Archives

Nat wealth writes ...

Re. Rs. 3 b transferred illegally to private company

Great Mahapola Trust Fund swindle

We write with reference to the above captioned news items appearing in the Ceylon Daily News of Tuesday 23rd March 2004. We wish to state at the outset that the entirely of this news item is false, malicious, misleading and defamatory.

We have set out hereunder our response to each allegation contained in your news item and request you to publish this response providing equal prominence as you provided to the said news item in the Ceylon Daily News.

1. National Wealth Corporation is not a Private Company

1.1 National Wealth Corporation Limited, a Public Limited Liability, Company is a wholly owned subsidiary of the Mahapola Trust Fund. It is not a private company as you have alleged.

2. No transfer of any funds belonging to the Mahapola Trust Fund have been made to National Wealth Corporation at any time.

2.1 The primary purpose of setting up National Wealth Corporation was to manage the over Rs. 3 Billion funds of the Mahapola Trust Fund in order to secure better returns for the Fund and its beneficiaries - the Mahapola Higher Education Scholarship recipients.

2.2 Pursuant to a decision of the Mahapola Trust Fund on May 22, 2003 the National Wealth Corporation executed a Fund Management Agreement dated February 19, 2004.

2.3 The provisions of this fund management agreement are similar to such agreements entered into in the ordinary course of business by several investment banks locally or globally and a fundamental requirement of such agreements is that the funds remain in the legal ownership of our client - in this case the Mahapola Trust Fund.

2.4 Furthermore an independent custodian of funds in this case - the HSBC, is a party to the fund management services we provide.

The Mahapola Trust Fund Board on January 23, 2004 approved the appointment of HSBC as the custodian of funds.

3. No illegal transfer of funds has been made.

3.1 The National Wealth Corporation was set up primarily to manage Mahapola Trust Fund monies and the need to invite any competitive bids from any third parties does not arise. Your caption "Rs. 3 Billion transferred illegally to Private Company" is therefore incorrect.

3.2 You will recognize from the above that your comment "The United People's Freedom Alliance has bared another massive racket involving monetary assets of the Mahapola Trust Fund where Commerce and Consumer Affairs Minister Ravi Karunanayake has allegedly transferred those funds to a private company ..." with a suggested reference to National Wealth Corporation, is false, misleading, malicious and defamatory to us.

3.3 You alleged that the agreement does not provide for any provisions for the Mahapola Trust Fund to call for a re-transfer of its Funds if and when necessary. This is completely false. The relevant provisions of the Fund Management Agreement are as follows:

* Ownership of the funds and investments therefore continue to remain with Mahapola i.e., all investments are in the name of Mahapola.

* National Wealth Corporation can only make investments within the investment guidelines agreed between Mahapola and National Wealth Corporation.

* All investments are held with the Custodian Bank, HSBC in terms of a Custodian Agreement entered into between Mahapola and HSBC in January 2004.

3.4 You alleged that a loan of Rs. 200 Million was given by the Hon. Minister Ravi Karunanayake and a further Rs. 10 Million as operational expenditure.

No loan was given by the Hon. Minister Ravi Karunanayake. The initial equity capital contribution of the Mahapola Trust Fund in National Wealth Corporation was to accommodate the minimum capital requirement for a primary dealership licence of Rs. 200 Million at the time of our application to the Central Bank. The Rs. 10 M referred to in our Memorandum of Understanding was for working capital requirements.

4. National Wealth Corporation is not operated by a close associate of the United National Party

4.1 The following persons were appointed by the Mahapola Trust Fund on March 3, 2003 to the Board of its wholly owned subsidiary National Wealth Corporation - Mr. Ranel T. Wijesinha, Chairman, Dr. Wickrema Weerasooria, Director, Mr. A. Kathiravelupillai, Director, Mr. Dhamsiri Fonseka, Director. Accordingly every one of them is a nominee of the Mahapola Trust Fund.

4.2 The Managing Director of the Company Mr. Mangala Boyagoda was appointed to the Board pursuant to a unanimous decision of the Board on July 7,2003.

