SEC Banned front runner; alleged Manipulator Dinal Wijemanne’s friend Ravi Karunanayake sends a letter to COPE?

Ravi Karunanayake

The Colombo District, United National Party (UNP) MP -Sandresh Ravindra Karunanayake (Ravi K) has recently send a letter to Chairman, Committee On Public Enterprises (COPE) requesting him to summon officials of the Securities and Exchange Commission (SEC) and the Colombo Stock Exchange (CSE) over the fiasco in capital markets and boost investor confidence.

Investors praise at least one politician has woken up and at least written a letter thinking it would boost investor confidence. The Government, the Opposition and the Stock Brokers have not taken any significant steps to boost investor confidence here and abroad. The Government and Opposition politicians do not understand the Capital Markets and do not bother about it as it does not concern their electorates. They do also not know the importance of the Capital markets although it depicts the health of the economy.

The Opposition 'Big Talk' has successfully scared off all Government Institutions to stop even all legitimate purchases in the Stock Market when most company share prices have fallen over 50% from February 2011 to date. In fact the Opposition big talk has created over hundred thousand small investors cursing the Opposition while has been compounding losses for these institutions which have funds of the public.

The only good outcome of Opposition big talk is that the Government may at least now think of checking the theoretical media leaking officials of the SEC who are inefficient to take to task the "Pumpers & Dumpers" affiliated to the Government and the Opposition while some of the Stock Brokers  aiding and abetting manipulators also will be put into place.

However, the public laugh that the boosting investor confidence effort should not be commenced by Ravi K who does not know how to boost the confidence of investors. 

CSE Leaks learns that Late Lalith Athulathmudali’s that time proxy/nominee investor (it is a popular famous secret in cocktail circles) Ravi Karunanayake nourished Dinal Wijemanne at Ministry of Commerce and Consumer Affairs from 2001 under the United National Party Regime as the Director, Investments and Projects at the Ministry of Commerce and Consumer Affairs

Further, it is known in media circles and business  circles that the SEC Banned manipulator -Dinal Wijemanne CEO/ Director of Taprobane Securities was one time nourished as a top official under Ministry of Commerce and Consumer Affairs when Ravi Karunanayake was Minister of Commerce and Consumer Affairs of the Ranil Wickramasinghe led UNP Government in 2001. 

A report in Pakistan’s media outlines in 2002 that when a Pakistan delegation was invited to INTRAD 2002 exhibition organized by the National Chamber of Commerce & Industry in Sri Lanka Pakistani delegation had detailed discussions with a group of Sri Lankans led by Ravi Karunanayake and Prof. G.L. Pieris where Dinal Wijemanne represented Ministry of Commerce and Consumer Affairs as Director, Investments and Projects. 

Go to Link : http://majydaziz.blogspot.com/2011/05/at-saarcs-1985-inaugural-summit-in.html

In another development in 2001 an ‘Expression of Interest (EOI)’ advertisement published behalf of ‘Mahapola Higher Education Scholarship Trust Fund’ in the Sunday Observer outlines that for any clarification to contact Mr. Dinal Wijemanne, Director - Investment and Projects, Ministry of Commerce & Consumer Affairs on telephone number 94-1-312152 or email address dinal@commerce.gov.lk . 

Go to Link: 

http://www.sundayobserver.lk/2001/pix/ad_so-mahapola.html & http://www.dailynews.lk/2001/pix/ad_cdn-mahapola.html 

It was during 2001-2004 UNP Regime that Sri Lanka Insurance Corporation (SLIC) and Lanka Marine Services Limited (LMSL) was privatised and PERC was under the guidance of UNP Minister Milinda Moragoda where Dr. P.B. Jayasundera headed it as the Chairman and at the same era Dinal Wijemanne also held the position of Senior Manager of the Public Enterprise Reform Commission (PERC).

That is why although Ravi Karunanayake and so called Independent Economists is not mentioning about Dinal Wijemanne in their ‘Big Talks’ in television channels and parliament” a top UNP source told CSE Leaks.

Accordingly although an Independent Economist onetime who always lost money by investing in the Stock market (according to DFCC sources who knew  him at the time he was a small banker at DFCC)  gave a ‘Big Speech about the ‘Controversial NSB-TFC Doomed Deal’ at the parliament recently and he was cautious enough to protect the  SEC banned stock broker Dinal Wijemanne’s  name throughout without mentioning Wijemanne's name. 

