Amarasuriya wins Com Bank round 1
By Duruthu Edirimuni
The much awaited Commercial Bank EGM concluded on a turbulent but
jubilant note and an unbelievable turn of events for the bank’s
Chairman Mahendra Amarasuriya, against whom the stakes were piled
Amarasuriya, who was expected to be ousted at the special meeting
of shareholders on Wednesday, had an unprecedented show of support
both from the staff and shareholders at a meeting where tempers
rose and opposing sides almost came to blows.
won the first round against powerful business tycoon Harry Jayawardena
after the latter’s majority stake – through other parties
– was reduced when the Court of Appeal ruled against any shareholding
in excess of 10 percent in the bank. HNB and Distilleries Ltd, both
controlled by Jayawardene had called the meeting to remove Amarasuriya.
No reasons were given in the notice calling the meeting but by early
last week shareholders backing Amarasuriya had taken every step
possible to defeat the resolution. That included three court actions
seeking orders to reduce stakes in Commercial Bank held by Harry
Jayawardene-controlled firms. However no one was in store for what
happened on Wednesday apart from the fact that Amarasuriya was likely
to be ousted.
By two in the afternoon, more than 1,000 people, mostly in a pensive
mood, had gathered at the Holiday Inn, the venue of the EGM. Some
were queuing up to the second floor ballroom. A. Tennakoon, a non
voting shareholder for more than 10 years, said he wanted to attend
the meeting as a show of support to Amarasuriya. “This is
the first time that I am attending a Commercial Bank meeting and
I hope that Mahendra Amarasuriya will retain his chairmanship, because
he has not done anything wrong,” he said.
T.E. Dias, who has been both a voting and non voting shareholder
for over 10 years, said he hoped Amarasuriya would continue as chairman.
A host of staff members said they wanted Amarasuriya to continue
as he was the great motivating factor at the bank.
By three o'clock, the whole scene had changed into mild panic, with
many more shareholders gathering up near the ballroom amongst tight
security and the queues piling up from the ground floor to the second
floor. Others were clamouring for last minute proxies. There was
tight security and shareholders with their proxies were restless
as security personnel began checking identity cards. No media was
allowed and around 10 security men manned the main entrance to the
When the EGM started around 3.45 pm, long past the scheduled 3 pm,
boisterous unionised staff members who were either shareholders
or had proxies defended their chairman and shouted down Jayawardena’s
allies when they tried to voice their opinions.
was a lot of booing at the directors by the staff and Commercial
Bank Branch Union Secretary, M. R. Shah, who could be heard through
a megaphone, was very vocal and determined.
Vignarajah, another petitioner against Jayawardena’s excessive
shareholding, protested against the change of the venue of the EGM.
He told The Sunday Times FT that the shareholders have to be notified
21 days prior to the change of the venue. “The Companies’
Act clearly stipulates that if the agenda, venue, resolution and
the time are changed, it has to be notified to the shareholders
21 days prior to holding the EGM,” he said. He said when this
point was brought forward, the pro-tem chairman, B.R.L. Fernando
replied saying that he had received legal opinion. “When I
said that the meeting was illegal and improper, the pro-tem chairman
ruled that he had obtained legal opinion. I asked Mr. Fernando whether
he has a written document with the opinion, which he did not have,”
he explained. Meanwhile, Desmond Fernando, President of the Bar
Association, who also attended the EGM as shareholder, said that
it was illegal.
also objected to the selected pro-tem chairman of the meeting saying
such a person must be picked by the shareholders and not the directors
alone. “The meeting itself has to decide who the pro-tem chairman
should be,” he said. He said that the meeting clearly showed
that there was no unity among the directors and some were booed
by the shareholders and the staff members. “It appeared that
the high standards of the Commercial Bank board had already started
deteriorating because of some dissident directors and I saw that
the staff had great contempt for them,” he said. “There
must be a limit to a person’s ambition and it should not affect
the larger interest of the society,” he added.
the meeting was called off after objections were raised as to the
convening of the meeting and also after the Appeal Court judgement
was conveyed, there was pandemonium and jubilation by staff and
many crowded round Amarasuriya to congratulate him. Amarasuriya
who was speechless couldn’t initially comprehend what had
happened with the thunderous applause of the staff and the shareholders.
He at once went towards Shah and embraced him and was trying to
return a good word to all who congratulated him. Visibly moved and
somewhat relieved, he told the media, ‘justice has prevailed’.
