Sri Lanka’s Buckle Tight Regulator may go home by end of 2011?

After many tight regulations he took to curb investors and brokers from so called manipulations since his appointment in 2010; Sri Lanka’s buckle tight regulator Malik Cader had been asked to leave from his position of Director General (DG) at the Securities and Exchange Commission of Sri Lanka; CSE Leaks learns.

'Accordingly by a special Cabinet paper decision he had been asked to leave his office', reports reveal. “He had asked for more time till 31 December 2011  but he will be removed early as 31 October 2011” a source close to SEC told CSE Leaks.

SEC Director Malik Cader at Aquaventure Dubai Water Park at  Atlantis Hotel at Dubai,
United Arab Emirates. Search for Malik Cader in facebook and
 investigate his investing friends in CSE
go to link: http://www.facebook.com/malik.cader?sk=friends 

Since the time when Cader took the DG seat he had been implementing so many rules in terms of regulation to CSE in what called to be the ‘Moves that are taken to develop a disciplined capital market in the country’. However it is now learnt from various stock market sources that although Malik Cader was acting as a highly disciplined regulator he had a circle of friends who had pushed up illiquid shares that has no value in the CSE; and those friends never got caught to Cader’s Rules.

“There’s an to head of a stock brokering firm who is called to be the Cashier of Malik” many other sources from Colombo Stock Exchange told CSE Leaks adding that industry officials are aware that particular top official charged money from ‘SEC caught investors and brokers’ telling them that he can sort the matter with Director General of SEC at several occassions.

At a time when Sri Lanka’s tourism is booming, in another development Sri Lankan stock market investors had been surprised by a new Hotel Development project coming up in tourism booming Pasikudah beach valued at an investment of nearly Rs.220 million or US $ 2 million that is yet to be constructed which is called to be a project jointly owned by a regulatory official at SEC and a head of a stock broking company with couple of Investors. “It is said this Leisure project coming up at Pasikudah is constructed by a capital market watchdog official’s father in law who runs a construction firm and who is a top architect in the island nation"Sources added. Now it is also learn from sources the Hotel is nearing completion.

Since Sri Lanka’s capital market watchdog got a new official, Malik Cader as the Director General of the Securities and Exchange Commission with effect from 2 November 2010, Sri Lanka’s Browns fame led subsidiaries and associates including Hydro Power Free Lanka (HPFL), Free Lanka Capital Holdings (FLCH), Browns Investments (BIL) had already been listed whilst Agstar Fertilizers, Sierra Constructions is yet to be listed in Colombo Bourse after an IPO or through ‘Introduction’ after a Private Placement. It is also learnt that several Browns fame investors made ‘Big Deals’ at a time when Malik Cader head the seat as DG in the capital market watchdog’s house in the island.

On the contrary ever since Securities and Exchange Commission Director General Malik Cader was appointed to DG seat Colombo Stock Market performance had been gradually dipping whilst retail investors had left market time to time since early January 2011.

Surprisingly when a published article in Sri Lanka’s Pink Paper;  Daily FT on 21 October 2011 questioned whether SEC DG ‘Malik Cader Out or In?’ the market indices shot up whilst stock prices soar with investors flocking up to CSE about the Good News that outlined the future of Malik Cader in Sri Lanka at the capital market watchdog’s house.

Joined as a Press Officer to SEC in mid 1980’s Malik Cader was the Director-Legal and Enforcement prior to being DG at the capital market watchdog’s house in Sri Lanka.

Questionable New Plan of CSE?

CSE Leaks exclusively learn from market sources that Colombo Stock Exchange’s (CSE) officials had consulted a global management consultant firm; McKinsey & Company, Inc. branch office in India to provide a better plan to the next development phase of Sri Lanka’s only capital market.

“CSE consulted McKinsey & Company, Inc. two months ago and so far nothing has happened and it was recommended by the CSE Chairman and its Chief Executive Officer” a top source said to CSE Leaks.

It is also learnt that so far McKinsey & Company had not been able to get an official appointment from Sri Lanka’s top treasury secretariat of the island nation to discuss the development plan for the capital market of Sri Lanka.

Meanwhile it is learnt from market sources that McKinsey & Company had been interviewing top Board of Directors of CSE, Stock Brokers, Unit Trusts and largest investors for nearly month since they started to develop a plan for the growth of CSE.

McKinsey & Company in India is established in Gurgaon in Haryana (close to New Delhi) and Mumbai whilst Gurgaon office is housed at Plot No. 4 Echelon Institutional Area, Sector 32 Gurgaon 122001, Haryana, India having phone numbers +91 (124) 661 1000 and fax number +91 (124) 661 1400.

The McKinsey Knowledge Center is located in Gurgaon and is the largest hub of knowledge professionals within McKinsey according to reports. McKinsey is said to be an advisor and counselor to many of the most influential businesses and institutions in the world and serve more than 80 percent of Fortune magazine’s list of the Most Admired Companies.

