Touchwood Investments investors were given the opportunity to get their monies back on Thursday when the Colombo Commercial High Court agreed to appoint a liquidator after issuing the order to wind up the company since it was unable to pay back its debts. Colombo Commercial High Court Judge Amendra Seneviratne pronounced his Order stating that [...]

The Sundaytimes Sri Lanka

Touchwood drama takes new twist, court orders winding up


Touchwood Investments investors were given the opportunity to get their monies back on Thursday when the Colombo Commercial High Court agreed to appoint a liquidator after issuing the order to wind up the company since it was unable to pay back its debts.
Colombo Commercial High Court Judge Amendra Seneviratne pronounced his Order stating that he had taken into consideration all submissions made by Petitioner in the case No. 31/2013/CO as filed by the Attorneys-at-Law F.J. & G de Saram on July 24, 2013 in addition to the company being wound-up and those of the other intervening creditors.

A neglected Touchwood plantation in Sri Lanka

It was noted that the company’s failure to comply with the statutory demand served by the Petitioner was taken into consideration before instituting winding-up action. Justice Seneviratne also said that the debts due to the Petitioner and other creditors were undisputed.

The failure of the company to pay off their debts due to the Petitioner and other creditors was taken into account despite the company claims of possessing billions of rupees to pay back, in issuing the order to wind up the company.


Touchwood Investments PLC CEO Lanka Kiwlegedera was present in Court when the judge issued the order to wind-up the company.
Other parties involved in the case were the Securities and Exchange Commission (SEC) whose lawyers speaking with the Sunday Times after the order was issued, stated that they were not in favour of the winding up of a listed company since it could have an impact on the market.

The Petitioner in the Touchwood winding up case that filed action against the company is Priyanka Nanayakkara of Rajagiriya who had stated that the company had not paid back to him the full amount due upon maturity of the trees that he had invested in.

In the written submissions made by Mr. Nanayakkara it was pointed out that around October 2006 he had invested in Touchwood Investments PLC and entered into a Tree Sale Order Agreement with the company for 920 Agarwood trees located at the Touchwood Khaopor Estate, Thailand by the company and was issued a Harvest Agreement Certificate bearing No.0004393 under which he would be the holder of Tree Sale Order No. SL 006183 on January 11, 2007. This agreement was issued along with a confirmation letter regarding payment of the minimum price per tree for trees purchased.

In this regard, Mr. Nanaykkara made an initial payment of US$46, 500 and an annual pre-determined fee of $4650 for five consecutive years starting from 2007 for the maintenance and other expenses. The final harvest was due in 2012 for 46,000 kg of Aloeswood including 460kg of Agarwood, it was stated.

About two months prior to the date of receiving his dues Mr. Nanayakkara when contacted the company was informed verbally that they could not reap the optimum harvest by December 2012 and that a further three year period was required for the harvest.Later, the company had informed him that they were unable to settle the dues within the stipulated time. Thereafter, Mr. Nanaykkara requested for a part payment of at least 50 per cent before the end of December 2012 and to collect the rest after nine years. Then the

Touchwood’s empty new office. Pix by Mangala Weerasekera

company informed him of making payments in six installments.

Cheques bounce

The company then issued a cheque for the first installment of Rs.1 million from its Sampath Bank account but was cleared on or about January 7, 2013 as the company had requested the Petitioner to delay depositing it till funds were available in the account.
In January of that year the company again issued five cheques from the same bank but found that it got returned as the Sampath Bank account of Touchwood was closed.

In the written submissions it was also stated that the company had admitted it owed money to 257 Agarwood investors issued with the Harvest Agreement Certificates. In addition, it was stated that Touchwood Investments also has a large number of investors in its teak, mahogany, sandalwood and vanilla plantations but dues were not disclosed.

Touchwood Annual Report for 2012/2013 stated its assets at Rs. 8 billion and total liabilities of Rs.4.7 billion.

The judgment of the winding-up case of Touchwood Investments PLC was postponed on two previous occasions.

During the previous court proceedings the magnitude of the fraud surfaced and the company’s share trading was suspended by the SEC.

The new management of the Company provided an address in Nawala as its new registered address, where there is no office. The employees of the company whose salaries have not been paid over one year have now dispersed.

High hopes

The new CEO Kiwlegedara however, seems to still have hope in reviving the company. In fact the company informed the CSE of its new address at Pelawatta, Battaramulla however, though an office stands there when the Business Times visited the site last Monday there were no employees inside it nor was there any board indicating it belonged to the Touchwood Investments.

Mr. Kiwlegedera issued personal cheques in Court with the hope of settling the creditors of the company which were dishonoured.
Ms. Rozali Fernando with Avindra Rodrigo appeared for the Petitioner while Shehan Gunawardene with Harsha Amarasekera P.C. appeared for the Touchwood.


