5th December 1999
Some directors in quoted companies are not aware of their duties, nor are they aware that they are held personally liable for board decisions, industry experts highlighted at a seminar last week.
Experts say that there is an urgent need to develop and train a new breed of directors to make them aware of their duties and responsibilities. Most directors just lend their names to boards of companies without knowing the seriousness of it and the authorities should not neglect this area before anything major happens.
LOLC Chairman, C P de Silva called for adequate remuneration for non-executive directors if they are to execute their duties seriously and take on further responsibilities. He said that a large number of directors are not aware of their duties and responsibilities. "It's a vicious circle - the liabilities are great and the rewards are small. Some non-executive directors fees are similar to that of a peon of a Bank in Ceylon. If remuneration is increased, they would be obliged to be serious," he said addressing a SEC seminar on 'Directors Responsibility'.
Steven Enderby, General Manager Ayojana Fund Management (Pvt.) Ltd. too shared similar sentiments. Speaking of the UK experience, he said that there is a significant trend in the UK where directors are paid a remuneration of around £ 20,000 per year.
Enderby says, the negative side of being a director, is the whole issue of personal liabilities which most people don't seem to be aware of.
However, Director Hayleys Ltd. Richard Ebell says non-executive directors of Hayleys are encouraged to learn the group's businesses and are given the opportunity to visit group factories to see for themselves how things are done.
He suggests companies should keep out civil servants and MP's from boards of corporatised companies as they don't bring in the necessary dimensions to a company. "You need qualified professional people to sit on boards. You also need some kind of a database of experienced people and of those who can make a contribution."
Consultant Nivard Cabraal said the Sri Lanka Accounting and Auditing Monitoring Board Act too casts new responsibilities on directors. The Act specifies all companies will have to prepare audited accounts according to Sri Lankan auditing standards and ensure accounts are audited by professionals. Consultant Weeraratne called for a code of ethics for directors. The SEC is also in the process of establishing a toolkit for directors and an institute for directors in the future.
Market update By Dinali Goonewardene
The Colombo bourse picked up during the week after a dismal start on Monday. Average turnover during the week was Rs 66.55 mn. The week saw the All Share Price Index rise 1.68 per cent to close at 561.5 while the Milanka Price Index gained 1.14 per cent to register 917.5. Net foreign inflows were Rs 70.4 mn.
Retail interest in the plantation sector caused the plantation index to rise 9.16 per cent during the week. Analysts said expectations of tea prices remaining firm with its resultant impact on profitability had spurred buying. Less tea production in Kenya and India and a forecasted shortfall of 20 per cent in the 1 st quarter of 2000 are also expected to affect the sector.
Top gainers during the week include Blue Diamonds 38.89 per cent, Lanka Walltile 28.22 per cent and Kelani Valley 21.57 per cent. Trans Asia lost 12.5 per cent, Habarana Lodge fell 7.41 per cent and Colonial Motors dropped 7.14 per cent.
"There will be activity in the market as investors take speculative positions based on anticipated election results," Director, John Keells Stock Brokers, Nandakumar Nair said. "Our market is undervalued with prices at 15 per cent above a nine and a half year low," he said.
"Our technical forecast revealed that there will be technical resistance of the index at 564 and if it passes the 567 mark it will continue upto 575," Head of Research, CDIC Sassoon Cumberbatch, Diluk Desinghe said. "If the market opens strongly on Monday we are hopeful of a couple of good days trading next week," he said.
"There will be a continuation of the markets gradual recovery. There might be further buying from local institutions," Head of Research, Asia Securities, Dushyanth Wijaysingha said.
"The market will remain static because of the elections but will move up after the elections," Assistant Manager Research, CT Smith's Stock Brokers, Pravin Ramanadan said.
"The current momentum in the market will be maintained. The market will continue to move up in the run upto the elections," General Manager, Forbes ABN Amro Securities, Alastair Corera said.
"Political expectations will be a key driver of the market over the next month. As a result the market is unlikely to be stuck at the current levels and is more likely to move sharply in response to political developments," Strategist, Jardine Fleming HNB Securities, Amal Sanderatne said. "Improving corporate and economic fundamentals support an upward move in the market while valuations remain attractive specially in the midcaps which we favour," Sanderatne said.