As a global management consulting firm that focuses on solving issues of concern to senior management; McKinsey serves as an adviser to many governments and institutions too. It is recognized as one of the most prestigious firms in the consulting industry and has been a top employer for new MBA graduates since 1996 globally.

Citrus Leisure PLC (REEF) to come up with couple of IPOs?

Citrus Leisure flagship Hotel at Hikkaduwa, Sri Lanka

After undergoing a management change in 2010, former Hotel Reefcomber PLC now Citrus Leisure (REEF) will come up with couple of IPOs on coming months to raise funds to their newest to ventures, an analyst told CSE Leaks.

Citrus Leisure in the last quarter of 2010 bought two new lands at Kalpitiya and Waskaduwa in a bid to build two new hotels with a view becoming a post war bullish fast growing hotel chain in the country.

“The IPOs might come in February” the analyst told CSE Leaks.

Citrus Leisure had earlier purchased 78 acres of land, known as Santhoduwa-Kalpitiya, to construct a four star resort in Kalpitiya in Sri Lanka. The proposed resort will feature 150 rooms and 28 water front villas. The water front villas will be constructed facing a 50 meter-wide waterway which cuts through the land and connects at the end to the sea. Murad Ismail, a Sri Lankan architect, has designed the resort.

The water villas will feature individual gondolas providing the occupants access to the sea. The villas will be made available to local and foreign high net worth individuals on a 99-year lease basis.

The ‘Santhoduwa-Kalpitiya’ site is ideally placed in close proximity to the whale- and dolphin-watching sites in the seas off Kalpitiya and the magnificent Wilpattu National Park, home to the elephant and the elusive Ceylon leopard.

Citrus Leisure will operate the villas as part of the hotel with the concurrence of their owners. The company has spent approximately Rs.122.18 million (US $1.1 million) for land acquisition.

The purchase is Citrus' second major acquisition. Earlier, the company had acquired a 7.2 acre beach property in Waskaduwa and it will commence construction work on the site in early 2011. The proposed scheme would be a 150-room, four-star property.

Sri Lanka’s home grown advertising giant Triad and its creative duo Dilith Jayaweera and Varuni Amunugama Fernando bought a majority stake in Reefcomber through Emagewise Ltd., a private venture of Triad Advertising in 2010 and rebranded the company as Citrus Leisure PLC.

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.

Why GREG drastically fell, was it to facilitate Nimal Perera, or Did Nimal Perera sell his GREG shares?

Nimal Perera sipping some Wine
at a High Exclusive Corporate Event

High Exclusive sources close to Colombo Stock Exchange revealed CSE Leaks that High net worth investor Nimal Perera had sold his GREG or famous Environmental Resources Investment (ERI) PLC shares before the week ended 23 January 2011 as the share shot up high again to above Rs.100 and along with slight appreciations in the warrants.

However, as at 30 September 2010, according to Quarterly report of ERI PLC Nimal Perera had 2.34 million GREG shares which amounted to 0.75% of the company.

Some sources say that he has sold this stake to put money for Vallibel One IPO where he is also on Director board; However it could be now derived according to our analysis may be that Nimal Perera had applied for a few more shares of Vallibel One to profit from CSE when it is listed and since he would have applied by a Bank Guarantee he would have sold his GREG shares to partly settle the money for Bank Guarantee’s Bank Charges. 

No Perera’s for The Finance PLC share issue-Official?

Although, lots of Institutional and a few high net worth investors had applied for recently concluded The Finance Co. (TFC) PLC secondary IPO, A top official from TFC revealed CSE Leaks that none of the Big Time players of Sri Lanka’s stock market had applied to the share issue adding that its only genuine people who have applied to shares.

“No Pereras, its only genuine people who have applied” source from TFC told CSE Leaks.

This in turn resembles according to some corporate community in the country that ‘Perera Duo’ who is bullish in Colombo Stock Exchange apart from their Casino business in the country are not ‘So Genuine’, which is questionable to CSE Leaks.

However on the other hand when The Finance Co. PLC official says that ‘Pereras are not Genuine’ it is arguably questionable whether The Finance Co. PLC’s Founder Chairman, Dickman’s Road Financier Lalith Kotelawala who master minded Rs.26 billion South Asia’s largest ever Financial Scam in Golden Key with Khavan Perera are genuine people in Sri Lanka.

Sri Lanka Market Follower Reveals Watch Dog’s ‘Goni Billa’ Price Band Theory?

By CSE Leaks Professor

The so called unexplained ‘Goni Billa’ Formulae or the 10% Price Band Theory implemented by the Buckle Tight Watch Dogs of Sri Lanka’s Capital Market was revealed to CSE Leaks by a leading market follower in the country.

“According to our studies if a company has more than 30% of Public Float, that share will never get caught to ‘Goni Billa’ Price Band” said the well versed market analyst to CSE Leaks.

“That is why REEF.N was never caught with Price Band. I guarantee similarly that if Touchwood (TOUCH) share reach Rs.500 within a day it will never get caught to ‘Goni Billa’ because there is no major shareholder for Touchwood. It is 100% guaranteed Touchwood will not get caught to 10% Price Band” he concluded.