1999 – Touchwood founded in Sri Lanka by Group Chairman Roscoe A. Maloney. BOI approval granted after opening. Opens operation within 5 years in Dubai, Hong Kong and Thailand.
2004 – Channa Abeygunawardena appointed CEO.
2006 – Expands into Australia for native hardwood plantations in Queensland.
2006 – Thai-based Company Touchwood Ltd formed. Global expansion to build 43 plantations in 30 countries.
2006 – Obtains ISO Certification.
August 30, 2010 – Touchwood records profits for FY 2009/10.
January 25, 2010 – Court of Appeal quashes decision of Sri Lanka Accounting and Auditing Standards Monitoring Board against Touchwood Investments PLC.
October 19, 2010 – Touchwood launches new brand identity.
February 7, 2011 – New Touchwood office opens in Jaffna.
August 8, 2011 – Touchwood wins National Quality Award.
January 2, 2012 – Touchwood Investments PLC relocates to No.28, Joseph’s Lane, Bambalapitiya, Colombo 4.
January 2012 – Rienzie Wijethilleke appointed Chairman of Touchwood Investments PLC.
July 2012 – Roscoe Maloney takes over as Chairman from Mr. Wijetilleke who steps down.
August 2012 – Asitha Koralage resigns as Deputy Chairman.
October 9, 2012 – Channa Abeygunawardena resigns as CEO.
May 2013 – eChanneling Chairman/CEO Ruwan Silva appointed as Principal Consultant and Advisor for Touchwood restructuring.
June 2013 – Swarna Maloney appointed as Vice Chairperson/CEO.
September 2013 – SEC issues directive for full investigation into business affairs of Touchwood Investments PLC.
September 2013 – Suspension of trading on CSE.
March 2014 – SEC issues directive based on findings of investigation.
June 2, 2014 – Touchwood Investments opens office at No. 5/3, Rathnayaka Mawatha, Pelawatta, Battaramulla.
June 5, 2014 – Court issues order winding up company.


SEC finds Touchwood in breach of Listing Rules

The Securities and Exchange Commission (SEC) intervened in the Touchwood winding up case and had submitted to court the report on the investigation carried out by the regulator concerning the company.

In the report, the SEC noted that the company had failed to comply with the disclosure requirements and has neglected or deliberately withheld important information from the SEC.

In addition, the company was said to have violated the listing rules in respect of the use of the rights Issue proceeds; market manipulation and its founding directors were said to have “siphoned off substantial funds.”

The SEC issued two directives in September, 2013 and March, 2014 restricting on managing and alienating company assets.

In addition, the regulator also suspended trading of the company on the Colombo Stock Exchange as well.

During the investigations carried out by the SEC, the former Touchwood Plantation Director Prageeth B. Herath and former Touchwood CEO Jeffrey Ebert had stated that the company at the time held approximately 1450 acres of free hold land and 450 acres of lease hold land situated in Anuradhapura, Matale, Kalutara, Rathnapura, Badulla and Kandy.

It was noted that the company would manage these plantations that comprised Mahogany, Sandalwood and Vanilla for and on behalf of the certificate holders.

Down payment

The company would sell these plots to the public after obtaining from them a down payment and an annual management fee with guarantees to either deliver the harvest or purchase back at the prevailing market value on a future date.

Mr. Herath had stated that Roscoe Maloney and his wife Swarna incorporated identical or similar businesses to those carried out by Touchwood Investment PLC in Thailand and Cambodia. And he noted that though the duo personally owned the foreign companies, the Touchwood Investment PLC had no ownership in those said companies. The Thailand based company, Touchwood Ltd was formed in 2006 and Touchwood Ltd in Hong Kong was the marketing arm of Touchwood Forestry Company in Thailand which managed the plantations. The Maloneys were the majority shareholders of all three companies. It was revealed that the Thailand Plantation consisted of approximately 500,000 Agarwood trees, which was originally devised as a nine year product.

However, upon research, it was found out that the duration of the certificates issued to investors was shrunk to six years. But, the six year maturity of harvest proved to be insufficient to meet the liability at the end of the period.

It was revealed that therefore the alternative for the Maloneys was to extend the maturity period by a further three years.
In this respect, at least 70 per cent of the clients, Mr. Herath noted had agreed to extend with an additional pay out on top of the original maturity value and the balance 30 per cent opted for money back.

The Agarwood client base included Sri Lankans and demanded payment from Touchwood Investment PLC on the assumption that it was part of the group of companies that included the Thai companies. The clients had been informed that their matters would be resolved by Touchwood Investment PLC by the Maloneys. But Touchwood Investment was not given full information by the Maloneys as to their liabilities in respect of the Agarwood plantation in Thailand.

As such Touchwood Investment was compelled to get involved in the issue although they claim there was no legal link. The Touchwood Forestry Thailand had informed the company they needed 3-4 years for maturity of the trees.


As a result, the company resolved the issue by purchasing certificates of the Sri Lankan clients with the agreement that the underlying asset attached to the certificates would be transferred to Touchwood Investment PLC. However, the documents to retransfer the lease agreements were claimed to have not been transferred to the company, which was the responsibility of the Touchwood Ltd Hong Kong.
Attempts to reclaim the lease agreements resulted in a confirmation letter issued by Ms. Maloney guaranteeing that they would be extended on a future date. The payouts of Touchwood Investments were restricted to approximately Rs.70 million but this was not enough to meet the liability of the local Agarwood clients, Mr. Herath stated. Further it was stated that the Cambodia operations commenced two and a half years before on a land said to be given by the Cambodian government approximately 11, 000 hectares to fell trees and simultaneously replanting. It was also noted that salaries of approximately 200 employees of Touchwood PLC including plantation workers were not paid for the last two months since September 2013.

The investigations also found that approximately Rs.3 million was paid out as interest to Touchwood Pvt Ltd, which was owned by the Maloneys at a Moratuwa address, for its debenture customers by Touchwood Investment.

During a meeting held with the board of directors of Touchwood Investments it was found that the Touchwood companies that is Touchwood Investment PLC (Sri Lanka), Touchwood Limited (Hong Kong), Touchwood Forestry Company Ltd (Thailand) and the other Touchwood companies found in Dubai, Australia, China, Vietnam, Cambodian and other countries (if any) were all standalone entities. But there were only common directors. Touchwood Hong Kong however, was said to have held shares of approximately 3.6 per cent of the equity which were later sold out.

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