Capri Club members revolt

Special General Meeting next week to pass new Club Rules
By Leon Berenger

The Capri Club, one of Colombo's once elitist social club's will next week decide on amending its Rules to ensure that only "fit and proper persons" could hold office following an Inland Revenue probe into how VAT dues from the club were settled through a 'tax consultant' misrepresented to the membership as a chartered accountant by its President Morgan Fernando.

The amendments being moved by a special committee that has gone into revising the club rules state that any person seeking to hold office at the 57 year old club, now at the centre of an alleged VAT scam involving the club's president and vice-president, henceforth should swear an affidavit that he has not been sued in a criminal court for fraud, has not been found guilty of any criminal misappropriation of funds, is not a judgment-debtor and not in arrears to anyone nor been faced with any disciplinary inquiries in any other club.

It was revealed last week that the 'tax consultant' was only a former clerk in an accounting firm. He had been paid a fee of Rs. 575,000 of club funds to settle the VAT claim of Rs. 528,000 by the Inland Revenue Department late last year.

A select committee of the club had found Fernando and Vice President Ananda Chittambalam guilty of violating club rules in this fiasco now involving the attention of the Inland Revenue Department.
In a letter to the members this week explaining the circumstances that made him break club rules, Fernando has remained silent on the issue of misrepresenting facts and misleading the general membership on the credentials of the 'tax consultant' they had retained and to whom they had paid a fee of over half a million.

Asked whether he lied to the members, Mr. Fernando told the Sunday Times yesterday that he did not want to talk about it. Mr. Fernando, however, released a letter written by the 'tax consultant' addressed to Mr. Chittambalam long after the alleged VAT scam blew up within the club where he confessed that it was on his (Mr. Chittambalam's) request that he got involved in the VAT matter. The so-called 'chartered accountant' has, in that letter referred to the "friendship" between himself and Mr. Chittambalam.

Mr. Fernando also circulated to members a photocopy of a cheque for Rs. 575,000 addressed to the Capri by the 'tax consultant' hired by Mr. Chittambalam but added that that the club never credited it into their account,. The amount remains a payment made by the club.

Meanwhile, 32 senior members of the club have signed a petition asking for a special general meeting to discuss the report of the select committee that probed the VAT issue and its "damning findings" against Mr. Fernando and Mr. Chittambalam.

In view of next week's special general meeting to discuss the constitutional amendments, these members have asked that the select committee report - known in the club as the VAT Commission - be also tabled at the same meeting. They have stated that should the select committee report not be tabled on that date they would move a formal vote of no confidence against Mr. Fernando and Mr. Chittambalam.

Separately, five former Presidents of Capri Club Eddie Wijesuriya, Rajah Sinnathuray, Dudley Thambinayagam, Razik Zarook PC and Lasantha Fernando wrote to the incumbent President also asking for the select committee report to be discussed at an SGM in view of the "scandalous revelations" of the report's findings published in the Sunday Times which were being withheld by Mr. Fernando and Mr. Chittambalam from the general membership.

The report was sent to members on Wednesday only after pressure by senior members, but what these senior members are demanding is the tabling of the report and a discussion on its findings.
Two Corporate Members (companies with ten members) withdrew their application for membership and a state bank withdrew their installation of an ATM machine at the club premises amidst the questionable finances at the club.

Since last week six members of the Management Committee have resigned leaving the decision-making body of the club with only four members, which includes Mr. Fernando, Mr. Chittambalam and two others, and thereby without a quorum to function.

Several senior club members have been suspended from the club by Fernando and Chittambalam for violating club rules, which they now stand accused of violating themselves. Senior members called for the resignations of Mr. Fernando and Mr. Chittambalam in the wake of the disrepute they have brought to the club on the VAT matter.

However, Mr. Fernando told the members this week it would be "business as usual" as far as he was concerned. Mr. Chittambalam told the Sunday Times that he would never resign.

Tax Chief takes over Capri VAT probe

Inland Revenue Commissioner General Sunil Kandegedera has himself taken over the inquiry into the alleged VAT scam at the Capri Club.

Commissioner (VAT) Kalyani Dahanayake told the Sunday Times this week that the internal inquiry into how Capri paid Rs. 75,000 on a claim by the Department for Rs. 528,000 and received a tax clearance certificate had already commenced.

Department sources said that the Assessor involved in the settlement had already been questioned and a statement recorded.

The inquiry comes against the backdrop of a Treasury directive to the Department to intensify its efforts in collecting Rs. 14 billion as VAT payments according to figures tabled in Parliament this month by the Government.

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