Restrictions on shareholdings in Licensed Commercial Banks hailed

by Surekha Galagoda

The independent and minority shareholders have welcomed the move taken by the Central Bank to impose restrictions on shareholding in licensed commercial banks.

The former chairman of the Ceylon National Chamber of Industries K.C. Vignarajah who has been consistently championing the cause of innocent and helpless shareholders/investors for many years and in the process been very critical of the regulators, the Central Bank, Securities and Exchange(SEC) Commission and the Colombo Stock Exchange (CSE) recently congratulated the new Central Bank Governor Ajith Nivard Cabraal for coming out strongly to impose restrictions on shareholding in Licensed Commercial Banks.

The instances where the Central Bank in the past drew serious criticism from him were many; one was their attempted liquidation of Pramuka Bank, where as Chairman of the Restructuring Committee he resisted it in the interests of the Depositors; another was their inaction and deafening silence on the indirect moves by Harry Jayawardene to dominate the Financial Sector acting through, and/or in concert with HNB, DFCC, NAMAL, Distilleries (DCSL), Sri Lanka Insurance (SLI), in the matter of obtaining control of Commercial Bank.

He also drew attention to the good work done by Cabraal in drawing up a 'Code of Ethics' as President of ICASL in the early nineties for members of that Institute.

"The latest occasion he drew attention to it, was in a letter dated January 18 to the Secretary to the Treasury Dr. P.B. Jayasundera requesting his influence to ensure good Corporate Governance in Public Companies ; also that the SEC, Council of ICASL and CSE acts fairly and vigourously to investigate errant members among them and relentlessly seek Accountability and Transparency which would energise the stock market to spectacularly enlarge the investing public.

He commended President Mahinda Rajapaksa for the proposals which encouraged higher Dividend Payout and equitable treatment of shareholders.

Rienzie T. Wijetilleke on the TV program "State of Business" referring to this program said that he was happy at the coincidence that he saw a portion of the interview of the Chairman HNB and a few other Companies.

He responded that it was an illustration of the controlling interests swaying a good man and good banker; unfortunately having to be his masters' voice. Wijetilleke was defending or advocating higher shareholding percentage or control of banks by individuals or groups, especially those who pioneered to start banks.

It is far fetched for the present controlling shareholders group to lay claim on this account. If at all appropriate, it could only apply to the Ceylinco/Seylan Bank group led by the pioneer of many good ventures, Dr. Lalith Kotelawela.

Incidentally it also comes to my mind that while the Central Bank, in concert with many crooked Boards of Directors of Finance Companies, destroyed billions of depositors' moneys, only he stood out as having restructured and saved two Finance Companies which he took over ! I believe that the take over of the Colombo branch of the failed BCCI and saving the depositors also was to his credit.

It appeared that Wijetilleke was trying to indirectly justify his masters' group and associates' continued excessive holdings in DFCC, and Commercial Bank. I am sorry to say that there can be no misleading example bigger than this. DFCC was formed as a Development Finance Corporation with Government control and funded mostly by Foreign Institutions.

DFCC was given permission specially to hold about 30% of ComBank when the Chartered Bank in view of its Global restructuring sold its shares.

Ironically, if my memory serves me right, this special permission was given to prevent HNB or other private groups getting control of DFCC. Later, when the Government divested its holdings in DFCC, these Groups acted in concert and obtained control of DFCC, through which attempted to brazenly dismiss the very independent Chairman of ComBank, the illustrious Mahendra Amarasuriya - the next President of the Lions world body, a significant honour to Sri Lanka.

Wijetilleke's comments blasting the total incompetence, negligence and responsibility of the Central Bank finds good resonance as I had the most frustrating experience at first hand, having to correspond, and negotiate, over a long period of time with the Central Bank and Monetary Board on behalf of the poor depositors.

Vignarajah said there are many exceptionally good Directors who should be encouraged, and who welcome the regulations to help safeguard stakeholders' rights as they themselves practise.

As a past Chairman of the Ceylon National Chamber of Industries, (CNCI), and Chairman for the first three years of SMED he recollects it was their collective effort to promote all industry, enterprise, exports, employment and rapid economic growth to brighten the prospects of all Sri Lankans.

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