It is time to drink tea, industry officials say; for its health properties, to keep warm and to get better prices at auctions. Officials are anticipating a slight increase in local tea consumption this year due to the unusual weather and the increasing promotions by the companies.
However, accumulated exports for the first ten months of this year have taken a dip. Exports fell from 227.88 million kilos for the first 10 months of last year to 224.6 million kilos for the same period this year.
36.8 percent of this year's exports were shipped in value added form, down from 42.3 percent of total tea exports last year. Russia still remains the prime destination for Ceylon tea. It is also the reason for the drop in value added tea.
Asia Siyaka Commodities said that Iran, one of our traditional buyers, recorded the greatest increase in imports. Iran imported a whopping 8.4 million kilos, a 82 percent increase over the 4.6 million kilos they imported last year. Value wise, export earnings for October' 99 was lower by Rs. 278 million over October last year. The January/October cumulative figure was worse yet as it nose-dived by Rs. 6.8 billion, Forbes and Walkers Tea Brokers said.
Meanwhile, the first sale of December concluded last week recording better than anticipated figures. The quantity on offer was relatively lower than anticipated, but higher than predicted. Prices remained relatively the same as last week. Quantities are expected to improve in the following sales. Forbes and Walkers said that low growns met with better demand and hence they anticipate an improvement in the overall weekly sale average. They said that additional interest witnessed this week possibly follows the urgent requirements of buyers teas for immediate shipment.
Maskeliya Plantations last week joined the e-commerce race with its decision to sell tea on Sri Lanka's premier shopping mall.
Avakase Kade's website last week boasted a new addition to its growing line up of products and companies with a new category for tea. Maskeliya Plantations became the first plantation company to sell tea on Avakase Kade's on line shopping mall and probably Sri Lanka's first plantation company to sell tea on an on line shopping mall.
Maskeliya Plantations offers twelve individual tea packs and two gift packs of pure Ceylon tea at prices ranging from Rs. 38 and above. Company officials said they decided to sell their tea on Avakase Kade and not on their own website due to inadequate expertise in selling on line. They said that in the future the company might consider selling on their own web site in addition to selling on Avakase Kade.
The company promises factory fresh teas, packed at the plantation itself. They also offer free delivery within Colombo, Dehiwala, Mt. Lavinia, Nugegoda and Battaramulla.
Maskeliya Plantations was privatised in 1992, one of only 19 plantation companies that were listed under the government's privatisation process.
The plantation is managed by RPK Management Services who also are the majority stake holders, holding 37.81 percent of the 100 percent listed company. The company shares traded at Rs. 29.50 on Thursday.
Avakase Kade began operations early this year. Officials said the on-line store had recorded an estimated average turnover of Rs. 500,000 since inception. The company's future plans include tying up with a brewery and a supermarket. They also plan to tie up with Seylan Bank to handle their credit card only transactions.
PARIS, (Reuters) - Billionaire banker Edmond Safra died in a fire which gutted his penthouse apartment in Monaco after a break-in by two hooded attackers in the early hours of Friday.
Safra, who at 67 had just sealed a multi-billion-dollar deal to sell out of the Republic New York Corp and another bank he founded, died from suffocation after a blaze gutted his top floor "Belle Epoque" flat, Monaco's official press office said.
A member of his staff was also killed in the fire and a bodyguard was injured when he intervened to fend off knife-wielding assailants, the press office said in a statement. "There were two killed — Edmond Safra, president and managing director of the Republic National Bank of New York and a member of his staff," it said.
The press office said security services were alerted to the
attack at Safra's apartment building at 5.30 a.m. (0430 GMT) and that the fire originated outside his flat before spreading inside. It was not immediately clear how the fire started.
Safra, from a Jewish-Lebanese family that has banks around the world, was set to receive $3 billion from British bank HSBC Holdings Plc, for his stake in U.S. Republic New York Corp and Luxembourg-based bank Safra Republic.
Banking sources said Safra's death would not affect the
deal. HSBC's head of communications Michael Broadbent said: "Everyone at HSBC was appalled to learn the sad news of Edmond Safra's death in Monaco. We extend our sympathies to Mrs Safra." Police, firemen and specialist units in Monaco, the Mediterranean principality and playground of the rich and famous, rushed to the building in the Avenue d'Ostende after being alerted to the break-in..
