The Nation GAIN

Monday, October 11, 2010

Sri Lankans arrested in major illegal immigration investigation

In one of the largest enforcement operations ever undertaken, the UK Border Agency and police officers undertook a series of raids on twenty-one locations in Sussex, Surrey and Kent at the end of September. These raids followed an eight month investigation by the UK Border Agency's South East Immigration Crime Team into a gang suspected of facilitating illegal working by immigrants for an employment agency in Crawley, Surrey.

Five people, including two Sri Lankan nationals, were arrested for various immigration offences including facilitating breach of UK immigration laws and money laundering. A further twenty-five people, mainly understood to be Sri Lankan nationals, were also arrested for immigration offences at a number of locations in Sussex and Surrey. The UK Border Agency will seek to remove those found to be working in the UK illegally.
Damian Green, Minister for Immigration, said:
“This was part of a nationwide UK Border Agency campaign to tackle illegal working and organised immigration crime.
“Working with the police and other law enforcement partners we are determined to tackle the organised criminals who prey on vulnerable immigrants, and take action against those who break the law. Today’s operation is an example of that.”

Andy Cummins, who heads up the South East Immigration Crime Team, said:
“We believe that we have disrupted a significant international organised criminal network, which aimed to assist people to enter and stay in the UK illegally.

“Today’s operation is the result of an extensive investigation involving both the UK Border Agency and the police South East Organised Crime Directorate. That investigation continues”

The South East Immigration Crime Team is a specialist unit of seconded police officers and UK Border Agency staff have been set up to investigate immigration crime, and prosecute those behind it. Officers from Sussex, Surrey, Hampshire, Kent and Thames Valley Police forces are involved.

Anyone who suspects that illegal workers are being employed at a business or any other immigration crimes can contact Crimestoppers on 0044 (0) 800 555 111 ,or visit www.ukba.homeoffice.gov.uk/report-immigration-crime where anonymity can be guaranteed.

A fine of up to £10,000 can be imposed on an employer for every illegal worker found in the business, unless the employer can prove that it carried out the correct right-to-work checks on the employees.

Employers can find guidance on how to employ workers legally at www.ukba.homeoffice.gov.uk/employers or by calling the UK Border Agency’s Employers’ Helpline on 0044 (0) 300 123 4699.

Fishing ban lifted

Sri Lanka has lifted all restrictions for fishing imposed due to LTTE terrorism making the country's territorial waters free and open for fishing.

Fisheries and Aquatic Resources Minister Dr. Rajitha Senaratna said according to Defence Ministry the sea will now be free of restrictions except for areas where landmines were not yet removed.

The decision has taken by the Defence Ministry after a discussion held between Minister Senaratne and the Defence Secretary Gotabaya Rajapaksa, early last week.

He said following the decision to lift the ban on fishing, the restrictions imposed on fishing boats with 40 HP engines has also been lifted.

" This is the first time the government has lifted the ban on fishing boats with 40 HP engines. We expect a good harvest this time", he said.

The Defence Ministry has agreed to release the 141 fishing boats with 40 HP engines held in their custody to the Fisheries Ministry .

Labour Federation opposes amendment to EPF Act

The Ceylon Federation of Labour (CFL) has filed a strong objection against the proposed amendments to the Employees Provident Fund (EPF) Act.The federation, which is an organisation bringing together trade unions in the private, semi-government and co-operative sectors of Sri Lankahas urged the authorities not to introduce any proposals in the amendment that could eat into the balance of members of the EPF and ultimately leave only a meagre sum at retirement to the individual.

“It is the considered view of the CFL that the original objective of the EPF which is to provide tax free benefits for the individual worker at retirement should not be harmed in any reform of the EPF but it appears that your amendments allow too many pre-retirement withdrawals,” an extract from a letter, dated October 4 sent by CFL secretary-general of CFL, S Siriwardena and addressed to Labour Relations and Productivity Promotion Minister Gamini Lokuge said.

The letter said the Federation does not object to the stipulated withdrawal for housing purposes but are certainly opposed to the allocation of EPF funds to build ostentatious secretariat urging the Minister to find other means to fund projects of this type.

“The proposal to allow withdrawals in respect of medical wants is not welcomed as it overlaps with the medical facilities provided by the Employees Trust Fund (ETF).We suggest that the medical benefits proposed by you be undertaken by the ETF by widening the scope of the medical benefits offered by them at present.”

The letter added: “The CFL considers your proposals to have an insurance and pension scheme built into the EPF as ill conceived and these are best operated as separate schemes outside the EPF. However, we are unable to comment further on these proposals as details are not within our knowledge.”.

Meanwhile, CFL has also alleged that the Minister had proceeded with the amendments to the EPF Act by obtaining cabinet approval for the proposals without any consultation with the National Labour Advisory Council. (NLAC)

“You would recall at the last meeting at the NLAC, it was agreed that an opportunity would be provided for NLAC to discuss the proposals before amendments to the EPF are made.

