SriLankan probe finds BoC letter requesting shares be registered to EPF, state banks

ECONOMYNEXT- A former Chairman of Bank of Ceylon had written to then Treasury Secretary P.B. Jayasundera asking shares of SriLankan Airlines be registered with the Employees Provident Fund and state banks that had contributed money, evidence presented to a commission of inquiry showed.

At a Presidential Commission of Inquiry into irregularities at SriLankan Airlines and Mihin Lanka, Company Secretary Dalrene Thirukumar provided documents filed by her predecessor.

She said then Bank of Ceylon Chairman Gamini Wickramasinghe had written to then Treasury Secretary P. B. Jayasundera in August 2010, saying the bank had completed the purchase of shares held by Emirates.

Wickramasinghe had told Jayasundera that BOC wishes to register shareholding in SriLankan as owning 12.1 million shares worth 28.6 million US dollars.

Thirukumar said that she could only find documents giving cabinet approval for BOC to purchase 22.3 million shares worth 53 million US dollars held by Emirates.

She said that Wickramasinghe had requested for People’s Bank to be registered as a SriLankan shareholder with 4.2 million shares at it had contributed 10 million US dollars to the transfer.

National Savings Bank (NSB) too had contributed 10 million US dollars, and was requested to be registered as owning 4.2 million SriLankan shares, she said.

She said that the letter also calls for the Employees’ Provident Fund (EPF) to be registered as owning 1.8 million SriLankan shares, for its contribution of 4.3 million US dollars.

Wickramasinghe had referred to a letter from Jayasundera in June 2010 in completing the transfer, Thirukumar said.

However, she said that even this letter had only given authorization for BOC to purchase the shares after the BOC board had approved such a decision.





No Monetary Board approval had also been given for the EPF to purchase the shares from Emirates, Thirukumar said based on available documents.

In an earlier testimony, she had said that the cabinet had been informed of the possibility of state financial institution owning SriLankan shares.

The SriLankan board required a proper instrument of transfer to register the shares held by BOC, People’s Bank, NSB and EPF according to the articles of association of the airline, Thirukumar said.

However, she could only find one incomplete instrument of transfer, she said.

Thirukumar presented an original of the instrument of transfer to the commission, upon a request a commissioner had made last week.

When asked, she said that she could not find a taxpayer identification number, company number or any other numbers identifying SriLankan on the instrument, and the ‘number of units’ was also missing.

She said that she could not find any company numbers identifying Emirates, BOC, People’s Bank, NSB and the EPF on the instrument. Company seals were also missing, she had said in a previous testimony.

The articles of association and the Companies Act No. 7 of 2007 also require a board approval for registration of shares, Thirukumar said.

She said that while the instrument had been tabled with the SriLankan board by 20 August 2010, there are no board minutes approving the transfer of shares from Emirates to BOC.

By 2013, the budget for 2014 read by then President Mahinda Rajapaksa had sought approval for the Treasury to buy back the shares held by the three state banks, as the SriLankan shares were a burden on the banks, Thirukumar said.

The EPF continues to hold a minority stake in SriLankan, she said. (COLOMBO, 7 August, 2018)

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