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| Investors
battle corporate crime
The association intends to highlight irregularities in quoted companies, put pressure on management to ensure good governance and a fair return to investors, and undertake litigation in the interest of shareholders. "We want to incorporate the association so that we will have more recognition owing to the present situation in the market," said D. Wijesinghe, the association's secretary. "Many listed companies are running at a loss and have paid no dividends for a number of years." Small investors were concerned about recent corporate scandals such as the insider-dealing crisis involving Michael Mack, former chairman of the Securities and Exchange Commission, he said. "We want to get together and bring pressure on companies to see that they do well and treat minority shareholders better," Wijesinghe said. The association,
initially formed two years ago, has about 40 members, mainly small
investors and retirees who have invested their savings in the stock
market. The government should appoint people with no conflict of interest to watchdog bodies like the SEC and ensure that a wide variety of interests and opinion is included in such organizations, he said. Some of the SEC commissioners representing the private sector have been accused of having serious conflicts of interest and acting in a biased manner in the insider dealing investigation against Mack, a former Aitken Spence chairman. These conflicts of interest were cited as one of the reasons for the resignation of SEC director general Dr Dayanath Jayasuriya. Attorney General K.C. Kamalasabayson, in his ruling, said the commissioners had "acted improperly" in getting a second opinion on the probe despite the original ruling by the AG's Department. The investigation centred around the timing of the sale of shares with the accused alleged to have sold at a time they were privy to price sensitive information about losses sustained by the company following a big fraud, criminal activity and alleged exchange control violations at its Aitken Spence Garments subsidiary. Mack resigned as SEC chairman after the AG's ruling that the SEC Secretariat could go ahead with legal action against him, and Norman Gunewardene, another former chairman of the conglomerate. The insider dealing fiasco at the SEC, in which some of the commissioners representing the private sector tried to block the initial investigation and subsequently tried to ignore the AG's Department's advice that there was a prima facie case against the accused, rocked the stock market and dented investor confidence. SLT-
Mobitel tender In its complaint, Siemens alleged that despite being rated best in the technical evaluation as well as offering the most competitive prices it had not been called for commercial negotiations. Siemens alleged that Mobitel held talks and signed the contract with another vendor, Ericsson, which was rated second in the evaluation, and which had installed Mobitel's existing analog network. Siemens also alleged that there was a lack of transparency and fairness in the tender evaluation process and that if the tender was awarded to Ericsson, Mobitel, and ultimately the Sri Lankan government, would have to bear an additional burden of up to around $10 million. They also said that the incumbent vendor received undue advantage because it had installed Mobitel's existing analog infrastructure. Senior Ericsson officials in Colombo were unavailable for comment despite several calls to the company. Mobitel chairman Lalith de Silva denied the allegations. "This is definitely not the case," he said. The four vendors, namely Siemens, Ericsson, NDC and Alcatel were put through a process of technical, commercial and credit evaluation involving external as well as internal consultants. Ernst and Young as their auditors were also involved in the bid and there was constant cross-checking. "We followed the best practices of evaluation and it was not just a project we did abruptly," said de Silva, adding that their evaluation process was extremely effective and done in a transparent manner. De Silva said that Mobitel had decided on Ericsson as they had been ranked the best in their evaluation process and also offered the most competitive prices. However, according to the evaluation report Siemens was ranked first with a score of 46.63 percent and Ericsson second with a score of 44.47 percent. De Silva also said that before the decision Mobitel had got letters signed by the four vendors stating that a fair opportunity was given and that there was no undue influence in the award. "I'm surprised that anyone is complaining … we gave everyone a fair chance," he said. Siemens also alleged that during the tender evaluation the reading of prices to bidders was not done although it was a requirement in the process. (RC) Furore
over power tender The tender was called to meet the urgent need for electricity generation plants to ward off future power cuts. When the bidders were short-listed the lowest tariffs were reportedly quoted by a local conglomerate whose proposal had been recommended to the Cabinet by the Power and Energy Ministry. Subsequently, the US envoy has reportedly intervened to push a proposal by a local firm which has tied up with the American company Caterpillar. Asked about reports that the US ambassador had interfered in the tender process, US embassy spokesman Bruce Lohoff said: "Any trade matter that the US embassy promotes, we believe would benefit both US and Sri Lanka." He added: "US embassies all around the world are charged with the responsibility of advocating their business communities, and the US embassy in Sri Lanka is no exception." Government officials involved in the tender declined comment. Ceylon Electricity Board chairman Mohamed Zubair said he was unable to make specific comments but said the tender had not yet been awarded and rejected charges of irregularities. The tender would be awarded after the due process of selection based on the technical competency of bidder and the cheapest offer, he added.