4.3 Each of the above mentioned persons has extensive experience in the private and public sector, in industry and professional services and in banking and law and have held local and overseas appointments.

4.4. The Non-Executive Chairman as well as the Managing Director and the professional management staff have at no stage throughout their careers been associated with any political party.

5. The Board of Directors are not owners of shares of the company

5.1 On March 21, 2003, the following were signatories/subscribers to the Memorandum of Associations of the Company - Ranel Tissa Wijesinha, Dr. Wickrema Weerasooria, Arumugam Kathirevelupillai, Dhamsiri Fonseka, Dhammika Hemantha Bandara Ranawana, Ranatunga Arachchige Chaminda Dilruck Ranatunga, Gayani Samanthi Wijesinghe

5.2 The current share holding composition is as follows -

* Mahapola Higher Education

Scholarship Trust Fund 30,000,000 shares

* Ranel T. Wijesinha

01 (Subscriber Share)

* W. S. Weerasooria

01 (Subscriber Share)

* A. Kathiravelupillai

01 (Subscriber Share)

* D. Fonseka

01 (Subscriber Share)

* D. H. B. Ranawana

01 (Subscriber Share)

* R. A. C. D. Ranatunga

01 (Subscriber Share)

* G. S. Wijesinghe

01 (Subscriber Share)

Total 30,000,007

5.3 Dhamika Ranawana and Chaminda Dilruk Ranatunga are not Directors of the Company but are members of the Senior Management Team.

6. Allegations of student recipients of the Mahapola Trust Fund

6.1 Dr. Wickrema Weerasooria, Advisor to the Ministry of Tertiary Education and Training and a Board Member of the Mahapola Trust Fund was nominated by the Mahapola Trust Fund to National Wealth Corporation in much the same manner as many corporates locally and globally nominate their main Board Directors to the boards of subsidiary companies. Those who have experience in and adequate familiarity with best commercial practices and good governance structures would recognize the rationale for this appointment. Accordingly, the allegation "erosion of all ethical norms" does not arise.

6.2 National Wealth Corporation has not made any investments in the Stock Market nor has National Wealth Corporation recommended the investment of any Mahapola Funds into the Equity Market at present. All Investments made by National Wealth Corporation are in Government Securities. All Investments and performance of the Mahapola Fund are reviewed by an Investment Committee which comprises of three members appointed by Mahapola and 2 members from National Wealth Corporation.

7. Administrative ability of the Team

7.1 The Managing Director Mr. Mangala Boyagoda has over 30 years experience in banking having served with the Bank of Ceylon in Colombo, Sri Lanka and London, England, John Keells Holdings, DFCC, Standard Chartered Bank. He was Executive/Head of Global Markets and Consultant to the Central Bank, Sri Lanka and Asian Development Bank, Manila, Philippines. He also has experience in Treasury Management in Fixed Income Securities markets in Sri Lanka and in London. He was the pioneer in introducing many of the Money Market instruments to the Sri Lanka financial market.

7.2 Dhamika Ranawana, CEO, Natwealth Securities Ltd., counts for approximately 12 years experience in the field of fixed income securities with an emphasis on government securities and he was responsible for setting up Primary Dealer Units on two previous Companies he worked for, with active participation in the primary and secondary markets. He has also been responsible for structuring and placing some of the innovative corporate debt instruments in the market. He holds a Masters in Business Administration from the University of Lincoln, United Kingdom and an Executive Diploma in Business Administration from the University of Colombo.

7.3 Chaminda Ranatunga, Assistant General Manager (Debt and Structured Finance) has over ten years extensive experience in investment banking and served in several investment banks in Sri Lanka and Bangladesh. He was previously Head of Debt Markets at SC Capital Limited, prior to which he was the General Manager of VB Corporate Solutions Ltd., Bangladesh - a subsidiary of Vanik Bangladesh Limited, where he was responsible for financial training and debt market activities. He holds a Masters in Business Administration (MBA) from the Trinity University, USA and is a finalist of Chartered Institute of Management Accountants (CIMA), UK.

