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SEC
inquiry stirs hornet's nest The unprecedented probe has gripped the attention of investors, created tension between the Commissioners and SEC investigators, and even led to an inquiry whether information about the case had leaked from the SEC in which journalists covering the story were questioned. The decision of the Commissioners to review the advice given by the Attorney General's Department, instead of going ahead and prosecuting those involved, also raised fears of a cover-up, although a terse SEC statement said the matter was being considered with the "utmost seriousness". A former member of the SEC slammed the practice of businessmen serving as Commissioners. "Its absolutely ridiculous for people with business interests in quoted companies to sit on the board, because there is obviously a conflict of interest," he said. "This type of position leaves only the ex-officio members to stake an independent claim, which is not healthy." Market analysts said the conflict of interest was more pronounced because the Colombo bourse was tiny and mainly controlled by a small group of rich businessmen with connections to each other. "The Colombo market is generally controlled by 30-40 directors who are on most of the boards of companies and also are friends of most SEC commissioners," one source said. There were calls for Mack to resign until his name is cleared. "In most countries he (SEC chairman) would have resigned," said a former SEC chairman. "The stock market is an important focal point of economic activity in the country," he added. "If the public gets the impression that the market is not properly regulated, it would be a hell of a bad thing for the development of the market." Mack was not available for comment despite repeated attempts to contact him. Nor were any of the others being investigated, except for former Aitken Spence director Manil de Mel, who made a brief statement saying his transactions were transparent. (See inside). Aitken Spence officials too were not available for comment. The SEC is probing the sale of Aitken Spence shares during May-June by several company board members, including Mack, a former chairman, as well as some of their family members including Ajit Gunawardene, chairman of the Colombo Stock Exchange which issued a statement saying its chief had not been informed by the SEC of any probe against him. They are supposed to have been privy to price sensitive information about an alleged fraud at the group's garments subsidiary, which could have reduced company profits and brought down its share price. However, the company has not announced any fraud, or any related losses. This prompted some market analysts to say that the allegations were baseless since Aitken Spence has reported sharply higher profits for the first half of this financial year. Brokers said the market had reacted coolly to the SEC probe except for some uncertainty among foreign investors. A quick Sunday Times FT poll among 40 corporate executives found the majority saying "Yes" to the question - Is the SEC fair in investigating its own chairman? "Anyone should be investigated if there is a case of wrongdoing irrespective of his position," said one executive. (See related stories) Confusion
over tax amnesty notices The government notice "Exoneration of Tax, Duty, Levy, Exchange Control Offences and other offences under the Inland Revenue (Special Provisions) Act No. 7 of 2002" issued by the Secretary to the Treasury appears to be poorly proof-read. Organizations are confused about the period of immunity applicable on their declared returns as no corrections seem to have been made since the announcement. Paragraph 2 of the English advertisement specifies March 31, 2000 as the date upto which the declared returns will be accepted as the final tax. The same paragraph in the Sinhala version specifies the date as March 31, 2002. The correct date is March 31, 2000, according to P. Guruge, fiscal policy advisor at the Finance Ministry. Similarly, paragraph 3 of the notice states, "In the case of persons who do not have an income tax file ... no penalty will be levied if such income tax is paid on or before September 30, 2003", while the Sinhala version reads as "September 30, 2002". Guruge said the correct date is September 30, 2003. The mistakes
had been made by the publishers and not the ministry, he said. However, they were of the view that the Department of Inland Revenue needs to be proactive and free of corruption, if future disputes on declarations are to be settled quickly and not allowed to extend and accumulate. Sri
Lanka-US joint council meets John Hudsman, an official of ambassadorial rank at the US Trade Department, would be representing the US while Colombo will have Commerce Minister Ravi Karunanayake at the head of the delegation backed by Commerce department officials and private sector representatives. The council was established under the US-Sri Lanka Trade and Investment agreement signed by Prime Minister Ranil Wickremesinghe during his US visit in September where efforts were made to drum up interest in Sri Lanka as an investment base. Some of the issues that are expected to come up for discussion are the investment climate in Sri Lanka, transparency, the privatization initiatives, the impact of Sri Lanka's recent FTA's with India and the proposed one with Pakistan on the US, bio technology and opportunities for US companies in the reconstruction process in the northeast. Rainbow
Pages from SLT They said the directory was the first - after many years - produced by the SLT since in recent years the directory plus Yellow Pages was handled by GTE Directories Lanka Ltd. The SLT agreement with GTE was terminated after the state-owned telecom operator said GTE - which had undertaken this assignment for more than 10 years - had failed to fuilfill its undertakings and satisfy SLT's requirements. The new general directory will not contain a Yellow Pages section but will have the usual business directory. No directory was issued so far this year by SLT after the GTE agreement ended. Official sources said that there was a likelihood of SLT renegotiating with GTE to collect advertisements on its behalf and continuation of a Yellow Pages directory. STL has 750,000 fixed lines and 40,000 mobile phones from Mobitel which is now fully-owned by the state operator. In comparison, there are 125,000 fixed phones by other operators like Suntel and Lanka Bell and 600,000 mobile phones by private operators with Dialog ahead of the rest. |
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