Being economical with the truth
Dilith Jayaweera. Pic by Kushan Pathiraja
Dilith Jayaweera, the Sri Lankan advertising executive with powerful connections to the government, faced a barrage of questions during an encounter with the media on Tuesday in Colombo. Seated alone flanked by no one prompted a senior journalist (before the briefing began) to tell Mr Jayaweera; “I must say I admire your courage in facing the media but you are going to get blasted today,” to which the latter responded with his trademark smile.
Just a few minutes into the briefing, the barrage of questions began at the event called by Mr Jayaweera to ‘set the record straight’ and clear his ‘good name’ following media reports accusing him being a high net worth investor and part of a ‘mafia’ that brought down two chairpersons of the Securities and Exchange Commission (SEC).
The ‘informal and friendly chat’ that he planned turned into a rousing, fiery and no-holds-barred exchange with journalists pitching into him and occasionally the ‘man in the dock’ returning back the fire. There was a lot of cross-talk, innuendo, hedging, parrying and sometime inaudible comments from both sides and the 11 am briefing went well past its scheduled time, so much so that the hotel had to remind organisers (at around 3.30 pm) that their time was up.
Excerpts of the briefing;
On early beginning and involvement in business:
We never expected to get business because of the political clout…… never used any connections. Never mixed professional duties with politics. We haven’t used any connections for business gain. There were no shortcuts to our success (as an advertising agency).
In the stock market we (the company- Divasa Equity) first started with small portfolios. We initially invested Rs 25 million and then Rs 50 million. We used the market as a tool. We thought coming into the market was as safe as other investments. We didn’t realise there was zero security. We believe in good governance and ethics. We never found short-cuts to make money. We’re disappointed that some sections of the media are making inferences to create a different opinion.
Our first investment was Reefcomber (hotel) in which we bought a considerable stake, because we could use our core talent to rebrand. This was followed by eight acres in Waskaduwa and a land in Kalpitiya. We have always taken the difficult path to come up to where we are. Haven’t paid a single cent as a bribe except for Rs 3,000 to a wharf clerk; never taken commissions. Many of the chairmen of newspaper companies and media organizations are our friends. We (have) never picked up the phone and asked them what happened when articles (about him) were carried.
Mr Jayaweera was asked as to how he was given the privilege of making a presentation (at a meeting called by the President with stakeholders to discuss the marker crisis) when others including the Securities and Exchange Commission (SEC), Colombo Stock Echange (CSE) and the Colombo Stockbrokers Association (CSBA) were not able to do so.
Jayaweera (DJ) – When a person from the President’s office called and invited me, I asked will there be time for me to make a presentation. I thought it was our duty to make a presentation. He said that if I mailed it then it’s possible. I said that I’ll e-mail the presentation to him. (He had not emailed it, he later clarified)
At the meeting, the President asked who had problems or issues. I then quickly requested permission and made the presentation.
DJ-On the reasons for his presentation;
This came about because a letter that was prepared by the stockbrokers contained childish requests. I felt sad seeing this letter and thought that if the stock market had those wanting such requests what’s the plight of those who invest in it and (then) decided to do a presentation. Mr. Karunaratne knew that I was making a presentation.
On claims of the market being over regulated;
Media – There’s nothing called an over-regulated market. No one can say that Sri Lanka has an over-regulated market. Not a single person has gone to jail compared to other developed markets. All offences are compounded and a fine imposed; the alleged offenders are not deemed guilty under this process, including a former SEC chairperson who was being investigated for insider trading.
On his accusation of sections of the media being anti-government:
Media -You are implying that sections of the media are anti government. The media has a role to play. Their job is to ensure that truth and justice prevail. They don’t have any agendas. (On the other hand) Are you a supporter of the government? Because you are saying anti-government, you are implying that the media is anti government. Are you a supporter of the government? (No response from DJ)
Media – You said you have never paid a single bribe. Bribery goes along with corruption and this doesn’t mean only accepting cash (for favours). Bribery and corruption can also come in the form of receiving favours or contracts.
On receiving contracts:
Media – You mean to say that you haven’t got any favours or contracts from the government?
DJ – Nothing. Not in cash or kind.
Media – What are the inferences made by the media which you think are wrong?
