MBSL M.R. Shah revealed; Will he secretly liquidate Ceylinco Investments & Realty?

Why did M.R. Shah send Gamini Karunathilake home? 

Left: M.R. Shah, while A.P.Gaminii Karunathilake opening the
City Branch of MBSL in September 2010 with M.R. Shah.

According to exclusive internal sources from Merchant Bank of Sri Lanka (MBSL), its present Chairman M.R. Shah is under many deals with regards to Ceylinco companies that he is managing under island nation’s Merchant Bank house, a subsidiary of Bankers to The Nation; Bank of Ceylon.

“M.R. Shah is secretly trying to liquidate the Standard Credit Lanka Limited former Ceylinco Investments & Realty Limited” a concerned depositor recently revealed in a letter to CSE Leaks.

However, when CSE Leaks tried to contact M.R. Shah he was not available for comments whilst no return calls were received when tried to contact Sanka Wijesinghe’s mobile who earlier headed Ceylinco Investments & Realty Limited under Ceylinco umbrella.

Back in August 2010, Ceylinco Investments & Realty was retiled as Standard Credit Lanka Limited under the supervision of its managing agent Merchant Bank of Sri Lanka (MBSL). That time Shah had said that company is not accepting any public deposits while it was spending nearly Rs.30 million per month to pay arrears and interests of customers. Shah had said company will start to accept public deposits soon and it had retained customer confidence among its 3800 depositors.

M.R. Shah had also said that the company has a five-year master plan to continue the pawning business opening its official pawning business centre at Union Place, Colombo.

Meanwhile reports reveal that Standard Credit Lanka Limited is close to finalising an Rs.100 million private placement deal with a new investor, Entrust Limited to convert 68% of their deposits into shares.

Entrust Limited now headed by a different board of directors is another former Ceylinco subsidiary, Ceylinco Shriram Securities Holdings which retiled under ‘Entrust’ brand in the wake of Golden Key financial fiasco. However,  following this capital restructuring exercise, Entrust would have the controlling stake amounting to over 51% of Standard Credit Lanka Limited . As per reports Entrust will come in to rescue to meet a Rs.648 million deposit liability of Standard Credit Lanka Limited.

Former Ceylinco Investments & Realty Limited now known as Standard Credit Lanka Limited will go for an Initial Public Offering (IPO) next year under the directives issued by the Monetary Board after this private placement deal with Entrust according to sources.

Sri Lanka’s former corporate whistleblower, the active Unionist M.R. Shah who was once the President Ceylon Bank Employee's Union (CBEU) today heads one of Sri Lanka’s top state owned investment banking subsidiary MBSL and manage fallen entities of Ceylinco such as The Finance PLC (TFC), The Finance & Guarantee Co. Ltd. (F&G), Ceylinco Building Society, Ceylinco Sussex School Network, Ceylinco Savings Bank (Now MBSL Savings Bank) and Ceylinco Investments & Realty Ltd. which is now Standard Credit Lanka Limited.

Ultimately, M.R. Shah is today sitting on boards which were once led by Lalith Kotelawala; who once slammed M.R. Shah by seeking damages of Rs.1 billion through filling a case against the M.R. Shah and his union and the union General Secretary for defamation back in November 2008.At the time it was said that in September 2008, Court issued an Enjoining Order restraining the CBEU, Shah and CBEU General Secretary from publishing and/or issuing and/or circulating any statement derogatory and/or defamatory of Kotelawala, while Shah had written to Seylan Bank PLC General Manager/CEO with a copy to the Labour Commissioner General containing statements derogatory and/or defamatory of Kotelawala while the enjoining order was in force.

Ceylinco Group Chairman Deshamanya Dr. Lalith Kotelawala on Tuesday filed a petition in the Colombo District Court against President M.R.Shah for alleged Contempt of Court.

The incident turned out when Whistle Blowing M.R. Shah’s Ceylon Bank Employees Union (CBEU) filed action against Seylan Bank PLC and its Founder Chairman Deshamanya Dr. Lalith Kotelawala in the Colombo District Court and obtained two enjoining orders against Seylan Bank and Kotelawala, refraining them from preventing Seylan Bank employees joining the CBEU and from interfering with its activities.

However, later both Seylan Bank and Kotelawala filed two Leave to Appeal applications with the Colombo High Court against the said enjoining orders. The High Court having heard the submissions made by Counsels for Seylan Bank and Kotelawala, and being satisfied that the CBEU had allegedly misrepresented facts to Court in obtaining the enjoining orders and that the CBEU has not presented a prima facie case, issued an interim order suspending the said enjoining orders. Further, High Court also granted Leave to Appeal to Seylan Bank and. Kotelawala at the time.

