State control expands at Commercial Bank
View(s):The vacant position on the board of directors of the Commercial Bank after Dinesh Weerakkody stepped down in line with the maximum 9-year rule is likely to be filled by a Treasury nominee, informed sources said.
If that happens, the Government would take effective control of the privately-held bank with five directors representing its interests through government stakes and in other ways. Directors that represent state interests (Treasury and Central Bank) are Dharma Dheerasinghe (Chairman), Prithi Jayawardena (Deputy Chairman), W. Swarnajothi – former Auditor General and Lakshman Hulugalle, Deputy Sri Lankan High Commissioner in Australia. The other directors are Prof. Uditha Liyanage and the bank’s managing director and his deputy. Earlier this month, John Wilson from the IFC was appointed a non-executive director of the bank.
The sources said that while Mr. Weerakkody was a nominee of the Harry Jayawardene-led DFCC Bank, the Government has a 35 per cent stake in that bank and the Treasury is believed to be using this clout to push its nominee on the Commercial Bank board.All directors including Mr. Hulugalle, who flew in from Australia, were present at Monday’s board where Mr. Weerakkody exited and Mr. Dheerasinghe took over.
While conflicts of interest have re-surfaced over the new chairman and his deputy, what is also interesting is the continued presence on the board of Mr. Hulugalle who has a criminal past which automatically should disqualify him under the ‘fit and proper’ rules of the Central Bank.
Mr. Hulugalle was convicted in the early 1990s over a timber offence and was sentenced to two years imprisonment suspended for 10 years by the Colombo High Court after he pleaded guilty.
The other bank where the government informally exercises control is Hatton National Bank with at least five directors known to represent state interests.
One minority shareholders said that he hoped ‘and prayed’ that the Commercial Bank, despite growing state influence, would be run as a professional organisation without external interference.
Banking analysts also wondered whether the next target would be the proposed combined NDB-DFCC Bank for more government representation.