SLIC, a fully Govt owned venture

In 2003 Sri Lanka Insurance Corporation (SLIC) sold assets worth about Rs. 70 billion for a mere six billion and fifty million rupees under the name of privatisation. At the time of privatisation SLIC was earning profits and the decision to privatise was political.

It was privatised under the UNF government of Prime Minister Ranil Wickramasinghe.

His policies spelled out in infamous 'Re-gaining Sri Lanka' policy statement, clearly pointed out that the government sector should go out of all business activities leaving the way for the private sector.

The UNF government halted recruiting to State sector and sold State institutions such as Coorporative Wholesale Establishment (SATHOSA). Lanka Marine Service Ltd, the bunkering arm of the Ceylon Petroleum Corporation under the name of privatisation in line with these policies.

However, from the inception the opposition political parties, employees of the SLIC and other concerned groups opposed this corrupt deal.

The employees and civil society group led by Vasudeva Nanayakkara filed a fundamental rights petition challenging the privatisation of SLIC.

Six years after the privatisation on June 7 The Supreme Court ruled out that the share sale and purchase agreement 2003 in the privatization of SLIC is illegal, null and void. Furthermore, the sale of SLIC to Milford Holdings (Pvt) Ltd and Greenfield Pacific EM Holdings Ltd. was also null and void.

The bench headed by Chief Justice Sarath N. Silva and Justices P. Sripavan and G. Amaratunga, who delivered the judgment, said a primary factor in privatizing SLIC was the need to conform to conditions for loans from the International Monetary Fund (IMF) and the Asian Development Bank (ADB).

During this six year period SLIC under the private sector especially under the chairmanship of business tycoon Harry Jayawardene showed progress and SLIC invested in many business ventures. Purchase of Apollo Hospital shares is one of them. In September 2006 India's Apollo Hospitals sold shares to SLIC. Apollo Hospital Enterprise and Indian Hospital Corporation, which owned slightly over 30 per cent, sold 52 million shares, each for 28 rupees, valuing the total deal at Rs.1,456 million.

In addition, two other shareholders, Sino Lanka which had 3.18 per cent and R. Navaratnam who had 5.19 per cent, also sold out their shares at the same time. The reason for selling shares was later disclosed by the Apollo Hospitals and the officials said that with only a minority share holding, it would have been difficult for Apollo Hospitals to operate effectively while the offer made by SLIC is adequate and good enough to accept. After the deal the SLIC secured the majority shares of the Lanka Hospitals Ltd and also the controlling power.

With nulfying the privatisation of the SLIC the Apollo Hospital, a subsidiary of the SLIC too came under government control. Accordingly new directors were appointed to the Apollo Hospital in August 2009 under the chairmanship of Defence Secretary Gotabhaya Rajapaksa.

Therefore, Defence Secretary Gotabhaya Rajapaksa is in the Lanka Hospitals Ltd. board representing the SLIC and the government and not in his private capacity or having any shares in the venture, said a spokesman.