M.R. Shah Vs. A.P.Gamini Karunathilake

After assuming duties as Chairman of Merchant Bank of Sri Lanka PLC in June, 2010, later in December 2010, former whistle blower M.R. Shah suspended MBSL’s long standing Chief Executive Officer (CEO) and reputed banker, A.P.Gamini Karunathilake while internal sources from the bank said it was a personal grudge that may have led to the suspension of CEO by M.R.Shah who directed and internal investigation.

“Frankly to tell you, he has only taken one extra salary and kept the one of company owned cars at home” said a source from MBSL to CSE Leaks revealing about the background of A.P.G. Karunathilake’s suspension.

Banking sources say that State Merchant Bank is much indebted to Karunathilake who had brought about a steady growth after taking over the administration from Sunil Wijesinghe in 2005 who ran a dud porcelain company, Dankotuwa Porcelain (DPL) until Sri Lanka’s trail blazer company Environmental Resources Investment PLC (GREG) came into rescue of Wijesinghe’s porcelain entity. A.P.Gamini Karunathilake is said to have hurdled major operations that lifted the MBSL from a crisis to a sound position.

However, on 3 January 2011, Merchant Bank of Sri Lanka (MBSL) Chief Executive Officer Gamini Karunathilake got an enjoining order from the District Court of Colombo against his suspension beating former whistleblower M.R. Shah’s so called ‘baseless’ misconduct allegations that were un-described.

Karunatillake is a professional banker with over 30 years of experience. He obtained a B.Com (Hon) Degree from the University of Sri Jayewardenepura and an MBA from the Post Graduate Institute of Management (PIM) of Sri Lanka. He is a fellow member of the Institute of Bankers of Sri Lanka and was a visiting lecturer on ‘Law and Practice of Banking’ for the Bachelor of Commerce and Economics Degree programmes and on ‘Banking and Finance’ for the MSc. Management Programme at the University of Sri Jayewardenepura. He also served as a lecturer and Chief Examiner on ‘Law and Practice of Banking’ and ‘Practice of Banking’ at the Institute of Bankers of Sri Lanka. He was also a Director of Merchant Credit of Sri Lanka Ltd.

Ceylinco to sell the Model ‘Ceylinco City’ in Colombo

The Finance PLC to sell two iconic properties of the company at R.A. De Mel Mawatha

Sri Lanka’s oldest Golden financial power house, Ceylinco owned The Finance Company (TFC) PLC which had been in the forefront of creating confidence in country’s finance industry continuously for four generations from Great Grand Fathers’ to Grand Sons has recently call for sealed offers to sell two iconic properties which are the benchmarks of the company.

In a recent advertisement in weekend news papers island nation’s oldest finance company The Finance Company (TFC) PLC had invited for offers to outright purchase of two commercial properties, including its head office at No. 55, R.A. De Mel Mawatha, Colombo 04 and No.9A, De Fonseka Place, Colombo 04 amidst a recent secondary offer by the company to raise funds through a public share issue which is offering 40 million ordinary voting shares at Rs.40 per share.

The four storey commercial building property at No.55, R.A. De Mel Mawatha is built on a 72.65 perches land covering 17,800 square feet with ample parking facilities added with access to two road fronts including Gower Street. The other two storey commercial building covering 2500 square feet is built on 13.75 perches land which is just 25 meters from R.A. De Mel Mawatha and 50 meters from Galle Road, in Colombo.

Accordingly any interested party could send their offers titled ‘Offers for the purchase of Commercial Property’ indicating the either property name out of two on the top left corner of the envelope to reach the company’s Assistant General Manager-Administration before the noon of 28 January 2011.

The advertisement further said that prospective buyer should deposit a refundable fee of Rs.250,000 in cash with  TFC, prior to obtaining the title documents of each property while once the buyer is accepted; the buyer should pay 25% of the offer within two working days and the balance with next 14 days whilst the refundable deposit will not be refunded at an instance where buyer delays the full payment of the property.

R.A. De Mel Mawatha which was formerly known as Duplication Road was the central hub Sri Lanka’s former most diversified conglomerate Ceylinco Consolidated, where many head offices of Ceylinco subsidiaries were located including Chairman Lalith Kotelawala’s house and Ceylinco Consolidated head office which was also the consular office of Honorary Consulate for Singapore.