DJ – Actually there’s nothing wrong. Because the media has the right. Our organization wants to be seen as an honest organisation.
Media - You said that the media has been targeting your organisation but by and large what the media has been reporting is about you, and not your organization?
DJ –They have been referring to my company and also me intermittently.
Media - What’s the public perception about your company?
DJ – More than 50% of the media have given us a fair chance. So far I don’t think that the public identifies us with the so-called mafia, etc.
Media - (So) you’re an influential person?
DJ- I am influential- I handled two campaigns for the President.
Media – you say that pump and dump are created by the media here but it’s a commonly-used phrase (all over the world) in any media.
DJ – What I say is that it’s loosely used.
Media - You are coming out in the open after Dr Karunaratne resigned. Is there a connection?
DJ – No.
Media - The question is why Gotabaya Rajapaksa chose you out of so many agencies to do an ad campaign.
DJ -You have the right to say that but I refuse it (response fragmented).
Media - Mr. Gotabaya Rajapaksa has called the SEC chairman. What’s the evidence that Mr. Rajapaksa hasn’t called Mr. Karunaratne? Did he tell you that?
DJ – I’m very sad that a wrong interpretation has been made. He made a call. It was in my presence. It was an informal discussion. He made a call in my presence. I asked if he could please get an appointment. Then he called Dr. Karunaratne in my presence and asked him to meet us, saying that what they have to say may also be important to you. Then we went to see him.
Media - There may have been other instances that he may have called on other occasions?
DJ – Today I called Mr. Rajapaksa and he wasn’t aware. And he said that he didn’t call (make any other calls).
Mrs. (Indrani) Weeratunga (former SEC chairperson) should have never left. She’s very close to me and I meet her at parties, etc.
(Some more banter)
Media - What about Dr. Karunaratne?
DJ – He should’ve remained up to the point of becoming like this (Unclear what he means). I empathize with him. I understand his mental stress. He, in his opinion, tried to do a good job.
Media - But not Cader (Malik Cader, former SEC Director-General)?
DJ – Not Malik Cader, (he) was responsible for bringing in ad hoc laws and being very insensitive to stock market behaviour.
Media – Quick question: The IMF, Chamber of Commerce and Sri Lanka Institute of Directors have all said they were concerned by the events where two SEC chiefs resigned in less than a year, and have said a regulated market is very, very important, and that the resignations send a wrong signal to the international community. Do you agree or disagree with these statements?
DJ – I agree it was the wrong signal (internationally).
Media - What was the fault of Dr. Karunaratne? Is it speaking to the media or what?
DJ – Speaking to the media………….. it’s like the IGP without saying that the road is full of drunk drivers; (then) he has to capture them and put them in jail.
Media - The SEC Chairperson tried to bring justice.
DJ – Trying is not good enough. We don’t expect the IGP of this country to try and wait. I don’t know whether I’m in the 17 investigations. He has to catch them (manipulators) and put them in jail.
Media - How many letters have you got (from the SEC on clarifications on investments)?
DJ – We got four to five letters which were queries. Why I have bought, sold shares, etc, but there have not been investigations. Many (people) I know have got letters. Some transactions are at least two years old. We have not at least being called for a discussion.
We volunteered to give information when the first investigation started a few years ago. This is to the knowledge of the SEC, the ex Chairperson and the ex DG.
(The Business Times reliably learns that he was summoned, and he had gone to the SEC during Ms Sugathadasa’s tenure to record statements).
DJ -( I can’t see these letters) – me being a lawyer – and the laws pertaining to the SEC transaction, I can’t expect this going beyond these letters and becoming investigations. As they call it they are routine clarifications.
When I ask them, they say it’s a routine clarification. An investor who came into the market with Rs. 5,000 and got ‘caught’ to a transaction, gets a letter with a warning and is told you can go to jail for five years, I think you may create (a wrong impression) …. A Customs officer came to me and asked whether I could find a lawyer (on a similar issue). I said he doesn’t need one as it’s a routine letter. But he said, ‘No. no it (the letter says….’ (goes on to imply that this person was scared)
Media – Investors in the CSE should know ….. as a lawyer you should know that you (any individual) can’t go to courts and say you are ignorant of the law. Anyone who invests in the CSE must know (the rules and laws) even if you are investing Rs. 10 or Rs. 10 billion. That’s one of the biggest weaknesses in our market, because they’re (shareholders) are not aware. And that letter is just reiterating that they (SEC) are acting under the particular provision in the law.
