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Firm to manage state shareholdings By Thushara
Matthias The proposed holding company, to be modelled on the lines of Singapore's Temasek Holdings, will also work to improve corporate governance and implement the code of best practice in corporate governance for public enterprises, Treasury officials said. Among the key
benefits of such a move would be to give companies under it more
flexibility and freedom as well as minimize the present political
and bureaucratic interference in these organizations. The idea of
implementing the holding company concept in Sri Lanka was mooted
by Prime Minister Ranil Wickremesinghe. Temasek Holdings
Singapore is the investment holding arm of the Singapore government.
Many of its companies are listed in the Singapore Stock Exchange
and include DBS Bank, Keppel Corporation, Singapore Airlines, and
Singapore Telecom. The move to
create such a holding company comes in the wake of growing concern
among investors that government appointed directors represented
on the boards of these companies were adopting a "disinterested"
attitude, despite enjoying the perks that go with such positions,
and were not doing enough to protect the interests of investors. The holding
company will initially hold and manage government shareholdings
in state-owned companies and thereafter others. This includes two
state banks, two statutory boards and 10 commercial public enterprises. It could even
appoint new boards of directors although the Treasury does not intend
to touch those institutions that are undergoing restructuring or
being privatised at the moment. The establishment
of the holding company is the one of the main tasks of the Corporate
Governance Unit established under the Public Enterprise Division
of the Treasury. This unit,
which was established on December 16, 2002, was set up as a separate
section to deal with corporate governance. It is tasked with the
implementation of a code of best practice for corporate governance. The implementation of this code will be done in a staggered manner. The first step will be to identify the institutions in which the code will be implemented. Then, a Corporate Charter and a Citizen Charter will be drawn up, followed by the appointment of a board of directors and the holding of the annual general meeting. Targets will
be identified and a strategic plan drawn up. The companies' performance
will be closely evaluated and penalties imposed for non-performance,
the Treasury officials said. The Public
Finance Act is also being been redrafted. The Public Enterprise
Division would conduct seven awareness programmes at provincial
level. This is with the view of getting the ideas of public servants,
NGOs, and other organizations. Each programme would consist of nearly
one hundred participants. The act, when passed by parliament, would make the legal enforcement part of the holding company steady and sound, officials said. At present the "final touches" are being given to the new act. Both the code of best practices and the holding company procedures will be adopted simultaneou sly. The memorandum and articles of the company are being drafted with the help of the AG's Department. SEC insider dealing probe reaches critical stage The Securities
and Exchange Commission probe into insider dealing allegations against
its own chairman, Michael Mack, and other ex-directors of Aitken
Spence has reached a critical stage with the Attorney General's
ruling expected to be the final word in the matter. "I have
asked the SEC to get the Attorney General's opinion as he is the
principal legal officer of the state," Finance Minister K.
N. Choksy said. "They (SEC) will have to abide by his opinion." The AG's opinion was sought on the "second opinion" given by a so-called two-man independent panel, which reportedly cleared the accused of any wrongdoing. This panel reviewed the SEC's investigation into the sale of Aitken Spence shares in May and June this year by the three former directors of the company and their relatives following advice from the AG's Department that there was a
prima facie case against the accused. Legal sources
have described as "unprecedented" the market watchdog's
decision to seek a second opinion on the advice of the AG's Department
in the probe. This second opinion was sought and the SEC investigation
halted just as it was about to issue notice of action against the
accused. The decision
was taken by the Commissioners and the SEC Secretariat was unaware
of the basis on which the two-man panel was selected. It has been
unable to reveal any information because of a gag imposed by the
Commissioners. It is also unclear who will meet the cost of hiring
the independent panel. Legal sources said the proper procedure would
have been to proceed with the notice of action and for the accused
to have responded with their explanations. Very little official
information has been released on the investigation and details about
the probe have reached the public largely through leaks by sources
connected to one side or the other. Allegations have been levelled
against the SEC Secretariat that it did not conduct its probe properly.