Many Sri Lankans arguably called R.A. De Mel Mawatha as ‘Future Ceylinco City’ as many subsidiaries such as Ceylinco Consolidated, Ceylinco Shriram, Ceylinco CISCO (Now CERTIS Singapore), Ceylinco Fast Cash, Golden Key Credit Card Company, The Finance Co. PLC, Ceylinco Building Society, Lalith Kotelawala’s House at No.28, Elibank Road, American National College (ANC) are all housed in the close proximities of the Road whilst many ‘Big Properties’ at R.A. De Mel Mawatha was once owned by Ceylinco Group.

However, as at today only Punarjeeva Karunanayake advised by Jagath Alwis is been able to carry out Ceylinco’s Multi Million Education business with ANC and Wycherley International School  while securing some of the Premier R.A. De Mel Mawatha properties owned by Ceylinco.

While its main properties are up for sale The Finance Co. PLC had started issuing 10% of the value of its deposits by way of non-voting shares to company’s depositors due to the collapse that resulted after Ceylinco owned Golden Key shutting down its operations without paying back its Rs.26 billion worth depositors.   

Shangri La's Seven Star hotel Insurance Deal signed up by Ceylinco Insurance?

Shangri-La development site in the heart of Colombo,Sri Lanka

According to top end exclusive sources from Sri Lanka’s leading Insurance giant, Ceylinco Insurance PLC; it had signed up for insurance deal with the upcoming US $ 500 million investment on a Sri Lanka's first ever Seven Star hotel, that is going to be owned by world famous hotelier Hong Kong-based Shangri-La group.

This was confirmed to CSE Leaks; by an exclusive high profile Director who holds Director Posts in a number of Ceylinco companies, “Yes Partly” said (answering to CSE Leaks' question on whether Ceylinco Insurance has got the Shangri La Hotel Insurance deal) the top Director type who is also one of the Deputy Chairmen of a sub group of Ceylinco; at a recently concluded high profile social of a new beverage company IPO launch.

In the high time sources reveal that, somewhere back in last week of October, Ceylinco Insurance PLC has send one of its officials to Singapore to sign the Shangri-La Insurance deal following the three day visit of Shangri-La head’s visit to the Sri Lanka.

Accordingly, CSE Leaks learns from Sri Lankan corporate sources that Ceylinco Insurance is sitting on a wealth management portfolio where island nation’s top companies insured under its policies such as HSBC-Sri Lanka, along with several other Banks and afforesting companies such as Touchwood PLC.

On the contrary another source from insurance industry in Sri Lanka told CSE Leaks that if Ceylinco has got insured the Shangri La hotel property that it will in turn boost the revenue of Ajita De Zoysa owned ADZ Insurance Brokers of Sri Lanka as many of Ceylinco’s Life and General Business that has to be Re-Insured has been Re-Insured via ADZ Insurance Brokers which has a partnership with one of the world’s leading risk managing and reinsuring  service provider Marsh.

Measnwhile, sources close to ADZ Insurance Brokers says that company is expecting to reach revenue amounting almost Rs.1 billion during this year.

During the last quarter of 2010 Hong Kong Based Shangri La Asia Limited announced the purchase of six acres of government land facing the Galle Face green promenade, a prominent landmark in Colombo, Sri Lanka.  The development will be a multi-use complex with high-end retail facilities, deluxe apartments and a 500-key luxury hotel to open in early 2014.  The purchase marks the entry of the hotel group into Sri Lanka, often referred to as “The Pearl of the Indian Ocean.” says Shangri la’s corporate website.

Shangri-La is also planning to develop a second property, a 300-key city resort on approximately 100 acres of land in Hambantota, on the southern coast of Sri Lanka, to be opened up in 2013.

“Sri Lanka is a country of unsurpassed natural beauty, rich in cultural heritage, and above all it is well recognised for its warm and hospitable population.  The local government is fully committed to rebuilding the economy following the end of three decades of conflict and we believe that Shangri-La will be able to assist in positioning the country as a prime global tourist destination.  Both Shangri-La hotels strategically fit into the group’s ongoing expansion plans to link the Indian subcontinent and our South East Asia developments,” Greg Dogan, President and CEO of Shangri-La International Hotel Management Ltd. reported to have said.

It is reported that Shangri-La Hotel chain had paid a premium price amounting to US $ 125 million for the property at Galle Face (Army headquarters) while the average price of a perch was around Rs.8.5 million.

Hong Kong-based Shangri-La Hotels and Resorts, one of the world’s premier hotel companies, currently owns and/or manages 70 hotels under the Shangri-La and Traders brands, with a rooms inventory of over 30,000.  Over almost four decades the group has established its brand hallmark of ‘hospitality from the heart.’  The group has a substantial development pipeline with projects in Austria, Canada, mainland China, India, Macau, Malaysia, Philippines, Mongolia, Russia, Qatar, Sri Lanka, Turkey and United Kingdom.