Finance Ministry to report malpractices at Hyatt Hotel project to FCID

The Finance Ministry on the directions of Minister Ravi Karunanayake has taken the necessary initiatives to make a formal complaint to the Police Financial Crime Investigation Division (FCID) on the large-scale misappropriation of funds and malpractices said to have taken place in the construction of the Hyatt Hotel projects in Colpetty and Hambantota during the last regime

The Hyatt hotel project is owned by Canwill Holdings Ltd which is a fully Government-owned public enterprise; 46% of its shares are held by Sri Lanka Insurance while the rest is equally shared by the EPF, and the Litro Gas Company under the Finance Ministry, each holding 27% of the shares.

Soon after the new Government came into office, the new management of the Canwill Holdings conducted a forensic audit on the affairs of the company.

This outsourced forensic audit firm has uncovered mass fraud and malpractices inclusive of the doubling the initial cost of the construction to Rs. 27 billion from Rs. 13 billion. Canwill Holdings was previously managed by the former President’s Chief of Staff Gamini Senarath, who has also held several other high profile offices in several other public enterprises inclusive of Litro Gas, which is a stakeholder of the owning company of the Hyatt Hotel project.

According to Shalila Moonasinghe, present Chairman of Litro Gas Lanka Ltd., who is also Director at the Canwill Holdings, a host of irregularities and mismanagements have been highlighted in the forensic audit, which warrants further investigations by Police.

The forensic audit report points out that the company of which Senarath was at the helm has had no regard for the laid-down tender procedures and has engaged in surreptitious transactions, blatantly violating all norms and regulations.

A payment of Rs. 10 million has been made to a lawyer without any agreement, Rs. 16 million losses were reported in steel purchases, Rs. 80 million payment to a fitting supplier without approval from the Board of Directors and entering into an international tender for $ 37 million the day before the 8 January presidential election are among the host of irregularities unearthed by the forensic audit.

The Hyatt Hotel project has two components, with the other being the construction of another hotel in Hambantota. It has been revealed that Rs. 300 million has been spent from the Rs. 5 billion earmarked for the Hambantota Hyatt project even without the foundation stone being laid for the project  

Moonasinghe said that, on the instruction of the Minister Karunanayake, the company would make a formal complaint to the Police FCID next week with reported incidents of irregularities for further investigation by the Police.

Canwill correction

In response to the Daily FT article titled ‘Hyatt heist’ published on 30 June, Canwill Holdings Ltd. has said that reference to hiring a foreign manager for a salary of Rs. 1.4 million was incorrect. The company said a foreign consultant was hired for a fee of Rs. 16 million and the project head’s salary was approximately Rs. 1.4 million. Furthermore, the foreign consultant was terminated by the new Board of Directors. The error is regretted.