May 22, 2012 (LBO) – Sri Lankan shares prices slipped one percent on Tuesday, despite selective buying in blue chip counters, brokers said.
The 280-stock All Share Price Index lost 52.11 points to close at 5,155.61 while the 25-stock Milanka Price Index fell 13.99 points or 0.29 percent to 4,656.51, according to Colombo Stock Exchange figures.
Turnover was 296.3 million rupees of which foreign buying accounted for 119.5 million rupees and foreign selling 13.0 million rupees.
The Carson Group owned Lion Brewery PLC was the toast of the day, gaining 3.50 rupees to close at 220.00 rupees. Lion, which dominates Sri Lanka’s beer market, saw 251,200 shares change hands.
During early trade, a parcel of 125.000 Lion shares crossed the floor at 225.0 rupees (up 8.50 rupees).
Hatton National Bank’s non-voting shares gained 1.30 rupees to 99.50 rupees on trades of 323,124 shares.
Commercial Bank of Ceylon PLC, closed flat at 105.00 rupees on 243,816 shares.
source - www.lbo.lk
Tuesday, May 22, 2012
Monday, May 21, 2012
Sri Lanka stocks dip on Monday
May 21, 2012 (LBO) – Sri Lanka’s stock market dipped Monday in the absence of buying support, though a crossing in conglomerate John Keells Holdings, brokers said.
Colombo’s benchmark All Share Price index lost 0.27 percent or 14.37 points to close at 5,207.72, while the 25-stock liquid Milanka Price Index shed 0.49 percent or 23.09 points to close at4,670.50.
Monday’s turnover was a modest 192.0 million rupees, according to Colombo Stock Exchange figures.
John Keells, the biggest stock in terms of market capitalisation, dominated turnover on trades of 235,051. The counter closed up 1.30 rupees to 202.20 rupees.
Commercial Bank PLC, one of the country’s most profitable stocks, closed flat at 105.00 rupees on trades of 140,437 shares.
Royal Ceramics PLC, fell 1.40 rupees to 103.10 rupees on trades of 120,000 shares.
Shares of The Finance PLC fell 1.00 rupee to 25.00 rupees. The company is in the news after state-run National Savings Bank agreed to return over seven million shares it bought in April, to its original owners.
NSB, the country’s biggest savings bank, also dominated news on Monday, that its Chairman Pradeep Kariyawasam had resigned following the aborted The Finance share purchase.
source - www.lbo.lk
Colombo’s benchmark All Share Price index lost 0.27 percent or 14.37 points to close at 5,207.72, while the 25-stock liquid Milanka Price Index shed 0.49 percent or 23.09 points to close at4,670.50.
Monday’s turnover was a modest 192.0 million rupees, according to Colombo Stock Exchange figures.
John Keells, the biggest stock in terms of market capitalisation, dominated turnover on trades of 235,051. The counter closed up 1.30 rupees to 202.20 rupees.
Commercial Bank PLC, one of the country’s most profitable stocks, closed flat at 105.00 rupees on trades of 140,437 shares.
Royal Ceramics PLC, fell 1.40 rupees to 103.10 rupees on trades of 120,000 shares.
Shares of The Finance PLC fell 1.00 rupee to 25.00 rupees. The company is in the news after state-run National Savings Bank agreed to return over seven million shares it bought in April, to its original owners.
NSB, the country’s biggest savings bank, also dominated news on Monday, that its Chairman Pradeep Kariyawasam had resigned following the aborted The Finance share purchase.
source - www.lbo.lk
Sunday, May 20, 2012
NSB Chairman, directors must step down - BT Poll
Kariyawasam defies unions
A quick poll on Thursday by the Business Times (BT) on the crisis at the National Savings Bank (NSB) vis-à-vis a tainted stock market transaction, found near-unanimity in the call for the removal of bank chairman Pradeepa Kariyawasam and its directors.
The poll which drew more than 400 respondents, from different professional and civil society segments, also saw 100 % of the respondents saying the authorities "had failed in their obligation to the public on the right to know and information about the affairs of a state bank."
The BT, as the crisis at the country's main savings bank grew following a refusal by Mr Kariyawasam to step down which resulted in a wildcat strike by unions, on Thursday sent out the email questionnaire asking: (1) Should the transaction be reversed? (2) Are the SEC and CSE slow in their response? (3) Should the SEC cancel the multi-million rupee (Rs 390 million) deal? (4) Failure on the part of the authorities to issue a statement on the crisis? (5) Failure to inform the public on the status of the bank? And, (6) Should the NSB chairman and board of directors be sacked? The response was tremendous and comments poured in during a 3-hour period. Though the poll closed on Thursday (3 pm), comments and responses continued to flow in on Friday reflecting public concern and a plea to be heard.
