In response to last week’s report in The Sunday Times FT under the above headline, Mr Kandiah Neelakandan, Group Deputy Chairman/Secretary of George Steuart & Co has sent in the following letter:

1. The headline is misleading for the reasons we state below.

2. Mr. Kanagaratnam who was earlier a Director of George Steuart & Company Limited, voluntarily stepped down as Director when he was declared a bankrupt, and he re-joined the Board only after he was discharged (by the British High Court) bankrupt on April 25, 2005. (A copy of the Order was sent to the newspaper).

3. Mr. Kanagaratnam was appointed as Group Joint Managing Director of George Steuarts (GS) from April 1, 2008. The headline creates a wrong impression that he was declared bankrupt whilst he was “George Steuart’ s M.D.”, which is incorrect.

4. Although Mr. Solomons claimed that Mr. Kanagaratnam’s shares in George Steuart were vested in him, the company has repeatedly pointed out that according to the legal advice obtained from its lawyers, there has been no such vesting under the applicable laws.

5. Mr. Solomons sought to register an order of U.K. Court under the Reciprocal Enforcement of Judgments Ordinance, but the District Court of Colombo has only made an order to register it giving the opportunity to Mr. Kanagaratnam to make an application within three months to set aside the same. The Provincial Appellate Court has stayed the operation of that order. However, Mr. Kanagaratnam has informed the company that his lawyers have made an application to point out that there is no valid judgment or decree under the Reciprocal Enforcement of Judgments Ordinance directing him to pay any money.

6. Furthermore, Mr. Solomons has instituted another action in the Colombo Commercial High Court seeking to have the Share Register of the company rectified in respect of the said shares. Although Mr. Solomon sought an interim order it could not be supported by his lawyers, because the lawyers of Mr. Kanagaratnam and the lawyers of the company objected thereto. The Court has granted time to file written objections.

7. In the circumstances it is incorrect to say that the request made by Mr. Solomon to transfer the shares of Mr. Kanagaratnam in George Steuart and to hand over his assets in Sri Lanka under the provisions of the Insolvency Act went unheeded. The correct situation is that Mr. Solomons has still not obtained a suitable order of a competent court to establish his position. The company’s position has been that Mr. Kanagaratnam continues to hold 625,000 shares and unless Mr. Solomon obtains a binding order from a Sri Lankan Court of competent jurisdiction, the company cannot accede to his request. As Mr. Kanagaratnam was discharged from his bankruptcy proceedings in April 2005, the company had no objection to appoint him as a Director and having obtained appropriate legal advice, the company always acted according to the laws of the land.

In a separate letter, Mr Kanagaratnam’s lawyer Mr A.H. Sumathipala has raised the same issues pertaining to the report. He also says Mr Kanagaratnam stepped down from the GS board when court proceedings were on and then rejoined after he was discharged. Mr Sumathipala says there is no order or judgement directing his client to pay money by a UK court, adding that his client never absconded.