Financial Times

Harry J threatens legal action against the media
Forget elections: Commercial Bank is the focus this week
By Duruthu Edirimuni
Forget the presidential elections – Sri Lanka’s corporate sector will be glued to the Commercial Bank drama this week when business tycoon Harry Jayawardena seeks to oust its chairman Mahendra Amarasuriya.

Tagged the biggest and most fiercely fought battle of shareholders in the corporate history in the country, the Commercial Bank EGM on Wednesday has become a pot-boiling affair with proxies changing hands and Jayawardena’s opponents filing court actions to stall his moves.

The powerful business tycoon resorted to a advertising blitz saying there were many false statements being published in the newspapers and the media, noting that “the lack of the public in-depth understanding of laws governing the companies and banks is continuously abused by these individuals to mislead them and the employees of banks.” An advertisement placed by Sri Lanka Insurance and Distilleries said that, “the laws that govern the major economic sectors cannot be turned and twisted to the wants and fancies of few individuals or their stooges who attempt to maintain their positions and status at the cost of others.”

The companies also threatened to legally pursue the media and other institutions “who give publicity to such false and defamatory statements without verifying the authenticity and accuracy of such material.”

The adverts were placed a day before the Central Bank issued a statement saying that the share ownership concentration in the three banks, DFCC, HNB and Commercial Bank by Jayawardena and related parties is not illegal. It said, ‘Share ownership concentration in banks, per se, is neither new nor illegal. The current Banking Act contains provisions in respect of share ownership in banks in Sri Lanka by connected parties.

The share ownership of investors in the three banks in question has been examined by a team of professionals in relation to these provisions, and it has been found by the examinations conducted so far that there has not been a violation of law in respect of which enforcement action can be taken by the authorities.’

A Central Bank source said that ‘acting in concert’, explained under Section 12 of the Banking Act applies when ‘acquisitions take place’. “The Commercial Bank’s present shareholders can ‘hold’ the stipulated amount, but ‘acting in concert’ applies to the point of acquisition,” the source said. He accepted that the law is not clear on certain instances and not very straightforward.
“The chances are the EGM will be stalled,” a banking source said, adding that this is true shareholder power.

R. Vignarajah, a shareholder who has gone to courts to stall Jayawardena, said the move by Jayawardena to oust Amarasuriya is without any reason. “Personally I admire Mr. Jayawardena for his business acumen and I have invested in Distilleries as well and it is a well run company. I will oppose any move, for these reasons, if an attempt is made to oust Mr Jayawardena as chairman.”

Similarly, he said, he would defend the Commercial Bank because it is not in the interests of everyone for one person to control three private banks.

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