Corporate Scandals with Impunity

One of our top listed companies which was picked for a top award by a Business Magazine was recently faulted by the Supreme Court in the case filed by Mr Vasudeva Nanayakkara re the privatization of Lanka Marine Services. The bunkering business was a government monopoly carried out by a government owned company- Lanka Marine Services. The government had decided to privatize it but not before liberalizing the bunkering business which was to be done in one year. The Cabinet had decided to recommend the issue of 3 licenses to carry on the business. But the Chairman of PERC had decided to privatize it before such liberalization. The Chairman Dr P.B Jayasundera says the Supreme Court in its judgment “instead devised and carried out without any authority of the Cabinet a process for the sale of the Lanka Marine Services while the monopoly was still intact.” According to the findings of the Supreme Court the Chairman BOI had manipulated the tender procedure to allow only the favored tenderer and he had also secured a valuation from a party other than the Chief Valuer. It said this about the tenderer John Keels Holdings at Para 13 page 60 “that JKH had made a false representation of collaboration with FAMM for the purpose of securing 70 marks to be short-listed. This falsity is established by a contemporaneous application made by JKH to the BOI for investment relief in which no reference is made to any foreign collaboration;

Para 14 that JKH had an assurance that it would succeed in securing a sale of shares in its favor even before the bid contained a misrepresentation referred above was accepted, since it made an application to the BOI well before the bidding process, on a false basis that the application is in respect of a new investment whereas the particulars in the application are referable to the business of LMSL. The tax relief granted to JKH was not permissible under the existing Regulations and JKH got an amendment tailor made for its purpose and secured the tax exemption. This resulted in the LMSL which was a tax paying company when owned by the CPC becoming a tax free Company when sold to JKH.”

The Supreme Court held that the PERC Chairman’s action was biased in favor of JKH. It also held that the company (JKH) has secured advantages and benefits through the illegal process and in specific instances by misrepresentations that have been made.”It went on to state that “the allegation of the Petitioner that he (Dr PBJ) worked in collusion with S. Ratnayake of John Keells to secure illegal advantages to the latter , adverse to the public interest is established.”

But the Chairman of JKH continues despite these findings against him. There are statutory authorities like the Securities Exchange Commission supervising the listed companies in addition to the Colombo Stock Exchange. Why are they silent? Will the other authorities like the Bribery & Corruption Commission take action on the findings of the Supreme Court regarding the John Keels Holdings conduct of affairs? END  782 words

One of our top listed companies which was picked for a top award by a Business Magazine was recently faulted by the Supreme Court in the case filed by Mr Vasudeva Nanayakkara re the privatization of Lanka Marine Services. The bunkering business was a government monopoly carried out by a government owned company- Lanka Marine Services. The government had decided to privatize it but not before liberalizing the bunkering business which was to be done in one year. The Cabinet had decided to recommend the issue of 3 licenses to carry on the business. But the Chairman of PERC had decided to privatize it before such liberalization. The Chairman Dr P.B Jayasundera says the Supreme Court in its judgment “instead devised and carried out without any authority of the Cabinet a process for the sale of the Lanka Marine Services while the monopoly was still intact.” According to the findings of the Supreme Court the Chairman BOI had manipulated the tender procedure to allow only the favored tenderer and he had also secured a valuation from a party other than the Chief Valuer. It said this about the tenderer John Keels Holdings at Para 13 page 60 “that JKH had made a false representation of collaboration with FAMM for the purpose of securing 70 marks to be short-listed. This falsity is established by a contemporaneous application made by JKH to the BOI for investment relief in which no reference is made to any foreign collaboration;

Para 14 that JKH had an assurance that it would succeed in securing a sale of shares in its favor even before the bid contained a misrepresentation referred above was accepted, since it made an application to the BOI well before the bidding process, on a false basis that the application is in respect of a new investment whereas the particulars in the application are referable to the business of LMSL. The tax relief granted to JKH was not permissible under the existing Regulations and JKH got an amendment tailor made for its purpose and secured the tax exemption. This resulted in the LMSL which was a tax paying company when owned by the CPC becoming a tax free Company when sold to JKH.”

The Supreme Court held that the PERC Chairman’s action was biased in favor of JKH. It also held that the company (JKH) has secured advantages and benefits through the illegal process and in specific instances by misrepresentations that have been made.”It went on to state that “the allegation of the Petitioner that he (Dr PBJ) worked in collusion with S. Ratnayake of John Keells to secure illegal advantages to the latter , adverse to the public interest is established.”

But the Chairman of JKH continues despite these findings against him. There are statutory authorities like the Securities Exchange Commission supervising the listed companies in addition to the Colombo Stock Exchange. Why are they silent? Will the other authorities like the Bribery & Corruption Commission take action on the findings of the Supreme Court regarding the John Keels Holdings conduct of affairs?