The Colombo Stock Exchange (CSE) is examining the recent purchase made by Malaysian businessman Vijay Eswaran’s recent purchase in Asia Capital (ACap), CSE officials said.
“We are looking at this transaction carefully and trying to ascertain whether there has been a foreign exchange violation in this transaction and to find out if the money to buy the shares infact was remitted from abroad,” a CSE official told The Sunday Times FT.
Mr. Eswaran, founder of the controversial multilevel marketing scheme GoldQuest (GQ), purchased nearly 27% in ACap early this month and he now controls 28.01% in the company.
Dihan Dedigama, CEO of Asia Securities which did this transaction on behalf of Mr. Eswaran confirmed that CSE is investigating the transaction. “But I do not have any knowledge of why they are investigating,” he told The Sunday Times FT. Last week, ACap appointed Mano Nanayakkara as its Chairman. The other three directors are Paul Ratnayake, Asanga Seneviratne and Seri Tiong.
Soon after the Eswaran deal, ACap Chairman Harsha Amarasekera resigned but it was unconnected to the developments. "I resigned from both ACap and Asian Alliance Insurance. I am on the board of eight quoted firms," he told The Sunday Times, adding that he wanted to shed about four of these. "I had told Mr. Seneviratne that I will be resigning in June. As he said he was planning to sell his shares in ACap, I spoke of my resignation too," he said.
On May 18 Mr. Eswaran bought 10% in Asian Alliance Insurance (AAIC), a part of Acap. Mr. Eswaran’s GQ operation in the country was streneously opposed by CB a few years ago, so much so that the regulator amended the Banking Act to ban multilevel marketing pyramid schemes.
Stock market analysts say that Mr. Eswaran now controls Acap, regulated by Securities and Exchange Commission, AAIC, regulated by the Insurance Board and Asia Asset Finance Company (AAFC) regulated by the CB. AAFC has about Rs 1 billion in deposits. “This is a clear move to get into the mainstream. Earlier he owned a few stakes, but now he is the biggest investor in these companies. That shows he wants a larger play in the financial fabric in the country,” an analyst said.
CB Governor Ajith Nivard Cabraal, asked by The Sunday Times FT about Mr Eswaran’s investments in the corporate sector in a big way, said, “as long as the money comes from proper channels, we cannot question a transaction."
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