Financial Times

Suntex International Holdings Limited, owned by the controversial GoldQuest group, last week ousted Jayantha Fernando, Chairman and Managing Director of Ferntea Ltd as the head of the company in a swift move after raising its stake in the local firm to 56 percent and claiming Fernando was interfering in the business.

A stunned Fernando, who founded the tea firm in 1977, went to court on Friday opposing the decision. The previous day – the Appeal Court heard a petition by Goldquest-related companies against the Central Bank and the Police for arbitrary arrest of its representatives over the sale of products related to pyramid schemes. That case is set to come up again on August 21.

A company source said six GoldQuest directors of the company had ‘schemed’ to remove Fernando and had notified him only 45 minutes before an unscheduled board meeting on Tuesday. “He was notified of the meeting 45 minutes ahead with the agenda where one of the items was to remove him,” he said. Jayantha Fernando attended the meeting but when his proposed removal came up, he walked out of the room in protest – after which Anura Fernando, director in the company and an active member in the GoldQuest camp, was appointed chairman and managing director. But the former chairman – in his absence – was retained as a director. Jayantha Fernandos’ family has a 25 percent stake in the company with the balance (excluding Suntex) held by the public.

“Fernando was proving to be difficult, especially after the recent articles in the newspapers involving Capital Reach Holdings, GoldQuest and Mr Anura Fernando. This is what turned the tables against him,” the company source said. Both Fernandos (Jayantha and Anura who are unrelated) declined to comment on last week’s fast moving events.

The company source said the meeting was not held at the company office but at JAIC Hilton. Suntex acquired 48 percent of the company in May last year and gradually bought more shares upto the current stake.

Fernando was also barred from entering the Ferntea premises – despite being a director - but on Friday was granted permission to enter the consulate premises (in the same building) of the Czech Republic for which he is the Consul General.

“It is ironic, because he is still a director and he cannot enter Ferntea,” the source said. “It seems as if they were planning this for sometime and the opportunity came as a result of recent media publicity concerning GoldQuest, Anura Fernando and Jayantha Fernando’s concern for the reputation of the company that he had founded.” He said that taking control of Ferntea might have been an attempt to whitewash GoldQuest’s much dented name.

The District Court on Friday also ruled that in future 24- hours notice should be given prior to a meeting and that Ferntea is barred from accessing Ferntea’s Bank of Ceylon credit line which has Fernando as a personal guarantor. “This (credit-line) is a severe blow to the company, but with GoldQuest backing the company it may not be an issue in the long term,” he added.

GoldQuest has stated that they do not operate ‘Pyramid Schemes’ or illegal or unlawful business operation but the Central Bank has been gradually squeezing out its operations, through warnings in newspapers and a series of arrests of those selling Goldquest products. When The Sunday Times FT contacted the Central Bank Governor, Nivard Cabraal, he said the regulator will resist the case accordingly. Asked about Goldquest links to his former company Capital Reach Holdings, he said, “I’ am no longer there; you’ll have to ask the company.”

In another development, Anura Fernando has complained to the CID of the alleged misappropriation of Rs 21 million by former Ferntea chairman Jayantha Fernando.