Transparency and unsolicited proposals

Editorial-March 1, 2014
We reported last Sunday that China Harbor Engineering Corporation (CHEC), the company that offered and won through an unsolicited proposal a gigantic project valued at S! "#$ billion, has floated a company here to underta%e this mega &ort City project# 'his company, CHEC &ort City Colombo (&rivate) (td#, hired a well %nown public relations firm to publici)e a detailed statement it made regarding the project in the conte*t of their being at the receiving end of a great deal of fla% from opposition political parties, notably the +&# 'he first salvo against the project was fired by +ational (ist ,& Harsha de Silva, memorably labeled as the +&-s ..economic hatchet man-- by Central /an% 0overnor 1jith +ivard Cabraal, followed by 2pposition (eader 3anil Wic%remesinghe# While CHEC was careful not to name names or point accusing fingers, restricting itself to a blan%et reference on press ..articles-- that had referred to it and the &ort City project, it is clear that the political opposition had usefully performed its function by triggering the response 4 perhaps more detailed and forthcoming than what the government had hitherto said# 'his &ort City had been tal%ed about for a long time now# 5t is a huge land reclamation project that entails no e*penditure from state coffers or a government guarantee with the developer pumping over a billion S dollars cash that will create a 677 hectare island in the deep sea in pro*imity of the Colombo harbor# 'he developer will get freehold 68 ha# of the new land together with a further 99 ha# on a ::;year lease in consideration of its investment# 1 total of "6< ha# plus the ownership of the 99 ha# to be leased to CHEC, will devolve on the government# 'here have been reports of grandiose plans for the newly reclaimed land including, hotels, lu*ury residences, shopping malls, a golf course and a =ormula 2ne motor racing trac%# 'he Sri (an%a &orts 1uthority, one of the proponents of the &ort City is supposed to get some of the land for which, certainly, there will be many ta%ers# +aturally a project of this magnitude,

however attractive it loo%s because no ta* money is to be poured into it, will raise environmental concerns# 3emember, Sri (an%a still has grave reservations over the Sethsamudram project where no environmental impact assessment had yet been done to our satisfaction# 'he opposition leader said that a /ritish firm that did similar wor% on the Colombo South Harbor project has been commissioned for this wor% at &ort City and >uestioned the wisdom of giving them a second project# CHEC, in its statement last wee% presented some impressive credentials# 5t has since 688< been a subsidiary of China Communications Construction Company (td# (CCCC), a =ortune <88 company listed on the Hong ?ong and Shanghai Stoc% E*changes# 'he 0overnment of China is the majority shareholder of CCCC which in 688< had been incorporated into a holding company under which CHEC, established in ":98, had been brought# 'he Colombo &ort City project comes under CCCC with CHEC as the implementing company# ,& Harsha de Silva has alleged that CCC has been blac%listed by the World /an% over a road building project in the &hilippines and also carries 1!/# 'he CHEC statement e*plained that this related to yet another CCCC subsidiary, China 3oad and /ridge Company 0roup (C3/C) established in ":@: which was also brought under CCCC in 688<# 'he sanctions against C3/C, which according to the CHEC statement were ..unilateral-- and is disputed, affected CCCC which got caught up in the rules of the World /an%-s sanctions regime which also applies to successor organi)ations# 'his resulted in CCCC getting tarred with the same brush# 1ll this has been e*plained in a clarification announcement issued in Aanuary 688: to the Hong ?ong Stoc% E*change in which CCCC is listed, CHEC said# Harsha de Silva maintains that he was only wrong in what he said because he omitted to say that the 1!/ too had blac%listed the Chinese firmB CHEC has underta%en some major projects in Sri (an%a including the Southern E*pressway, the Hambantota &ort and the ,attala 1irport among others# 5t has been present here for "< years and says that the country has ..great potential to become a regional business center for South 1sia#-- Hence its interest in partnering Sri (an%a in mega development projects li%e &ort City# /e that as it may, China has grown the way it has because even its state;owned companies are hardnosed commercial organi)ations with an appetite for profit# nsolicited proposals are undoubtedly tric%y propositions however attractive they may seem on the surface# 'hat is why it is most important that there is a wide;ranging discussion on whether such a project is in the national interest and we are getting the best possible deal# =or that to be possible, it is essential that all

the pertinent details and documents are made public# 'his is what ,r# 3anil Wic%remesinghe as%ed for in &arliament and won the concurrence of Spea%er Chamal 3ajapa%sa# 5f all details of the proposal that has been made, including the willingness of CCCC to fund it totally with its own e>uity and funds raised by itself, are publici)ed along with ta* and other concessions to be allowed, it will be open to other interested parties to possibly ma%e more attractive proposals# While we have had no e*perience of reclaiming large e*tents of land from the sea, neighboring ,aldives who are much more land;strapped than us have underta%en such projects# /ut the areas reclaimed there are from a shallower sea, it has been said# 'here is also the factor that the creation of new offshore land will have an effect on urban land prices in Colombo# While it may not be possible to find as many as 677 hectares for development in one place in Colombo, large e*tents of land for development has been found in the past# 0oing bac% to the A#3# Aayewardene years, the old Echelon barrac%s and its grounds made way for the construction of the country-s early five star hotels li%e the then 5ntercontinental, Hilton and 0aladari# ,ore recently large e*tents of 0alle =ace land that belonged to the military will see new hotels li%e Shangri;(a# 'he Customs now have a span%ing new head>uarters building in what used to be the old Chalmers 0ranaries# We must also not forget that there is discomfort, particularly in 5ndia, about what is perceived to be a too co)y relationship both politically and economically between Sri (an%a and China# While China has long been a good friend to Sri (an%a, and her support particularly at this time when our country has been targeted unfairly by the West, is invaluable, it is always best not to place all our eggs in one bas%et# CHEC says that ..there is no sound basis for direct andCor indirect allegations made that Chinese companies, in particular CCCC or CHEC may engage in corrupt practices#-5ts statement stresses that China-s criminal law specifically tac%les this issue and ma%es it a crime to ma%e payments to non;&3C government officials and to officials of international public organi)ations for any illegitimate commercial benefit# Well and goodD while such laws e*ist in most countries it is the common perception that they are bro%en with impunity# 'he perception here is that bigger the project, better the commission# 'hat is why ma*imum transparency on all aspects of &ort City is a sine >ua non# Posted by Thavam