Harry seeking to install his wife

Business tycoon Harry Jayawardena, as developments unfolded in his business empire, this week launched a move aimed at installing his wife and a close aide as directors at one of the groups.

He has called for an extra ordinary general meeting (EGM) at Milford Exports (Ceylon) Limited (MEL) despite objections from his other once-buddy directors V.P. Vittachi, Raj Obeyesekere and Zaki Alif raising questions about a possible break-up in Sri Lanka’s biggest conglomerates.

Informed sources said Jayawardena sent a letter to Secretaries and Registrars Ltd on Wednesday – a day after he unceremoniously sacked Vittachi from the board of MEL and Stassen -- directing them to call an EGM of MEL to appoint his wife Jacinta Priyadarshini Jayawardena and Royle Jansz, a director at Distilleries Company of Sri Lanka Limited (DCSL) as directors of MEL. This is the first time Jayawardena’s wife is to enter the powerful business empire.

A legal expert said that under the Companies’ Act, the board has 28 days to decide on the date of the EGM after such a notice is given and if a date is not decided, then Jayawardena as the shareholder has the right to call for an EGM within 90 days, after the expiry of the initial notice.

The trio has challenged this letter writing to the Secretaries and Registrars Ltd, company secretary of MEL, saying that the EGM has to be convened by the board of directors, in terms of the Companies’ Act.

“You are therefore advised to convene a meeting of the entire board of directors to consider the notice received and to schedule the EGM. In fixing a date for the board meeting, please ensure that it is done in consultation with each of its members,” the trio said in the letter.

On Monday, Jayawardena removed Vittachi from the chairmanship of both Stassen Exports Ltd (SEL) and Mel together with other companies in the group, saying that the founder chairman was unfit for office as he is over 70 years of age under section 181 of the Companies’ Act. This happened less than a week after Vittachi was removed from DCSL as its chairman.

“However, this applies only to the public companies and not private companies,” a legal expert told The Sunday Times FT.

He said that Stassen is a company incorporated in 1977, enacted under the previous company law which said that a private firm did not have to state ‘private’ in the company name. “Both Stassen and Milford do not have ‘private’ in their company names, but in the new Companies’ Act there is a clause saying that a private company needs to carry ‘private’ (Pvt) in the company’s name,” he explained, adding that Jayawardena has clearly misconstrued this information when taking the decision to get rid of Vittachi.

Jayawardena’s letter has said Vittachi ceased to be a director of SEL with effect from March 1, 1993 by “operation of the law”, meaning that Vittachi had reached the age of 70.

The legal expert said if Jayawardena’s interpretation of the law was correct it would raise questions about the legality of all the decisions taken by these companies over the past 13 years, and whether all the directors including those opposed to Jayawardena were also responsible.

The three directors have each written to both Jayawardena and the Secretaries and Registrars Ltd asking them not to recognise Jayawardena’s directives to remove Vittachi from the Chairmanship of both Milford and Stassen. “We wish to inform you that the said letter has absolutely no effect and that you have written the same without any authority to do so from the board. Your act is also mala fide, in that it is contrary to the arrangements that exist between the four of us,” the letter says, adding that, “We also wish to point out to you that you have either been ill advised or wrongly advised yourself on the provisions of the law. The contents of your letter are therefore null and void and your request to the Chairman, Dr. V.P. Vittachi to return all company property is unlawful and has no effect.”

On Wednesday, Jayawardena instructed the security personnel to bar Vittachi from entering the premises where all three companies, including SEL, MEL and CBD Exports (of which Jayawardena is not a director) at 833, Sirimavo Bandaranaike Mawatha in Colombo 8 are housed. Vittachi then filed a complaint at the Grandpass Police of his forcible removal from the company premises.

A source close to the company said that this move is also illegal as CBD Exports is an independent company of which Vittachi is the Chairman and is inside the same premises.

Writing to the Secretaries and Registrars Ltd the trio has said that Jayawardena’s letter to them, stating the removal of Vittachi has not been authorised by the board of directors of the company or by a resolution by the members of the company and that it has no legal effect. They have further said that the provisions of law cited by Jayawardena have no application to SEL. “We therefore specifically direct you to disregard the aforesaid letter.”

“I will act within the law,” Vittachi told The Sunday Times FT separately when asked for his comments. He said Jayawardena spent billions of rupees from DCSL funds to build his image without the authority of the board.

The company source said that the trio also disagrees that it was Jayawardena’s ‘single handed’ decisions that took both companies to their glory. “The trio was present literally during the masonry stages of both companies, unlike Jayawardena who was ‘inspecting’ the work. Also they had a good corporate image up until the DCSL deal and after he realised that the company was a cash cow, he deprived the other three directors in decision making and claimed sole responsibility,” he added.

He said that ‘even a puppet at the DCSL helm’ will get the job done. “DCSL is a cash cow. There is nothing to ‘do’ there,” he added.

Vittachi said Jayawardena is doing everything for his personal glory and not for the company.

He said that both the companies have a lack of corporate governance. “We want value for the company, together with integrity, honesty and good public image,” he added.