Cornel Perera rebuts Basil

The article contained the full speech by Economic Development Minister Basil Rajapaksa on the Expropriation Bill in Parliament on 9 November. In that speech with regard to Hilton Hotel, Rajapaksa said: The present position relating to Hilton Hotel needs no elaboration. It is known to all how it acquired its land, revalued it and transferred this to others, and the litigation it entailed. Last year, it recorded a loss of Rs. 10.3 billion.

The hotel is in a very expensive land, where the former Fort Police Station had been located. It has become unproductive today after various irregularities. This is one of the prime hotels in Sri Lanka.

Repairs to rooms have not been effected for a number of years. The hotel has to be freed from its encumbrances. The hotel land is about 6.6 acres. Cornel Perera was selected on 7 February 1984 to invest in the hotel project. The UDA valued the project for Rs. 136 million on the same date. On 15 February, after a lapse of eight days, Cornel Perera transfers the project to Hotel Developers (Lanka), having valued the property for Rs. 250 million – the value having increased by Rs. 114 million within seven days by reducing the previous value.

Subsequently, shares were purchased, but the sum of Rs.136 million was not paid. He paid only Rs. 28 million, the balance was to be paid in instalments. However, no instalments were paid thereafter. Later several transactions followed.

A loan was obtained from a Japanese company. The amount pledged to invest was not forthcoming. Later, since the Government guarantee was not honoured, the responsibility fell upon the Government to settle the deal. K.N. Choksy appeared in the case.

We have taken back the land. This is public property which is economically important to the country. The Government is definitely committed to protect it and that is why we have listed it. I believe no representative of the people could raise objection to this.”

Cornel Perera’s statement is as follows

With all due respect, but with full responsibility, I categorically and confidently state that this statement is not only incorrect, incomplete, but misleading and definitely defamatory. It says, “Cornel Perera was selected on 7 February 1984 to invest in the hotel project”.

Cornel chose to realise the Hilton in 1977, and started investing his own funds in the project from 1978 through 1980 when Hilton’s Management agreement was signed.

•  All expenses related to securing Hilton’s Management Agreement in 1980 was entirely Cornel’s.
• Over 25 aspirant companies wanted to bed with Hilton and for Hilton alone the state had reserved and preserved the land at Echelon Square.
• So when in 1980 Hilton chose Cornel over the other competitors/rivals, the Government had to assign the land to Cornel.
• July 1983, Colombo burnt. The UDA needed money badly and appealed for some portion of the 20% of the down payment on the lease.

Cornel & Co. readily acceded by paying Rs. 5 million, in August 1983, almost 30 years ago, one month after Black July and had inadvertently, initiated and given effect to the now much-spoken-of Public-Private Partnership (PPP).

• UDA land in the Fort area was offered to all Hotel Investors like Taj, Galadari, John Keells, at Rs. 150,000 PP or less, on a 99-year lease with 20% down payment and the balance to be paid in 33 annual instalments, with a three-year grace period and all arrears and the last instalment due only in 2021.
• Cornel paid in August 1983 one month after Black July, the first Rs. 5 million. Another Rs. 16 million was paid on 19 January 1984. On 13 February it was the last payment Rs. 6.361 million.
• The UDA Land for Hilton was valued by Prof. Shirley Fernando at Rs. 300 million.
• However, as the Sri Lankan Government, Mitsui & Taisei and Cornel & Co. had all decided that

a. Irrespective of the market value, shares will be issued to Cornel & Co., for only Rs. 250 million.

b. These fully paid/valid share certificate issued to Cornel must be instantly transferred to the Secretary to the Treasury on the same day, 15 February 1984.

c. Further, Cornel had also to cash purchase and transfer to Secretary Ministry of Finance, 298,713 shares – on the same date, 15 February.

•     So there was NO BUYING, NO SELLING or PROFITEERING AT ALL, as this was no gem business.
•     All these steps/conditions were agreed to by Government, Mitsui/Taisei and enshrined in the sacred INVESTMENT AGREEMENT, SHARE TRANSFER AGREEMENT, PRELIMINARY AGREEMENT and LEASE AGREEMENT.

There is clear provision in these Agreements, and also in the Lease Agreement for International Arbitration.

