COLOMBO (EconomyNext) – Sri Lanka’s new Securities and Exchange Commission chief Tilak Karunaratne said he will not start a witch-hunt but continue from where he left off and push for new laws drafted two years ago but left to gather dust at the Treasury by the previous regime.
This is the second time Karunaratne takes reigns of the SEC after he resigned as its chairman in 2012 after the previous regime prevented him from investigating rampant market manipulation.
Then president Mahinda Rajapaksa had told him, ‘I did not appoint you to catch crooks’.
His predecessor Indrani Sugathadasa resigned barely a year earlier ‘on principle’ for the same reason.
“I am not going to start a witch-hunt, this must be made clear,” Karunaratne told EconomyNext.
When he resigned, 17 investigations into market malpractices such manipulation, pump-and-dump were ongoing. Karunaratne’s replacement Dr Nalaka Godahewa in 2014 said these investigations had been concluded. Officials said most of them were closed on the grounds that there was not enough evidence.
“I will continue from where I left off and all the half done things will be concluded, but I will not start a witch-hunt,” Karunaratne said.
The parliamentary Committee on Public Enterprises (COPE) chairman DEW Gunasekera in 2012 said the country’s market was controlled by a mafia and urged the government to empower the SEC to take action against offenders.
He also wanted the SEC to investigate equity investments carried out by the central bank using funds from the trillion-rupee national superannuation fund under its care.
Before he resigned in 2012, the SEC had completed the final draft of the amended SEC Act.
“We must take it back from the Treasury and correct it because I understand a few changes have been made and this has to be looked into. Hopefully it will be ready for the next parliament to approve,” the SEC chief said.
The SEC has powers to instigate criminal court action against action but proving guilt beyond a doubt is difficult, so the mechanism most used is for offenders to compound their offences ‘without the admission of guilt’.
The SEC is called a toothless tiger for this reason.
The amendments will allow the SEC to take suspected offenders before civil courts where heavy penalties can be sanctioned.
Karunaratne will officially assume duties next week but did not say when.
“I will need some time to understand the changes that have taken place in the SEC since I left. Directors and officials have been changes and shifted around, so we will have to put our house in order.”
When Karunaratne resigned, he left a divided SEC with a vocal minority who did not share his views but found favour with the then government.
“Many small time investors were taken for a ride and they lost their savings, we will have to look into this,” Karunaratne said.