The Securities and Exchange Commission (SEC) has referred the recent purchase of a stake in Asia Capital (ACap) by Malaysian-based Vijay Eswaran, founder of controversial multilevel marketing scheme GoldQuest (GQ), to the Financial Investigations Unit (FIU) of the Central Bank, informed sources say.
“What the authorities want to verify is whether there has been a foreign exchange violation in this transaction and to find out if the money to buy the shares came through a Share Investment External Rupee Account (SIERA),” a source told the Sunday Times FT.
Under SEC rules, all foreign investments in the stock-market must be made through a SIERA (account) and, if not, permission should be obtained from the Exchange Control Department. “The SEC wants to verify whether Mr. Eswaran purchased nearly 27% in ACap last month through a SIERA, as it appears that he had not,” the source said. Mr. Eswaran now has a total stake of 28.01% at ACap but is said to control the company through other shareholders.
Earlier the SEC asked the Colombo Stock Exchange (CSE) to investigate the transaction. The CSE made inquires, found there were some ‘doubts’ in the transaction process and referred it back to the SEC with its observations.
On May 18 Mr. Eswaran bought 10% in Asian Alliance Insurance (AAIC), which is under the Acap umbrella. The company said it was done as a part of AAIC’s restructuring exercise.
Mr. Eswaran’s GQ operation in the country was strongly opposed by the CB a few years ago resulting in the Banking Act being amended to ban multilevel marketing pyramid schemes.
Acap on Tuesday purchased 7.5 million shares of Capital Reach Holdings Ltd (CRHL) at a price of Rs. 10 per share and increased its shareholding to 12.8 million shares. This represents approximately 47% of the shareholdings of CRHL.
CRHL is the holding company of Capital Reach Leasing PLC (CRLP) which is listed on the CSE. |
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