15 August, 2020

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Chandra Jayaratne Seeks Clarification From SEC Regarding Exposing Errant Members Of Listed Companies

Civil society activist Chandra Jayaratne has sought a clarification from the Director General of the Securities and Exchange Commission of the applicable statutory provisions, policies, regulations and enforcement practices to make investors and public aware of errant directors and officers of listed companies.

Chandra Jayaratne

Explaining the context of his letters, Jayaratne said, “In the context that Professional Associations and Chambers of Commerce being reluctant and reticent in proactive enforcement of Codes of Ethics and Conduct; and especially in “blacklisting” and “Public Announcement” of errant directors and officers, and with the Institute of Directors adopting a role limited to training and developing awareness amongst directors, it is essential the proactive public announcement accountability be assumed by the Public Regulatory Authorities. It is therefore incumbent upon the Securities Exchange Commission, as the “Thought and Action leader” with the closest functional relationship to good governance in the Corporate Sector that the lead action in regard to such public announcements comes under its initiation and direction.”

The full letter, written by Jayaratne, to the SEC, is as follows:

The Director General, 

Securities & Exchange Commission of Sri Lanka,

Level 28 and 29, East Tower, 

World Trade Centre, 

Echelon Square, 

Colombo 01.

Dear Sir,

Seeking a Clarification of the Applicable Statutory Provisions, Policies, Regulations and Enforcement Practices to Make Investors and Public Aware of Errant Directors and Officers of Listed Companies 

I would be most grateful for your kind clarification, as to whether there are in place, requisite Statutory Provisions, Policies/Guidelines and Regulations, as well as effective Enforcement Practices, (whether enforced by the Securities Exchange Commission of Sri Lanka or by the Colombo Stock Exchange or any other Regulatory Public Authority,) whereby the investors and the general public are made aware of errant directors and officers of listed companies (including associated External Auditors, Secretaries, Registrars and Legal Advisors).

In specific, I wish to be advised of Statutory Provisions, Policies/Guidelines and Regulations, as well as effective Enforcement Practice regularly used proactively by the Securities Exchange Commission of Sri Lanka or by the Colombo Stock Exchange or any other Regulatory Public Authority, in making investors and the public aware of errant directors and officers of listed companies, culpable of the under noted violations of the law and non compliance with laws, regulations and best practice guidelines:

  • Directors and Officers of Failed Deposit Taking Banking and Financial Services Organizations
  • Directors and officers of failed listed and non listed and other entities, where public funds have been invested  via prospectuses or statements in lieu of prospectuses or by way of deposit taking
  • Directors and Officers responsible for criminal breach of trust
  • Directors and Officers responsible reckless management of businesses, demonstrating bad faith and not in the best interests of the company and without exercising  the degree of care, skill and diligence that may reasonably be expected of the errant director/officer
  • Directors and Officers responsible for fraud, misappropriation and illegal transfer of assets and engaging in corrupt practices, bribery , malfeasance and malpractices
  • Directors and Officers of business entities responsible for gross misrepresentations, mismanagement, and gross negligence  which tantamount to criminal negligence
  • Directors and Officers responsible for maintaining books of accounts which fail to reflect  true and fair state of affairs and presenting accounting and other associated information that are not a true fair reflection of the state of affairs
  • Directors and officers responsible for going concern failures due to reckless and bad management
  • Directors and Officers who have discharged their responsibilities whilst being in undeclared/unmanaged positions of conflicts of interests and having substantial undeclared/unmanaged related party interests
  • Directors and Officers charged with penal sanctions connected with money laundering and transfer pricing and tax evasion 
  • Directors and Officers having engaged in borrowing funds, securing bank loans, overdrafts and facilities, with the preplanned intent of not settling same or securing such facilities by means of deception, knowing very well that the required cash flows will not be forthcoming in the future to settle such liabilities
  • Directors and Officers who have engaged in Securities Offenses, including front running, market manipulations, insider dealings, etc and further engaging in acts violating sanctions, engaging in illicit and illegal trades etc
  • Directors and Officers failing to abide by the key provisions of the Companies Act, Listing Rules, Best Practices Codes on Good Governance/Ethics/Conduct and Codes dealing with Non Compliance With Laws and Regulations (NOCLAR)
  • Directors designated as Independent Directors, Senior Non Executive Directors and Chairpersons of Audit/Remunerations/Investments/Risk and Credit Committees, who have failed in the discharge of their assigned accountabilities
  • Directors and Officers who have failed to make specified market disclosures on a timely and  accurate basis
  • Errant Directors of business entities referred to above, where the errant directors responsible for scams, frauds and losses to shareholders  have resigned or retired prior to its discovery

In the context that Professional Associations and Chambers of Commerce being reluctant and reticent in proactive enforcement of Codes of Ethics and Conduct; and especially in “blacklisting” and “Public Announcement” of errant directors and officers, and with the Institute of Directors adopting a role limited to training and developing awareness amongst directors, it is essential the proactive public announcement accountability be assumed by the Public Regulatory Authorities. It is therefore incumbent upon the Securities Exchange Commission, as the “Thought and Action leader” with the closest functional relationship to good governance in the Corporate Sector that the lead action in regard to such public announcements comes under its initiation and direction.

