Aitken Spence breaks into hotels

by Charitha. P. de Silva

At about this time (1972) Mrs B’s government introduced tax incentives to encourage the building of hotels. I had already indicated to the directors and executives that our expansion would be confined to activities that gave employment and earned foreign exchange. This was based on my belief that all governments regardless of their political hue would support such activities. I had also made it clear that we would not go into a particularly lucrative source of income, construction, and other government tenders. This was because I was well aware that tenders involved bribery.

One thing I had repeatedly stressed to my staff was that we had to be scrupulously honest in all our dealings, even if it meant loss of business opportunities. This attitude became particularly relevant when the head of Printing, Stanley Wickramaratne, told us that we were losing business because it was customary in the printing trade that kickbacks had to be given to the purchasing departments of our clients. He claimed that we would not be able to survive if we did not do what every other Printer was doing.

I was totally against it because I realized that giving kickbacks would inevitably lead to the corruption of our own employees as kickbacks were cash transactions and receipts were never given for them; and in the course of time some or all of the kickbacks would find their way into the pockets of those of our employees that had to make the payments. It is because of principles such as this that Aitken Spence soon gained a reputation for honesty that was to be a source of protection for me throughout my career.

It also clearly established that Honesty was a guiding principle in our company. It is my view after a career of over 50 years in the private sector that the integrity of a company is determined by the integrity of the top man. If the top man is bent the whole organization will gradually become corrupt.

Michael (Mack), who was a man full of ideas, came up with the proposal that we should build a seaside hotel. Even though we had no experience in this area we studied the feasibility of diversifying in this direction. The tax incentives given by the government made it a very attractive proposition. When we decided to go ahead with it, Michael came up with the idea that we should build our first hotel on his land in Uswetakeiyawa. Browns already had a hotel in that area, so that the proposition seemed reasonable.

However, I was aware that water was not readily available there. In fact, the Rasaratnams (Susheela’s cousins) were selling water on a regular basis in bowsers from a well they had on their property in Hendala. I insisted that we get reports on the availability of water before we embarked on the project. I also wrote a cautionary memorandum on the pros and cons of a hotel project, pointing out that some factors outside our control such as an outbreak of disease could keep tourists away. At that stage nobody anticipated the disastrous effects of terrorism that later affected tourism for many years from 1983 onwards.

On the grounds that lack of water was an insurmountable drawback we decided that Hendala was not where we should site our first hotel. Michael would have been bitterly disappointed but should have realized that there was a serious conflict of interest in promoting the use of his own land. It was significant (and unfortunate) that his close friend Norman (Gunawardene) supported his proposal despite its drawbacks. Fortunately, the others went along with me.

I instructed (Ratna) Sivaratnam who was Michael’s lieutenant in the hotel project to scour the Southern beaches up to 50 miles from Colombo looking for suitable sites. Within a few weeks he came back with about four possible locations from Wadduwa down to Beruwela. All the directors piled into two cars and drove down one Saturday to examine all the sites. When we got to Beruwala, the tide was out and the beach looked gorgeous. We picked on that site and at Michael’s urging chose Geoffrey Bawa to be the architect. I suggested that the name of the hotel should be Neptune (Roman God of the Sea) to which all agreed.

We built Neptune over a period of three years starting from 1974. We built it in stages, first the central block, then the one on the right and finally that on the left. This was in order not to put too great a strain on our cash flow. The first two blocks had been two storied but when it came to the third, Bawa decided to make it three stories. However, when I visited it in its early stages I could not see it, lacking visual imagination. I sent for him, sat him opposite me and told him with some concern that I could not see signs of his brilliance.

Being very much a layman I protested to him saying that it would look odd, being asymmetric. He smiled gently and told me not to worry, and assured me that nobody would notice it because you could not look at both blocks together! He was absolutely right. Bawa’s brilliance was easily discernible. One feature of the design was the swimming pool was right alongside the dining area. He had originally designed a separate kiddy’s pool some distance away from the main pool. I prevailed on him to design the main pool so that kids could swim in shallow water under the eyes of their parents.

He did so with a maximum depth of four feet. The four-foot depth suited me too (I could never swim in deep water). It was a great success. When it came to furnishing the suite at the corner of the right wing, I was so happy with the project that I told Bawa to do whatever he wanted. He was delighted to be given a free hand and went to town putting in a four-poster bed and antique furniture. It was later my favourite room even though I resisted the temptation to take advantage of the tradition in many hotels that the Chairman had the best room reserved for himself.

