UNP raises alarm over NSB investment in The Finance

The main Opposition UNP yesterday raised alarm bells over National Savings Bank’s (NSB) investment in to The Finance Company Plc (TFC) expressing serious concerns over a range of issues.

In a statement UNP’s MP and its Chief Spokesman on economic matters, Dr. Harsha De Silva said, “We note with serious concern the purchase of close to 8 million shares of TFC by the NSB at 65 per cent above its current market price. What logic was employed to pay Rs 49.75 for shares of this high risk and loss making financial institution when it was last traded at the Colombo Stock Exchange for only Rs. 30.00 is more than a puzzle.” 

“Perhaps one could argue that it is the business of the board and management of any institution to pay whatever price it feels is right for anything they purchase. But NSB is not, by any stretch of the imagination, just another institution. It is absolutely the only bank whose deposits are fully guaranteed by the Government of Sri Lanka as expressed explicitly in the statute governing the Bank: NSB Act No.30 of 1971,” the MP said.

“This necessarily means that NSB must maintain a risk-averse investment profile and transactions like the one just concluded are not what it should be engaging in,” he added.

Dr. De Silva said that TFC had an accumulated loss of over Rs. 9,000 million as at end December 2011 and even if it has made a moderate profit for the financial year ending March 2012, which is not yet public knowledge, a premium of 65 per cent is by any standard extremely high.

“Therefore, in the interest of the depositor base of NSB as well as the public at large, it becomes imperative that authorities provide satisfactory answers to the questions on this transaction,” Dr. De Silva said in his statement.

It alleged that the husband of the Chief Justice of Sri Lanka, Pradeep Kariyawasam, who continues to enjoy the power and position as chairman of the NSB among several other plum postings offered by the Rajapaksa Government in a glaring example of conflict of interest.

“Hennayake Bandara, its General Manager, must justify to the public under what circumstance almost Rs. 400 million of depositor money guaranteed by the Government was spent on this high risk transaction and why they paid 65 per cent more than the current market price,” UNP MP said.

He said that that the Central Bank of Sri Lanka controlled Employees Provident Fund owns a considerable share of the post-Kotalawela The Finance Company and counts several high profile investors in the calibre of Rayynor Silva, brother of  Duminda Silva, MP, as its largest shareholders.  “A number of colourful personalities including Anura Fernando whose name has been linked to the now abandoned Central Bank investigation on the Goldquest pyramid scam and a former director of Capital Reach Leasing a company in which Ajith Nivard Cabraal had a significant interest also sit on its board,” alleged the statement by UNP MP.

“In a country where its citizen’s are denied the right to information and where governance principles are jack booted with impunity by people of power it becomes critically important that we as the main opposition not only raise these issues in public interest but media and civil society pressure the authorities for satisfactory answers not only to protect democracy but also economic freedom and the wealth of the people,” the statement added.