DJ – Among the letters that I have got, only in one letter this (extracts of the law relating to a violation) suddenly came. Earlier letters didn’t cite this provision.
Media – How do you see the CSE now?
DJ – There’s a perception that it’s full of mafias.
Media -Who’s fault is it, the media’s or the regulator or …?
DJ – I can’t (ever) blame the media. The media has worked according to the information they get.
Media – You say the SEC has leaked information to the media. What proof do you have?
DJ -Like the email (which has been sent from a SEC employee to many- and displays an email on the screen). sIf anyone has used our official mail to send what is detrimental to the organization, we would have taken immediate action.
Media – Don’t you agree that as this was the only presentation made that it led to a series of developments (including the resignation of Mr.Karunaratne and Commissioner Sanjay Kulatunga). DJ – There were many others who spoke (and raised issues) at the meeting with the President.
The CSE is a place where perception takes a huge role. Mark Zuckerberg thought his Facebook share was going to be 100 plus P/E, it’s a belief. There is a belief that Citrus (his leisure company) is going to take over all the hotels in the country, it’s what they (people) believe. It’s the perception.
I was to meet a large investor in India last Saturday but at the last minute he cancelled the meeting with me, because his secretary had done a google search and found that this Dilith Jayaweera is part of the market mafia. This investor was to come and help us develop Colombo Land to the next level. But this wasn’t the only meeting – there were about four meetings. Others may have not seen it or been bothered about it (reports of the alleged mafia).
If you all love the country this is not what you should be rightfully doing.
We want foreigners to come into the CSE. Will they come (with things such as this happening )?
Media - Foreigners are net investors (more money coming in than going out) in the CSE. So how do you substantiate this (that foreigners are affected by sentiments about the alleged mafia control of the market)? For example foreign trades show a Rs. 27 billion net inflow.
DJ – There are foreigners, foreigners and foreigners. Three types of foreign investors? There are locals holding foreign accounts (Kalu Suddas), genuine foreign institutional and retail investors who take a short term view to the CSE and they will dump it back to the locals and go when the CSE is down.
Media – Please explain this.
DJ – When the CSE was really going up the SEC thought we should put all the rules because some thought it was too much. It cannot be an individual’s opinion. It cannot be anybody’s opinion. Is the Citrus share at Rs. 500 too much? Why is it too much? Why is Zuckerberg’s 100 + PE not too much? It cannot be anybody’s opinion.
This is a disclosures-based market. Demand and supply. People come to the market and they decide. Value is in the perception.
Media – But still foreign capital comes into the country.
DJ – Foreign money at Rs 1 million now could have been Rs 400 or 500 million if not for this kind of perception.
Media - Shouldn’t one be buying shares based on fundamentals?
DJ – Fundamentals’ is one argument. Milk is fundamentally the best drink in the world. Nowhere in the world has a milk company build a brand like Coca Cola. You can’t ignore the dynamics of this market. It’s out for anybody to come and decide on Zuckerberg’s share be banned. Three or four shares of ours got delisted. Warrants and rights are used all over the world. It’s SEC’s and media’s duty to educate the market. Write a story like what Divasa has done in the past, what possibility of them (doing ….), etc
Media - Why did the foreigners suddenly started investing in the CSE? Today it’s Rs 28 billion. (Value of investment).
DJ – It’s a bargain hunt. Among them are the three types of foreigners (which I explained).
Media - An investor recently said that (the market is controlled by a) small community ………….?
DJ – What got published in the media according to that it says that ……………. (statement is unclear). What I think about insider trading is that it’s difficult to avoid certain information becoming disseminated to certain sections of the public compared to a large market such as US.
DJ - Four broker firms have written to the President saying that the SEC is not over regulated. They appreciated every directive by the SEC and they tried to justify that as well. In that context, your opinions are in conflict.
