end to SEC case
Ever since The Sunday Times FT broke the story about the investigation
into insider dealing in shares of Aitken Spence by a senior official
of a regulatory body, there have been many bizarre twists and turns
in the whole affair.
unprecedented nature of the investigation into the share deals of
the then-head of the Colombo Stock Exchange, and as subsequently
revealed, the then-chairman of the Securities and Exchange Commission,
the markets watchdog, rocked the cosy world of Colombo's corporate
this year there were warnings by astute market watchers that the
SEC might be preparing the ground to compound the insider dealing
offence former SEC chairman Michael Mack and former Aitken Spence
director Norman Gunewardene was accused of when it did the same
in another investigation. These fears have been proved right.
decision by the SEC Commission, now chaired by Dr Dayanath Jayasuriya,
to compound the offences in such a high-profile case, can only be
described as bizarre. There seems to be reluctance on the part of
the regulators to explain the reasons for compounding the offences
against Mack and Gunewardene and the SEC's announcement that under
the SEC Act compounding does not entail a finding of guilt.
act does not say that compounding does not entail a finding of guilt
nor does it say compounding entails a finding of innocence. What
is the ordinary investor to make of the SEC announcement and the
manner in which this controversial case has now ended?
silence on the part of the authorities is not a good thing as it
could lead to all sorts of bizarre rumours. Why the SEC should compound
an offence when the Attorney General himself has twice given an
opinion that there was enough evidence to prosecute the accused
is not clear.
may be true that the SEC has imposed the maximum fines possible,
that the age and health of the accused was taken into consideration
and Dr Jayasuriya himself may not have wanted to open himself up
to accusations of malice by opposing the request to compound the
offence given his previous involvement in the matter.
may also be true that up to now the SEC had refused a compounding
request only once. However, it is a pity that this case was not
allowed to proceed because now there would always be a question
mark over the whole affair, especially given the outrageous and
blatant efforts to scuttle the initial SEC investigation.
it not have been in the interests of the two accused, who maintain
their innocence, to have proceeded with the case and cleared their
there is no finding of guilt that is only because the matter did
not go up for trial. It was only a matter of days before the Appeal
Court would have decided whether or not the SEC could proceed with
its effort to prosecute the accused.
was there such haste to compound the offence by lawyers for the
accused? Why did they want the request to compound the offence,
made on the same day the Commission met, and just the week before
the hearings fixed by Appeal Court, to be treated as "urgent"?
SEC will have only itself to blame if its decision erodes public
confidence in the institution.
The investing public is left wondering whether white-collar crime
pays and the impression that gentlemen with means can simply buy
their way out by paying a fine not to have their alleged crimes
criminals like pickpockets are known to languish in jail simply
for not being able to pay a paltry fine -- sometimes just Rs 1,000
- or put up bail.
This decision by the SEC certainly calls for a review of the law
to ensure the rules are applied equally to everybody.
is in stark contrast to the fate of another high-flying and wealthy
Sri Lankan, Sanjay Kumar, head of Computer Associates, who is being
prosecuted by US authorities for fraud.