The directors who were present were Amarasuriya, Nihal Fonseka,
B.R.L Fernando, Amitha Gooneratne, Sanjiva Senanayake, Dinesh Weerakkody,
Lalin Fernando and Shelton Wanasinghe. Another director A.S. Mather
was not present.
ado about nothing?
Some minority shareholders raised questions about the furore over
Harry Jayawardena holding a stake in excess of 10 percent in the
bank but the lack of objections to the International Finance Corporation
holding 15 percent. This, however, was done with special permission
from the Central Bank.
They also asked who would compensate a shareholder forced to divest
any excess holding in a bank if he suffered a loss on the sale at
the market price.
They also said that although Amarasuriya maintains that no reason
has been given for demanding his removal as a director of Commercial
Bank, the members of the boards of Commercial Bank and DFCC Bank
had objected to him raising questions about shareholdings in his
recent letter to the Central Bank.
In that letter Amarasuriya objected to DFCC Bank continuing to have
a stake in Commercial Bank as there was a conflict of interest for
DFCC Bank now has a commercial banking arm competing with Commercial
Bank. His fellow directors however objected to him writing to the
regulator without board approval.
Court rules in favour of union
The Appeal Court overruled a District Court order rejecting the
enjoining order sought by four shareholders who are also members
of Ceylon Bank Employees Union (CBEU) to stop business tycoon Harry
Jayawardena acting directly or indirectly from voting at the Commercial
Bank EGM. The order was given just as the EGM got started on Wednesday.
After the District Court dismissed the CBEU request, the unionists
immediately filed a fresh appeal in the Appeal Court challenging
the District court order.
Senior Counsel Faisz Musthapha appearing for the petitioners said
the order was erroneous as the District Judge, K. H Sumithrapala
had not made even a passing reference to the Banking Act or to the
Sampath Bank order.
appeal was heard before Appeal Court judges, Justices Andrew Somawansa
and L. K. Wimalachandra. Counsel Upul Jayasuriya supporting the
CBEU members said that it was important to issue an order soon,
because the EGM was taking place at the time of the case proceeding.
Colombo District judge K. H Sumithrapala refused an enjoining order
against Harry Jayewardene saying there was no prima facie case against
the defendants. Jayawardene was represented by President’s
Counsel K. N. Choksy PC and his team.
The Court of Appeal issued a stay order until November 16 and ordered
to communicate the order over the telephone to the necessary parties
– in view of the meeting being held at the same time.
Bank urged to step in again
A top shareholder, who helped restrain business tycoon Harry Jayawardene
from seizing control of Commercial Bank, has urged the Central Bank
to call on the group seeking to oust Mahendra Amarasuriya as chairman
of the bank to “back off.”
In a letter sent to Central Bank governor Sunil Mendis, two days
before Amarasuriya got a reprieve after shareholders backing the
latter forced the EGM to be postponed, K.C. Vignarajah said it was
the duty of regulators to ensure “the ugly face of oppressive
capitalism would not be manipulated to reduce healthy competition,
supply sources, and narrow choices to the consumer.”
Vignarajah, also a shareholder of Jayawardene-controlled companies,
Distilleries, HNB and DFCC), said the tendency to have extensive
control of three of the top well performing local private banks
by a few is clearly unacceptable; especially in the banking and
financial services sector it could easily degenerate into a mafia
like control of the economy.
He said the Commercial Bank under the eminent leadership of Mr.
Mahendra Amarasuriya, has prospered extremely well and shown tremendous
success in Sri Lanka and abroad. “Even the new capital adequacy
rules, suddenly imposed by Central Bank has already been very easily
met,” he said, adding that it was unhealthy for the Sri Lankan
economy and national interest, if a very small group of persons
with material shareholding in competing banks manipulated the flourishing
independent Commercial Bank.
“The Central Bank must genuinely try ‘in the interests
of a safe, sound and stable banking system and fair competition
prevailing in the banking industry……”, to ensure
that Commercial Bank does not also fall into the sphere of influence
and / or control of Mr. Harry J’s group of SL Insurance, Distilleries,
HNB, DFCC, DFCC Vardana Bank, etc.”
said Mr. Harry Jayawardene has to be admired as a superb entrepreneur
who has made a tremendous success of Stassens and Milford Groups,
Distilleries, etc. and through their success bought into the control
of Aitken Spence Group, Sri Lanka Insurance Group, plus a host of
there are question marks on his handling of some companies like
Madulsima Plantations. His success overall is matter of pride to
the shareholders of those successful companies, perhaps as much
as Mr. Mahendra Amarasuriya’s success and international image
is a source of immense pride to numerous ordinary shareholders of
Commercial Bank like me,” he said.