Vignarajah raises fresh concern in capital markets

Monday, 1 December 2014 00:41 - - {{hitsCtrl.values.hits}}

The selfish mafia likes to depict the sharp decline in the CSE as due to fear of change! President Rajapaksa will certainly not like it. The mafia would try to justify their foolish tactics to gain short term benefits for themselves, while tarnishing the administration further. The average decent independent minority shareholders (IMS) and investors have been much perturbed that many banks have been influenced and coerced to request them to convert normal overdraft/loan facilities granted for investments in desirable, valuable assets according to the customer’s requirements, based on good safe collateral, including shares, to ‘Margin Trading’ if they use part of it for investment in listed company shares!! Lives of good investors have been lost to satiate the greed of the mafia! The best banks with management and staff dedicated to the best tradition of banking, will certainly not heed such advice or request. The culture of such banks will not permit any of them to forsake the customer’s interests. Undesirables brought in through the back door to the Boards by outside powerful forces have occasionally been, and must in future be, thwarted by powerful employees unions, alert customers and concerned shareholders. I hope they will continue to ensure this position in all banks. A bank’s primary responsibility is to nurture the faith, confidence and ease of doing business.

There are some sad exceptions in the case of banks who would support malpractices which affect the real stakeholders and the country. They should be subjugated by ethical entities and forces using the same mode of consolidation that have become necessary due to the unwise proliferation of banking and finance companies licenses granted during the last few years. A cabal of crooked persons belonging to so-called reputed professions/institutions influences codes of best practice/ethics and their implementation! The incentives given to draw away funds from the equity markets (which support good entrepreneurs), to tax free high yielding debentures and high corporate debt, is unbelievable. These instruments do infact burden companies with debt and high interest payments. The huge foreign borrowings, coupled with regular volatility of the exchange rate and interest rate, have been exploited to hugely benefit insider traders and manipulators. The ownership and structure of the Unit Trusts, investment trusts, and the relationships and modus operandi of some funds and their managers do not lend much confidence to IMS/investors even though they have been advised to herd their investments into these opaque areas. The decent responsible private sector with many eminent corporate leaders should stand up and speak for the larger interest of protecting the very base of the best investment capital available to entrepreneurs. The banks have a very noble, if not a near sacred duty of protecting all its customers and shareholders’ funds. The trust and confidence of the investors (depositors/shareholders) and security of jobs of the staff and employees is paramount. Highest degree of job satisfaction including elevation of three of the best and senior management to the Board has been espouse by us for a long time. They would disburse bank funds in the most prudent manner, in the best interest of the bank and the country. Some of the honest officials of the SEC have for many years been trying to implement their prime role of protecting the investors in the stock market, but appear to be hampered in doing so by powerful forces inimical to this fundamental process. We were glad that the SEC had stirred somewhat, in the matter of Touchwood and CIFL but does not seem to have achieved much in giving relief to the Investors. However, we are very happy with the manner in which they influenced the reversal of siphoning off profits/spinning off assets to in a most unethical manner. The tragedy is that the big fish seems to be given time to escape! Transparency of the investigations is required; the lack of it is knowing at the vitals of the confidence building measure exhibited in dealing only with the sprats. The independence and competence of independent directors, auditors, valuers and company secretaries have still not been established, even though everyone is aware of the dire necessity for them over the last many years. Good governance experts have been insisting on this to clean up the errant components of the corporate sector and the stock market. Urgent action is needed! K.C. Vignarajah 9/10, Cambridge Place, Colombo 7