Financial Times

Kotelawala sues Central Bank Governor over mandatory code

Renowned businessman and Ceylinco Group Chairman Dr. Lalith Kotelawala is suing Central Bank Governor Ajit Nivard Cabraal for ‘malicious conduct’ over the proposed mandatory code for finance companies banks which would affect the former.

In a letter sent by his attorney Thushari Weerasinghe to the Central Bank governor, Dr Kotelawala said that if the governance codes applicable to banks and licensed finance companies are implemented, legal action would be taken against the governor seeking his removal, on the grounds that ‘you are not a fit and a proper person to hold the post of Governor of the Central Bank of Sri Lanka, and any other public office.” The Ceylinco chief, who is demanding a sum of Rs 1 billion in damages from losses incurred if the code for finance companies is implemented, says the governance code was promulgated specifically to remove him as Chairman and director of Seylan Bank PLC by preventing him holding the post of director.

hc code bars directors from serving more than nine years, beyond the age of 70 years and in more than 20 companies or entities. Dr Kotelawala has been having a running battle with Mr Cabraal ever since the mandatory code of governance for banks became effective this year. A second code for finance companies, which will also adversely affect Dr Kotelawala, has been prepared by the Central Bank and is currently under public discussion and scrutiny.

Dr Kotelawala says the rules in the banking code have been formulated, deliberately targeting him to prevent him from functioning as Chairman and director of Seylan Bank PLC, which is a bank created and built up by the vision and guidance of my client, and in defiance of the confidence placed in him by Seylan Bank shareholders, customers and other stakeholders.

“… the code of corporate governance has been introduced as a direction under the Banking Act, in the background and in ignorance of the provisions relating to corporate governance envisaged in the Companies Act No 7of 2007, the Banking Act No 30 of 1988 as amended, and the Finance Companies Act No 78 of 1988 and in violation of a citizens’ right to engage in a lawful trade, without age, number of directorial positions held, being a barrier; which even the said acts passed by the Parliament of Sri Lanka has recognized,” the letter said. Dr Kotelawala, Seylan Bank and other commercial banks have challenged the legality of the banking code and “in spite of the aforesaid pending litigation and sentiments expressed on behalf of you, as well as the Central Bank of Sri Lanka to bring about a settlement between the parties to the said actions; you have initiated to implement an exposure draft code of corporate governance, in relation to registered finance companies, once again, with the malicious intention and sinister motive of summarily removing me from the position of the Chairman and director of the aforesaid finance companies, as well.”


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