On the 6th question about sacking the NSB chairman and directors, 91 % of respondents endorsed this view.The only question where the response was somewhat mixed (with 'ayes' totaling 59 %) was 'should the SEC cancel the deal'. Many of the brokers and investors were not in favour saying this would erode confidence in the market but were more in favour of a reverse transaction through the market, while others said there is no provision to cancel the deal.
Respondents were also critical of the SEC and CSE with 91 % agreeing that the two institutions were slow (and are yet to even make an official statement - apart from comments made by the SEC chairman) in their response to a deal that has turned sour. The transaction has been roundly condemned and NSB unions have been flexing their muscles bracing for tougher action if Mr Kariyawasam remains in office.
"The NSB has seriously betrayed the trust and confidence of its (claimed) 16 million depositors. I withdrew my child's savings account years ago when I saw the rot set in. In this competitive banking environment, we do have a choice. There is NO comparative advantage in banking with NSB," one respondent wrote.
Another agreed that a statement should have been issued by the Government or the Central Bank. "The statement issued by the NSB (through a small Page 1 advertisement on Sunday) was pathetic to say the least. It conveyed a serious lack of governance and transparency, not to mention the lack, also, of a clear strategic direction as to why the bank contemplated this purchase," this respondent noted, adding "the explanation was worse than the crime!"
He said this is no ordinary state bank as a large proportion of the Sri Lankan population has reposed their trust in the bank by depositing, in some cases, all their savings. "The public is entitled to reciprocity for this trust by way of exemplary governance procedures, checks and balances. From what has been stated in the media with respect to this transaction, the NSB does not seem to have such governance procedures and controls and this is an affront to the trust that the public has placed in this institution," he added.
Public rights activist Nihal Sri Ameresekere, who has also raised the issue in a case before the Supreme Court, said the SEC and CSE comprising of Government-appointed persons appear to be subserviently lukewarm. "The direction to act as per the statute and regulations must necessarily come from the very top i.e. the Minister of Finance and the Secretary, against whom and others, disregarding Supreme Court findings he questionably did not enforce the law, amply demonstrating scant respect for the rule of law," he added.
source - http://www.sundaytimes.lk/120520/BusinessTimes/bt01.html
A quick poll on Thursday by the Business Times (BT) on the crisis at the National Savings Bank (NSB) vis-à-vis a tainted stock market transaction, found near-unanimity in the call for the removal of bank chairman Pradeepa Kariyawasam and its directors.
The poll which drew more than 400 respondents, from different professional and civil society segments, also saw 100 % of the respondents saying the authorities "had failed in their obligation to the public on the right to know and information about the affairs of a state bank."
The BT, as the crisis at the country's main savings bank grew following a refusal by Mr Kariyawasam to step down which resulted in a wildcat strike by unions, on Thursday sent out the email questionnaire asking: (1) Should the transaction be reversed? (2) Are the SEC and CSE slow in their response? (3) Should the SEC cancel the multi-million rupee (Rs 390 million) deal? (4) Failure on the part of the authorities to issue a statement on the crisis? (5) Failure to inform the public on the status of the bank? And, (6) Should the NSB chairman and board of directors be sacked? The response was tremendous and comments poured in during a 3-hour period. Though the poll closed on Thursday (3 pm), comments and responses continued to flow in on Friday reflecting public concern and a plea to be heard.
On the 6th question about sacking the NSB chairman and directors, 91 % of respondents endorsed this view.The only question where the response was somewhat mixed (with 'ayes' totaling 59 %) was 'should the SEC cancel the deal'. Many of the brokers and investors were not in favour saying this would erode confidence in the market but were more in favour of a reverse transaction through the market, while others said there is no provision to cancel the deal.
Respondents were also critical of the SEC and CSE with 91 % agreeing that the two institutions were slow (and are yet to even make an official statement - apart from comments made by the SEC chairman) in their response to a deal that has turned sour. The transaction has been roundly condemned and NSB unions have been flexing their muscles bracing for tougher action if Mr Kariyawasam remains in office.
"The NSB has seriously betrayed the trust and confidence of its (claimed) 16 million depositors. I withdrew my child's savings account years ago when I saw the rot set in. In this competitive banking environment, we do have a choice. There is NO comparative advantage in banking with NSB," one respondent wrote.
Another agreed that a statement should have been issued by the Government or the Central Bank. "The statement issued by the NSB (through a small Page 1 advertisement on Sunday) was pathetic to say the least. It conveyed a serious lack of governance and transparency, not to mention the lack, also, of a clear strategic direction as to why the bank contemplated this purchase," this respondent noted, adding "the explanation was worse than the crime!"