"Independent Economist mentioned about Dinal Wijemanne's boss - the Bond King turned Ajith Lasantha Devasurendra may be without knowing the small financial assistance by Devasurendra to United National Party (UNP) led by the Opposition Leader and UNP Leader Ranil Wickramasinghe prior to the 2005 November Presidential Elections" another UNP insider revealed to CSE Leaks.

Extract from Ravi K's letter to COPE- "Over the last five to six months the country’s economy has been traversing through some turbulent times. If these trying times are a result of uncontrollable factors and world economic meltdown being one of there we can console ourselves and accept it. However, if it is owing to arrogance, ignorance, corruption and manipulative practices where insider trading is being pursued by a few at the expense of the majority we need to expose and eliminate these white collar fraudsters.

You as the Chairman have been alive and responsive to our requests to act on institutions such as Central Bank, SriLankan Airlines, Ports Authority, Ceylon Electricity Board, National Savings Bank, Lankaputhra Bank, EPF and Bank of Ceylon, etc.

The recent development of the National Savings Bank and The Finance Company Ltd. share purchase transaction reversal has led to exposing many problems, this only being the ‘tip of the iceberg’.

We also should bear in mind and recall with respect Indrani Sugathadasa, who a couple of months ago tendered her resignation in disgust trying to ameliorate the wrongs that were happening in the Securities and Stock Exchange. Considering her close political affiliation, it is nothing but right to commend her bold act of protecting her good name and also honouring the dignity of high office by resigning to prove a point.

Therefore, let us not lose this opportunity to take cognisance of the fact of her resignation and summon the Securities Exchange, the Stock Exchange, the former Chairperson and the present Chairman, the former Director General, the present Directors General and the senior officers of both institutions before COPE for immediate investigation.

I would look forward to your usual prompt and favourable response in order to restore confidence among the Sri Lankan foreign investors and the citizens of our country.”

How Will They Cancel TFC-NSB Deal on Today-Exclusive

Sri Lanka’s famous ‘King of Bonds’ former money broker Ajith Devasurendra lead Taprobane Holdings own Taprobane Securities which was recently involved in the controversial The Finance Company (TFC) and National Savings Bank (NSB) deal will soon announce its clarification on the cancelation of the ‘Deal’ today to Colombo Bourse, CSE Leaks learn.

“Accordingly ‘King of Bonds’ Ajith Devasurendra articulated and pioneered Taprobane Securities will write a letter requesting the transfer of shares of TFC from NSB Custodian account to Taprobane Securities Suspense Account’ market analysts told CSE Leaks.

“Further thereby Sampath Bank will get the opportunity to recover the loss of over Rs.390 million  and the market would return to normal” the analysts added.

Earlier CSE Leaks reported that 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. However it is now been a question while Sri Lanka’s Bond Market Pioneer Ajith Devasurendra had represented the mother entity Taprobane Holdings’ Director Board, sources outline that Devasurendra had not been representing the board of Directors of Taprobane Securities, the stock brokering arm which Devasurendra’s junior Dinal Wijemanne-one of TFC Directors who shed shares to NSB at a premium price-is the CEO/Managing Director position of the entity.

On 27^th April 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. Yogananda Perera and Nandadeva Perera who held TFC shares also sold their quantities on the same day whilst the TFC share opened at Rs.30 on April 27, and during the month of April, the TFC share had been trading between Rs.30-32.50.

On another development The Finance Company PLC (TFC), whose some directors are involved in a controversial share transaction National Savings Bank (NSB) made a quite surprising disclosure of a share purchase transaction of TFC shares by its Director Dinal Wijemanne who is also the CEO of Taprobane Securities. The disclosure which is as old as 3-weeks said Dinal Wijemanne the director recently sold nearly little over 2.9 million shares at Rs.50 on 27th April; had bought  4,983 shares at Rs 30 per share on 16th April, 2012 just one and half weeks before the selling transaction came in to effect.

But majority investors had raised concerns and questions since Wijemanne's selling transaction was disclosed to Colombo Bourse on 27th April (on the same day which transaction took place) whilst the buying transaction was disclosed way later on the 8th May 2012 according to reports.

Meanwhile it was reported that the Securities and Exchange Commission (SEC) will be meeting the Board of Directors of Taprobane Securities today in connection to the contentious The Finance - National Savings Bank deal, quoting a SEC top official.