"For reasons as yet unknown, a fire broke out on the outside of his split-level apartment on the top floor and then spread through the roof," said the Monaco press office statement.
Safra, who is married to Lily, a Brazilian, but had no
children from their marriage, hails from Beirut. His ancestors were originally gold traders and bankers in
Aleppo, Syria, and moved first to Beirut and then to Europe and the Americas to start banking businesses in the late 1940s.
In a little over 30 years, Safra built a banking empire that includes trading businesses, financial services for the wealthy and loans to governments of developing nations.
There may be no smoke without fire but those who sell the former are in a bit of quandary these days.
They have found that retailers are having second thoughts about selling their wares next year and some are refusing to do so.
It is the result of a curious combination of a health education programme and a religious campaign, they say.
What with an advertising ban and a restriction on sports sponsorship looming on the horizon, the industry may be in for hard times...
Officially at least, the top blue chips remain non-committal about their support in the upcoming poll- simply because they themselves are not sure who will win!
But one top chief executive was almost forced to take a stand, when he was asked to address some campaign rallies in support of the leading lady.
Of course, he couldn't accept and he couldn't decline, so he took the next best step: he flew out of the country and said "I'd love to, but I'm out of the island...!" Now, the man is worried whether this will be interpreted as a 'no!'
It's boom time for the tourist industry because of the millennium but some hoteliers are lamenting that the polls have put a wet blanket over celebrations.
Most hotels are still booked to capacity but the five-stars are feeling the pinch: up-market travel agencies have cancelled many bookings and even those are coming are arriving just before Christmas, when they hope the dust would have settled on the hustings. It is small consolation that some locals have opted to usher in the new millennium in five-star comfort, hoteliers say, because their stay is just for a few days only...
What is the WTO?
It's an international organisation of 134 member countries which is both a forum for negotiating international trade agreements and the monitoring and regulating body for enforcing the agreements. The WTO was created in 1995, by the passage of the provisions of "Uruguay Round" of the General Agreement on Tariffs and Trade (GATT). Prior to the Uruguay Round, GATT focused on promoting world trade by pressuring countries to reduce tariffs. But with the creation of the WTO, this corporate inspired agenda was significantly ratchet up by targeting so-called "non-tariff barriers to trade" - essentially any national or local protective legislation which might be construed as impacting trade.
So, aren't we in favour of regulation?
Sure, but not the type of regulation proposed by the WTO, a powerful body of unelected bureaucrats, who deliberate in secret with an aim to turning the entire world into one big market. Officially, the WTO has two main objectives: to promote and extend trade liberalisation (by breaking down national "barriers" to trade), and to establish a mechanism for trade dispute settlement. In practice, the WTO is seeking to deregulate international commerce and break open domestic markets for foreign investors.
Its rule making seeks to free corporations from government regulation, which would constitute a barrier to trade. It permits relatively unrestricted movement of money, capital, goods and services, while at the same time providing investors and corporations with extensive protection of their property rights. It even extends corporate property rights through the so called "intellectual properties" provisions. Intellectual property as defined by trade agreements is not about the creative powers of intellectuals. Rather, it is about protecting corporate ownership and monopoly over the patenting of plants, processes, seed varieties, drugs, and software. The intellectual property provisions are just one example of how there is extensive protectionism in this so-called "free trade" regime - but protection for corporations and punitive market discipline for workers, consumers and small farmers.
Freedom for Capital, Market Discipline for Labour
Here's an example of WTO thinking. The WTO says that they can not deal with social issues, only "trade" forgetting that once you start to deal with trade in services, you are indeed dealing with many social issues. It says that it can only regulate "product" not "process." With labour and environmental standards, what we normally regulate is process. It's been an important acquisition of the labour, consumer, and environmental movements in recent years to move beyond the simple regulation of end product and regulate process - how things are made. It is in the very production methods that we can improve safety, eliminate hazards and develop cleaner processes. The difference between a shirt produced by sweated labour under near slave like conditions and a shirt produced by union labour under decent conditions isn't readily obvious in the packaging (the end product) but rather its observed in the monitoring of the "process" of how the shirt is produced.
