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President Stop Multi Million Share Market Racket
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By Faraz Shauketaly
President Mahinda Rajapaksa has ordered the National Savings Bank to cancel its highly controversial purchase of 13% stake in The Finance Company at an inflated price.
The transaction was described by many stock market analysts at the time as yet another ‘fixed’ deal where a state entity buys shares of a company at highly a inflated price in what is termed as ‘push and dump’ practice.
The National Savings Bank NSB purchased 13% stake in the Finance Company (TFC), a former Ceylinco Group company late last month at a premium for the 7,863,362 shares. The TFC share was trading at around Rs 30 to Rs 32 during the month of April. However, NSB paid Rs. 393 Million at a per share price of a staggering Rs. 49.74.
This transaction was the latest in a series of controversial stocks purchased by State institutions invariably paying a premium and usually citing ‘strategic’ investments as the reason.
The shares were sold by deleted Silva, CEO of ABC Broadcasting Corporation, and brothers Nandadeva Perera and Yogendra Perera two top share market investors with interests in the automobile and jewellery trade.
The transaction that has caused immense interest and controversy is likely to pose a conundrum of issues including the likelihood that some of the Colombo Stock Exchange Rules have been compromised with regard to the settlement for the shares.
In this instance the broker has received settlement from Sampath Bank – and the broker has settled the sellers. The Colombo Stock Exchange rules have therefore not been breached. However the issue is that NSB Custodian Services has not settled with Sampath Bank as they would normally be expected to by 10:30 a.m. on “T+3” (third day after transaction).
Sampath Bank our sources reveal, has settled the broker for the sale of the shares. However Sampath Bank has not received payment from NSB as yet.
In this instance a number of options become available to Sampath Bank: they have already withheld monies due to the broker on further settlements and may now ask the broker to sell the shares again to recover monies due to them. Any shortfall may well become the subject of litigation between NSB Custodian Services and Sampath Bank.
In spite of speculation that the Chairman of National Savings Bank Pradeep Kariyawasam had acted without the concurrence of his Board, documentary evidence seen by The Sunday Leader indicates that the Board of NSB did in fact discuss the strategic investment in The Finance Company as they felt there were good synergies with TFC. The offer letter was made on April 25, the formal acceptance was on April 26, and a further letter on April 27 was sent to the brokers giving the names of the NSB nominees to be on the TFC board.
All attempts to contact NSB Chairman Pradeep Kariyawasam and senior members of Sampath Bank at the time of going to press were of no avail.
■
By Faraz Shauketaly
President Mahinda Rajapaksa has ordered the National Savings Bank to cancel its highly controversial purchase of 13% stake in The Finance Company at an inflated price.
The transaction was described by many stock market analysts at the time as yet another ‘fixed’ deal where a state entity buys shares of a company at highly a inflated price in what is termed as ‘push and dump’ practice.
The National Savings Bank NSB purchased 13% stake in the Finance Company (TFC), a former Ceylinco Group company late last month at a premium for the 7,863,362 shares. The TFC share was trading at around Rs 30 to Rs 32 during the month of April. However, NSB paid Rs. 393 Million at a per share price of a staggering Rs. 49.74.
This transaction was the latest in a series of controversial stocks purchased by State institutions invariably paying a premium and usually citing ‘strategic’ investments as the reason.
The shares were sold by deleted Silva, CEO of ABC Broadcasting Corporation, and brothers Nandadeva Perera and Yogendra Perera two top share market investors with interests in the automobile and jewellery trade.
The transaction that has caused immense interest and controversy is likely to pose a conundrum of issues including the likelihood that some of the Colombo Stock Exchange Rules have been compromised with regard to the settlement for the shares.
In this instance the broker has received settlement from Sampath Bank – and the broker has settled the sellers. The Colombo Stock Exchange rules have therefore not been breached. However the issue is that NSB Custodian Services has not settled with Sampath Bank as they would normally be expected to by 10:30 a.m. on “T+3” (third day after transaction).
Sampath Bank our sources reveal, has settled the broker for the sale of the shares. However Sampath Bank has not received payment from NSB as yet.
In this instance a number of options become available to Sampath Bank: they have already withheld monies due to the broker on further settlements and may now ask the broker to sell the shares again to recover monies due to them. Any shortfall may well become the subject of litigation between NSB Custodian Services and Sampath Bank.
In spite of speculation that the Chairman of National Savings Bank Pradeep Kariyawasam had acted without the concurrence of his Board, documentary evidence seen by The Sunday Leader indicates that the Board of NSB did in fact discuss the strategic investment in The Finance Company as they felt there were good synergies with TFC. The offer letter was made on April 25, the formal acceptance was on April 26, and a further letter on April 27 was sent to the brokers giving the names of the NSB nominees to be on the TFC board.
All attempts to contact NSB Chairman Pradeep Kariyawasam and senior members of Sampath Bank at the time of going to press were of no avail.
