People’s Bank says acting on court order in response to Chinese Embassy blacklisting

While denying it defaulted a payment on Letter of Credit (LC) to China’s Qingdao Seawin Biotech Group Co., Ltd, People’s Bank in a statement stressed that the payment is delayed due to an enjoining order issued by the Colombo Commercial High Courts.

The state-owned bank said this in response to a move by the Economic and Commercial Office of the Chinese Embassy in Colombo to blacklist People’s Bank over the organic fertiliser imports from China. 

“People’s Bank already communicated to the relevant authorities at the Chinese Embassy that the bank is bound by an enjoining order issued by the Colombo Commercial High Courts of Sri Lanka, with regard to the trade transaction in question, which precludes the bank from processing the payment. 

The temporary delay in processing the said payment pertaining to the LC is solely due to the bank’s obligation to be bound by the legal directions of the country as a responsible corporate citizen,” People’s Bank elaborated.
The Economic and Commercial Office of the Chinese Embassy in Sri Lanka yesterday blacklisted People’s Bank, citing the bank failed to make the payment according to the LC and the contacts between the two parties. Further, the embassy had submitted its decision to the Commerce Ministry of China.

The blacklisting came into force as the government took a firm decision not to allow the Chinese vessel containing organic fertiliser to enter into the country, after detecting the presence of organisms, including certain types of harmful bacteria in tests conducted by the National Plant Quarantine Services. 

The government instructed the Sri Lanka Port Authority not to allow the Chinese vessel with the organic fertiliser to enter into any port in the country. 

However, the Chinese Embassy in Sri Lanka continued to back the Chinese firm.

“Timeline: Seawin won open bid, signed contracts, passed tests of China and Int’l agency designated by Ceylon Fertiliser, shipped before due. NPQ SL disagreed in halfway, called toxic/harmful. Ship refused. Third party test refused. L/C payment obligation refused. PBSL blacklisted,” the Chinese Embassy in Sri Lanka tweeted yesterday, defending the decision to blacklist People’s Bank.

Further, issuing a warning, the embassy called all Chinese firms to tighten risk control and avoid accepting the LCs issued by People’s Bank of Sri Lanka in international trade with Sri Lanka. 

Meanwhile, Seawin blamed state-owned Ceylon Fertilizer Company for failing to honour the principals of the LC.
“After receiving the LC, the buyer repeatedly violated the principals of the LC and obstructed the bank from paying the payment to the seller by arbitrarily changing the negotiation conditions of the LC, changing the settlement method from LC to collection, applying court for a stop payment order of LC... etc.,” the company said.