• VIP wives rocked by corruption 
• AC comfort for top cops 
• Seventy in 5-year interim council 
• US diplomats walk out 
• Employees oppose takeover 

Censorship In line with a blanket censorship imposed through an emergency gazette notification on May 3, the news stories, columns, pictures, maps and cartoons in this newspaper have been subjected to censorship by the Competent Authority. In most instances we have left the censored sections blank. We hope our readers will bear with us.

VIP wives rocked by corruption

By Shelani de Silva

The Sunday Times learns the main dispute was over allegations of how a senior member had bought furniture which belonged to the movement. 

The furniture was to be auctioned but the senior member — wife of a senior minister — had allegedly called it off and bought the furniture for a mere 10,000 rupees though the estimated value was more than 200,000 rupees.

The purchases were allegedly made withholding her name in the receipt. Following this, Seva Vanitha Treasurer Pamitha Jayakody — wife of Religious and Cultural Affairs Minister Lakshman Jayakody — resigned her post and sent a letter to President Chandrika Kumaratunga, saying she was quitting due to misuse of funds and undue interference by a senior member.

Ms. Jayakody told The Sunday Times it was difficult to work with so much corruption going on.

She said some members had proposed that the movement should spend all its savings — about 14 million rupees — before Parliament was dissolved.

'To even think of such a move is absurd. There is no internal politics here. But I am quitting because of corruption. 

"We were called to do a service, but little has been done during the past six years," Ms. Jayakody said.

The Sunday Times learns that at the last meeting of the movement, senior members angrily traded charges and Minister Hema Ratnayake who heads the Seva Vanitha was hardpressed to maintain order. The dispute among the VIP wives is reported to be causing concern among Cabinet Ministers because of the personal allegations that were hurled.

Meanwhile some of the Seva Vanitha Units of Ministries which function independently have expressed concern that their credibility could be affected due to infighting in the parent body.

AC comfort for top cops

The Sunday Times learns that a tender has been awarded for the installation of air-conditioning facilities, the first time in police history, that such a luxury is being provided.

DIG Jayaratna Herath who is in charge of supplies and logistics declined to comment on the move, but other police sources said rank and file appeared to be getting hot headed over the provision of luxuries for some amidst increasing difficulties for others.

The air-conditioning which would mean much more electricity comes in the wake of an appeal by the Ceylon Electricity Board for a reduction in consumption because of declining water levels in reservoirs and rising costs.

Seventy in 5-year interim council

They said PA and UNP leaders meeting again tomorrow had agreed on the concept of the interim council but the ground work and practical aspects had yet to be put in shape.

They said discussions would be held on the powers of the proposed council and the members to be nominated with provision for adequate representation of the Sinhala and Muslim communities.

A member of the UNP delegation said agreement also needed to be reached on presenting and discussing the proposed reforms with the LTTE. He said the government was at present strongly opposed to this but UNP members felt some accommodation had to be reached.

US diplomats walk out

The meeting held on the request of the US diplomats at the private residence of party leader S.L. Gunasekera came to a head when they asked about genocide by the Sri Lankan forces and Mr Gunasekera brought up the issue of the bombing of Hiroshima and genocide by the US. 

Earlier the US diplomats had questioned the Sihala Urumaya leaders about minority rights, and human rights in Sri Lanka and were in turn questioned about minority (Black) rights and human rights in the US. 

The meeting turned sour, as heated words were traded and Deputy Head of mission Andrew Mann rose and left abruptly. The other diplomats Kevin Mclocklin and Ms. Shannon also left saying they had come in Mr. Mann's car. 

A US Embassy spokesman confirmed the meeting between the diplomats and the leaders of the Sihala Urumaya, but declined to elaborate.

Please see exclusive interview of Mr. Gunasekera 

Sampath battle hots up

Employees oppose takeover

By Feizal Samath

"It is clear that the group of investors who together have a near 45 percent stake in Sampath is controlled by Mr. Jayawardene and HNB, through him," a spokesman for the Sampath Bank Employees Association said.

The association plans to urge the President and Minister G. L. Peiris to step in and resolve the crisis where they say banking laws on mergers and takeover codes have been violated and unethical practices resorted to in stockmarket deals.

It is the second crisis faced by Sampath, the first being when founder chairman N.U. Jayewardene was eased out in 1991 after the Central Bank stepped in to prevent a run on the bank's deposits. 

The association, which has been functioning since then, said it had at that time too urged the Central Bank to step in to ensure stability.

This time around, the situation is slightly different in that the highly-profitable bank has been targeted by a group of investors resulting in huge transactions at the Colombo Stock Exchange and a fast change in share holdings.

The drama has also angered some HNB employees who allege the HNB's Employees' Provident Fund (EPF) has been used to purchase the shares of a competitor at a price far above the market value. HNB's EPF, which like any other bank-owned EPF is authorized to make good investments, has a 4.9 percent stake in Sampath Bank following deals done in the past three weeks.

In a letter to The Sunday Times, an angry bank employee said employees were shocked by the transaction for which no explanation had been offered by the management. 

"The other bigger surprise is that three of HNB's top management employees have bought over five million shares each, spending more than 100 million rupees from their personal funds," the letter said. "From where did they get so much money?" the employee asked.

Banking rules restrict the share holdings of individuals, groups or banks and the association alleges that the HNB/Harry Jayawardene liaison has broken these rules. "Sadly the authorities — the Securities and Exchange Commission (SEC) and the Central Bank — have failed to be proactive in this issue and at least initiate an investigation after so much drama in the stock exchange and the resultant media coverage," said a worried Sampath bank employee.

HNB's top management has maintained in various news reports that the investments and increase shareholdings were within legal limits and made with the best interests of both HNB and Sampath and the deals were not meant to take over the latter. 

Mr. Jayawardene or officials of the HNB or the SEC were not immediately available for comment on the course of events.

The association is holding a special meeting in Colombo today to decide on the future course of action ahead of Sampath Bank's annual general meeting on Friday, June 30. But it is hoping that government authorities and the SEC will initiate an investigation to uncover the truth.

Analysts say that HNB and Mr. Jayawardene's companies through which most of the Sampath Bank deals went through — are to nominate four directors at the meeting to replace four currently serving directors who retire by rotation but are eligible for re-election.

While millions of Sampath shares have exchanged hands in the past two to three weeks at the Colombo bourse in what was clearly seen as a takeover attempt, the bid for Sampath Bank may have actually started six months ago. 

"There was a huge parcel of Sampath shares that were bought by HNB six months ago and at that time we questioned the transaction, speculation of the prospects of HNB increasing its stake in the future," said the association spokesman.

Central Bank sources said it was still unclear whether any particular group had violated the Banking Act in the high-stakes battle for control at Sampath Bank. They said takeovers, mergers and strategic alliances were the order of the day in the corporate world.

"We believe the raid on Sampath Bank is part of a wider move by the raiders to merge or take control of other banks which would enable them to monopolise the industry," one association official said.

"On the longer run, this would not only hurt all commercial banks and its customers but would also hurt stability in the banking industry and the economy," he said.

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