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MAGA NEGUMA GOING ASTRAY


 

 The necessity to have a national policy for every sector is the requirement for the development of the country and a matter that has been discussed for a long time. But what happens is just 
the opposite!   

For example Maga Neguma was a project that was given prominence during the previous regime. This coveted project is now in the doldrums. Ignoring the stipulations of the Committee on Public Enterprises its actions have earned the wrath of the Ministry of Highways. Today in this exposure the fate of Maga Neguma is discussed at length. 

The Road Planning and Development Company which was under the Road Development Authority was closed on 31st March 2004 by the then UNP Government. This was following a decision taken by the Cabinet. Rs 1400 million was set aside to compensate the employees who served at this company. A change of Government took place at that time. The UPFA Government that took over and Mahinda Rajapaksa became the Minister of Highways. On 3rd August he presented a cabinet paper to form three companies in place of Road Planning and Development Company. They were the Maga Neguma Emulsion Private Company, Maga Neguma Road Construction Equipment Company and Maga Neguma Planning Private Company. However the Maga Neguma Road Construction Company had been registered under Company Registration number N9PVS) 37844 with the Registrar of Companies on 11th June, two months before the presentation of the Cabinet Paper. Later with Rajapaksa becoming President of the country the Maga Neguma Project became a prime stake holder in the Government construction sector.   


Issues regarding Maga Neguma surfaced from far back as 2009. The then Government expressed contradictory views regarding this project at various forums. Maga Neguma Road Construction Equipment Company was again registered on 16th November 2009 with the Registrar of Companies. When the opposition at that time raised questions regarding corruption at Maga Neguma, former Minister Mahindananda Aluthgamage replied that it was a private company and therefore it does not come under the purview of COPE. At the time of his statement the Attorney General’s Department had already declared that the three companies came under the purview of COPE. This was in fact a reply made regarding an inquiry made by the Secretary to the Ministry of Highways, dated 09th May 2012.   

 


Cabinet Memorandum   
Maga Neguma commenced by Mahinda Rajapaksa during his premiership, while holding the post of Minister of Highways, received most of the projects with the intervention of the Former President. A directive was sent to all ministry secretaries that it was necessary to involve Maga Neguma in all state constructions. The primary aim was to ensure that contractors, Provincial Councils, local bodies and other companies obtain their machinery and equipment through Maga Neguma. This company was tasked with the supply of equipment, sale, leasing out or renting out operations. The Cabinet Memorandum issued by Rajapaksa, the then President and Minister of Finance and Plan Implementation, on 18th February 2013 is of paramount importance.   


This memorandum states, “The Road Development Authority is a fully fledged Government owned institute. The companies listed hereunder have been provided with the required capital provided under the consolidated fund of the Government. The consolidated fund had infused funds to the Road Construction and Development Company (RC &DC) from its assets. The ownership of these companies lies with the state. Therefore a larger share of income should be made to the treasury and the balance to the Road Development Authority. Therefore I recommend that the Capital structure of these companies to be restructured and necessary amendments to the companies constitution to be made.   

“In addition the companies by operating under the regulations of the Companies Act and as per the directions of State Enterprises Department could satisfy the proposals 11 and 111 of the Cabinet Memorandum. As proposed by the Cabinet Memorandum there is no objection against Maga Neguma Construction Equipment (PVT) Company undertaking contracts, but in consideration of the fact that the Road Development Authority, when offering contracts under direct allocations to this company, could create an injustice to the small contractors in the private sector. And the Road Development authority being unable to obtain a competitive price and the authority not been able to complete the tasks during the agreed period could entail difficulties and as such this company, when allocating contracts by the Road Development Authority, should only be used for carrying out maintenance work and with regard to other type of construction work while adopting strategies and proper planning and make use of the direct contract 
under limitations.   


