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Sunday, July 21, 2024

Rienzie lashes out at culture of bad governance

Retired senior banker and a former Colombo Stock Exchange Chairman Rienzie T. Wijetilleke yesterday highlighted several damning outcomes of the controversial deal where the National Savings Bank purchased a 13.2 percent stake of The Finance Company at an inflated price.

“The deal cancelled by President Mahinda Rajapaksa, as the Finance Minister and the low, unethical statement by the bank, which now rejects the purchase due to several matters which they had identified later, had brought about questions of credibility,” the outspoken fomer chairman of Hatton National Bank told The Island Financial Review.

He said it was a low thing for the NSB board to reject its own original decision. Despite several allegations, it should have stuck to the original decision and halted the deal.

The cancelled controversial deal would have a negative impact on the CSE and the image of the country because such a large investment was halted due to the negligence of the authorities.

He said that NSB, the CSE, Monetary Board and the SEC had failed in their duties.

Wijetilleke highlighted several downturns of NSB on the investment, which had unlikely followed the proper system for investment of public funds.

According to him, a specific system involving a committee and the Board of directors had to be followed. The committee had to submit a research paper on an identified investment to the board for approval by each director.

The committee would evaluate the company assets, the safety of the investment and the return before they could submit the prepared analysis to the board, where, if the investment was viable, all board members agree on it.

“However, given the status of the current situation of the stock market and the company which had been purchased, it was unlikely such a procedure had been followed and in a broader perspective it merely seems like the bank was misusing deposits,” Wijetilleke said.

“The Central Board, as the custodian of public funds, had to intervene in the controversial deal. However, the responsibilities of the Central Bank seems to have been skipped and passed on to the SEC for investigation,” he said.

The SEC had assured brokers a fair investigation on the controversial deal, which disturbed the Colombo bourse but it has not materialized as nothing has been published so far, he said.

He criticised the function of the Colombo Stock Exchange as a corrupt institution. Questioning good governance, he said the CSE had not done its duties on the day of the suspicious deal.

According to him, when the transaction took place the CSE authority should have halted the deal for a few hours and conducted special research reasoning on the deal. It is unlikely that such a procedure had been followed, and given the magnitude of the deal it was mandatory for the authority to inform the CEO whereby a message would been sent to the SEC to conduct a special investigation, specially knowing it was public funds which were invested.

“The Colombo Stock Exchange performed well for two years,” he said, “But now for some time it has been falling. A transaction of this magnitude breaking down has an adverse effect.”

He also highlighted that the custodian bank, which had paid the seller, before they had received funds from the buyer, had misused public funds in the CDS account disturbing the smoothness of the Colombo Bourse.

According to him, it was unethical for the custodian account holder to pay the seller without receiving funds from the buyer.

He said today’s ‘stock brokers’ were more likely ‘stock breakers’. The brokers are having conflicts of interests. The stock brokers involved in the controversial deal were participating for both the buyer and seller which makes the purchase more suspicious.

In conclusion, he said that several members needed to be fired from all authorities and a special investigation was needed to be conducted to prosecute the guilty in courts.

By Mario Andree


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