High profile stakes!

Whilst the NSB Chairman or General Manager/CEO are yet to officially respond to allegations surrounding the purchase of TFC shares, especially by UNP MP Dr. Harsha De Silva, Presidential Spokesman Bandula Jayasekara told the Daily FT yesterday that President Rajapaksa had instructed officials to look into the transaction.

In response to an inquiry on the same, Finance Ministry Secretary Dr. P.B. Jayasundera told the Daily FT that the Treasury Representative on the NSB Board, P.A. Abeysekera, who is a Deputy Secretary to the Treasury, had called for a report on the transaction.

“As we (Treasury) are answerable to Parliament, proper procedures must be followed by all State institutions and NSB is no exception. Until such procedure is completed, I have requested the (NSB) General Manager to suspend the transaction,” Dr. Jayasundera added.

 Meanwhile the ill-fated deal of NSB buying into The Finance Co Plc (TFC) from a consortium of sellers as well as the post-purchase development involved several high profile personalities.

NSB Chairman Prasad Kariyawasam is a popular figure on his own right having served both private sector and public sector in recent years apart from being the husband of Chief Justice.

The Finance Plc after it ran into difficulties following the Golden Key fiasco saw the Central Bank stepping in to ensure stability and continuity with Governor Nivard Cabraal hand picking some of the new appointees to its Board.

They included Preethi Jayawardena, Anura Fernando and Ajith Devasurendra.

High net worth investor Dr. T. Senthilverl salvaged TFC originally buying nearly a 30% stake after he was introduced to Governor Cabraal by EDB Chairman Janaka Ratnayake, who has had experience in revitalising several troubled Ceylinco Group companies.

It is said that NSB trade unions had complained to the Treasury Secretary Dr. P.B. Jayasundera about the ill-effects of the purchase, which had resulted in the share market deal going to Temple Trees as President Mahinda Rajapaksa is also the Finance Minister.

Speculation that the NSB Board did approve the decision to go ahead with the purchase and that the NSB Investment Committee headed by General Manager/CEO Hennayake Bandara wasn’t aware exposes the possible rift within NSB. The fact that even after the transaction went through, NSB hadn’t remitted funds for which GM/CEO sanction is required underscores the latter as well.

UNP MP Dr. Harsha De Silva last week (see Daily FT issue of 30 April) raised a host of issues over NSB risking public deposits by paying a premium (Rs. 50 per share when it was trading around Rs. 30 level) for a 13% stake in TFC which has a negative net worth of around Rs. 3 billion and saddled with Rs. 9 billion retained loss.

TFC, the oldest finance company with an asset base of Rs. 20 billion, badly needs fresh capital infusion and has justified NSB’s entry saying it would be beneficial, especially at a time when the company is being turned around.