“Harry J threatened to shoot me”

V. P. Vittachi, ousted as Chairman of Distilleries Company of Sri Lanka (DCSL) on Thursday, said he will not contest his removal because he has no intention of returning to the company.

He told The Sunday Times FT in an interview Harry Jayawardene, who was the Managing Director, has installed himself as the new chairman. "It was utterly illegal. He didn't do it the proper way," Vittachi said. He cited two reasons, the first was that the appointment of a new chairman was not mentioned in the Notice of Meeting and secondly, Jayawardene was appointed chairman with the vote of Damian Fernando, an "illegally" appointed Director.

However, Vittachi said he might take his case to court on the entire substantive issue but did not go into detail. He added that resentment towards Jayawardene had been building up throughout the years. "He wants power and to make all the decisions. He doesn't know the law and doesn't care for the law." Vittachi said he got exasperated with the situation a few months ago after receiving complaints on organized raids on liquor stores, instigated by Jayawardene, attempting to intimidate store owners to stop selling products of other companies except DCSL. Approximately two weeks ago, one of DCSL's main customers, Alvaris & Sons, made a complaint to Vittachi about threats from Jayawardene. Alvaris is a company which purchases between Rs.6 – 7 million worth of DCSL products a week. When Jayawardene was confronted by Vittachi, Jayawardene called it "aggressive sales promotion" and believes it to be legitimate.

In a statement given to The Sunday Times FT, Vittachi says, "Following the appointment by President Kumaratunge of Mr. Jayawardena as Senior Advisor to the President, he underwent a major personality metamorphosis and developed delusions of grandeur. Mr. Jayawardene took full charge of DCSL and bypassed me and the working director, Mr. Obeyesekera. Mr. Jayawardene has gone on record claiming the right to make unilateral decisions on his own, excluding the Board of Directors, arguing that he alone can make big profits for the company and pay large dividends to the shareholders. He does not appear to believe that the law of the land applies to him. Though this public quoted company is legally the property of 14,500 shareholders, Mr. Jayawardene treats it as his own private property to do as he pleases. Actually, the shareholders receive only a fraction of the dividends they should really be getting because the DCSL produces enormous profits due to the drinking habits of our people."

According to Vittachi, DCSL is well known as a "cash cow" and he has used the money it generates to buy controlling interests in several large companies including Aitken Spence and Sri Lanka Insurance Corporation (SLIC), without the knowledge and approval of the Board of Directors. Jayawardene further incorporated a new company named Milford Holdings Ltd to which he gave an unsecured interest free loan of Rs.2.1 billion of the company's money, also without Board approval. The new company used the money to buy a controlling interest in Lanka Bell Ltd. "This is in my view, tantamount to criminal misappropriation. All these things he has done on the strength of the 60% share he has in Milford Exports (Ceylon) Ltd. The shareholders of DCSL are unaware that their vast fortune is in the hands of one man to do as he likes without the knowledge and approval of the Board of Directors," said Vittachi.

Vittachi went on to say that a recent award won by DCSL was received by Jayawardene calling himself Chairman of DCSL which the media also described him as. He also said that Jayawardene occupies the Chairman's room and desk at DCSL. "When these developments came to my notice, I called a meeting of the founder-directors of the Stassen group to remonstrate with Mr. Jayawardene. He flew into a rage and wouldn't let anybody say a word. He went into a harangue, talking wildly and finally ended by threatening to shoot me. He did this in front of eye-witnesses who are willing to testify." Vittachi said he was stating this on record in case “I meet with sudden death.”

Jayawardene also made the decisions to delete the Chairman's statement from the Annual Report and announced it at an improperly summoned Board meeting at which Vittachi and the only other director who is a shareholder of the company, R.K. Obeyesekere, was not present. Vittachi further said Jayawardene has openly announced he has the right to spend the company's money on any project he fancies without Board approval. "Mr. Jayawardene has openly admitted that he had instructed the (Company) Secretary, Mrs. Senaratne to intercept my private mail and hand it over to him. It is hard to believe that these are the acts of a rational man."

Vittachi does concede that Jayawardene has played a central role in the growth and development of the company over the years but says it is not him alone who is responsible. "When we started out, we were all friends who were working together in a trusting way," he said. When they first started out, Vittachi and Jayawardene owned 20% of the shares, with Obeysekere and Zaki Alif controlling 10% each. Thilak Fernando controlled another 20% and the remaining 20% was controlled by the Hulugalle brothers. "Thilak Fernando wasn't immediately joining the company so Jayawardene held his shares in trust." However, he never gave them back and did the same to the brothers. "I didn't care," said Vittachi. "I wasn't interested in getting more than what I already had. But all Jayawardene wanted was power and control."

Here are other extracts from the former chairman’s statement:

“Milford Exports (Cey) Ltd. (a private limited company) owns 41.49 % of DCSL and together with 12.65% owned by Lanka Milk Foods Ltd. (a public quoted company), the Stassen Group has a controlling interest in DCSL. 60% of the shares of Milford Exports is owned by Mr Harry Jayawardena, 20% by me and 10% each by Mr. Raj Obeyesekera and Mr. Z.Alif.

He produced a certificate issued by an American body calling itself the American Biographical Institute stating that Mr. Jayawardena had been selected Man of the Year 2003 "based on his outstanding accomplishments and the noble example he has set for his peers and entire community." The certificate does not specify the country in which Mr. J. is man of the year (Is it the whole world?) and it does not say who did the selection. The address of the American Biographical Institute is not revealed. This certificate he framed and placed in my office room at Stassen Exports Ltd. to ensure that I got the message.”