rajapaksa had been misinformed that assets were underutilized.

"He had been misled and the cabinet of ministers had been misled," Gamage said.

"That person has to be found. And this bill must be withdrawn."

Gamage's words echoed a statement from Agroislna, a Venezuelan agriculture supply firm that was listed for expropriation by President Hugo Chavez, last year.

"[T]he only explanation that occurs to us right now is that the president ... hasn’t been sufficiently well informed," Agroislena said in October 2010.

At the time Chavez said he planned to seize more farmland deemed 'under-used' for distribution.

Harsha de Silva, a lawmaker representing Sri Lanka's opposition has labelled the expropriations as being Zimbabwe style, where large commercial farms owned by white skinned settlers were distributed to black skinned citizens.

But Gamage said his factory only had 469 hectares, and most of its supplies already came from thousands of small contract growers who had been given land by the state.

State-backed settlements in the East of Sri Lanka involving mostly majority Sinhalese had been factor in Sri Lanka's three decades war which ended two years ago.

Gamage had bought the Sugar firm from the state in 2001 paying 550 million rupees when it was making a loss of 140 million a year and invested more than two billion over the last several years.

Small Farmers

Gamage said he wrote of a part of the credit for small growers, stopped using furnace oil and fired the plant from sugar cane waster and modernized it investing about two billion rupees over the last several years.

Last year it made a profit of 220 million rupees and dividends had been paid to factory workers who owned 10 percent of the stock in the firm, he said. It had revenues of 1.1 billion rupees.

If he had not bought the factory the Treasury would have had to pay several hundreds of millions of rupees to maintain the factory, he said.

Justin Jayasekera, a contract grower who flanked Gamage at a media conference told reporters he now got a cash advance two days after he sold cane to the factory and full settlement was made in week compared to a month under state management.

Gamage said money was credited to accounts at micro-finance firm Bimputh Finance, now a listed company.

"When I bought the factory I went to many banks but no one was willing to give credit to cane farmers to re-start cultivation," Gamage said. "So I borrowed money from banks, on my credit, started a micro-finance company and loaned money to the farmers."

Domino Effect

He said since the expropriation law was announced some depositors had withdrawn their deposits. Banks were demanding additional guarantees even pass documents at his export businesses, he said.

"The government does not realize the magnitude of the problem," he said. "Foreigners will not come. Local investors will leave the country. Who will come forward to invest?"

The Rajapaksa administration has been pushing for 8.0 percent growth and over a billion dollars of foreign direct investments.

Sri Lanka has had a history of violating property rights of both foreigners and its own citizens. It killed flowering domestic businesses after independence from British rule by expropriation. But later the state gave a constitutional guarantee specially mentioning foreign investors and even tax breaks.

The constitutional guarantee came after unemployment topped more than 20 percent in the 1970s. But the new constitution itself has come under fire for destroying an independent public service and exposing citizens to arbitrary actions of rulers.

It is unclear what determination the Supreme Court gave on the draft bill.

Rule of Law

Sri Lanka's Bar Association chief Shibly Aziz has called for the law to be withdrawn and its compliance with the constitution re-examined with citizens being given a chance to make their case, as in the case of other bills.

No one other than the state prosecutor was allowed to raise objections to the draft law Supreme Court.

Aziz said in the interests of Rule of Law and democratic values, in the future laws should not be rushed into parliament in this manner.

The factory invasion and assaults of works comes ahead of the actual passage of the bill.

Company officials said there was no help from the police which seemed to be under thumb of a ruling party strongman in the area, indicating the lack of general rule of law and liberty in the country to citizens.

"The police in fact went to court to get an order to stop the factory from trucking sugar to buyers," he said. "But we heard that the magistrate refused to grant the order."

If the expropriation bill is passed the invasions would be effectively made 'lawful'.

Sri Lanka'a administration says that foreign investors will come rushing in when 'under-utilized' assets are turned around.

"When they see that we are putting in place systems to ensure better management, they should be encouraged to come and invest here," minister Keheliya Rambukwella was quoted as saying by the AFP news agency.

Source: 

http://www.lankabusinessonline.com/fullstory.php?nid=2139859574