Six major probes at SEC were swept under the carpet
Some six probes involving large amounts of cash/share transactions were swept under the carpet without being ‘properly’ investigated by the Securities and Exchange Commission (SEC) after the departure of Thilak Karunaratne, former chairperson SEC.
According to reliable sources, these were serious investigations which showed blatant manipulation. “One was pumping and dumping of low valued hotel shares by a mafia don who is famous for insider dealing,” a source told the Business Times. He is allegedly tried to meet some powerful persons in the new Cabinet, seeking to pledge support to the new regime, according to the source.
“He was constantly seen with former President Mahinda Rajapaksa’s sons and allegedly had a strong hand in the resignation of Mr. Karunaratne and also his predecessor Indranee Sugathadasa.”
He along with his close mafia colleagues had brought in the new SEC chairman Nalaka Godahewa who is maintained a defiant stand, refusing to step down despite an order by the Sri Lankan Government, official sources told the Business Times.
“He finally quit on Friday after writing a farewell e-mail to SEC staff,” one official said. This the first time under President Maithripala Sirisena’s new administration where the head of a state agency has refused to quit after being ordered to.
On Wednesday night, Finance Minister Ravi Karunanayake told the Business Times that Godahewa had sent in his resignation on Tuesday, but the latter was quoted as telling some staff members that he hasn’t tendered his resignation because the SEC comes under the Ministry of Economic Development and not the Finance Ministry.
The SEC was placed under Prime Minister Ranil Wickremesinghe’s purview according to a list of subjects of ministries gazetted on Tuesday.
The source added that during 2012 there was a transaction where an alleged ‘mafia’ trader made some Rs. 500 million in 10 days, which wasn’t dealt with properly. “This was an individual who was close to a powerful brother of President Rajapaksa and ‘frequently’ dropped his connections to this person.” The Business Times reliably learns that he was summoned to the SEC during Ms Sugathadasa’s tenure to record statements relating to manipulations.
The source reiterated that these two mafia dealers along with their cronies who aided and abetted are trying to see that the probes won’t resurface. Also an insider at the SEC who was siding the mafia and successfully stopped these probes is visibly upset over the turn of events. “He ‘leaked’ the papers tabled at the investigation committee in mid 2012. He was interested in a top post, which he believed that the mafia with their close commotions could help him to secure,” he said.
One powerful trader was quoted in the media as saying, “We never expected to get business because of the political clout…… never used any connections. Never mixed professional duties with politics. We haven’t used any connections for business gain. There were no shortcuts to our success.” The IMF, Chamber of Commerce and Sri Lanka Institute of Directors have all said in the past that they were concerned by the events where two SEC chiefs resigned in less than a year, and have said a regulated market is very, very important, and that the resignations had sent a wrong signal to the international community.
Mr. Karunaratna when contacted said that, provided that he is appointed, he will do a thorough study of the SEC and ‘put the house in order’. “I am concerned about the volatility in the market. There might be manipulation now. All the black money seems to be exiting.”
He said that he plans to call a meeting with the Colombo Stock Exchange and draw up some measures to create stability. When asked if the probes will be reopened, he said that he will not be on a ‘witch-hunt’.
The Business Times also reliably learns that some SEC commissioners have already tendered their resignations.