Good leadership from MBSL Chairman M.R. Shah
MBSL Chairman M.R. Shah’s leadership in creating a healthy alliance of independent shareholders, management, staff and the regulator is an exemplary one which enhances the company’s value and infuses investor confidence. This contrasts starkly with the mollycoddling and appeasing of corporate crooks by other boards acting under the purview of indifferent regulators where honesty and transparency at the top level, is minimal or nonexistent, under false pretense of “protecting the corporate or stock market image”. Mr. Shah has dealt with this blatant hypocrisy forcefully in his review report for 2013.
I was happy to be able to attend the MBSL AGM on June 24 particularly since I was able to effectively counter some puppets of the wrongdoing corporate cabal, as they tried to detract from the splendid achievements of the chairman and the Board. One of them went into some minor details of small points here and there. Those were answered well by the chairman. I stated that we had faced real challenging times not only in this sector and in the stock market, but also within the company and the group.
I made the following additional points at the AGM:
•At the previous AGM of 2012, and the succeeding EGM. I had, together with others, firmly raised the issue of the ‘Conflict of Interest (CoI) of a Director. The chairman and the Board must be congratulated for the brave manner in which they acted to cleanse the organization, and get rid of elements that were disrupting the functions of this company and the group. These happenings at the top levels dissipated the energies of the Board, the management and staff; it was handled very well together with the Regulator (IBSL) in such a manner, that least damage was done. Many of you know that I have for many years raised issues of corruption, conflicts of interests, non disclosure, malpractices, etc at various fora on good corporate governance, and at numerous corporate AGMs. They listen very well but mostly no real corrective action is taken. In fact, action is sometimes taken to provide escape routes and/or protect the wrongdoers! In the case of the MBSL group, this has not been so. That is the most important positive factor which we certainly must applaud. The industry has not done too brightly; having good governance and running an organization has its own challenges. In this case we have seen how errant, wrongdoing top level people have tendered resignations or been removed together with all those conniving. In the shareholder fraternity also there are members who are cheerleaders for some of corrupt unethical corporate directors/ controlling interest and Related Parties (CI&RP), for equally unethical and corrupt reason. The first step towards progress is to ensure that you have a good team led by the chairman and the Board, who have diligently acted to first clean up the organization and then move it forward.
I must again congratulate the chairman and the Board; this time for a dividend payout of 57 per cent even in this challenging scenario!
On other issues:
•MBSL is hampered by the fact that it does not have a commercial banking license which will give them more money free of interest cost by way of current accounts deposits.
•MBSL should yet again be tremendously applauded for action being taken to merge/amalgamate its two subsidiaries. Another splendid example! Groups and conglomerates which have enriched CI&RP while impoverishing IMS (Independent Minority Shareholders) should please learn (not depart or delist!).
•May I suggest to the Board to consider issue of scrip dividends, without affecting the cash flow from the retained earnings /revenue reserves. It increases the liquidity, the value and flexibility to the shareholders; some shareholders may want to cash out part or all of those scrip dividends which will also boost market activity.
Excerpts from his review in the MBSL Annual report of 2013 on fraud, corruption, etc”
• “….Although such incidents are not normally disclosed, citing possible detrimental impacts on corporate image, I am a firm believer in transparency as a key component of good governance. That is why I feel it necessary, to disclose the unpleasant incident of a fraud in one of our subsidiaries, MBSL Insurance Company Ltd. …“those responsible for the misappropriation of public funds and some who justified such misappropriations are no longer in the company and the Board.“
•“…. I wish to place on record my sincere appreciation to the Insurance Board of Sri Lanka for its role as the regulator in restoring normalcy in the company”.
•… “The ‘conflict of interest,’ of a Director, which was raised by respected shareholders, has now been resolved. The matter was raised at the previous AGM and the subsequent EGM….The Director concerned has tendered his resignation from the Board, consequent to the Board seeking clarification promptly on the conflict of interest. “… I must express my pleasure and gratitude towards our shareholders, about the concern exhibited towards the Company’s wellbeing and for flagging such governance issues responsibly.”
•Thank you once again Mr. Chairman, and the team at all levels of this wonderful MBSL group, for really giving leadership.
K.C. Vignarajah (Shareholder acting in the best interests of IMS, the investing public and the national interest).