Questions are being raised as to whether Sri Lanka Tourism Development Authority (SLTDA) Chairman Nalaka Godahewa could face ‘disqualification’ by serving as chairman of a company that recently announced construction of a 180 room city hotel.This came after a local news channel raised the issue of the conflict of interest and also arising out of a media conference on Tuesday held by Dilith Jayaweera, Joint Managing Director of Triad Advertising and other finance and leisure related companies. (See Page 2 story)
The Colombo Land and Development Co, which is a listed company in the Colombo Stock Exchange (CSE), informed the CSE on April 4th that it planned to construct a building for a hotel.
“.. we write to inform you that as part of the proposed Liberty Plaza expansion programme the board of directors of The Colombo Land and Development Co entered into a Sales agreement today to purchase a plot of land on the Duplication Road adjacent to the Liberty Plaza southern Car park at a cost of Rs 221 million. The objective of this acquisition is to construct a 180 room city hotel which will cater to the fast growing demand of tourist accommodation in the city of Colombo. The planned project is expected to commence in the later part of 2012 and completed by 2014,” the statement from the company in which Dr Godahewa is the chairman said. Mr Jayaweera is a major shareholder of the company.
Dr Godahewa also has a 0.321 per cent stake (500,000 shares) in Waskaduwa Beach Resort PLC and is in 16th position in the list of top 20 shareholders of the company, according to the annual report for the 12-month period ending March 31, 2012. The Jayaweera-controlled Citrus Leisure controls this hotel company. Section 5 of the Tourism Act, No. 38 of 2005 states: “5. (1) A person shall be disqualified from being appointed or from continuing, as a member of the Authority, if he is, or becomes,— (a) the owner, partner, director, majority shareholder or an employee of, or in, any business which operates or provides tourist services of any class or description.”
Asked whether his position at Colombo Land and Development Co is in conflict and could contravene the above provision, he said it was not so and requested that the Business Times publish his full response (as chairman of the company) which is given below:
“Colombo Land and Development Co Plc is a real estate development company, primarily engaged in selling and leasing of investment properties.
We select development projects based on the market demand and future prospects which can cover a range of projects including residential apartments, business parks, hotels, hospitals, shopping malls, office buildings or mixed developments. Our customers are the ultimate service providers in the respective industries and we have no involvement in managing their businesses. Given the current country requirement for room capacity in the tourism sector we see many opportunities for real estate development. Whether a company entering into a sales agreement to purchase a land for a future real estate development could be interpreted as providing a tourism service in the current context is up to the stakeholders to decide and act upon. Since there is nothing illegal, immoral or unethical in our business plans we will work relentlessly to achieve our plans thereby contributing to the development of country’s economy,” Dr Godahewa said in a statement to this newspaper.
Industry analysts said that there is a grey area in this issue which could be argued either way – that the company is only putting up a building and not involved in tourist services or that there is an indirect connection.