"I would not want to specifically comment about Merc Bank," he said. "But in general we look at any potential investment opportunities that come our way. After a preliminary evaluation if it makes business sense and is in line with our investment strategy we would obviously look at that investment positively." He was responding to queries about possible ETF investments in Merc Bank. Marriot,
Hyatt interested in Oberoi? “The new name would be effective until a new company takes over the management or a new franchise operator is found,” noted Viren Perera, Joint Managing director of Crescat Developments Ltd. “ We are either looking at a franchise agreement where the owner runs the hotel and uses an international franchise like the former Trans Asia or a full management contract.” The AHC group owns the 540-room Oberoi, Crescat Boulevard, Crescat Apartments and has a controlling interest in the Trans Asia Hotel. Perera said AHC has asked for proposals from nine top hotel groups, some of whom have shown interest in running the Oberoi. He said they were upbeat on the prospects of getting a top hotel operator to manage the hotel. “This is a perfect time to find a manager for the hotel. We have had many inquiries from overseas about prospects of running the Oberoi and things are extremely bright,” Perera said, adding that proposals for either a management contract or franchise operation would close in the first week of March. “Within eight weeks thereafter we should be able to find a new partner.” Perera said there is tremendous interest in the leisure industry in Sri Lanka in view of the current peace process had helped in AHT looking for a new partner to run the Oberoi. Requests for proposals have been sought from the Starwood group, owners of the Sheraton and Westin, Marriot International which owns the Marriot chain and Ritz Carlton, Hyatt International, Meridien and the Eccor group which owns the Novotel and Sofitel chains. Tea
demand back, plans to repatriate migrant workers But private
tea factory owners, who were hit hard when prices fell at recent
sales, said the government's support for the industry was too little
and not effective enough. "This is an extremely positive sign," said Mahen Dayananda of the Colombo Tea Traders' Association. "At moment all the sea lanes to the Middle East are open and hopefully we will not have a build up of stock in Colombo or at the plantations." Although demand and prices had recovered slightly at last week's auction, the Private Tea Factory Owners Association (PTFOA) said they would not be able to recoup the losses sustained when the market crashed in the last week of January and the first two weeks of February. "We'll have to watch what happens next week to see if the recovery lasts," PTFOA secretary general W.M.C.J. Wijetunge said last week. The government has offered to subsidise interest payments on working capital loans and arrange for unsold teas to be stored at warehouses for shipment later on. But Wijetunge said this would solve the problem only on a temporary basis and that only a few factory owners would qualify for the subsidized loans. Meanwhile, government officials from the ministries of labour and foreign affairs and other agencies are to meet on Monday, along with representatives of Sri Lankan Airlines, to work out ways of repatriating Sri Lankan migrant workers in the Gulf in the event of war. Chairman of the Sri Lanka Bureau of Foreign Employment Susantha Fernando said they had contacted all host country governments in the Middle East where there were significant numbers of Sri Lankan workers. "They asked us to fall in with their rescue operations in providing for the safety of these people," he said. If the need to repatriate workers arose, the government would seek the aid of international agencies like the ICRC, UN and Red Cross like it did in the 1991 Gulf war, he said. There are an estimated 350,000 Sri Lankan migrant workers in Saudi Arabia, 150,000 in Kuwait and 80,000 in Jordan, the countries bordering Iraq which would be the most vulnerable if war breaks out The Ceylon Petroleum Corporation said it was making plans to maintain full stocks of crude oil and petroleum products as well as diversify its sourcing to ensure supplies if normal shipments are disrupted by military action in the Gulf. "We're going to maintain one month's stock of crude and product," a CPC official said. The CPC could also make use of its tie-up with the Indian Oil Corp, which has a refinery in Chennai, to ensure security of petroleum supplies, he said. Tea trade officials said demand at the Colombo auctions had revived after the initial uncertainty over looming American military action against Iraq triggered a "knee-jerk reaction" on the part of overseas buyers who reduced their buying. "It is a fact of life that everybody in the region is extremely cautious," one exporter said. Brokers John Keells said the Low Grown sale average had dipped very sharply during the past few weeks, due to the unsettled conditions in the Middle East. |
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