By contrast, when the WTO sees the interest of investors and capital threatened - it can spring into action and be quite powerful in its enforcement. So, for example, when workers are being forced to work with flagrant violation of labour law and safety codes, the WTO says there is nothing it can do. But let these same workers illegally produce "pirate" videos, or CDs (challenging a corporations copyright) and the WTO can spring into action sanctioning all sorts of actions against the offending country - in order to protect a corporations "intellectual property."
Ok, back to Seattle, what is the millennium round?
The WTO wants to continue its campaign of trade liberalisation and in particular it wants to increase the trade in services - including public services. Unfortunately, this means further turning over services such as health care, education, water and utilities to markets and international competition and undermining and destroying local control and protection of communities.
What's the problem with markets?
Markets are fine, in their place, but they must not be permitted to replace social decision-making. Markets should not be confused with democratic institutions. Markets, for example, might be useful in determining price of goods, but they should not be mechanisms for determining our values as a community. Markets are oblivious to morals and promote only the value of profit.
So, what do we want to do about the WTO?
Resistance to the free trade agenda and the continual drive to undermine social decision-making and democracy is the basis of unity for all the groups protesting the WTO. Beyond that profound and important agreement, there are wider differences about what to do about the WTO.
Resisters want to abolish the WTO
Some of the groups coming to Seattle are supporters of the resistance movement - arguing that the trade liberalisation program of the WTO is fundamentally flawed and we would be better simply abolishing this dangerous organisation. They argue for building the global resistance and constructing global solidarity from below.
Reformers believe they can transform the WTO
Others, in particular much of organised labour argue that while the WTO trade liberalisation program is deeply flawed, it's now well established as a powerful organisation and that the concept of negotiated trade regulation is vital to the health and welfare of the world community. They argue that if core labour rights, environmental protections, and what the Europeans refer to as a "social clause" was inserted into the WTO's mandate and practice that it could be transformed.
Resisters, reformers and rebels from around the globe will be gathering in Seattle later this month in a remarkable international solidarity action challenging the WTO's corporate agenda. While there are important tactical differences in approaches to the WTO, there is also a fair degree of unity in action and in identifying the WTO as an important global institution promoting policies, which are contributing to the growth of inequality and the undermining of democracy. The protest in Seattle maybe be both the last major, international demonstration of the century and the beginning of a new powerful global solidarity movement.
Developed countries want
America wants a few priority issues to be settled in advance, perhaps at the Seattle meeting itself. Its list includes transparency in government procurement, an extension of the duty-free status of e-commerce, a broader information-technology pact, reform of the WTO's dispute-settlement system, increased WTO transparency and the phase-out of tariffs in eight sectors: chemicals, energy products, environmental products, fish, forest products, jewellery, medical and scientific equipment, and toys.
This list is a non-starter, since it reflects only America's priorities. But Japan does not want to liberalise fish and forestry products. The EU professes to want a more comprehensive approach that focuses on removing tariff peaks for such imports as textiles, glass and footwear, but would preserve tariff preferences for developing countries.
Or consider dispute-settlement reform, which aims to fix flaws in WTO rules exposed by the EU's battle with America over bananas and beef hormones.
The EU says it will block reform unless it includes a ban on changing the products against which retaliatory sanctions are imposed. But America says no, because it wants to keep up the heat on the Europeans.
For the first time, Sri Lanka together with the other SAARC countries are resisting efforts to put new issues on the agenda for a new world trade round, a top trade official said last week.
The government delegation would instead push for a common trade initiative in agriculture, intellectual property rights and market access, Director General of Commerce, H Hewage said.
"We are also asking for a continuous built-in-agenda, which we fell should be implemented in true spirits, without special differential treatment," he said.
Sri Lanka's basic position remained that a new round was unnecessary. The implementation of agreements reached in the Uruguay Round and the discussions on farming and services, which WTO members were obliged to hold under that agreement, provided a sufficient agenda.
Developing countries want
The biggest obstacle to an early harvest at Seattle-and, indeed, to a broader round afterwards-may be the insistence of many developing countries (notably India) that they will block further liberalisation until their gripes over the Uruguay round are addressed. For a start, many say they cannot comply with some Uruguay-round commitments to upgrade customs-valuation procedures, for example, or to enforce food-safety standards.
More generally, developing countries complain that the Uruguay round was unbalanced.
Rich-country promises about granting preferential treatment have amounted to little.