“We have summoned the director board of Taprobane Securities, the brokerage involved in this deal for discussions. Last Friday we summoned Taprobane CEO/ Director Dinal Wijemanne for clarifications,” SEC Chairman Tilak Karunaratne had told reporters. He had also said that the SEC has ordered Wijemanne to provide all his explanations in writing by this Friday according to reports.

“We’ve told him to submit his explanations in writing by May 8. However, he had asked for time till this Friday,” Karunaratne had told reporters.

In the TFC-NSB deal Taprobane Securities had been the broker for the both buyer and seller. Meanwhile SEC Chairman had told reporters that this is the first default that has taken place in the history of the Colombo Stock Exchange in which NSB had not paid the sum of its buying transaction. He had also confirmed to reporters that the SEC is also currently investigating into any possible incidents of ‘Insider Dealing’ related to the TFC-NSB deal and said that the SEC officials last Friday visited the premises of Taprobane Securities and took into possession several documents and data that might be useful in the investigation process.

When asked about the actions that can be taken against Taprobane, Karunaratne had said that if there is proof of malpractice, the penalty can range from a temporary ban to the revocation of brokering license according to reports.

SEC Chairman had also noted reporters that as the regulator, the SEC will be doing its maximum to discover whether; had there been any wrongdoing with regard to this deal, and said the SEC has also drawn the attention of the Central Bank on the matter.

White Wash?

Having a Board Meeting with Treasury officials on the ‘Reconfirmation of the Cancellation of the Controversial TFC-NSB Deal’ on Tuesday May 8 (from 3:00 p.m. to 6:00 p.m.) at NSB 

Premises the bank’s Board of Directors which stood silence from 27^th April issued a statement to some media organizations of the country.

NSB said the following in the Statement:

“The offer from TFC initially came to NSB to subscribe for their voting shares in January 2011. The bank carried out a detailed analysis on the TFC and was willing to purchase the voting shares up to approximately 8.33%. However, since the share issue had been oversubscribed, we were not in a position to proceed”

“Similarly, the bank received an invitation from a stock broker to purchase voting shares in March 2012. Since the bank had already carried out a detailed analysis in January 2011, the Board Sub Committee on Corporate Lending and Equity Investment decided to relook at the investment from a strategic initiative point of view with further analysis. Having done a further analysis, a favourable consideration was given to purchase voting shares of TFC, amounting to 10%-15%”

“However, since the Board was of the view that benefits of this investment are not as strong enough to proceed with, a decision was taken not to make the payment, due on this transaction”

“The above decision was conveyed to the Secretary to the Treasury Dr. P. B. Jayasundera at the meeting held on 8 May 2012 with the entire Board of Directors of NSB. Other relevant parties too have been informed of this development, accordingly. The Secretary advised the Board that the Bank should not move out from its core activity and advised to promote NSB as a premier savings bank without exposing its risk profile to maintain public confidence”

“As a socially conscious and a responsible State-owned financial institution, we wish to give a strong pledge to the general public that we would continue to uphold all traditions of our bank and as done in the past, continue our quest in having the depositors’ and other stakeholders’ total interest foremost in our minds in the future as well as the leader in developing you and the country.”

Meanwhile, Sri Lanka’s Pink Paper said the county’s premier business chamber, Ceylon Chamber of Commerce (CCC) which has been so far silent about the state-owned pension funds and institutions making peculiar investments in the market, Tuesday issued a statement praising the timely intervention by the officials in the TFC-NSB deal.

“The Ceylon Chamber of Commerce (CCC) notes with concern the recent transaction of approximately 13% of The Finance Company PLC. The chamber believes that ensuring integrity and transparency are vital to maintain investor confidence in the Colombo Stock Exchange (CSE) for the capital market to buyer and seller, Taprobane cannot avoid its responsibility towards the completion of this transaction” Pink Paper said.

However, on Tuesday, Banking Watchdog Central Bank Governor Ajith Nivard Cabraal had told reporters that as the banking regulator, it has no role to play in the transaction. Cabraal had told the media that the banking regulator in a broad sense generally defines the parameters within which banks can engage in equity investments, and said that thereafter it is "their business."

Sri Lanka cancels an unethical deal of Fake Stock Market Bulls

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 27^th 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.

Await Updates