Transparency International expresses serious concern about new law on Chinese-funded commercial zone

The Sri Lankan parliament cleared the Colombo Port City Economic Bill On 20 May, two days after the Supreme Court  gave its determination about the constitutionality of the legislation, ColomboPage reported.

TISL, which was among the petitioners at the apex court, alleged that the way the legislation was rushed through “was an affront to the right to information of the citizens of Sri Lanka.

“The proposed bill was not gazetted in advance, and there was no opportunity given for public consultation and public review, even after the Supreme Court determination was announced, as the Bill was debated soon after and passed, even amidst the height of the third Covid wave in the country.

“Such timing of this critical Bill raises the concern as to whether the constitutionally guaranteed fundamental right to information of the people of Sri Lanka was respected in this crucial endeavor to impose a law with such far-reaching impact on the country,” it said.

TISL noted with ‘grave concern’ that sufficient time was not given to the MPs to review and understand the changes made and reach an informed decision.

Referring to the petition, TISL said ”the establishment of offshore banks and companies could open pathways for money laundering and illicit financial flows”.

“The Supreme Court determination has eased some of these concerns… however, the Registrar of Companies has limited control over offshore companies and the Supreme Court has not expressly stated whether the Banking Act would apply to these offshore Banks,” TISL said.

The watchdog said ‘the lack of public accessibility would result in minimal scrutiny over such entities by the public, which will lead to many ‘illicit transactions’ not being apprehended.

It feared that Sri Lanka could be downgraded in the Financial Action Task Force rankings as a fallout of the law.

“The rise of risks about attracting and facilitating black money could also lead to Sri Lanka being downgraded in the Financial Action Task Force (FATF) rankings, which in turn would have a detrimental effect on the country’s ability to obtain foreign aid, loans and lawful investments,” it added.

The Sri Lankan Supreme Court had ruled some of the bill’s provisions “unconstitutional” and directed that the clauses be passed with amendments by a special majority.

The Sri Lankan government passed the bill by incorporating the court’s rulings on its various provisions.

The government hopes the project  could attract USD 15 billion in investments, and emerge as a leading business, retail, residential and tourist destination in South Asia.

CHEC Port City Colombo is a joint venture between the Sri Lankan government and China Harbour Engineering Company.