DJ - The contents in the letter said that the market isn’t over regulated. It’s a relative term. It’s a double edged sword. We are for regulation. If these four are saying that proper regulation is important, then timely regulation is also important -a 2 1/2 half year transaction cannot be investigated now. Then there’s an efficiency issue. It should be efficiently take place.
DJ - There is a perception that has been created due to the SEC opening up the investigations. Mr Karunaratne didn’t tell us anything. We are made to understand that the whole thing blew up after this. It’s only recently that he started telling us that he’s been getting pressure. He said it came from January. Where is this pressure coming from and what’s this pressure? Do you think that it’s a good thing?
DJ - In the media I see that he has said that investors are putting pressure on him. Personally I have never called him.
Media - Mr. Karunaratne has said that indirect pressure has come.
DJ - He’s appointed by the President. If (there) any pressure, then the pressure would come from the President. The SEC is saying 17 investigations. They should say who these 17 are and that they are being investigated for these these malpractices. Clarification sought by the media saying why should the SEC say who they are before establishing whether they are innocent or not, and then release the names.
DJ - When you loosely ‘use 17 are being investigated’ five of them could be here. If they are not innocent (they) shouldn’t worry, if we’re talking about the betting centre in the village. Then it’s no problem. Or if in fisheries the Minister says all fish at St. Johns Market are spoilt or that it has 17 which sells’ such fish. Without closing those stalls, if the Minister goes public with it………… (lot of cross-talk)
DJ – The SEC didn’t start with Mr Karunaratne or Mrs Sugathadasa. It’s been around for 30 odd years. This is the first time there has been a media awakening such as this and also talks about investigations.
This isn’t the first time probes, There had been many. The regulations are very good, investigations are good, media is even better. But all these when used in the wrong context, just like in a society in the market where there are many types of people, sensitivity, then in a place where investments are being done, loosely using such things should be done responsibly. I’m very sad I had to do the presentation, he (Mr Karunaratne) had to leave but there’s no connection.
Media - He had to leave after…………… (cross talk, inaudible)
DJ - Mr. (K.C.) Vignarajah (a investor protecting the rights of independent minority shares) also spoke more than I did. Mr Karunaratne also spoke. Mrs. Sugathadasa also left (resigned) without me doing a presentation (meaning she resigned and didn’t follow any presentation being made by me).
Media : On Mrs Sugathadasa’s resignation ?
DJ - I’m still saying she is a person with such integrity.
Media - Are there manipulators in the CSE?
DJ – There’re manipulators all around. There is a mafia, in the US, in Japan, in the fish market, Manning Market, in parliament, in the country and even in this room.
Media – Then what’s the fault in sending letters?
DJ -There’s nothing wrong. When sending letters, there’s no issue, if it’s routine information collection that’s also fine. Just because you sent 15 letters and that creating a perception that there’s an investigations (because these letters were sent), is wrong.
Media - Letters are sent as part of supervision.
DJ - That’s right, but the secrecy in regulation is important.
Media - Then those getting letters who want to show a fear psychosis can be leaking it to the media?
DJ – That too is an acceptably answer, theoretically and technically.
Thilak’s resignation cannot be connected with my presentation. He wasn’t sacked. Just because Dr. Karunaratne has left, the SEC hasn’t closed. The regulator has to be independent. If the wife of the President’s Secretary cannot keep the job and if a best friend (Thilak Karunaratne) of the President for 35 years who played marbles growing up together cannot keep the job, then there is a big problem.
Media - The SEC Act hasn’t got powers to catch manipulators.
DJ – It’s not about powers. It’s about using powers effectively and objectively.
Media - Why has the CSE (market) fallen?
DJ – A combination of factors including the interest rate, economic sentiments.
Media - What is the fate of Dr. Godahewa in your firms if he becomes the SEC Chairman?
(An earlier question and comment from th media was raised about Dr Godahewa being the chairman of Divasa Finance and that the latter was a government official)
DJ – Nalaka Godahewa will have to go from our company chairmanship if he’s appointed as the SEC Chairman.
Media - Were the two chairpersons right people (correct persons for the job)?
DJ – Both were right people. We’re all in trouble if the message is that the share market is full of crooks and the mafia.
The (current and former) DG and the secretariat are feeding information (to the media). There is a need to get efficient and honest officials.
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