“It is prudent to strengthen the Maga Neguma Consultation Services and Management (PVT) Company so that the authorities will depend only on consultation services if the broadening activities of the Road Development Authority are not profitable at any given time”   

 


Does it belong to the state?   
From such a foregoing it is apparent that from time to time unspecific information regarding the ownership of the companies under Maga Neguma had surfaced. It is not clear why Maga Neguma Road Construction Equipment Company was established as a private company, when the Maga Neguma Project was in operation under a Government policy. Does it now belong to the state or not? As these companies had been established with funds provided using the assets of RC &DC and funds of Road Development Authority from the allocations of the consolidated fund it is questionable how and why Government funds had been used to establish a private company.   

 


True position 
Those who had obtained sub-contracts at that time are calling over  and demanding payment. This has become a nuisance. He declined to take  responsibility for a company of this nature. But it is pertinent to state  that two board directors of the company were appointed on his  recommendations.   
In accordance with the establishment of Maga Neguma, 60% of   its earnings are to be given to the General Treasury and the balance 40%  to the Road Development Authority. Despite these regulations this hasn’t been done since 2004. MNRCE Chairman said that the  present board of directors act in the same manner. But the Ministry of  Highways does not appear to be making inquiries. If it is so Maga Neguma   even today has no future plan. The Minister insists that contracts for   road development should not be given without calling for tenders. But  Contracts awarded by Maga Neguma to outside companies had never  been following a tender procedure. There is a list of 228 such companies. Inquiries were made regarding randomly selected companies. They were able to secure these contracts  through political affiliations. Maga Neguma owes them several thousands of rupees for contracts  offered in 2017. The amounts payable to these individuals are in the  region of over Rs 5 million. 


Refuting the claim made by MNRCE Chairman the  workers says that the number of vehicles left abandoned at work sites  exceed 400. Most of them have corroded and can only be sold as scrap, the chairman said. But the photos and reports appearing in this article  clearly portray the true position.   
Udukawa was once acclaimed for being so productive and won  an award for the best administered work site. Today it has become a site  with overgrown bushes.   


The COPE generally summons officials when the ministries  concerned are not investigating. The irregularities, frauds, acts of  Corruption and wastage are investigated into with the assistance of the  Auditor General and information is passed down for necessary corrective  action. When Maga Neguma came under the eyes of investigations, it was  revealed that it shot to fame in the construction industry through  irregular means. This was an issue concerning the political and administrative sectors. There are many questions which remain  unanswered. These are public funds and the authorities are answerable to  the people for their misuse.   


“99.98% of the institute owned by RDA” 

Following are excerpts of an interview done with Maga Neguma Consultancy Services Company Chairman Janaka Herath. 


QWhat is the present position of the Maga Neguma Consultancy Services Company?   
At the time of its establishment Rs 1 million had been  invested by the Road Development Authority. This had been converted into  shares. Now RDA owns 10.001 Maga Neguma Emulsion and Construction one  share each. That is to say that 99.98% of the shares are owned by Road  
Development Authority. 

 
Q Is there a move to take over the Kundasale work site?
I am hopeful that Kundasale can be made a profit earning   concern in six months time. A proposal in that respect has already been  forwarded. The employees would be taken to our company if they are  willing and vacancies would be filled.   


QIs this company being regulated by the RDA?   
This is a private company, with seven members on its  board. Five directors including the chairman are appointed by the RDA.  The other two are appointed based on the share holdings.   


QWhat are the activities of your company?   
This company was registered for consultancy services on  appraisals and construction. At the beginning RDA did not give any work  to us. Before the change of Government there had been some allocation   of work to the value of Rs 4 Billion. It had been a system of handing  over sub contracts and earning a commission. We do not get any projects   from the RDA now.   


QWhat about the profits and losses?   
By 31 December 2015 we had settled the loans due to our  suppliers and also recovered amounts due to us. Following the ideals of   S5 we are ready to advance.   


 

Total mess    

The following is a Q & A done with Maga Neguma Road Construction Machinery Enterprises Chairman Rajiv Senevirathne.   