“However, we now learn that you have sought and obtained cabinet approval for your proposals,” it said.

“This is most unsatisfactory and we lodge our strong protest against your cavalier attitude towards the NLAC and wish to place on record our objections to the amending Act,” the letter highlighted. (AR)

Tourism stakeholders concerned over promotion curbs

Tourism stakeholders in Sri Lanka have expressed their concern over a recent policy change advocated by the tourism authorities to halt promotional campaigns for the next two years.

The stakeholders are puzzled over the recent comments expressed by Sri Lanka Tourism chairman Dr Nalaka Godahewa where in a recent speech made at the ‘CIM Talking Point’, he had been quoted in the media to have said that Sri Lanka Tourism would refrain from running promotional campaigns for the next two years.“I think stopping all promotional campaigns completely is not good although I agree that building infrastructure should take precedence over the promotional campaigns. In this competitive global environment, Sri Lanka should be constantly known just as you advertise a product to the market,” Sri Lal Miththapala, the immediate Past-President of the Hotels Association who is now a project director at the Ceylon Chamber of Commerce told The Bottom Line.
He said that although stopping promotions for a few months will not impact the numbers in the short term, stopping them for as much as for two years, would impact the numbers drastically in the long run.
Similar views were expressed by some other industry stakeholders this paper also spoke to.
Earlier, Dr Godahewa, in his speech had argued that a severe reduction of publicity was being contemplated as a result of the unpreparedness of the industry and due to present ‘infrastructure constraints’.
He is also reported to have said that sweeping changes will be made to Sri Lanka tourism in future such as the amalgamation of the five tourist boards into one authority and that the planned 2011 as ‘Visit Sri Lanka Year’ will now not be celebrated in a full scale.
During the speech, Dr Godahewa is stated to have said that Sri Lanka would get 850,000 tourists next year even without running promotional campaigns and commented that the targeted 2.5 million tourists by 2016 is ‘not a very well calculated number’.
Attempts to get a response from Dr Godahewa on his opinion proved futile as he did not call back to a message left with his secretary nor reply to an email sent to his email address.

Laugfs IPO ‘may fund Shell takeover’

By Azhar Razak

Local petroleum gas distributor Laugfs Gas Holdings (LAUGFS) is hoping to utilise funds raised through its forthcoming Initial Public Offering (IPO) to partly fund a possible acquisition of a 49 percent stake in Shell Gas Lanka Ltd (SGLL), a top company official said.

LAUGFS has expressed interest in buying the 49 percent stake of Shell from the Sri Lanka government if the ongoing Royal Dutch Shell (RDS) deal with Sri Lanka government is signed and a 49 percent stake is then divested by the government.

“If a 49 percent stake held by the government is sold to the public through a listing, as proposed, we are very interested in grabbing the full 49 percent stake,” Chairman Laugfs Gas Holding, W K H Wegapitiya told The Bottom Line.

According to him, LAUGFS would not have a problem in raising the necessary finance to acquire the stake of Shell, since at that time it might even have the funding raised by a forthcoming Initial Public Offering (IPO) which commences early next month.

“As far as funding is concerned, we could also use funds raised through the forthcoming IPO as well if necessary,” he suggested.

LAUGFS seeks to raise Rs. 2.5 billion through the IPO which is set to officially open on November 04, 2010. However, according to calculations, if US $63 million (Rs7.056 bn, assuming 1 USD = Rs112) is required by the Government of Sri Lanka to buy a 51 percent stake, LAUGFS might need an approximate Rs6.8 bn for a 49 percent stake of Shell.

Media reports that came in earlier in the week however suggested that part of the funds raised through the LAUGFS IPO would be used to retire expensive debt, finance further expansion and to diversify into the leisure sector.

“Out of the total money raised, we are hoping to use Rs. 1 bn for our expansion drive and use another Rs. 800 m to set off our borrowings from the banks,” one media report quoting the LAUGFS chairman had stated.

The government, which already owns a 49 percent in Shell and is presently finalising a deal with RDS to buy the balance 51 percent stake said that it is looking to divest a 49 percent stake after buying out the controlling stake.

According to the media minister and government spokesman Keheliya Rambukwella, the government is looking to divest the 49 percent minority stake by way of listing in the stock exchange to pave way for an effective public public-private partnership.

Addressing a cabinet briefing on last Thursday, he said the government had offered US 63 million dollars to acquire the remaining 51 percent stake of SGLL with talks between the two parties now over and the deal currently being finalised.

According to sources, state institutions such as Sri Lanka Insurance Corporation, state banks and Employees Trust Fund may help finance the purchase.

