- the year in retrospect
The year that's ending has been a pretty hectic one for the capital
markets and all signs point to the coming year being no less active.
Stock market players appear to be in a bullish mood with the all
share price index hitting a new high, fuelled by the high-octane
performance of the Lanka Indian Oil Corporation IPO whose shares
debuted last week.
number of issues this paper highlighted during the year have had
a positive outcome. A most notable example is that of pyramid scams.
We can take satisfaction in the fact that it was The Sunday Times
FT and Lanka Business Report television programme which broke the
story in a joint investigation.
early exposure of the scam and subsequent Central Bank warnings
succeeded in raising public awareness of the dangers of putting
their money in such risky ventures and prevented the scam spreading
further. Even so, public ignorance and greed for quick money did
lead to substantial losses. President Chandrika Kumaratunga herself
has condemned such pyramid scams and said one such scam had led
to the loss of $50 million in foreign exchange.
such prominent scam appears to have all but dried up with hardly
any transactions being recorded and it is heartening to note that,
at long last, legislation to ban such pyramid schemes has finally
been approved by parliament.
issue this paper took up was the pathetic plight of Pramuka Bank
depositors. The courts have repeatedly held in favour of depositors
and compelled the Central Bank to continue its efforts to revive
the failed bank.
Central Bank has had to bear the brunt of the criticism over the
bank failure, on the grounds that they should have taken action
sooner, although, as the regulators have taken pains to point out,
their options were limited by the strenuous efforts by bank executives
to hide their crimes. The depositors themselves must accept part
of the responsibility for their plight because they were lured by
the prospect of high returns from the high interest rates offered
by Pramuka. High returns come with high risks.
significant point that has got overlooked in all the hand wringing
about the plight of depositors and criticism of regulators is the
fact that the culprits who ruined the bank appear to have got away
scot-free. The whereabouts of the controversial head of the bank,
Rohan Perera, who fled abroad, still remain unknown, despite his
claims that he would not run away.
he must be having the means to sustain himself overseas. The authorities
owe it to the public to say what is being done to catch the culprits.
Another regulator, the Securities and Exchange Commission, was also
embroiled in controversy and internal bickering - a state of affairs
that did no good for its image nor helped investors gain confidence
in the capital markets.
unprecedented probe into insider dealing allegations against its
own chairman demonstrated the independence of the regulators. But
the whole affair ended with many questions unanswered as the accused
was able to compound the offence. It also revealed deep divisions
with the SEC and alleged conflict of interest among commissioners.
was followed by another unseemly dispute between the present Director
General and the commissioners which has now ended with a settlement.
The government needs to appoint a replacement without much delay
and, hopefully, this could be a new beginning.
reportage on our own cola wars also ends on a positive note with
the local entrepreneur, My Cola, scoring a notable victory against
Coca-Cola International USA in the Commercial High Court over the
use of similar plastic bottles.