He said this is no ordinary state bank as a large proportion of the Sri Lankan population has reposed their trust in the bank by depositing, in some cases, all their savings. "The public is entitled to reciprocity for this trust by way of exemplary governance procedures, checks and balances. From what has been stated in the media with respect to this transaction, the NSB does not seem to have such governance procedures and controls and this is an affront to the trust that the public has placed in this institution," he added.
Public rights activist Nihal Sri Ameresekere, who has also raised the issue in a case before the Supreme Court, said the SEC and CSE comprising of Government-appointed persons appear to be subserviently lukewarm. "The direction to act as per the statute and regulations must necessarily come from the very top i.e. the Minister of Finance and the Secretary, against whom and others, disregarding Supreme Court findings he questionably did not enforce the law, amply demonstrating scant respect for the rule of law," he added.
source - http://www.sundaytimes.lk/120520/BusinessTimes/bt01.html
Lies and deception surround NSB-TFC deal
By Duruthu Edirimuni Chandrasekera
The Central Bank (CB) is yet to take action in the deal between some investors/directors at The Finance Co (TFC) and state-owned National Savings Bank (NSB) with many raising issues pertaining to the lies and deception surrounding this transaction.
The Business Times reliably learns that the Securities and Exchange Commission (SEC) had sent two letters to the CB pointing out certain irregularities in this deal. "The first letter pointed out that NSB bought it at a premium - Rs 50 per share against the market price of Rs 30-31 per share and requested the CB to investigate," an informed source told the Business Times. The second letter has noted the settlement risk as NSB hadn't paid its settlement bank, Sampath and had implored CB to intervene, he added, saying that up to now CB hasn't taken any action.
"When NSB didn't pay Rs 390 million that was due to Sampath, the CB could have forced NSB to settle this money under CB's Settlement Act," the source told the Business Times. Attempts at contacting CB officials by Business Times on Friday on this issue failed.
On Friday evening, the SEC said the transaction had been reversed. Meanwhile questions are being raised on the lies and deceptive nature of this deal and the credibility of the NSB Chairman, Pradeepa Kariyawasam. The Business Times reliably learns the NSB had written to Taprobane Securities (broker for both the buyer and seller in this transaction) requesting to reverse this transaction about 10 days ago and Taprobane had intimated it to the SEC. On Friday, Taprobane Securities took out a newspaper advertisement saying that both NSB and its selling clients were prepared to reverse the transaction. "... since NSB (our buying client) had expressed the view that it would wish to reverse the recent transaction, we have obtained the consent of our selling clients to reverse the transaction so that they could once again assume the ownership of this parcel of shares. Our selling clients have agreed to do so, because they have intimated to us, that they do recognize the value of the share," it said.
Two of the sellers Dinal Wijemanne and ABC Radio Group chairman Raynor Silva were directors of TFC. Mr. Wijemanne is also CEO of Taprobane Securities which was both the buying and selling broker of the 13 % stake. Referring to several news items on this transaction on April 27, the broker said: "These shares were acquired by our buying client, the NSB. Since then, some debate has arisen regarding this transaction, based mainly on the premise that the price per share at which the transaction was effected was significantly higher than the previous day's trading price. Generally a 13% parcel of shares may attract a 'per share' price that is higher than the 'per share' price of a small quantity of shares that may be traded on the floor."
"We have been informed that the majority of these shares were purchased by our selling clients several months ago at approximately Rs.48 per share, at a time when the share was trading at a considerably lower price." Analysts say that what NSB (which only made a short public statement regarding the transaction) and its Chairman, widely believed to be one of the architects in this deal say, contradict the Taprobane statement. "Mr. Kariyawasam has told the NSB unions that NSB will not sell the 13% stake as they see immense value in it. This shows that someone is lying," an analyst pointed out.
On Thursday, Mr Kariyawasam, in his second meeting during the week with bank trade unions, told them that the TFC deal was part of a larger plan to take control of the finance company. "He has said that the NSB would then be able to move into other areas like finance leasing, real estate, etc through a subsidiary as a way of getting round the restrictive NSB Act," one trade unionist said, "this is the corporate entrepreneurship model that was explained as the justification for the deal."
source - www.sundaytimes.lk
The Central Bank (CB) is yet to take action in the deal between some investors/directors at The Finance Co (TFC) and state-owned National Savings Bank (NSB) with many raising issues pertaining to the lies and deception surrounding this transaction.