The developing countries want their obligations in areas such as intellectual property, investor protection, subsidies and anti-dumping to be eased. And they argue that the Uruguay round has failed to deliver expected benefits in such areas as agriculture and textiles.
They point out that the EU's Common Agricultural Policy (CAP) remains highly protectionist, and that America has backloaded its textiles liberalisation, most of which will not occur until 2005.
There is some justification to these complaints. Indeed, as a concession to the least-developed countries, the EU wants agreement at Seattle on giving most of their products duty-free access to rich-country markets-but with agriculture and textiles still excluded. In general, though, it is impossible to reopen past deals.
If developing countries wish to get more concessions, the best way is to negotiate them in a new round.
Yet agreeing on the scope of such a round will still be hard. America favours a narrow, "manageable" round, limited to the core agenda of agriculture and services, plus industrial tariffs. But it wants to add monitoring of the environmental implications of any deal. And it proposes a WTO working party to look at links between trade and labour rights, to ensure that trade liberalisation does not lead to job losses or lower wages.
This sop to the unions reeks of hypocrisy, since America itself does not enforce all the International Labour Organisation's core labour rights.
The EU echoes the American position on trade and labour. It wants a standing forum on trade and labour rights involving the WTO and the ILO.
But apart from Japan, which broadly agrees with the EU, nearly all other WTO members oppose linking trade to labour rights.
Developing countries, who rightly see this as a pretext for rich-country protectionism, are particularly hostile.
When I was a little kid, I asked my parents, what will I be? Will I be a doctor, will I be an engineer, will I be an accountant? And this is what they said to me. Whatever will be will be... the future is not ours to see... What ever will be will be...
That was in the early part of the 20 th century and in the 21 century, the future is ours to see and kids do not ask their parents what they will be. They especially do not ask them if they will be doctors, engineers or accountants, but they tell them what they want to be. And increasingly kids want to be information technology (IT) professionals.
This trend has been witnessed internationally and now Sri Lanka too is gearing for better IT education. The Sunday Times Business Desk spoke about IT education with one of the up and coming IT schools in the country, the John Keells Institute of Information Technology (JKIIT) and their Indian counterparts, Tata Infotech Limited, India's Senior Vice President of the Systems Integration Division, V.K. Malhotra. We give you extracts of that interview.
At present the industry, the world over is hungry for IT qualified professionals. Industry estimates say that Sri Lanka is at least 2000 IT professionals short.
A few years ago we never even heard of IT education let alone have institutions offering IT education. But now universities and colleges have very specific courses in IT. back then people used to look at science courses, engineering or commerce courses, but today people are looking at IT as one of the key areas to have a career opportunity. Especially with the most attractive five figure starting salary.
Mr. Malhotra believes that IT is the way to go in the future especially since the general awareness within the government and the corporate world is growing. "Today without IT nothing can be done. IT has become an essential tool, and it helps in making decisions faster." He said that therefore it was necessary to create awareness at all levels and that they need to understand that IT is a very specific industry, which should be developed, fostered and given encouragement to develop. He feels that if individuals are not IT savvy they would find it difficult in the coming years as one will not be able to get a good job. Besides, you do not need an exceptionally high aggregate at the advanced level exam to pursue a career in IT regardless of the subjects you choose at the exams. One major problem found in the system is that the courses provided by most academic institutes are not very close to the real thing. That is where private institutes like ourselves can play a crucial role by providing training in IT which would be more close to reality.
However, these courses are generally very expensive and at present is really an alternative for students going abroad for their education. In a country like Sri Lanka where free education continues to be the main source of education and where over 40 percent of the population falls under the line of poverty, even a few thousand rupees is a scarce commodity. Companies claim that IT courses are not that expensive in terms of money spent on the course and what you can earn later is much higher than any other field. Mr. Malhotra believes that IT education is a little expensive at the moment. However, he said that the cost of IT education would come down with the increasing awareness of the importance of IT, the numerous job opportunities and the demand for IT education and IT professionals.
Mr. Malhotra said that the demand will continue to exist for IT professionals because of the increasing use and the continued advancement of technology, at least for the next decade.
As attractive as it may seem financially, the long associated name for a person involved in pushing buttons 'a nerd' still remains. Bill Gates, the world's richest man also called a nerd has helped change this perception slightly. At least people do not care if a person is a nerd because nerds seem to make the most amount of money.
