Sri Lanka central bank pours oil on troubled waters

Nov 17, 2011 (LBO) – Sri Lanka’s central bank said there may be room for former owners of seized assets to negotiate with competent authorities appointed by the state, after rating agencies raised fears of deteriorating property rights in the island. The government expropriated land in 36 enterprises and ordinary shares of listed Hotel Developers, where Colombo Hilton is operated through a law which lawmakers said was deeply flawed and trespassed on a constitutional separation of powers.

Some of the lands related to defunct firms, but most concern had been raised relating to Sevenagala Sugar, an unlisted firm and Pelwatte Sugar a listed firm both of which produce sugar and spirits and are profitable.

“In the case of the two sugar plantations it is noted that the total extent of land cultivated by the respective operators has been only a fraction of the total extent that was entrusted to them,” the Central Bank said in a statement.

“Further, it was noted that the operators were focusing on subsidiary objectives instead of concentrating on the primary objective of producing sugar which was the purpose for which the land was provided to them.”

Pelwatte Sugar had diversified into dairying. Sevenagala had been charged by critics in the r