• It had also been decided that

a. The lease obtained by Cornel must be transferred instantly to HDL.

b. The Share Certificate issued to Cornel must instantly and simultaneously be transferred in the name of Secretary Ministry of Finance, on the same day, without receipt of any money. (15 February 1984)

•     Additionally since Mitsui/Taisei did not want the burden of the Lease on HDL, Cornel was compelled to and took on the burden of the Lease instead.
•     For, if not, Mitsui/Taisei would have fled.
•     Neither the Government, nor Mitsui contributed or sacrificed a single cent till 1984 March when Government contributed the paper guarantee and Mitsui the loan.

Even the Japanese Exim Bank loan was also lobbied for by Cornel and his mentor Dr. Hattori, costing time, money and our goodwill. It was much later that Mitsui settled Exim and took over the loan.

•     The Government/Treasury of Sri Lanka from 1977 or even before has never failed to honour any and all State Guarantees, as failure would affect the Government’s borrowing power/ability, credit rating, etc.
•     Further there was no case, and no question of K.N. Choksy appearing.
•     Therefore, it is false and erroneous to say inter-alia, “The Government Guarantee was not honoured and K.N. Choksy appeared in the case”.
•     However, even after having paid for the lease, in February 1984, and the Agreement stating inter alia “these lands will be made available with all existing buildings demolished, free of encumbrances and a prepared site,”, the UDA failed to honour/deliver as per Agreement –

i. the first part of land was made available after a delay of one year – only in March 1985,

ii. the second portion in 1986 – a delay of about two years,

iii. the last portion which was occupied by Ceylon Hotels Corpn., was not handed over even after the opening of the Hotel in September1987.

•     The UDA did not have the money or means to do so, and consequently, not the project, Cornel alone was burdened with the heavy financial contingencies.

a. The only communication tower in Colombo, located on the site in Echelon Square, could not be moved due to obvious security reasons and was not moved. Cornel part paid overseas for a new tower to be installed in Mirihana.

b. The UDA was not able to find alternate location for the Fort police station, located in Echelon Square for generations.

c. Therefore Cornel had to sacrifice the business of Colombo Apothecaries Co./premises for the Fort Police to move into.

d.Similarly, the Dept. of Immigration/other State organisations too, could not be moved out in a hurry.

•     Even a layman could understand the huge costs – overruns to the blue chip Japanese contractors due to huge/long delays on the part of the UDA.
•     The site had to be cleared/prepared etc. by Cornel & Co., and also Mitsui Construction, for which Cornel paid.
•     Even after Hilton opened in 1987, still a significant portion of land occupied by Hotels Corp. was not handed over. Please see attachments 1) and 2) for details.
•     Therefore, even after March 1984, I had to personally make huge financial sacrifices and incur heavy loses up to 2005.
•     My “Financial contribution, commercial sacrifices/risks taken from 1978 – 1984” amounts to well over Rs. 136 million, the total cost of the UDA land.
•     The two attached documents with break down, were submitted to all Courts, AG. Secretary Treasury, etc. tabled at several board meetings,

a. “Cornel’s financial contribution, commercial sacrifices/risks taken (1978- 1984)”

b. “Financial losses and sacrifices – (1984 – 2005)”

•     Flying architects, engineers, décor professionals, etc. around the world mostly in Pan Am first class, to and from New York, Hong Kong, Singapore, Tokyo, etc.
•     Sponsoring them at Waldorf Astoria and other top Hotels was also from my own foreign sources, not with public money. Neither the Government nor Mitsui/Taisei gave me a cent. Nor did I have a cash cow Santa.
•     It was all from my own resources and from my own sources and with my own blood, sweat and tears tainted dollars.
•     These monies are far in excess of the total cost of 136 million for the lease, where the last instalment is not due until 2021, and, further I was road blocked and frustrated from paying the instalments.
•     All these terms were agreed upon and enshrined in the Agreement.
•     For all the contributions as documented from 1978 – 1984, several times the value of the total cost of the Lease, I was easily entitled to 51% or majority of HDL Shares, and certainly did not need the UDA lease for SHARES.

For this huge personal contribution and risks taken, for the country, is it fair to continue to harass and persecute me for now over 17 years for political and/or other reasons?