Ceylinco Life has announced major plans to diversify into the healthcare and to set up a comprehensive facility in Sri Lanka for the prevention, diagnosis and treatment of cancer.
Phase One of the project began recently, with the visit to Sri Lanka of Ms Maureen Ryan, the Director for International Services and Dr. Lawrence S. Lessin, the Medical Director of the Washington Cancer Institute, at Washington Hospital Centre, for the purpose of signing a Memorandum of Understanding between Ceylinco Life and the Washington Cancer Institute for the establishment of a hi-tech Second Opinion Centre, which will provide patients with electronic access to international medical specialists for second opinions.
The Second Opinion Centre, due to be operational in the year 2000, will use Radiologic and Microscopic Image Transmission techniques to digitally transmit patients' X-rays and MR Scans to the Washington Cancer Institute for examination by medical experts there.
Describing company's moves to diversify into healthcare as a "logical progression," Ceylinco Consolidated Charman Deshamanya Lalith Kotelawala said in a press release that Ceylinco Life was following a path taken by many large international insurance companies which own hospitals."We have been the leader among the private sector insurance companies for 11 years, and this will be the first step in our diversification," he said.
Phase Two of the project, expected to be operational later in 2000, will be the establishment of a Cancer Screening Centre to aid in the prevention or early detection of the disease, Ceylinco Insurance's Director / General Manager (Life) Mr. Rajkumar Renganathan said.
Dr. P.B. Jayasundara, Secretary of the Ministry of Finance on behalf of the Government of Sri Lanka and Mr. A. Wahid Jalil, FAO Representative in Sri Lanka on behalf of the Food and Agriculture Organization of the United Nations, recently signed an agreement for providing technical assistance to the Government of Sri Lanka, for implementing the Pilot Phase of the special Programme for Food Security, at a cost of US Dollars 286,000, funds received from the Technical Co-operation Programme of FAO. This is a follow-up to the World Food Summit held in Rome in November 1996.
The Heads of State and Governments, gathered at the World Food Summit held in Rome, in November 1996, at the invitation of the Food and Agriculture Organization of the United Nations, reaffirmed the right of everyone to have access to safe and nutritious food, consistent with the right to adequate food and fundamental right of everyone to be free from hunger, and pledged their political will and common and national commitment to achieving food security for all and to an ongoing effort to eradicate hunger in all countries, with an immediate view to reducing the number of undernourished people to half their present level no later than the year 2015 the press release said.
The Special Programme for Food Security launched by FAO responds to the urgent need to boost the food production in the developing countries, in order to meet rapidly growing market demands and help eradicate food insecurity.
Following the request made to FAO by the Government of Sri Lanka in September 1997, to participate in the Special Programme for Food Security and its approval by the FAO Director General, FAO assisted the Government in the preliminary activities leading to SPFS. Having clearly understood the rationale, objectives, approach and implementation procedures, the Government of Sri Lanka formulated the SPFS National Programme Document (NPD) and the National Plan of Action (NPO) for the Pilot Phase, including the main components of the Programme as appropriate. An agreement also was reached between the Government of Sri Lanka and the FAO for appropriate follow-up actions and also to support the Government in its contacts with external partners (bilateral and multilateral) to explore their interest in participating during the Expansion Phase of the SPFS in Sri Lanka, at country / national level.
Eagle Insurance has changed its accounting policies and presented its third quarter accounts in accordance with the International Accounting Standards supplemented by the United States Generally Accepted Accounting Principles (US GAAP) for insurance technical standards. Eagle changed its accounting policies on becoming a member of the Zurich Financial Services Group, after a review of local solvency margins and international accounting standards, a news release says.
The shareholders of Eagle Insurance Company will receive a dividend of Rs. 5.00 per share, to be issued in the form of debentures. These debentures are redeemable at par at the end of three years and carry an interest rate of 14.5% per annum payable half yearly. The debentures are guaranteed by the National Development Bank and will be listed in the Colombo Stock Exchange. Trading opportunities will be created through the entitlement of debentures of the joint venture investment company Zurich NDB Finance (Lanka) Ltd. being disposed through the Stock Exchange in a manner that facilitates greater smallholder participation. This will allow corporate as well as individual investors an opportunity to invest in a high security, high return instrument.
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