J to be sued by director-buddies
By Duruthu Edirimuni
Three directors of Milford Exports (Ceylon) Ltd have decided to
go to courts against powerful businessman Harry Jayawardena who
is the company’s Managing Director, seeking to liquidate the
company and all its associate firms, after negotiations between
lawyers of the two parties failed to resolve a dragging dispute
out of courts.
Vittachi, Chairman of Milford Exports, holding company of the Distilleries
Company of Sri Lanka (DCSL), which in turn holds Aitken Spence,
Milford Holdings and Sri Lanka Insurance Corporation (SLIC) and
the two main directors, Rajpal Kumar Obeysekere and Zaki Alif have
decided to file action against Jayawardena latest by mid next month,
informed sources said.
sources, who declined to be named, said this decision had been debated
for several weeks before a firm stand was taken soon after Jayawardena
last week called two extra ordinary general meetings on behalf of
Milford Holdings, which also bought Lanka Bell last year. This was
a similar strategy he used and failed in the now-famous Commercial
Bank EGM last year.
EGMs were called on two days – February 21 and 22 -- which
was a very sudden decision and Vittachi and Obeysekere could not
participate. On the 21st, it was the EGM of Milford Holdings and
the next day was the shareholders meeting to issue shares to DCSL
and regularise its loan amounting to Rs.2.188 billion,” one
source said. He said that Jayawardena borrowed this money from DCSL
without board approval and also without a security, which is illegal.
“Jayawardena wanted to increase the authorised share capital
of Milford Holdings to Rs.10 billion and transfer the loan amount
to DCSL, but nothing was mentioned about the interest accrued on
the borrowed money. This really angered the three directors and
they decided to go to courts,” he explained.
Sunday Times FT exclusively reported the fallout between Sri Lanka’s
most powerful business tycoon and his close buddies in its January
15, 2006 edition. “The trio -- V.P. Vittachi, Chairman Stassen
Group and its two main directors, Rajpal Kumar Obeysekere and Zaki
Alif who with Jayawardene left the old Consolexpo state company
to set up Stassen, is accusing their ‘old pal’ of arbitrary
and impulsive decision taking and contemplate taking him to court
if he doesn’t agree to an out-of-court settlement. Contd.
on page 13
settlement offer worked out by lawyers is being kept a secret but
it’s only a matter of time before the two groups’ part
company, The Sunday Times FT learns. The trio and Jayawardene are
not on talking terms,” that report said.
The following week we reported that the DCSL managing director had
rejected the offer.
owns 60 percent of Milford Exports, with Vittachi, holding 20 percent
and directors Obeysekere and Alif owning 15 percent each. “The
three directors want him to buy their shares over and they say that
he can afford to do so, but because of his vindictive nature he
does not want to,” the source said.
also said the directors were very angry when Jayawardena started
referring to himself as the Chairman of DCSL. “He is not the
chairman, but the managing director and Vittachi holds the chairmanship
of the company. He ran adverts in newspapers calling himself as
the chairman last year and he was throwing his weight around. This
was one of the boiling points for the three directors to gang up
against him,” the source said. He said the other directors
are accusing Jayawardena had bought Aitken Spence, Sri Lanka Insurance
Corporation (SLIC) and Lanka Bell without board approval.
officials closed to Jayawardene refused to comment when asked about
the allegations. The DCSL chairman was also not available for comment.
Liquidation of a company, according to legal sources, can take place
“whereby a company is prepared for dissolution involving cessation
of its operations, realisation of its assets, payments of its debts
and distribution of any balance to its shareholders. Winding up
may be compulsory by court order or on the application of certain
persons on certain grounds.”