The Business Times reliably learns that the Securities and Exchange Commission (SEC) had sent two letters to the CB pointing out certain irregularities in this deal. "The first letter pointed out that NSB bought it at a premium - Rs 50 per share against the market price of Rs 30-31 per share and requested the CB to investigate," an informed source told the Business Times. The second letter has noted the settlement risk as NSB hadn't paid its settlement bank, Sampath and had implored CB to intervene, he added, saying that up to now CB hasn't taken any action.
"When NSB didn't pay Rs 390 million that was due to Sampath, the CB could have forced NSB to settle this money under CB's Settlement Act," the source told the Business Times. Attempts at contacting CB officials by Business Times on Friday on this issue failed.
On Friday evening, the SEC said the transaction had been reversed. Meanwhile questions are being raised on the lies and deceptive nature of this deal and the credibility of the NSB Chairman, Pradeepa Kariyawasam. The Business Times reliably learns the NSB had written to Taprobane Securities (broker for both the buyer and seller in this transaction) requesting to reverse this transaction about 10 days ago and Taprobane had intimated it to the SEC. On Friday, Taprobane Securities took out a newspaper advertisement saying that both NSB and its selling clients were prepared to reverse the transaction. "... since NSB (our buying client) had expressed the view that it would wish to reverse the recent transaction, we have obtained the consent of our selling clients to reverse the transaction so that they could once again assume the ownership of this parcel of shares. Our selling clients have agreed to do so, because they have intimated to us, that they do recognize the value of the share," it said.
Two of the sellers Dinal Wijemanne and ABC Radio Group chairman Raynor Silva were directors of TFC. Mr. Wijemanne is also CEO of Taprobane Securities which was both the buying and selling broker of the 13 % stake. Referring to several news items on this transaction on April 27, the broker said: "These shares were acquired by our buying client, the NSB. Since then, some debate has arisen regarding this transaction, based mainly on the premise that the price per share at which the transaction was effected was significantly higher than the previous day's trading price. Generally a 13% parcel of shares may attract a 'per share' price that is higher than the 'per share' price of a small quantity of shares that may be traded on the floor."
"We have been informed that the majority of these shares were purchased by our selling clients several months ago at approximately Rs.48 per share, at a time when the share was trading at a considerably lower price." Analysts say that what NSB (which only made a short public statement regarding the transaction) and its Chairman, widely believed to be one of the architects in this deal say, contradict the Taprobane statement. "Mr. Kariyawasam has told the NSB unions that NSB will not sell the 13% stake as they see immense value in it. This shows that someone is lying," an analyst pointed out.
On Thursday, Mr Kariyawasam, in his second meeting during the week with bank trade unions, told them that the TFC deal was part of a larger plan to take control of the finance company. "He has said that the NSB would then be able to move into other areas like finance leasing, real estate, etc through a subsidiary as a way of getting round the restrictive NSB Act," one trade unionist said, "this is the corporate entrepreneurship model that was explained as the justification for the deal."
source - www.sundaytimes.lk
Transfer of TFC shares purchased by the NSB through the CSE
Here is the full statement by the Securities and Exchange Commission (SEC) which this newspaper received at 5.15 pm on Friday, May 18 on the TFC-NSB deal:
Taprobane Securities (Pvt) Ltd (TSL) and the National Savings Bank (NSB) by letters dated 11th May 2012 made an application to the Securities and Exchange Commission of Sri Lanka (SEC) seeking prior approval under Section 28 (1) of the SEC Act to transfer The Finance Company PLC (TFC) shares purchased by NSB on 27th April 2012 on the Colombo Stock Exchange (CSE) to persons identified by TSL outside the Trading Floor of the CSE.
TSL in their application undertook to pay Sampath Bank PLC the consideration due on this transaction including the interest due thereon in settlement of the monies due to Sampath Bank for the settlement services rendered by Sampath Bank on the share purchases done by NSB of TFC on the Trading Floor of the CSE on 27th April 2012.
NSB in their application also agreed to transfer TFC shares purchased on 27th April 2012 in its entirety to the persons identified by TSL outside the Trading Floor of the CSE. The NSB agreed to allow TSL to pay Sampath Bank the consideration sum due on this share transfer in satisfaction of the amounts due to Sampath Bank for the settlement services rendered on the share purchases transacted by them on the CSE on 27th April 2012.
Sampath Bank too intimated to SEC that the bank will discharge NSB and all parties connected with the impugned transaction, if TSL as undertaken by its letter pays Sampath Bank all sums due to them including interest/levies due thereon. In terms of Section 28 (1), the SEC has the discretionary power to approve transfers outside the trading procedure of the CSE.
In this backdrop the SEC has granted approval to allow NSB to transfer TFC shares purchased on 27th April 2012 in its entirety to the persons identified by TSL outside the Trading Floor of the CSE.
