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By Ravi Ladduwahetty

The decision of the two former Aitken Spence Chairmen Michael Mack and Norman Gunewardene and Main Board Director Manil De Mel to sell their shares in the holding company has been due to their retirement decision and the imprudence of their maintaining shares in a company that they had no control of, according to a survey conducted by the Daily News.

Michael Mack was 69 years at the time of selling his shares foresaw his not being re-elected on reaching the age of 70 in accordance with the company policy. The major shareholders of the company had also not deemed Gunewardene fit for re-election. Manil De Mel also retired from the company as Main Board Director of the parent company and as Managing Director of Aitken Spence Travels Ltd recently.

However, Mack, who is also the Chairman of the Securities and Exchange Commission (SEC) when contacted for comments, was tightlipped saying : "I cannot talk until the investigations are over."

Following the allegations on 'insider trading' Mack took 'leave in absence' paving way for investigations to be continued by the authorities.

The Daily News reliably understands that the two independent personnel appointed to inquire into the insider trading charges against the three Directors under question on insider trading is now being studied by the Commissioners and the Commissioners would not have referred to the inquiring officers, unless they saw the contents of the original report of the Solicitor General was insufficient for them to proceed to prosecute.

The Commissioners include: Deputy Secretary to the Treasury Faiz Mohideen, Chairman of Jinasena Ltd who is the acting Chairman of the SEC, Dr. Nihal Jinesena, Senior Deputy Governor of the Central Bank Manik Nagahawatte and President of the Institute of Chartered Accountants Asite Talwatte.

The commissioners would not normally looked at all the aspects in depth detail but looking at the facts of the case, they would have realised that the reason for the detailed investigations were required. The Solicitor General has given no explicit reason for recommending that the three to be charged.

There are also complex matters which are difficult to understand. The trio sold their shares after the publication of the annual report on June 6, 2002 where it was explicitly stated in "the post balance events" that there was no significant events had been taking place in the company other than the issue of debentures.

Aitken Spence has confirmed the accuracy of their financial statements. According to the regulations stipulated by the Registrar of Companies, all major events of a company need to be reported in the company's financial statements.

The breack of this would have been is a violation of the law. If the authorities accept the accuracy of the company's statements, the accuracy of the price sensitivity does not arise.

There is also nothing in terms of price sensitivity as the accounts have been published and also deemed accurate.

Once the Annual Report was published on June 6 and the matters which have been covered during a Board Meeting on May 14. Therefore, the issue of being price sensitive does not arise.

After all, the published content is in the public domain. The Annual General Meeting of the company in late June 2002, made no mention of the upheaval at Garments, Tourism, Plantations, and Shipping which are the major revenue generating centres of the Aitken Spence Group.

Therefore, the Annual report and the contents of which have been certified being accurate, there has not been an incident of "acting ion concert", there should have been a probe on the accounts.

The case against Manil De Mel is also interesting in the light of his intimating the Board of Directors of his impending sale , but also sold his stake after the annual reports and the financial statements were published and is evidently being considered for prosecuted on the basis of information given by the members of the same Board whose concurrence he got before he got before selling his shares.

It is also ironic that the same people within the Aitken Spence Board who told the SEC that there was a major loss of Rs. 125 million on Aitken Spence Garments Ltd for the year 2002 where in fact, the loss was Rs. 11 million to the parent company for the period under review. These two Directors had later confessed to the SEC that they had made a mistake.

If the allegation that there was a loss of Rs. 125 million was true, the Aitken Spence Group profits would have been overstated by 30 percent.

In fact, it was these same personnel of the Group who later informed the SEC that there is no major loss to the Group from Garments whose losses have been published over the least three years.

It is therefore, envisaged that the Commissioners take into consideration about all this.

Meanwhile, the report on the alleged 'insider trading' issue attributed to three directors of the Aitken Spence and Co Ltd including the Chairman of the Securities Exchange Commission (SEC), Michael Mack has been tabled at a special meeting of the SEC last week.

The findings of the 20-page report of the two-member panel comprising a retired Supreme Court Judge and an eminent member of the Accounting profession are currently under study, Acting Chairman SEC Dr. Nihal Jinasena told the Daily News.

Financial industry sources said yesterday that the report is to be submitted to the Attorney General in the first week of January.

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