The entire saga of the board-room battle of the Rs. 200 million Serene Pavilions Resort, a high-end sea-side boutique hotel at Wadduwa boiled over when Mr. Clive Leach arrived in Sri Lanka in August this year. About the same time, Mr. Lokuhetty is reported to have held a board meeting with his wife who is [...]


Battle for control of classy hotel shifts to courts

Family trio sacks company secretaries; key British investor ousts CEO

The entire saga of the board-room battle of the Rs. 200 million Serene Pavilions Resort, a high-end sea-side boutique hotel at Wadduwa boiled over when Mr. Clive Leach arrived in Sri Lanka in August this year.

About the same time, Mr. Lokuhetty is reported to have held a board meeting with his wife who is also a director, at their Rajagiriya residence, and as the quorum for a board meeting is 3 persons, appointed their son as a director along with two others. They removed the Company Secretaries viz., Chart Business Systems (Pvt.) Ltd., and appointed R & J Corporate Secretaries (Pvt.) Ltd., The resolution to remove the Company Secretaries was voted only by the Lokuhetty family.
Mr. Lokuhetty claims that people dressed in Army uniform were present outside his residence when he was holding his meeting.

The Company Secretaries thereafter lodged a complaint at the Welikada police station of the purported board meeting that had been held at the Lokuhetty residence and also reported the matter to the Registrar of Companies saying that the appointment of new Directors was illegal.

The hotel in question. Pic courtesy

However, Mr. Lokuhetty submitted papers to the Registrar of Companies with the new list of directors, and the Registrar accepted these names. Mr. Lokuhetty also complained to the Slave Island police station of an ‘illegal board meeting’ that is being held by the other directors.

Mr. Leach and the other directors decided to sack Mr. Lokuhetty as the CEO of Serene Pavilions. Mr. Dilith Jayaweera, a hotelier of recent origin was among those who visited the Serene Pavilions last week (September 11) with a group of some fifty persons. He accompanied two directors of the hotel who voted to oust Mr. Lokuhetty. Mr. Jayaweera says that he has no interest in the matter other than “it was my duty to clear the ill feeling that this British national had developed towards our motherland and its truly honest people”.

Mr. Jayaweera says that he met Mr. and Mrs. Leach late on the night of 31st August and that he was introduced to them by a senior official of the Capital Maharajah Group. Mr. Leach who was once Chairman of Yorkshire TV in the UK was also a director of Capital Maharajah Group.

He says that Mr. Leach had asked him to be the Alternate Director to him “if that was the only way I could fight for his rights and restore his faith in the goodness of our country.” Previously, he says, he was asked to consider managing the hotel and that he was in consultation with the management of Citrus Leisure PLC, a company that owns hotels in Sri Lanka, and that the company had “agreed to consider providing temporary management services to Serene Pavilions.”

Mr. Lokuhetty had then arrived at the hotel when Mr. Jayaweera and the directors were addressing the staff of the hotel accompanied by his lawyers and two police officers including a Senior Superintendent and said that he remained CEO of the hotel. The police then recorded statements from both parties. The matter is now before courts.

Meanwhile, Mr. and Mrs. Leach received a telephone call from the Department of Immigration asking them to call over immediately. When they went to the Department they were told that they were in receipt of a complaint from Mr. Lokuhetty that they were engaged in business having come on a tourist visa. Mr. and Mr. Leach left for the UK thereafter.

Quarrel with Leach was over exclusive right to one pavilion

Anura Lokuhetty, the CEO and director of Serene Pavilions had this to say about the saga:

“The reason for the falling out (with Mr. Clive Leach) is a very simple issue. We knew each other since 1991 when I was the General Manager at Riverina hotel. Our families were close to each other. Even in May when he came to Sri Lanka we met and went for dinner. The issue came up when we built this (hotel). We brought the land through South West Holdings. 

We were involved in other businesses. We sold all these businesses and invested the money in South West Holdings. We bought the land (to build the hotel) soon after the tsunami. We took a bank loan of USD 1.9 million from the Bank of Ceylon. It was the worst time in Sri Lanka. But the BOC considering my involvement in the hotel industry and my dealings provided the facility. We hired a foreign architect. While the buildings were going on we wanted extra money.

This was in 2008. I invited one of my schoolmates Sumith Guruge and Chris Warnakulasuriya and another Indian known as Gautam Radia came in. We sold about 32 per cent and both of us had the controlling shares. (68 per cent). When we were about to open the hotel Clive Leach wanted to block one pavilion for him exclusively. That means we can’t sell it when he is not here. I said I have not given that facility to other shareholders. We have only 12 pavilions.

If you block one pavilion the business will get affected by 8.5 per cent. I said it cannot be done, but at the initial stage I gave it. Later, the other two directors came to know about it and made a fuss, Clive expected (me) to support him. I could not do that. He did not accept the offer to occupy it when he is not in the country. We sell a pavilion for US dollars 600 per night. Then he said children below 15 cannot be entertained. I said that was not possible. So it was on this issue that we fell out.Mr. Lokuhetty denied there were questions about the hotel’s accounts. “Everything is audited. Even last month’s accounts were done. Everything is 100 per cent transparent”, he says.

He claims that the board meeting he held with only his wife was not a separate meeting. “That was a proper board meeting. We called all the directors .we informed them. They came for the meeting with 10 other people and an Army vehicle with a person in an Army-like uniform who was armed. My home is the registered office. I told them to come in. Only the directors can come in”.

“They lodged a complaint at the Welikada police saying I did not allow them to come in. It is they who had an illegal meeting. We lodged a complaint at the Slave Island police about that.” 

Asked about the appointment of his son as a director, Mr. Lokuhetty said “I am entitled to appoint my son as a director. I have more than 30 per cent of the shares therefore for every 10 per cent a director can be appointed”. He denies having employed local thugs and security personnel to block other directors from the hotel entering the hotel premises. He says it were others opposed to him who brought about 50 persons and intimidated him at the hotel site.

“They even came in an Army vehicle. One person was armed. Two directors were there,” he says.

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