Directors of Entrust Securities removed from other Group Cos.
The Securities and Exchange Commission (SEC) is flexing its muscles to sack directors at Entrust Capital Markets Private Ltd (ECMPL), the broking arm of Entrust Group whose beleaguered primary dealer, and Entrust Securities was taken over by the Central Bank (CB) early this month. The CB handed over its management to the National Savings Bank after its liabilities fell below its assets putting depositors and investors at risk.
“The SEC’s corporate Affairs Division is currently going through ECMPL and will make a decision soon,” a SEC official said.
The SEC’s move comes after the CB removed the common directors of Entrust Securities (Entrust) who served on the boards of Multi Finance and Standard Credit Finance Limited. The CB has appointed two directors to Multi Finance and removed the entire director board at Standard Credit replacing them with five new directors. The common directors at Multi Finance and Entrust Securities were Isira D.B. Dassanayake, Romesha Senerath, Niloshan Mendis, Sanjeewa Dayaratne and Mano Thilakawardena (independent director).
“Prof. Hareendra Dissa Bandara (former Director General, SEC) and private sector professional, Sanjeewa Fernando were appointed to Multi Finance board this week,” a CB official told the Business Times. Two Multi Finance’s independent directors (Kuvera de Zoysa, its chairman and Mohan Ratnayake) along with its CEO Pushpika Jayasundera, who met the CB mid this month, had recommended that common directors of these two firms should be removed The CB official added that the other three positions are to be filled by the newly appointed board in consultation with the CB.
He said that last week, four out of five directors at Standard Credit were replaced by CB nominees, while Rohan Fernando, Independent non Executive director wasn’t removed by the regulator. Prof. Dissa Bandara (as Chairman) and as directors – Sanjeewa Fernando, Claude Alwis and Kithsiri Bandara were appointed. Mr. Dassanayake (former Chairman), Chanuka Ratwatte, Mrs. Senerath and Mr. Mendis, Mr. Dayaratne and Chandra Dias were on this board. The company held its first board meeting on Friday afternoon.
A strong call has been made by depositors and interested parties to re-examine the director boards of firms under the Entrust Group. “In a situation of this as per the CB regulations and SEC requirements the fit and proper rule plays a major role when directors or senior management carries out duties. All the directors and senior management of Entrust are still continuing to be directors of other regulatory bodies namely Multi Finance PLC, a licensed Finance Company regulated by CB and SEC as well as in a Stock Broking Company regulated by the SEC. is it fair or is it appropriate to allow them to continue in these regulated bodies?” a letter by a depositor to the Business Times questioned.
CB governor Arjuna Mahendran told the Business Times that the regulator decided on this move as they have the authority under the Finance and Business Act to rearrange the boards of any financial institution in a bid to improve the way they’re run. “Also the fit and proper criteria arise in this case as Multi Finance is a subsidiary of Entrust,” he added. Meanwhile passports of former Entrust Securities’ director and five current directors along with former General Manager Sanjeeva Dayaratna were impounded by the Colombo Magistrate’s Court on Monday pending a probe into the company’s activities, sources said.
The Colombo Magistrate’s Court directed the Controller of Immigration to stop any one of the above individuals from overseas travel till the investigation is completed, they said. However, Entrust Non-Executive Director S. Jeyavarman was not included in the court order, they added. The CB earlier requested the police to impound passports of the directors in view of a current investigation in the company.