GoldQuest seen exiting from Colombo tea firm

GoldQuest, the controversial multi-level marketing firm, is considering selling its majority stake in Ferntea after company chairman Anura Fernando quit following an ongoing dispute with other shareholders.

Anura Fernando, who resigned on October 5 and went abroad the following day, is a nominee of GoldQuest which on July 2006 seized control of the company, earlier controlled by Jayantha Fernando and his family.

Along with GoldQuest, he has been embroiled in an ongoing court battle to take full control of Ferntea from Jayantha Fernando who has a 30 percent stake.

“I have notified both the company secretary and the Colombo Stock Exchange (CSE) of my resignation,” he told The Sunday Times FT over the telephone from abroad. Anura Fernando said his former friend and colleague, Jayantha Fernando didn’t want to settle the matter.

“He has filed eight cases against Ferntea and the current management and was not agreeable to any kind of settlement the management had offered,” he said, adding that he couldn’t move forward.

“I as an employee of GoldQuest cannot run the company in such a situation and they (GoldQuest) are not interested in the company as well,” he reiterated.

Fernando said when GoldQuest took over the company in 2005, they infused Rs.350 million into Ferntea and let Jayantha Fernando run it for one year, “The company then made a loss of Rs.250 million,” he said.

Presently there are eight directors in the company, excluding Anura Fernando. They are – Jayantha Fernando, his daughter Shyamica Fernando, his son Chrishane Fernando, Richard Zinkiewicz, Kuna Senathirajah, Deepak Korla, Pushpam Appalanaidu and Jakob Mayer.

Jayantha Fernando, the Ferntea founder, declined to comment. “The entire matter is in courts,” he told The Sunday Times FT.
Company sources said Anura Fernando’s resignation should be accepted by the board of directors before the CSE alerts the shareholders. According to the company law, a board meeting is necessary to accept or reject the resignation. Jayantha Fernando and his two children are also non executive directors of the company but due to the dispute there hasn’t been a board meeting for the past one year. “Presently there is no trading in the company,” Jayantha Fernando said.

In such a case Anura Fernando’s resignation is still not effective. Richard E Zinkiewicz, Group Director – Finance at QI Ltd, the holding company of GoldQuest, confirmed that Anura Fernando had resigned.

“Mr. Fernando has executed his responsibilities at Fern Tea with dedication and commitment and his resignation comes despite his attempts to stabilise the company’s business and its finances but pressures from the previous majority shareholders have made it impossible to run Fern Tea successfully,” he said in an email response from Hong Kong.

“In July 2006 we were forced to take over the management of Fern Tea as we found that the company was in a state of mismanagement,” Zinkiewicz said. “There were also qualified accounts of the company by audit firm Ernst & Young during the tenure of the former Chairman. From this point on we directed substantial funds to put the Company on track. Despite all the hardship and efforts, numerous suits have been filed against the company with unmerited contentions being made against the company and its current management,” he said.

Zinkiewicz had noted in his e-mail that coupled with heavy borrowing from financial institutions and even with funds put in, “the business (Fern Tea) is and has become, unviable.”