Harry sacks Vittachi; DCSL heads tipsily

Hardnosed business mogul, Harry Jayawardene, wielding his authority arbitrarily got rid of V.P. Vittachi from his position as Chairman Distilleries Company of Sri Lanka (DCSL) on Thursday at the company’s annual general meeting possibly triggering a flare-up in his empire, with an angry trinity who were his former partners.

Vittachi, along with Rajpal Kumar Obeyesekere and Zaki Alif have come forth as the triumvirate who have endured abuse by Jayawardene in both corporate giants, Milford Exports and Stassen, since his rise to fame and position in the government during the Chandrika Kumaratunga regime. Now, despite the open cynicism and scorn by industry and public at large, the trio is said to be fighting back.

A former employee of DCSL told The Sunday Times FT that the bitterness boiled into a crescendo in 2003 when the trio decided to put their foot down and ask Jayawardene to practise proper governance and stop wielding supreme powers.

“There were only three ‘legitimate’ transactions or acquisitions as far as the anti-Harry camp were concerned and those were the Hatton National Bank, Lanka Milk Foods and DCSL acquisitions,” he said.

He said that all three (in that order) were concluded with proper consultation and collective decisions amongst the four top players of Milford Exports. The trio is accusing Jayawardene of buying Aitken Spence, Sri Lanka Insurance Corporation (SLIC) and Lanka Bell without board approval. Vittachi, still the Chairman at both Milford Exports and Stassen Group and its two main directors, Obeyesekere and Alif with Jayawardene left the old Consolexpo state company to set up Stassen.

Vittachi in page 37 of his book ‘The fretful porpentine and other essays’ explaining how Jayawardena’s career was crafted says, ‘The Tea Department had no head, the previous incumbent having left after some displeasure. Serendipitously, I discovered a young man in the Tea Department who was, in my judgement excellent material for the post of Tea Manager. I appointed him.’ Vittachi goes on to say how he was out of favour with T.B. Illangaratne (TBI as he is referred to) then Minister of Trade. ‘I received a snorter from TBI. I had no business to have appointed such a junior officer to such a senior post etc. etc. And I should have consulted the minister before taking such a step and so forth. Very soon TBI changed his tune. He had learnt that my new Tea Manager was a personal friend of the Prime Minister's (Mrs. Sirimavo Bandaranaike’s) family. After that there was nothing the Tea Manager could do that was wrong.’

Meanwhile, the source construed that as was the case with a near 30 year relationship, it was very difficult for Vittachi to accept that Jayawardene will move in on him.

“His ‘old subordinate’ had reached an ozone level where he was literally ‘floating’ above his peers that was both intimidating and bullying when he often took random decisions without consulting them. “Some decisions were not very straightforward and their legal implications were also resting on the trio, as they had no alternative but to go along with Jayawardene for the sake of peace. He added that loyalty and unity were two strong words at the time, for the three.

He said that the move to appoint Damian Fernando, who was formerly heading Finance at DCSL as a director of the company at its board meeting (without the item being on the agenda), antagonised Vittachi, who wrote to the company secretary barring any item unlisted on the agenda, but Jayawardene did exactly as he pleased, prompting Vittachi to refrain from ‘improperly constituted’ board meetings ever since.

Vittachi requesting an explanation from Jayawardene on several complaints that he had received from competing distillers, W.M. Mendis, Alvaris & Sons in Kalutara and I.D.L. Lanka regarding unethical liquor distributing practices of DCSL, had angered Jayawardena the sources said.

The issues came to a head when Jayawardene had amended Vittachi’s ‘Chairman’s statement’ in 2005 DCSL annual report, which the latter refused to sign and Jayawardene had scrapped the statement. “Appointing a peon to a company would require his endorsement,” he said, explaining that Jayawardene will get highly involved in everything and go into the nitty-gritty of minute details.

“The three directors are strategising on how to manage the situation at present and both Obeyesekera and Alif are aware that they will be his next prey,” he said, adding that if it is possible for Jayawardene to mess his own house he can transcend any frontier.

Nearly 1.5 million DCSL shares were traded for the week and the counter seesawed between a low of Rs.92.00 and a high of Rs.98.00 and closed at Rs 94.50 on Friday. The market capitalisation of the company stands at Rs.28.5 billion and positioned as the fourth highest capitalised company in the market. Also the market capitalisation of DCSL has almost doubled during the last three months.

DCSL recorded a group profit after tax of Rs.1.94 billion for the nine months ended September 2006 against Rs.1.17 billion witnessed during the previous comparable period, which is an increase of 66 percent. Profit of the company alone was Rs.900 million indicating more bottom lines in terms of its subsidiaries and associate companies.