Financial Times

Harry: ‘I was re-offered SLIC’

By Duruthu Edirimuni Chandrasekera and Bandula Sirimanna

Business tycoon Harry Jayawardena, smarting from the stinging Supreme Court (SC) judgment on Sri Lanka Insurance Corporation (SLIC), has told directors at SLIC’s former parent company Distilleries Company (DCSL), of which he is the chairman, that the insurance company was offered to him for a second time, an SLIC source said.

The source told the Sunday Times FT that at the DCSL board meeting on Wednesday specially called to inform the board about the SC decision, Mr. Jayawardena had said that SLIC was ‘offered’ to him again.
“Then some directors had wanted to know whether the SLIC management was offered to him or whether he was requested to buy SLIC again. To this he had confirmed that the government had wanted him to buy SLIC again, but he will not accept it,” the source said.

On the same day, Wednesday, Treasury Secretary Sumith Abeysinghe visited the SLIC addressed staff and gave an assurance that no employee will be affected as there won’t be any change in the management other than the ownership.

None of the DCSL directors -- Royle Jansz, Raj Obeysekere, Jagath Kahanda, Nirajan Deva Aditya, Ms V.J. Senaratne, Damien Fernando or Mr. Jayawardena – was available for comment on the board meeting.

The source further said that Mr. Jayawardena when prodded by some directors as to why he will not accept the 'offer', had said that he is not interested, because of the unions at SLIC. "The directors then reminded Mr. Jayawardene that when SLIC was bought in April 2003, there were unions as well. “To this he had no comment to make," the source said. However, insurance industry analysts said that offering SLIC to Mr. Jayawardena (by the government) was not even a remote possibility. "When there is a court case pending, the state cannot re-offer it to Harry. Also it is against the state policy to privatize," an industry analyst said, adding that furthermore it would tantamount to the government rejecting the court judgment.

At the same meeting, Mr. Jayawardena had hinted at scouting for other investments, saying, "Now we got the money (Rs. 6 billion to be paid by the government) and we can do something else with it."
On Wednesday, the Treasury appointed former SLIC CEO Dr. Nalaka Godahewa as Competent Authority until the new board of directors is named (on June 18). Minister of State for Finance Ranjith Siyambalapitiya said any changes in the administration will be made by the new Board of directors. “At the moment there is no decision to sell the shares of Apollo Hospitals, Aitken Spence Holdings, DFCC, Asiri Medical Services Ltd, Asiri Hospitals and e-Channeling held by SLIC,” he said.

However, the new directors will decide on future strategies relating to these shares and whether the state should retain them. Industry analysts said that given the government’s strict policy towards alcohol consumption, it would be difficult for the state to retain SLIC’s 3.89% stake in Distilleries.

The names of Dr Jagath Wickremasinghe, a veteran academic and economist or Dr. Godahewa are being mentioned as the main prospects to the post of SLIC Chairman. Meanwhile, Mr Jayawardena was unable for comment. When the Sunday Times FT contacted him on his mobile phone last week, it was answered by a male voice who said 'I am his brother'. The respondent said he was not aware where Mr Jayawardena was. Mr Jayawardena’s response to the judgment appeared to be mixed, according to business associates. Some said he was upbeat, and handed over the SLIC to the government in an orderely manner and had told associates that this was not a big issue for his group of companies. Others said he and his family were unhappy over the verdict and the impact it would have on the range of businesses that he controls.

SLIC insiders said the company, weeks before the judgment, was preparing to retrench around 500 workers under a new plans connected to the current business environment and a new marketing campaign was to have been launched.

Meanwhile, Softlogic Chairman Ashok Pathirage told the Sunday Times FT that he is very interested in managing SLIC subsidiary Apollo Hospitals and if the price is right, will consider buying it. SLIC has 54.61% in Lanka Hospitals Company Ltd, owners of Apollo. “As Softlogic has experience in managing Asiri Surgical and Asiri Hospitals we are confident of managing Apollo as well and make it profitable, unlike the last six years when it was not profitable,” Mr. Pathirage noted. SLIC has 20% in Asiri Surgical and 27% in Asiri Hospitals.

Former SLIC employee Sarath Nandalal, also one of the petitioners in SLIC case, said that a workers committee has been formed to prevent any disputes with the management and to maintain normal functions smoothly during the interim period.

Mr Nandalal said over 1,000 employees had been affected by the SLIC privatization and the government should look into their grievances as well. He said the group called the ‘Organisation to Re-Establish SLIC’ will seek legal advice as to how these employees could get some redress following the judgment.

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