7.4 Vajira Wijegunawardena - Asst. General Manager (Asset Management). He counts seven years experience in the field of fund management as an Investment Analyst and Fund Manager. He possesses specialist experience in the management of both Equity and Fixed Income Funds including leveraged portfolios. He was responsible for setting up the operational technicalities of the Fund Management Company he was employed in prior to joining us. He also possesses expertise in Company Research with a view to making investment decision. He holds a B.A. (Hons) Degree in Business Management & Administration from University of Reading, UK.

7.5 Mahinda Galgamuwa - Merchant Banking and Treasury Consultant, possessing Treasury Management, Merchant Banking and Commercial Banking experience of over 30 years. He was seconded to Ceylon Petroleum Corporation, as Consultant Treasurer, from Citi National Investment Bank under a Treasury Management Mandate. He had previously held the positions of Country Treasurer Mashreq Bank, Colombo and Country Treasurer, ANZ Grindlays Bank, Colombo and UAE. He also worked as Consultant to the Technical Assistance Team of the World Bank Tea Sector Rehabilitation Program.

All the named persons in the executive Management Team of National Wealth Corporation have a demonstrated and locally and regionally accepted track record. Their ability to engage in the core-areas of our business - viz - Primary Dealership, Treasury Management, Treasury Advisory, Debt Restructuring was amply demonstrated within the first six months of operation when among their many achievements a cash profit of Rs. 133.9 Million was generated.

As conveyed earlier since the Mahapola Trust Fund wholly owns National Wealth Corporation the sole beneficiaries of this realized cash profit is the Mahapola Trust Fund and in turn the ultimate beneficiaries are the Mahapola Trust Fund scholarship recipients.

We wish to add further, that pursuant to the requirements of the Central Bank of Sri Lanka in connection with our application for a primary dealership that our wholly owned subsidiary National Wealth Corporation capitalized Rs. 100 million of these profits and converted same to equity by issuing bonus shares to the Mahapola Trust fund. Accordingly the investment of Rs. 200 million by Mahapola Trust Fund in National Wealth Corporation within a short space of Six months has grown to a share capital of Rs. 30 million shares of Rs. 10 or Rs. 300 million.

We wish to place on record that your Chairman, Mr. Keserralal Gunasekera of his own initiative spoke to the undersigned via telephone and offered to publish a correction.

Therefore we forwarded an advertisement entitled "Important Notice" which he agreed to publish. At his request this advertisement was forwarded to him via e-mail and faxed to No. 2430985.

He confirmed that he would leave instructions with a staff person of your organization to retrieve the facsimile message and the e-mail message and proceed to have it published. In my communication dated 23rd March 2004, faxed to the attention of Mr. Keserralal Gunasekera, Chairman at approximately 6.45 p.m., I confirmed in writing that the advertisement would be paid for by the National Wealth Corporation. This staff person contacted me and confirmed having received the facsimile message and the e-mail message and discussed the contents with me. I reiterated that this is a paid advertisement and that the contents are based on a resolution of the Board of Directors and legal advice.

An hour or so later he contacted me to say that although it was submitted for publication, the Director Editorial had received instructions that it should not be published. Given the correction/clarification we have provided above, the disappointment we have had with regard to your reluctance in publishing a paid advertisement/notice and the liberty you have then taken of continuing this story on the very next day we hereby request you to publish this letter in its entirety.

We also confirm that we have already sent you a letter of demand through our lawyers claiming a sum of Rs. 1,000 million as damages."

Yours sincerely,

National Wealth Corporation Ltd.,

Ranel T. Wijesinha - Chairman.

www.ceylincoproperties.com

www.Pathmaconstruction.com

www.ppilk.com

www.crescat.com

News | Business | Features | Editorial | Security
Politics | World | Letters | Sports | Obituaries

Produced by Lake House
Copyright © 2003 The Associated Newspapers of Ceylon Ltd.
Comments and suggestions to :Web Manager