This approval has been granted under exceptional circumstances for the smooth functioning and the system stability of the payment and settlement cycle of the Capital Market of Sri Lanka. It is stressed that the SEC will not consider this instance of granting approval to conduct a trade of this nature off the Floor of the CSE as creating a precedence.
The SEC is separately investigating the above mentioned transaction and the parties involved in it. Firm action will be taken against all those who are found to have violated the SEC Act. The SEC is currently studying this entire issue and expects to take a series of appropriate measures, rule and procedure changes to prevent such incidents in the future. The SEC will also intensify its efforts in implementing the Central Counter Party (CCP) for the CSE which will be the final solution to address settlement failure risk.
source - www.sundaytimes.lk
Taprobane Securities (Pvt) Ltd (TSL) and the National Savings Bank (NSB) by letters dated 11th May 2012 made an application to the Securities and Exchange Commission of Sri Lanka (SEC) seeking prior approval under Section 28 (1) of the SEC Act to transfer The Finance Company PLC (TFC) shares purchased by NSB on 27th April 2012 on the Colombo Stock Exchange (CSE) to persons identified by TSL outside the Trading Floor of the CSE.
TSL in their application undertook to pay Sampath Bank PLC the consideration due on this transaction including the interest due thereon in settlement of the monies due to Sampath Bank for the settlement services rendered by Sampath Bank on the share purchases done by NSB of TFC on the Trading Floor of the CSE on 27th April 2012.
NSB in their application also agreed to transfer TFC shares purchased on 27th April 2012 in its entirety to the persons identified by TSL outside the Trading Floor of the CSE. The NSB agreed to allow TSL to pay Sampath Bank the consideration sum due on this share transfer in satisfaction of the amounts due to Sampath Bank for the settlement services rendered on the share purchases transacted by them on the CSE on 27th April 2012.
Sampath Bank too intimated to SEC that the bank will discharge NSB and all parties connected with the impugned transaction, if TSL as undertaken by its letter pays Sampath Bank all sums due to them including interest/levies due thereon. In terms of Section 28 (1), the SEC has the discretionary power to approve transfers outside the trading procedure of the CSE.
In this backdrop the SEC has granted approval to allow NSB to transfer TFC shares purchased on 27th April 2012 in its entirety to the persons identified by TSL outside the Trading Floor of the CSE.
This approval has been granted under exceptional circumstances for the smooth functioning and the system stability of the payment and settlement cycle of the Capital Market of Sri Lanka. It is stressed that the SEC will not consider this instance of granting approval to conduct a trade of this nature off the Floor of the CSE as creating a precedence.
The SEC is separately investigating the above mentioned transaction and the parties involved in it. Firm action will be taken against all those who are found to have violated the SEC Act. The SEC is currently studying this entire issue and expects to take a series of appropriate measures, rule and procedure changes to prevent such incidents in the future. The SEC will also intensify its efforts in implementing the Central Counter Party (CCP) for the CSE which will be the final solution to address settlement failure risk.
source - www.sundaytimes.lk
Lying, cheating and silence
What has the National Savings Bank (NSB) told its 16.7 million depositors about the worst crisis that it is facing? Zero! Its website proudly says that the NSB is the first triple A rated Sri Lankan bank and that “Every 7 out of 10 Sri Lankans Bank with Us” but there hasn’t been any statement neither from the bank, the Ministry of Finance or the Central Bank on current issues.
Rating agency, Fitch which runs to the newspapers with statements on various ratings has been absolutely silent on whether the ratings of both the NSB and The Finance Co (TFC-the other culprit) would be reviewed.
This week’s poll by the Business Times saw the public vent their frustration on a single issue; governance, accountability and transparency. In every sense, the passing-the-buck game continues whether it be the government, the private sector or the regulators – the Securities and Exchange Commission (SEC) and the Central Bank (CB) – and also the Colombo Stock Exchange (CSE).
However in fairness to the SEC, its chairman Tilak Karunaratne has been speaking to the media explaining the SEC role, etc. It would have been better, however if the SEC had issued, even a short statement about the state of play relating to the investigation to restore confidence in the market. The CB however has failed in its duty over the settlement risk (the NSB defaulting payment) in publicly demanding the NSB to pay up or take action. This unfortunately is the continuing saga of Sri Lanka, a country that has huge potential to rise from the ashes at the end of the war, but will continue to be kept down owing to these fundamental issues.
