Financial Times

Spotlight on SEC probe
The insider dealing case against former Securities and Exchange Commission chairman Michael Mack and the need for the SEC to publicly disclose the interests of its commissioners was brought up at the National Review Committee looking into the affairs of the financial markets watchdog last week.

Committee members also expressed concern over delays in financial market reforms to ensure more corporate transparency and a better trading environment as well as in auditing company financial statements. SEC chairman General Dennis Perera and Director-General Palitha Gunawardene were present at the meeting.

Members said a key piece of information missing in the SEC annual report is that it does not publish the interests of its commissioners in areas such as shareholdings and auditing. One review committee member described the absence of this information as a "serious lapse".

Such conflicts of interest issues led to a controversy in the SEC investigation into the sale of Aitken Spence shares by its former chairman Michael Mack and attempts by some commissioners to scuttle the probe.The National Review Committee which functions under the Finance Ministry is part of government efforts to ensure good governance and transparency in public sector organizations. The controversy involved the SEC's investigation of Mack and two other former directors of Aitken Spence for alleged insider dealing in the company's shares.

The controversy forced Mack to resign and also later led to the resignation of SEC director general Dr. Dayanath Jayasuriya who quit on the grounds that the SEC Secretariat was not allowed to conduct its affairs in an impartial manner. The SEC subsequently decided to prosecute Mack, a former Aitken Spence chairman, and another ex-chairman of the conglomerate, Norman Gunewardene. Mack and Gunewardene filed write applications in the Court of Appeal seeking to quash the SEC's decision to prosecute them.

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