The Sundaytimes Sri Lanka

Harry J pays high bail of Rs 2 million in securities fraud case


Harry Jayewardena and his counsel S.L. Gunasekera walking out of courts. Pic by Athula Devapriya

Businessman Harry Jayawardena was released on Rs 2 million as bail on Wednesday, in a case involving his latest company Melstacorp Ltd when the Securities and Exchange Commission (SEC) took him and his directors to court. Questions also arose about whether Niranjan Deva Adithiya, director and a member of the European Parliament, has broken the EU Parliamentary Code of Ethics. Five other directors – R. K. Obeyesekere, Chrishantha Fernando, Adrian Balasuriya, Capt Kolitha Kahada and Udaya Fernando – of Melstacorp were also released on similar personal bail conditions on alleged violation Section 51 (2) of the SEC Act. Mr Adithiya was not present in court and was not among the directors imposed a bail bond.

The European Parliament supports the widest possible transparency in all the undertakings of its members and officials, among which is avoiding potential sources of fraud and corruption, according to official EU sources.The SEC in March filed a case before the Colombo Fort Magistrate against 10 defendants including Melstacorp and its directors over non-compliance of the Act in the transfer of Lanka Milk Foods PLC (LMF) shares to Melstacorp.

The SEC charged that Melstacorp together with Milford Exports (Ceylon) Limited and Distilleries Company (also controlled by Mr. Jayawardena) failed to declare a mandatory offer after they had purchased 36.27 per cent of voting rights of LMF on or around September 13, 2011, violating the SEC Takeovers and Mergers Code. The regulator also charged that Melstacorp bought another parcel of voting shares of LMF, each share at Rs.99, on February 15, 2012 without having made a mandatory offer at Rs.105 per share to the remaining shareholders of LMF within 35 days of having triggered the Code in September, last year.
Melstacorp whilst admitting their obligation to make a mandatory offer to the Commission refused to comply with the direction to pay the stipulated shareholders of LMF and wanted the Commission to restrict the computation of the period to a period of 60 days in order to pay the compensatory balance as stipulated by the regulator. “The Commission after having considered this request saw no valid reason to change its original decision,” the SEC said. Melstacorp then filed a Court of Appeal application seeking to quash the SEC ruling.
However the company asked for time on two occasions when its own case came up for support.

The SEC said Melstacorp agreed to withdraw the Appeal Court cases and comply with the SEC’s March 5 ruling.

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