Questions, questions, questions! This is what the public is asking: Why was the NSB permitted to buy a stock at a huge premium? Why wasn’t it cancelled by the regulator soon after the NSB refused to pay the seller? Why hasn’t the Government and the two regulators (as of Friday noon, May 18) issued statements to the public about the safety of their investments assuring the market (to restore confidence and credibility? Isn’t this an obligation to millions of depositors (who had to independently call branch managers and verify the status of the bank while some withdrew their money)? Is the Chairman and directors of the NSB ‘fit and proper’ persons? What about the issues that Pradeepa Kariyawasam had when he chaired Sri Lanka Insurance? Were these issues taken into consideration to declare him “fit and proper”?
There has been a lot of lying, cheating and deceit in the sordid transaction. Taprobane Securities, the buying and selling broker, said in a newspaper advertisement on Friday that after it received the consent of the NSB, it had got the consent of the sellers (Dinal Wijemanne and Raynor Silva, among others) to do a reverse transaction through the market. “... since NSB (our buying client) had expressed the view that it would wish to reverse the recent transaction, we have obtained the consent of our selling clients to reverse the transaction…,” the statement said.
This implies that the NSB has, at least a week, ago, expressed its willingness to sell back the stock. , while this week, Kariyawasam has twice told unions that deal was clean and implied there was no intention to sell back the stock. He also told the unions that “only the President can remove him”, more than a week after Treasury Secretary Dr P.B. Jayasundera had told officials that Kariyawasam should step down over the sordid affair.
Unfortunately the heady days when important personalities resign on issues like this are gone. The only noted instance in recent years of an official quitting on a principle of good governance is former SEC Chairperson Indrani Sugathadasa, whose stock rose many notches after she refused to bow to the whims and fancies of insider traders and manipulators.
After the crash of the finance companies, on the heels of Sakvithi and Golden Key, the CB stepped in to restore some confidence. That confidence is once again under question with the latest NSB fiasco and lack of explanation to the public who has a right to know. The TFC-NSB, as we said, earlier has raised many issues which are yet to be answered. Someone should be doing this. The buck must stop somewhere!
Storm in a teabag
The tea industry is divided over proposals by the Tea Exporters Association to increase import of tea for bagging and blending purposes. Those in favour (TEA) say that Sri Lanka can reach revenues of US$5 billion from a current$1.5 billion, and export volumes can up to 450 million kg from 320 million kg now.
Those against – workers, plantations companies and top single origin brands – say such a move would ruin the industry by the import of inferior, cheaper teas and endanger Sri Lanka’s position as the proud owner of the “Pure Ceylon Tea” brand that sells at a premium.
The tourism industry is facing a similar situation: promoting numbers instead of quality, high-spending travellers. Mass tourism takes a large slice of our resources, leaves a bigger carbon footprint and would (when Sri Lanka reaches the magical 2.5 million tourists’ figure in 2016) trigger inflation with food demand from locals and foreigners.
Those opposing the proposal have a much more valid case on the simple premise that tea is not only a beverage but a way of life, a culture, a product (Ceylon Tea) that is better known than the country itself. There are many other issues all of which we dealt with in our editorial on April 29 titled “Cheap teas: Killing ‘me’ softly”. We said, “Ceylon Tea is known as the best tea in the world.
Allowing cheap, uncontrollable tea imports for re-export as multi-origin tea for short-term economic gains will not only fritter away painstaking decades of building the Ceylon Tea brand (first by the British followed by innovative Sri Lankans) but also destroy a lifestyle, a heritage and an integral part of society. In the national interest, that shouldn’t be allowed to happen.”
The tea imports’ proposal is not a new debate. It began in the 1980s, was revived 10 years later and grew in 2002 when the Sunday Times reported on several attempts to get it on the table on the grounds that Sri Lanka is losing out to others in being an international tea hub.
Remember, the plantations – over the years under British rule, state control and now private hands – have looked after and cared for the workers in which management and workers resemble one big family. The well-known phrase in the plantations – from WOMB to TOMB – reflects how plantations look after the worker from birth to death, unlike exporters/traders sitting in comfortable offices – far removed from the fields and the biting cold at 4-5 am in the morning when planters have to wake up for muster.
They don’t have time to play golf or socialize in coffee shops or five-star hotels while stand-alone companies which own plantations, create a brand and also take care of the marketing have a gigantic task in ensuring undiluted, and unadulterated Ceylon Tea which enjoys a premium abroad. Don’t kill the goose that laid the golden egg.
source - www.sundaytimes.lk
Rating agency, Fitch which runs to the newspapers with statements on various ratings has been absolutely silent on whether the ratings of both the NSB and The Finance Co (TFC-the other culprit) would be reviewed.
