Sri
Lanka’s top citizen appointed by the people for the rule of the island had
cancelled the controversial National Savings Bank’s (NSB) deal pioneered by
government appointed NSB Chairman Pradeep Kariyawasam that involved in buying a
13.02% stake of former Ceylinco owned The Finance Company, a deal pioneered by
former First Capital Money Broker Ajith Devasurendra’s Taprobane Securities
lead by Dinal Wijemanne, top Sri Lankan’
Secretariat sources revealed CSE Leaks.
Accordingly
a statement by the Top Sri Lankan’s Office had said the deal had been cancelled
in a release at 8 p.m. to public.
Sri
Lanka's state owned public deposit rich National Savings Bank bought a 13.02%
stake of former Ceylinco owned oldest finance golden house of the island The
Finance Company PLC (TFC) on 27 April 2012. After the transaction a filing by
Sri Lanka's former Money Broker and Bond marketer Ajith Devasurendra lead
Taprobane Securities said.
National
Savings Bank had bought 7,863,362 ordinary voting shares of TFC at an average
price of Rs.49.74 per share. TFC was the largest contributor to the day's
turnover with Rs.394.09 million and a total of 7,982,705 shares traded via 58
trades. Several crossings were done whilst TFC stocks changed hands in parcels
of 2,904,983 and 4,237,400 shares at
Rs.50 per share and 701,761 shares at Rs.45 per share whilst the sellers were
believed to be Taprobane Securities CEO Dinal Wijemanne, Raynnor Silva and former
Chairman of failed Tea Company Fern Tea Nirmala Anura Fernando who sold 50,000
shares at Rs.45 per share.
Market Analysts said that after the deal NSB directors
had been compelled to cancel the payment of the transaction cost that amounted
to over Rs.390 million with the instructions of the Top Sri Lankan who had
later scolded the NSB Chairman for carrying out the transaction.
Not knowing the circumstances Sampath Bank PLC the
Central Depository System (CDS) settlement custodian of Taprobane Securities
had then paid the total sum to main sellers including Dinal Wijemmane and
others.
Since NSB had not paid to the transaction after losing
the payment of over Rs.390 million Sampath Bank had then cancelled settlement for
other share transactions that took place after 27th April behalf of
its other brokering clients which Sampath Bank acts as the settlement
custodian, according to analysts.
Meanwhile it is learnt
from inside sources that shares that were sold by Dinal Wijemanne were actually
owned by Ajith Davasurendra and Nirmala Anura Fernando whilst on 3 May 2012 The
Finance Company PLC (TFC) in a filling to Colombo Bourse said that company wish
to inform Dinal G. Wijemanne has resigned from the board of directors of The
Finance Company PLC (TFC) with effect from 2 May 2012.
However the company added
that Dinal Wijemanne has been again appointed as an Alternate Director to
Nirmala Anura Fernando - Independent Non Executive Director of The Finance
Company PLC with effect from 2 May 2012.
However TFC on Wednesday
issued a statement to Sri Lanka’s Pink paper writer defending NSB’s buy.
Pink Paper quoted that
analysts said that it was NSB’s prerogative to clarify or deny allegations
levelled by UNP MP Dr. Harsha De Silva over the investment of Rs. 400 million
to buy a 13% stake amounting to nearly eight million shares at Rs. 50 each,
when the TFC stock was trading around Rs. 30.
Sri Lanka’s Pink Paper
said quoting analysts that “If the TFC is making a statement and in the process
divulging various price-sensitive information, then such a move may have had
the TFC Board sanction. In that context then the Board as well as the director
who sold can run the risk of insider dealing,” analysts opined. Among major
sellers last Friday were shareholder Director Dinal Wijemanne, who incidentally
is also the CEO of Taprobane Securities, the broker picked by NSB for the
purchase.
According to Pink Paper
NSB’s buying into TFC stirred up a controversy due to multiple reasons. One is
the alleged risk of public savings when NSB makes such investments into a
company which has a negative net worth of Rs. 23 per share and is saddled with
Rs. 9 billion retained losses.
Though the Rs. 50 is being
perceived as expensive, sellers said the 13% stake had been originally bought
in September 29011 at Rs. 48 per share, suggesting that NSB paid only Rs. 2
extra.
However, others pointed
out that when there were thousands of those who were stuck with shares unable
to sell at lower prices after having bought last year at higher level, because
of the “Arranged Deal,” sellers of TFC shares indeed were the most fortunate
couple in the market.
On the day the deal went
through, a few others who had relatively large blocks offered to sell, however
the NSB broker had declined to buy. Analysts said it was important for NSB to
collect quantities from the market rather than buying from a favoured few.
Nevertheless, NSB did mop up 98.5% of the 7.982 million shares of TFC traded on
Friday, whilst the major sellers accounted for 89% or 7.1 million shares
comprising 2.9 million each (Dinal and Rayynor), 669,700 (Nandadeva Perera) and
667,700 (Yogendra Perera).
In the Pink Paper in a
statement, the UNP’s MP and its Chief Spokesman on economic matters, Dr. Harsha
De Silva had said: “We note with serious concern the purchase of close to eight
million shares of TFC by the NSB at 65 per cent above its current market price.
What logic was employed to pay Rs. 49.75 for shares of this high risk and
loss-making financial institution when it was last traded at the Colombo Stock
Exchange for only Rs. 30 is more than a puzzle.”
“Perhaps one could argue
that it is the business of the board and management of any institution to pay
whatever price it feels is right for anything they purchase. But NSB is not, by
any stretch of the imagination, just another institution. It is absolutely the
only bank whose deposits are fully guaranteed by the Government of Sri Lanka as
expressed explicitly in the statute governing the bank: NSB Act No. 30 of
1971,” the UNP MP had said.
“This necessarily means
that NSB must maintain a risk-averse investment profile and transactions like
the one just concluded are not what it should be engaging in,” Dr.De Silva had
said.
In the Pink Paper Dr. De
Silva had alleged that the husband of the Chief Justice of Sri Lanka, Pradeep
Kariyawasam, who continues to enjoy power and position as the Chairman of the
NSB among several other plum postings offered by the Government, was a glaring
example of conflict of interest.
“A number of colourful personalities including
Anura Fernando whose name has been linked to the now-abandoned Central Bank
investigation on the Gold Quest pyramid scam and a former Director of Capital
Reach Leasing, a company in which Ajith Nivard Cabraal had a significant
interest, also sit on its board,” alleged the statement by UNP MP.
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