QWhat is the present position of the MNRCE Company?
I took over on 18th March 2015 and since then the annual   profits have been increasing. Though under the Ministry of Highways this  a private limited liability company. The former Board of Directors  never allowed a Government Audit. Maga Neguma was never under the Government Audit, but was audited by private companies. It was I who  brought this under a Government Audit in 2016, and accordingly in 2016  there was a Nett profit of Rs 274 million. 

 
QDid the General Treasury provide funds to establish Maga Neguma?   

No. At that time there was the RCDC which was making a  loss and the then Minister of Highways of the UNP Government Thilak  Marapona abolished it and presented a cabinet paper to create Maga  Neguma Institute. Thereafter he instructed RCDC to handover the  machinery to the three companies of Maga Neguma. With the fall of the  UNP Government and UPFA Government being established these companies were  solely under the charge of Basil Rajapaksa. According to the Cabinet  regulations 60% had to be paid to the Treasury and 40 % to the Road  Development Authority. However from 2004 up to now this has not been  done.   


QNow what happens to the profits earned? 
We do not send the 60% to the Treasury and the 40% to the RDA, though it is stated in the Cabinet Paper.   


QHow many are there in the board?  
There are seven. Two from the Road Development Authority,  one from the Ministry and four others appointed on a political basis. I was  appointed by the chairman of the authority. There is no record anywhere   to say that he has power. Dealing with this subject invites  trouble.   


QWith the new Government assuming power it was highlighted through Mass media that vehicles and machinery belonging to Maga Neguma  being left to rot.   
 At the time I took over they had been there for eleven  months. These cannot be repaired and have to be sent back to RDA. Maga  Neguma was established in 2004 and RCDC was established when we were in   school. These are not roadworthy and have to be sold as scrap. There  are more than 100 such vehicles and we pay the lease only if they run. Even the machinery and Plants are dealt with in the same manner.   


QDuring the previous Government there were many projects where Maga Neguma was involved in. Now it is not so. Why?  
We also can do projects like Mahinda Rajapaksa did, using the   phone. He instructed the chairman using the phone to do things. There were no estimates. Goods and workers were taken  and work got started. Now it is not so. Engineers visit the place. Work will commence only if the RDA gives approval.  We don’t act without an order. That is 
the difference.   


Q Kundasale school and other institutes belonging to you are to be vested in the Maga Neguma Consultancy Company?   
Kundasale school does not belong to us. It was used to  repair vehicles belonging to the RDA. In 2012 they had also undertaken  to repair other vehicles. This is not in our constitution. The  loss amounts to millions since 2012. Therefore it was suggested to transfer the  51 employees to other stations and close the school down. They did not agree  to the closure and are hoping to start something new. 

 
QThe Secretary of the JSS U.K Ranjith accused you at the  progress review meeting held in March 2016 saying that since you took  over this institute is incurring losses.   

He connived with a former chairman and continued  stealing. He got caught and I dismissed him. When the Auditor General  says that we are earning profits how can he say it is not true?   


QYou said that there are debts to be settled. What is the total?   
We paid 300 Million as  VAT to the Inland Revenue Department. We owe 270 million to the Petroleum Corporation. The Economic  development Ministry of Former Minister Basil Rajapakse owes us Rs 575  million.   


 

 

“THERE ARE COMPANIES WITH MINIMUM PRICE LEVELS”

Following is a Q & A done with RDA Chairman NIhal Suriyaarachchi.  


QAfter the change of Government why is the RDA not giving projects to the companies under 
Maga Neguma?  

Now we call for tenders and some are given to them. Some of them are obtained by them on application. Keeping them for instant  construction work and keeping it open for the public in other projects  
are our wishes.   


QThe workers of Maga Neguma charge that the company is now dying a natural death. Your comments.    
When tenders are called there are those who quote low.  We hope to get the maximum revenue for the Government. If we go   on giving projects as a habit they will never improve efficiency.     


QWhy are projects taken by them given to outside parties?
That is a matter for the directors of those companies to address. That is a company established by the RDA. Our directors 
are there.       


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