This week’s poll by the Business Times saw the public vent their frustration on a single issue; governance, accountability and transparency. In every sense, the passing-the-buck game continues whether it be the government, the private sector or the regulators – the Securities and Exchange Commission (SEC) and the Central Bank (CB) – and also the Colombo Stock Exchange (CSE).
However in fairness to the SEC, its chairman Tilak Karunaratne has been speaking to the media explaining the SEC role, etc. It would have been better, however if the SEC had issued, even a short statement about the state of play relating to the investigation to restore confidence in the market. The CB however has failed in its duty over the settlement risk (the NSB defaulting payment) in publicly demanding the NSB to pay up or take action. This unfortunately is the continuing saga of Sri Lanka, a country that has huge potential to rise from the ashes at the end of the war, but will continue to be kept down owing to these fundamental issues.
Questions, questions, questions! This is what the public is asking: Why was the NSB permitted to buy a stock at a huge premium? Why wasn’t it cancelled by the regulator soon after the NSB refused to pay the seller? Why hasn’t the Government and the two regulators (as of Friday noon, May 18) issued statements to the public about the safety of their investments assuring the market (to restore confidence and credibility? Isn’t this an obligation to millions of depositors (who had to independently call branch managers and verify the status of the bank while some withdrew their money)? Is the Chairman and directors of the NSB ‘fit and proper’ persons? What about the issues that Pradeepa Kariyawasam had when he chaired Sri Lanka Insurance? Were these issues taken into consideration to declare him “fit and proper”?
There has been a lot of lying, cheating and deceit in the sordid transaction. Taprobane Securities, the buying and selling broker, said in a newspaper advertisement on Friday that after it received the consent of the NSB, it had got the consent of the sellers (Dinal Wijemanne and Raynor Silva, among others) to do a reverse transaction through the market. “... since NSB (our buying client) had expressed the view that it would wish to reverse the recent transaction, we have obtained the consent of our selling clients to reverse the transaction…,” the statement said.
This implies that the NSB has, at least a week, ago, expressed its willingness to sell back the stock. , while this week, Kariyawasam has twice told unions that deal was clean and implied there was no intention to sell back the stock. He also told the unions that “only the President can remove him”, more than a week after Treasury Secretary Dr P.B. Jayasundera had told officials that Kariyawasam should step down over the sordid affair.
Unfortunately the heady days when important personalities resign on issues like this are gone. The only noted instance in recent years of an official quitting on a principle of good governance is former SEC Chairperson Indrani Sugathadasa, whose stock rose many notches after she refused to bow to the whims and fancies of insider traders and manipulators.
After the crash of the finance companies, on the heels of Sakvithi and Golden Key, the CB stepped in to restore some confidence. That confidence is once again under question with the latest NSB fiasco and lack of explanation to the public who has a right to know. The TFC-NSB, as we said, earlier has raised many issues which are yet to be answered. Someone should be doing this. The buck must stop somewhere!
Storm in a teabag
The tea industry is divided over proposals by the Tea Exporters Association to increase import of tea for bagging and blending purposes. Those in favour (TEA) say that Sri Lanka can reach revenues of US$5 billion from a current$1.5 billion, and export volumes can up to 450 million kg from 320 million kg now.
Those against – workers, plantations companies and top single origin brands – say such a move would ruin the industry by the import of inferior, cheaper teas and endanger Sri Lanka’s position as the proud owner of the “Pure Ceylon Tea” brand that sells at a premium.
The tourism industry is facing a similar situation: promoting numbers instead of quality, high-spending travellers. Mass tourism takes a large slice of our resources, leaves a bigger carbon footprint and would (when Sri Lanka reaches the magical 2.5 million tourists’ figure in 2016) trigger inflation with food demand from locals and foreigners.
Those opposing the proposal have a much more valid case on the simple premise that tea is not only a beverage but a way of life, a culture, a product (Ceylon Tea) that is better known than the country itself. There are many other issues all of which we dealt with in our editorial on April 29 titled “Cheap teas: Killing ‘me’ softly”. We said, “Ceylon Tea is known as the best tea in the world.
Allowing cheap, uncontrollable tea imports for re-export as multi-origin tea for short-term economic gains will not only fritter away painstaking decades of building the Ceylon Tea brand (first by the British followed by innovative Sri Lankans) but also destroy a lifestyle, a heritage and an integral part of society. In the national interest, that shouldn’t be allowed to happen.”
The tea imports’ proposal is not a new debate. It began in the 1980s, was revived 10 years later and grew in 2002 when the Sunday Times reported on several attempts to get it on the table on the grounds that Sri Lanka is losing out to others in being an international tea hub.