RDS, which originally acquired the firm as part of a privatisation drive undertaken by the Sri Lanka government would be exiting its Asian oil operations if the controlling stake in the Sri Lankan operation is divested.

SGLL is engaged in importing, storing, filling, marketing and selling liquefied petroleum gas in Sri Lanka. Presently, it is a joint venture between RDS and Government of Sri Lanka with 51% and 49% shareholding, respectively. (AR)

What is there to burst bubble?

By Indika Sakalasooriya

The idea of a possible bubble forming in the Colombo bourse, the world’s second best performing market at the moment, has been cast aside by local market analysts dispelling the claims by several foreign fund mangers, terming them as ‘regret notes’.

The latter part of last week saw the market loosing some of the steam, triggering the fears of a possible bubble as speculated by some.

“Sri Lanka is a long term bull market. It is true that some shares are trading beyond their intrinsic values. But this doesn’t mean that a bubble is forming. Let’s assume that there is a bubble. But I don’t see any material evidence that would lead to burst it, such as a threatening interest rates scenario or at least a wild card situation like the re-emerging of the LTTE,” CT Capital chief executive Channa Amaratunga said.

He, however opined that the impact of restrictions on broker credit from January 1, 2010 by the market regulator, entrance of sizable IPOs in the early part of 2011 and continuous rights issues by firms can mop up the liquidity in the market and this may cause a slowing down of the momentum.

“Due to the regulatory restrictions, currently many stockbrokering houses provide ‘unofficial margin’ facilities and extended credit to retail investors to keep the momentum going,” he said.

Also noting that the “future looks bright”, Amaratunga added a cautious note — “this doesn’t mean that we should overlook the budget and trade deficits and finding actual political solutions to the problems that need urgent attention”.

In a recent interview with CNBC, regional economist at Barclays Capital Pakriti Sofat said Sri Lanka’s capital market rally is supported by strong economic fundamentals. Sofat, during her brief interview also said that in the near term Sri Lanka is not facing any risks arising from political or economic fronts.

But she averred that loss making state enterprises should be reformed.

She remarked that country’s fiscal side is improving as the government is making an effort to broaden and streamline the tax base via a Presidential Tax Commission.

She also said that she expected the rating agencies to upgrade Sri Lanka’s sovereign rating to BB- in 2011.

Sighting the comments made by some of the foreign fund managers about a possible bubble, Bartleet Mallory Stockbrokers research manager Rakshitha Perera said: “When the time was right these foreigners couldn’t get into the market. They resorted to the idea that the shares were over priced and the market is overheated. At the same time foreigners who held to their shares during the troubled time exited the market making a killing. They also thought they’d be able to get back into the market at low prices. But that is not happening. So now they complain the market is overvalued and a bubble is forming.”

Colombo Stock Exchange has risen by more than 100 percent this year — its main index crossing 7000 points — compared with the second best equity market in Asia, Indonesia, which is only up around about 40 percent.

Distributors ask payout from Royal Dutch Shell

By Jithendra Antonio

In the wake of the governments’ sky high promises to offer LPG at lower prices to consumers after the buyback, The Bottom Line reliably learns that Royal Dutch Shell PLC has faced serious criticism from its distribution channel in Sri Lanka and talks are on to compensate its distributors by the world’s second largest oil and gas giant before its exit from the country.

“Shell asked us to expand our operations in the country last year or to ‘step down’ from business if we did not have the capacity to expand from our own investments. So we had to generate funds through various ways. They were using our money to build their brand at no cost without revealing us their exit strategy. There abrupt exit will cost us serious losses,” said an official from Shell Gas Lanka’s distributors.

According to the distributors, Royal Dutch Shell PLC has encouraged its distribution channel in Sri Lanka two years ago on its sole behest to expand the distributor capacity and double the volume of sales on the expense of medium scale distributor business community of Shell Gas Lanka Limited.

The official also said that each of the distributors had to invest nearly Rs.40 million to upgrade and expand their operations as requested by Shell Gas Lanka.

According to him, the sale of Shell Gas Lanka would result in for them to lose the backing of a strong brand and hindering of credit lines.

He said that they are not asking for the whole Rs40 million afforded by each of them but at least some reasonable compensation. However since the negotiations are happening at the moment he refused to give us further comments on the matter.

There are around 30 Shell gas distributors islandwide.

However, neither the present country manager of Shell Gas Lanka Ltd, Walter Sanchez or any other official was not available for comments.

The Bottom Line also learns that Shell Gas Distributors’ Association is planning to hold a press conference next week to communicate the matter to the media.

Analysts say that Royal Dutch Shell is exiting from its core business LPG, in Asia and some South American Countries with a view of investing its money in oil drilling in some identified locations.

However, many ventures which Royal Dutch Shell had started during last decade has been shut down from time to time globally such as its solar energy and renewable energy projects.