Sri Lanka’s governance since January 2015 has been driven by a virtual bandwagon of claims to champion good governance, accountability and transparency. Since February 2015 those claims – that mainly propelled Sirisena and Wickremesinghe to power – have sounded shallow in the extreme.
The politicians in Sri Lanka have been given a torrid time by the media who have exposed corruption and apparent departures from due process in several instances almost all of which has the potential of impacting negatively on the public purse – or the peoples’ monies.
The private sector have not been exposed as much and perhaps because of the overwhelming state sponsored departures from due process especially in terms of national procurement matters, have remained ‘under the radar’. They seem to have operated in great stealth and managed to keep in the shadows of their political associates.
Corporate governance is not all rosy. The events in the Rajapaksa years where the Colombo Stock Exchange was the darling of both foreign and local investors and zoomed to extraordinary heights, has never been fully investigated or put another way there has been an appalling lack of legal action against those responsible for manipulating and price fixing the capital markets. The appointment of a new head of the SEC – the regulator – heralded the distinct possibility of reviving investigations against the chief culprits behind the price manipulation and other departures from due process at the Colombo bourse.
In spite of the promises and assurances, the SEC Chief from whom so much was expected has quietly retired and those ‘famous’ files appears to have evaporated into thin air. They certainly did not start in the way they have ended.
Perhaps the most sensational or high profile events came in 2006 and 2007. According to the Annual Report of the SEC several persons with a marked high level public profile were named for their role in breaches of the SEC rules and regulations. Some of these individuals continue in their positions – including Jayantha Dharmadasa and his son U Harsith Dharmadasa. Jayantha Dharmadasa remains the Chairman of Nawaloka Hospitals a listed entity. (http://www.sec.gov.lk/wp-content/uploads/2006-Annual-Report.pdf and http://www.sec.gov.lk/wp-content/uploads/2007-Annual-Report.pdf – both listed under litigation section of the Annual Reports)
The Dharmadasas and others in this action had their cases ‘compounded’ and were free as per the rules to carry on in their positions if they so wished.
The issue of good governance is immediately highlighted. Here are some people who have established themselves as hugely successful entrepreneurs, found fault with for having deliberately engaged in practices against the Stock Exchange regulations have had in effect a form of a penalty against them (Compounding) and are yet free to serve on the Boards of publicly listed companies. Some would aver that there is nothing to stop these persons from engaging in the same offences yet again and again.
Recently the British MEP Niranjan Deva Aditya issued a statement saying that his term as a non-executive Independent Director of a listed entity in Sri Lankan had ended. He maintained that the company did not in effect make use of his corporate experience and Mr. Deva appears to imply that this was because the shareholding and Board of Directors of the company was ‘dominated by a Malaysian family who owned over 90% of the shares’. He thus resigned. Apparently Mr. Deva took over 4 years to realise that the ‘Malaysian family dominated the Board’. His remuneration amounted to Euro 5,000 per month. The company in question is having a shaky time financially with number of Sri Lankan banks initiating measures to secure their facilities.
Mr. Deva a Sri Lankan born aeronautical engineer by profession and a die-hard Conservative party member, also serves on other Boards in Sri Lanka and has done so for several years. One of the most influential Directors of the Board of that company is an individual steeped in controversy and is easily a ‘Politically exposed person’, with several court cases for a variety of matters pending in the judicial system in Sri Lanka – known for its painfully slow progress. Some of the claims against this Director who ‘dominates the Board’ includes a potential charge of perjury having lied under oath in an affidavit supplied to the Government of Sri Lanka. No formal charges have been laid but it would be fair public commentary to say that this person (name withheld) is a controversial if extremely wealthy individual.
Mr. Deva may well claim – in the fullness of time of course – that in this instance too his expertise was not made use of due to the ‘dominance’ of the Board by any one or more persons.
Corporate governance in Sri Lanka is a shambles. An individual very much in the news and whose companies already have facilities that are listed as ‘non-performing loans’ by at least one state bank, has somehow or other inveigled himself into yet another advance of Rs 500 Million – despite having a NPL facility of over Rs 2,500 Million.
All what this indicates and proves is that in Sri Lanka it is not what you know that matters – it is who you know that matters. And of course you need a cloak of respectability like enjoying the accolades of serving on publicly listed entities to perhaps showcase to the world the lure of best practices and governance that publicly listed corporates are duty bound by law to maintain.
As for Dharmadasa senior, he is now at the epi centre of claims that companies where he is a dominant and influential player, had engaged in blatant acts of forgery in an attempt to secure ownership of a different business and to misinform the Central Bank of Sri Lanka, the Exchange Controller and also various institutions in the emirate of Sharjah, UAE.
Ironically the tag line of the business where Jayantha Dharmadasa and his family members and others control over 60% of the shares, Nawaloka Hospitals, remains to this day, “Healing with Feeling”. Clearly there is no feeling when they indulge in questionable practices like manipulating the share market and manipulating documents to become a player in the murky world of forgery and crime.
The matter of the influential Dr. SENA YADDEHIGE has been the most recent action for stock market related activities: http://www.sec.gov.lk/wp-content/uploads/Media-Release-SEC-Files-Action-for-Insider-Dealing.pdf