Remember, the plantations – over the years under British rule, state control and now private hands – have looked after and cared for the workers in which management and workers resemble one big family. The well-known phrase in the plantations – from WOMB to TOMB – reflects how plantations look after the worker from birth to death, unlike exporters/traders sitting in comfortable offices – far removed from the fields and the biting cold at 4-5 am in the morning when planters have to wake up for muster.
They don’t have time to play golf or socialize in coffee shops or five-star hotels while stand-alone companies which own plantations, create a brand and also take care of the marketing have a gigantic task in ensuring undiluted, and unadulterated Ceylon Tea which enjoys a premium abroad. Don’t kill the goose that laid the golden egg.
source - www.sundaytimes.lk
Friday, May 18, 2012
Sri Lanka controversial stock sale to state bank reversed
May 18, 2012 (LBO) - Sri Lanka’s securities regulator said it had allowed state-run National Savings Bank to return stock bought in a controversial deal at an inflated price to the sellers outside the trading floor.
The move comes, after NSB (the buyer), Sampath Bank (the settlement bank) and Taprobane Securities Private Limited (broker on behalf of the buyers and sellers) wrote the Securities Exchange Commission (SEC) seeking a reversal.
State-run NSB bought 13 percent of The Finance Company stock for 390 million rupees from a consortium on April 27, but failed to settle its purchase with Sampath, which acts as the settlement bank on behalf of the Central Depository System.
President Mahinda Rajapakse, who is also the island’s finance minister, ordered NSB to stop payment for the stock.
Senior career officials of the bank were also reported to have opposed the deal, which was sanctioned by its board of directors.
“In this backdrop the SEC has granted approval to allow NSB to transfer The Finance Company shares purchased on 27th April 2012 in its entirety to the persons identified by Taprobane Securities outside the trading floor of the Colombo Stock Exchange,” SEC said Friday.
The regulator did not say when the transfer would take place. Its directive came after the market closed for trading.
The non-payment, was the first in the tiny stock market’s history, and generated a lot of public debate.
However, the SEC has taken the decision to allow a smooth flow in the capital markets.
The regulator said it was keen to ensure the stability of the payment and settlement cycle system within the market.
“It is stressed that the SEC will not consider this instance of granting approval to conduct a trade of this nature off the floor of the Colombo Stock Exchange as creating a precedence,” the release said.
Separately, the watchdog said it was probing the transaction and the parties involved in it.
"Firm action will be taken against all those who are found to have violated the SEC Act.”
Opposition legislator Harsha de Silva has charged that the deal is only the 'tip of the iceberg' where stock is sold to state managed funds at inflated prices.
The regulator said it is also studying the issue and will introduce procedures to prevent future incidents.
“The SEC will also intensify its efforts in implementing the Central Counter Party (CCP) for the CSE which will be the final solution to address settlement failure risk,” the statement added.
source - www.lbo.lk
The move comes, after NSB (the buyer), Sampath Bank (the settlement bank) and Taprobane Securities Private Limited (broker on behalf of the buyers and sellers) wrote the Securities Exchange Commission (SEC) seeking a reversal.
State-run NSB bought 13 percent of The Finance Company stock for 390 million rupees from a consortium on April 27, but failed to settle its purchase with Sampath, which acts as the settlement bank on behalf of the Central Depository System.
President Mahinda Rajapakse, who is also the island’s finance minister, ordered NSB to stop payment for the stock.
Senior career officials of the bank were also reported to have opposed the deal, which was sanctioned by its board of directors.
“In this backdrop the SEC has granted approval to allow NSB to transfer The Finance Company shares purchased on 27th April 2012 in its entirety to the persons identified by Taprobane Securities outside the trading floor of the Colombo Stock Exchange,” SEC said Friday.
The regulator did not say when the transfer would take place. Its directive came after the market closed for trading.
The non-payment, was the first in the tiny stock market’s history, and generated a lot of public debate.
However, the SEC has taken the decision to allow a smooth flow in the capital markets.
The regulator said it was keen to ensure the stability of the payment and settlement cycle system within the market.
“It is stressed that the SEC will not consider this instance of granting approval to conduct a trade of this nature off the floor of the Colombo Stock Exchange as creating a precedence,” the release said.
Separately, the watchdog said it was probing the transaction and the parties involved in it.
"Firm action will be taken against all those who are found to have violated the SEC Act.”
Opposition legislator Harsha de Silva has charged that the deal is only the 'tip of the iceberg' where stock is sold to state managed funds at inflated prices.
The regulator said it is also studying the issue and will introduce procedures to prevent future incidents.
“The SEC will also intensify its efforts in implementing the Central Counter Party (CCP) for the CSE which will be the final solution to address settlement failure risk,” the statement added.
source - www.lbo.lk
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