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AG stands by ruling on SEC boss
By Ayesha R. Rafiq
The Attorney General has reiterated to the Securities and Exchange Commission that there is a prima facie case for prosecuting its Chairman Michael Mack and some of his former co-directors at Aitken Spence for insider dealing.

The AG's reiteration on Friday comes more than two months after his original advice that there was a prima facie case against the businessmen. Following the AG's first opinion, in what was an unprecedented move, the SEC, the watchdogs on insider dealing, commissioned an independent panel comprising a retired Supreme Court judge and a member of the accounting profession. The panel exonerated Mr. Mack, and his former directors at Aitken Spence, Norman Gunawardene and Manil de Mel. This opinion was then referred to the AG for his advice.

Lawyers for Mr. Mack and others had interviewed the AG and argued that the AG's original opinion was given without the benefit of some documentation. The Sunday Times learns that the AG has held that such information was in fact available to him when the original opinion was given.

While the SEC acting chairman Nihal Jinasena declined to comment on the AG's opinion, he said he would be acting in the best interests of the Commission. Mr. Jinasena said a meeting of the commissioners had been called for tomorrow to decide on a course of action.

Finance Minister K.N. Choksy said that while he was not yet aware that the AG's opinion had been delivered, he had instructed the SEC to accept the AG's advice as final. It is expected that the SEC will now request the AG to indict the businessmen. The AG was, however, unavailable for comment.

If found guilty, the SEC chairman and others could face imprisonment of upto five years, a maximum fine of Rs. 10 million or both. If the offence is compounded, however, the maximum fine payable would be one third of Rs. 10 million.

Mr. Mack and other co-directors of Aitken Spence have been accused of having information that an important arm within the umbrella of the Aitken Spence Group was in dire financial difficulty, where the projected losses ran into Rs. 150 million (approx.) trade in large amounts of therefore price-sensitive shares before disclosing that information to the public.

In law, any person who is privy to such information cannot trade in shares of that company. The Sunday Times learns that the Attorney General has been very critical of the SEC commissioners taking an unprecedented step in obtaining an independent opinion when other suspects before the same SEC were never given such an opportunity.

An investor has lodged a complaint with the CID on the SEC fiasco and asked that the matter be investigated. But investigating officer SP Kulatunga said it had not been lodged as an official complaint, and in any case they would first have to consult the AG before taking any action.

Meanwhile, SEC member and Singer Chairman Hemaka Amarasuriya said yesterday the AG had held that there were grounds for prosecuting the parties concerned including the SEC chairman.

"I was of the opinion that there was no case and that this was not price sensitive information. I have been proved wrong and based on a matter of principle I am sending in my resignation tomorrow when the commission meets," Mr. Amarasuriya said.

The SEC was probing the sale of Aitken Spence shares during May-June last year by the three former directors of Aitken Spence and their family members.

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