Lankaputhra Bank slips show in Chairman drama
Embroiled already in controversy over allegations of corruption by the Rajapaksa regime at the state owned Lankaputhra Development Bank (LDB), its present Chairman Lasantha Goonewardena’s appointment has been invalidated by the Central Bank, a year after assuming office.
The Bank Supervision Department of the Central Bank in a letter addressed to the General Manager/CEO of the LDB rejected the appointment of Lasantha Goonewardena ? as the Chairman as he is not fit and proper to hold office. Under provisions (Section 42 (2)) of the Banking Act of No. 30 of 1988 a director of a bank should be fit and proper in terms of his academic and professional qualifications; not involved in fraud, deceit, dishonesty or any other improper conduct, among other matters.
Lasantha Goonewardena
In this respect, the appointment of Mr. Goonewardena – who is a member of the United National Party Working Committee, has been refused by the regulator citing the above provisions, but the refusal was made nearly an year after the said officer had assumed duties. However, the Treasury-appointed Chairman said that he believed he had the adequate qualifications to assume office and continue in his position. Further the letter states that there are two more reasons for the refusal of his appointment based on a special examination which was carried out in 2015 of the LDB where it has been found that Mr. Goonewardena has failed to comply with directions pertaining to Corporate Governance under Section 3 (5) (ix) of the Banking Act Direction No. 12 of 2007.
In this regard, the Chairman is not allowed to engage in activities involving direct supervision of key management personnel or any other executive duties whatsoever. However, Mr. Goonewardena at a media conference held at the LDB auditorium on Thursday admitted to getting involved in such operations of the bank as he deemed it necessary in order to avoid alleged corrupt practices taking place within the institution.
The Supervision Department has also cited in its letter the meeting with the Chairman and the GM where the Central Bank had warned Mr. Goonewardena against divulging confidential information regarding creditors. “Mr. Goonewardena has failed and/or been negligent to maintain the duty of confidentiality in his capacity as the Chairman of LDBL in violation of Section 77 of the Banking Act,” the letter states.
According to the legal provision it is noted that every director, manager, officer or other person employed in the bank should maintain secrecy of all transactions of the bank, its customers and the state of accounts of any person and all matters relating thereto. Following this letter, the Chairman had requested a meeting with the Central Bank Governor Arjuna Mahendran, Finance Minister Ravi Karunanayaka together with the LDB Board of Directors. At the meeting which was held for less than 20 minutes the Governor had informed that the original of the fax of the letter sent by the Central Bank’s Supervision Department to be returned to the bank once the original is received, the notes of the meeting which were also signed by the Chairman (and seen by the Business Times), read.
However, Mr. Goonewardena, on the sidelines of the media briefing on Thursday, told the Business Times that the Governor had not recalled the letter at the meeting and that this particular letter was still with the bank. On the other hand, he noted that they had sent an appeal to the Central Bank’s Supervision Department pertaining to the reasons cited in the March 24 letter stating the chairman could not continue in his capacity to hold office. Despite this claim by Mr. Goonewardena, another letter signed by the LDB Company Secretary Gamini Pitipana addressed to Public Enterprise Development Ministry Secretary Ravindra Hewawitharana states that the Central Bank Governor had “recalled the said letter considering the clarifications given by the Chairman and the Board of Directors of Lankaputhra Development Bank.”
This letter had been sent with an attachment of the minutes of the meeting with the Governor. When queried by Mr. Goonewardena about the recall of the Central Bank letter by the Governor, he noted at the media briefing that it was “not recalled” and that action would be taken against the Company Secretary for stating this. The Chairman pointed out to the Business Times that the Governor had only asked to submit an appeal to the Central Bank. Mr. Goonewardena is not just accused of being unfit for the post he holds but has been questioned for several actions taken by him at the inquiry held by the Committee of Public Enterprises (COPE) on March 23, 2016 since he assumed office.
During the COPE meeting it was queried why the minimum number of board members had not been appointed yet and it was also noted that about four members had rejected appointments to the board as well. In this regard, the Public Enterprises Development Ministry and the Cabinet would be informed of filling the required vacancies. “I have been involved in a number of institutions,” Mr.Goonewardena explained adding that he had also been part of the Lions Club where he was elected as a District Governor as well, citing it as a qualification for the job.