Financial Times

The Colombo District Court has rejected a widely-reported application by four Ceylon Bank Employees Union (CBEU), seeking an order to bar business baron Harry Jayawardena from voting in excess of the 10 percent of shares at the AGM or any meeting of the Commercial Bank.

But on Friday the union was fighting back, challenging the decision and planning to resort to trade union action. “We have filed papers in the Appeal Court and hope to support it tomorrow (Monday),” noted Union President M.R. Shah.

Earlier in the week Colombo District Judge Aruna C. Ranasinghe ruled that there was no cause of action to proceed with this case where order was sought that Jayawardena, who was making a bid to control the Bank, had violated the Banking Act by acquiring Commercial Bank shares in excess of the 10 percent maximum limit.

The case and a subsequent action in the Appeal Court last November restraining Jayawardene from using these votes to take control of the Commercial Bank saw a group of bank directors led by its Chairman Mahendra Amarasuriya and backed by unions and a larger number of small shareholders retain control of the institution.

Shah said the executive committee of the union on Thursday reluctantly decided on trade union action due to pressure from the membership. “We were reluctant to resort to trade union action against the regulator (Central Bank) and some high officials of the Commercial Bank because it would be negative to the bank. However later we decided that in the long interests of the bank we had no choice but to resort to such action which we are aware would be a temporary setback to the bank – but beneficial in the long term,” he said, refusing to disclose what action is being contemplated. He said they were very disappointed with the Central Bank which has apparently decided on the response to the union letter of Jayawardene holding shares in excess of the minimum prescribed limited but that “no one in the bank or the Treasury is telling us what this response is.”

In the District Court case CBEU members including Shah had argued that Jayawardena owned 42.6 percent shares of the Commercial Bank through direct and indirect parties.

According to the law no individual or group acting in concert could own in excess of 10 percent of a bank, they had said.

The court in its judgment held that the Central Bank had not held that the acquisition of said amount of shares by the defendant was illegal and the plaintiff had not made the Central Bank a party or taken any action against it for not taking steps to reduce the shares held by the defendants.