The whole project, our first venture into hotels was a total success. We made profits from day one,

more or less. Our German tour operators were delighted with it and wanted us to build another seaside hotel. We first had to find another site. Once again we piled into two cars and visited the three or four sites that Sivaratnam had identified. When we got as far as Ahungalla we found a wide beach of golden sand. There was no doubt about its beauty. However, when it came to purchasing the land we were faced with a great difficulty. The land had to be purchased in small blocks and the title was what was called ‘Village Title”, in other words no real title.

The entire fifteen acres that we wanted were purchased over a number of years, and we signed about 150 deeds! This eventually created a problem when it came to the valuation of the land. Aitken Spence had bought the land after painful negotiations with a large number of individuals. As was to be expected we had to pay premium prices for the last few blocks that we purchased.

For the Ahungalla project we floated a separate company, Ahungalla Hotels Ltd. and we transferred the land to that company. The project was being financed by the National Development Bank whose Chairman was my cousin, C.A. Coorey. (Chanda Coorey was a brilliant [First in Chemistry] former Civil Servant who had been the Secretary to the Treasury and a director of the Asian Development Bank in his time. He and the legendary Baku Mahadeva had vied with each other for first place in class throughout their school careers at Royal College.)

According to the agreement with the NDB the price at which the land would be transferred by Aitken Spence to Ahugalla Hotels Ltd. was to be based on a valuation done by the best-known Valuer at that time. This was all a part of our agreement with the NDB. When his valuation was eventually given to the NDB Chairman, Chanda Coorey, he refused to accept it. What had happened was that the General Manager of the NDB, V.K. Wickremesinghe had advised him that the price was too high. VKW was not a Valuer, and I can only surmise that he was advised by his brother S.K. Wickremesinghe who was the Chairman of Chemical Industries Co. Ltd. and Chemanex. S.K. was buying land further down South for a hotel project and must have known something about land prices in those regions. However, he probably bought the land for his project in one transaction with one seller, which was vastly different to what we were compelled to do with over 150 sellers over a number of years with the price escalating with each purchase.

Be that as it may, here was I confronted by a refusal on the part of the NDB to honour their agreement with us. I tried to speak on the telephone to Chanda, with whom I was on very good terms, but he was not prepared to discuss the matter. I thereupon wrote a very strong letter to the Chairman (Chanda) with open copies to the other directors, who included strong men like Dr H.N.S. Karunatilleke, Governor of the Central Bank. I complained that the NDB that was a Development Bank was, in the quest for greater profits, behaving in a way that not even a commercial bank would stoop to. Chanda had to eventually increase the price paid for the land though he did not accept the exact figure given by the Valuer, whose name I cannot recall.

I remember being amused when Chanda, on a tour of Triton (son of Neptune) during its construction, remarked that the corridors designed by Bawa were wider than they needed to be. Chanda was as unimaginative as I was when confronted with Bawa’s brilliance (and apparent extravagance). The Triton turned out to be an architectural tour de force. It was a truly beautiful bit of work, and I was very proud of it. One of its beautiful features was the view of the pool and the sea that you saw, as one sheet of water, when you stepped down from your car in the porch.

None of us dared to question Bawa when it came to matters of design. He was a genius and we all knew it. However, I had occasion to question one of his concepts. One day Michael Mack (who was in charge of Hotels and Tourism) came to me and told me that Geoffrey was going to construct a bronze statue of Triton on the edge of the large swimming pool. It was to be a centaur, half horse, half man. I knew that Triton was not half horse but half fish. I told him to tell that to Geoffrey. He came back to me and told me that Geoffrey had said that according to his encyclopedia it was half horse.

I was not prepared to look foolish for all posterity, and told him to bring me the encyclopedia. That was the last I heard about the centaur, but Goeffrey’s brilliance can be gauged by what he replaced it with. He placed a genuine padda boat on the edge of the pool, and how appropriate it was! The bar alongside the pool was given the same padda boat theme.

While I was very proud of both Neptune and Triton, I did not have the usual ‘Soft Opening’ for either. The reason was simple. We could have only a limited number of invitees, and for every person I invited I would probably make ten enemies – those who were not invited. What I did was to invite those whom I wanted to invite, for weekends with their children included. I think that made us more friends and fewer enemies.

On one occasion Andrew Joseph who was with the UN suggested that I should invite the Secretary-General, Dr Kurt Waldheim, down to Neptune. I did so, and it was a tremendous success. Waldheim was a charming man and so was his wife. Susheela was her serene, composed self and would have made a great impression on Kurt. Andrew was totally delighted with the arrangements. His own standing with Kurt would no doubt have had a boost, though he was such an accomplished person that he did not need it. Susheela and I had a great regard for him, and visited him in different parts of the world, such as Djakarta and New York, while he went steadily up the UN tree. He was one of the most versatile men I have known with a great sense of humour that could set a party alight (as he did on one occasion at our home)