company law obligations of directors in a listed company Concerns of Minority Shareholders

4th April 2013 at Cinnamon Lakeside Hotel

Tuesday, 02 April 2013 

With the Committee on Public Enterprises of Parliament (COPE) conducting investigations into Securities & Exchange Commission (SEC), minority Shareholders in the Colombo Stock Exchange are laughing at this Seminar by SEC for capital market education !!!

Opening remarks are by Chairman SEC, Nalaka Godahewa. The SEC Act states that persons with wide experience and shown capacity in legal, financial, business or administrative matters be appointed as Members of SEC. Nalaka Godahewa’s qualification is questionable. He has been terminated as an Executive of Sri Lanka Insurance Corporation. Thereafter he had been a Director of Ariston Oil & Shipping (Pvt) Ltd., with K. Omprasadham and Nirj Deva Aditya and others and of CSC Kandia (Pvt) Ltd., and the CEO. These had been private companies and not listed companies.

After Sri Lanka Insurance Corporation was taken over by Government, Nalaka Godahewa received political appointment as CEO. In such position he was involved with Lanka Hospitals, and the controversy of Fortis Global Healthcare Holdings (Pte) Ltd., Singapore purchasing 29% of Lanka Hospitals. Media disclosed the local seller having paid a very large commission. It was alleged in the media that Nalaka Godahewa had been able to push this deal, with the assistance of Dilith Jayaweera, who had cleared Fortis Chairman through VIP Lounge, using his political clout.

Dilith Jayaweera also made the famous power point presentation at the SEC and Colombo Stock Exchange meeting chaired by President Rajapaksa. This led to the resignation of respected Thilak Karunaratne and the appointment of Nalaka Godahewa as Chairman SEC. Thilak Karunaratne had submitted a Report to COPE disclosing details of 17 serious investigations pending before the SEC at the time he resigned in August 2012. Chairman COPE D.E.W. Gunasekere recently told the media that the ‘mafia’ had blocked these investigations.

Presentation on the obligations of Directors is by Neomal Goonewardene of Nithya Partners, Attorneys-at-Law. They as Lawyers advised Ceylon Petroleum Corporation (CPC) to enter into illegal hedging deals with Standard Chartered Bank, Citibank and Deutsche Bank, resulting in losses of around US $ 300 million to the State. CPC Act did not permit such type of deals, which Nithya Partners failed to realize and also that these were illegal gambling deals. Nithya Partners failed to realize that CPC should have been advised by Attorney General and not by a private law firm. How could such persons preach on legal obligations of directors ?

Panel discussion also includes Rajendra Theagarajah, MD/CEO, Hatton National Bank (HNB). Sunday Leader recently exposed its controller Harry Jayawardene’s attempt to transfer Rs. 25 billion from Greenfield Pacific EM Holdings Ltd., a trust company in Gibraltar on behalf of Milford Exports Ceylon Ltd., a customer of HNB. Greenfield Pacific EM Holdings Ltd., had been a part of the consortium put together by HNB to purchase Sri Lanka Insurance Corporation Ltd. The purchase had been cancelled as illegal by the Supreme Court in 2009.

This Sunday Leader exposure of 10th March 2013 disclosed 5 foreign companies beneficially owned by Milford Exports Ceylon Ltd. One such Company disclosed had been Sonetto Holdings Ltd. This Company had been featured by The Nation of 14th January 2007 in an exposure titled ‘Blackmailed’ on allegations made by Pakistan’s famous nuclear physicist Dr. A.Q. Khan. Sonetto Holdings Ltd., had been disclosed to have a Bank Account at HNB to which nearly US $ 700,000 had been remitted as had been extorted as ‘hush money’, as alleged by Dr. A.Q. Khan. If this is the banking practice of HNB, how can they preach to others on legal obligations of directors ?

Another Panel Member is Ronnie Peiris, Finance Director of John Keells Holdings. Former Chief Justice Sarath Nanda Silva had disclosed to persons known to him, that John Keells Chairman Susantha Ratnayake accompanied by Dilith Jayaweera had visited the Buddhist Temple operating the Buddhist TV Channel at Wijerama Mawatha and donated Rs. 15 million to the Temple through an Advertising Company, and had also offered a luxury air condition mini Bus.

This had been just before the Supreme Court had delivered Judgment against John Keells Holdings, cancelling as fraudulent their purchase of Colombo Port’s Oil Bunkering company, Lanka Marine Services Ltd. Chief Justice Sarath Nanda Silva had been the Chief Dayaka of this Temple. It had been an attempt to virtually bribe the highest judiciary to prevent an adverse Judgment, which was a failure. Sarath Nanda Silva had reprimanded the Buddhist Priest. Ronnie Peiris as the Finance Director of John Keells Holdings would have handled this illegal donation. How can such persons preach on the legal obligations of directors ?

Comments

SEC has become a prostituted glorified marketing and business promotion outfit. The Law enacted to the Parliament had made the SEC a regulatory authority to protect the interest of the investors. It is sad that it had become worse than a Casino with manipulations perpetrated by educated people. High time COPE acted without merely issuing statements to the media. What has DEW done other than talk ?