Allegations have also been made against the SEC Commissioners of
conflicts of interests and that their move to seek a "second
opinion" was unusual and unprecedented. The two-man team, which
reviewed the SEC's investigation, has itself been accused of being
partial towards the accused. The gag on SEC director general Dr. Dayanath Jayasuriya and allegations against the SEC Secretariat prompted him to submit his resignation to Finance Minister K.N. Choksy. Speculation has it that Jayasuriya's resignation was not accepted because of the fear that he could reveal details of the probe if he is no longer with the SEC and free of the gag. The AG last week received submissions from the SEC about the report of the independent panel, which gave the "second opinion", as well as counsel for the accused, Romesh de Silva, PC. Ratan
Tata here next month Big Pramuka share-holders in revival effort Units of Janashakthi
Insurance Company Ltd are exploring the possibility of reviving
the failed Pramuka Savings and Development Bank (PSDB) if the Central
Bank grants approval. Janashakthi
is the largest shareholder of Pramuka, holding 13.5 percent in the
name of the National Insurance Corporation (NIC), which it acquired
last year, and Acland Holdings Ltd. "We are
working out a suitable plan of action to safeguard the interests
of both shareholders and depositors," a group spokesman said.
"We have the support of some of the other major shareholders
and the Depositors' Association. It is a collective effort." Senior officials
of these companies are scheduled to meet Central Bank officials
on Monday for talks on measures to revive Pramuka. The spokesman
said the initiative was at a "preliminary stage" and would
depend on whether the Central Bank was ready to consider a new approach. The Central Bank decided to liquidate Pramuka last month after its investigations into the bank's finances revealed serious irregularities and fraud. Former Pramuka Bank chairman Rohan Perera, who reportedly fled abroad, is now being hunted by Interpol on the request of the CID. Economy growing but concerns rise over COL Sri Lanka's
economy is seen growing by five to six percent this year, up sharply
from a projected three percent last year but serious questions are
being raised by the business community over inaction by the government
on rising prices and fears of JVP disruption in the private sector
this year. This year's improved growth patterns are essentially seen as a country bouncing back from a bad year in 2001. "What we need is consistent growth instead of an economy that keeps bouncing back from a bad year like a yo-yo. We need to sustain a five percent growth rate over a prolonged period," a top economist noted. Tourism is expected
to gain this year; so is the paddy sector where a bountiful rice
harvest is expected for both Maha and Yala because of sufficient
rains. But private sector investment continues to be slow and is
unlikely to gain this year as the business community continues to
show its reluctance to be moved positively by the peace process. "The uncertainty
still continues. There is also a reluctance to invest due to the
uneasy cohabitation between the president and the government. Most
people are waiting for the actual peace to happen," said a
business analyst close to the government. That may take a while
as some political analysts believe the peace process may extend
up to even 2005 before a workable solution is reached that is satisfactory
to all concerned sides. The rising cost of living is growing to be a major issue with key figures in the business community worried that the government is not adequately tackling this issue while the JVP takes advantage of state inaction and is gearing itself for a major protest campaign across the island. "They can make great strides if the government doesn't bring down COL to some comfort levels. It could also jeopardize the peace process because southern support for the process could get affected," added a political analyst. Pro-peace campaigners
in the private sector also concurred on this point, noting that
the two ministers chiefly involved in driving economic reforms were
more preoccupied with the peace process. "Ministers G.L. Peiris
and Milinda Moragoda are constantly abroad and would be much more
involved overseas in the next few months. What happened then to
economic reforms?" asked the business analyst. Industrial
closures are increasingly taking place going by parate advertisements
in newspapers. The closures are taking place simultaneously with
growth. Hemaka Amarasuriya, chairman Singer group, says he is concerned
about the manufacturing sector which is failing with the many closures
expected. "We are turning into a nation of shopkeepers. Many
manufacturers are moving into trading which is more lucrative,"
he said, adding that they were negotiating with the government to
reduce budget tariffs on imported TV components. The Public
Enterprises Reforms Commission (PERC) is also facing a minor crisis
with senior directors quitting at the same time as PERC chairman
Dr P.B. Jayasundera sent in his resignation earlier this month.
Questions are being raised about the bus privatization and its "swift"
approval by the state while the CWE privatization is also not without
hiccups. Car market
dealers and supermarkets owners say they are concerned about the
impact of rising costs of living on their business, which the JVP
is taking advantage of to woo the masses. "Economic activity
is improving but cost of living and cost of power are hurting revenues
and raising costs," said a supermarket official. Analysts also say the government, with pressure mounting on prices and demand for relief, may find it difficult to conform to rigid IMF targets on the budget deficit and expenditure cuts. - The Business Editor Qatar doubles flights to Colombo Qatar Airways
is planning to double its weekly schedule between Doha and Colombo
to 14 flights from seven, airline sources said. They said that the Doha-based airline, which announced an increase in its weekly schedule to seven from January against five earlier, is now planning to raise it further by an additional seven flights per week, aimed at catering to the growing number of Sri Lankans going to Doha and back for employment. |
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