I look forward to an opportunity to review this submission with you and your team

Yours Sincerely,

Chandra Jayaratne 

cc. Chairman, Securities & Exchange Commission,Chairman Ceylon Chamber of Commerce, Chairman, Colombo Stock Exchange, Chairman, Institute of Directors, Director General Colombo Stock Exchange, Chairman, Organization of Professional Associations, Governor, Central Bank of Sri Lanka, President, CA Sri Lanka, Chairman, Insurance Regulatory Authority, Registrar of Companies, Commissioner General of Inland Revenue.

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Latest comments

  • 10
    3

    Good work Chandra, but if SEC does what you ask it means that pretty much all of the big business houses and community would be in hot water.!

    Corruption is so deeply entrenched in the business sector that no one has the moral legitimacy and can open his mouth to speak about corruption against the powers that be.

    Bondscam Ranil and his Royal College club are the worst

    • 4
      1

      Indeed, pl. Keep speaking truth to power and seeking accountability Chandra.

      Panama Papers leaks named some of the pump an dump boys at the CSE who now defend Aloysius, and are also close to cross over chameleons and Ministers like Mahinda Samarasinghe and Mahinda Jarapassa family of thieves

      Meanwhile, what happened to IMF (which is crashing the Lankan rupee now) and US and UK promises to send their (Fake) Experts and Economic Hit men to help GOSL investigate and recover funds from those named in Panama Papers funds???

      Now 3 years later, not a single investigation on Panama Papers names or a penny has been got back. Rather corruption and a culture of impunity for Financial Crime fourishes while Lanka e grip of IMF , World Bank and Millenium Challenge Corp. ‘s Market Fundamentalism, dancing to the tunes of Out dated economic theory and following models that the long dead Washington Concensus is selling in Sri Lanka uncontested, because all the research institutions have been captured by US-Japan neo-liberal neo-con economists at LKI, IPS , CEPA and Advocata. No analysis on the poverty impact of rupee depreciation from any of these.
      Now the Indian rupee is strengthening again but LKR continues crashing.
      Bond scam Ranil must be impeached with Ravi K and Mallik.

  • 6
    1

    A good initiative Chandra and wish you luck.

    if I remember right, former chairman of SEC stated that there were 16 cases of insider trading and manipulation cases against investors and directors and action was going to be taken. He moved out without taking any action. It is unlikely that the new Commission would take any action either. It should be noted that all parties in power have appointed chairmen and some commissioners to SEC who are close to the party.

    There have been instances where directors have stepped down due to SEC action.

    Recently made to understand that a director of a bank had to step down overnight due to inappropriate behavior as a director. To be fair by the Central Bank there have been many instances where licensed commercial bank, specialized bank and non banking financial institution directors were asked to step down. Can recollect a chairman of one of these institutions had to step down sometime ago due to regulatory action.

    Also certain nominees by bank shareholders have been turned down by CBSL due to failure of the fit and proper test. However certain individuals who should never have been appointed to deposit taking institutions as directors have been cleared which is unfortunate.

  • 8
    1

    Thank you Chandra Jayaratne for raising these very important issues. These occur over the horizon that the laypersons cannot see. Chandra has the expertise and the integrity.

  • 9
    3

    Dear Chandra Jayaratne,
    .
    Like K.Pillai, I, too, am a lay person where these issues are concerned. I don’t think that I will ever understand all these issues, but your many articles have convinced me that you are indeed a man of “expertise and integrity”. There are a few other such, I’m sure.
    .
    However, most such people are out of touch with reality. Not you. This recent compilation of yours was really very impressive. Not enough people appear to have paid close attention to it (a remarkable collection of short Youtube clips) judging by the number who commented.
    .
    https://www.colombotelegraph.com/index.php/a-wake-up-call-an-open-letter-to-state-minister-of-finance-state-minister-of-national-policies-economic-affairs/
    .
    Let me hope that the business world will not only comment on that, but also show awareness of what the hinterland is like.

    .

  • 3
    3

    Can Chandra explain how much he was paid for being a consultant to boi supporting the corrupt tenure of upul Jayasuriya during which time they drove the investors away seeking ransom? Was he selected following due process?

  • 0
    0

    This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

  • 0
    0

    This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

  • 5
    0

    Somebody had tried to kill Ranil with a motorcycle the other day. Why media not report?

  • 1
    0

    What about the involvement of don Stanley, rosy Senanayake and her sons in the the bond scam, not to forget sujeeva Senanayake, Ravi k and his cahoots Sharmila Perera etc.

  • 2
    0

    I often wonder why good Chandra is not appointed Chairman People’s Bank after sacking crooked Hemasiri Fernando who takes the bank to dauldroms.

  • 3
    0

    Dear Chandra

    What do you have to say about People’s Bank going bankrupt owing to Rs 10 billion loan to Jehan Amarathunge whose company now applied for bankruptcy? The country has lost Rs 10 billion. Can we resurrect the People’s bank established by eminent NM Perera?

  • 4
    0

    Such intellectuals and good honest people like Chandra Jayarathne must take up high positions in this fantastic yahapalan government that we currently have. What the appointement as Sri Lanka’s ambassador in Australia?

  • 4
    0

    agree with burampi singho that chandra should be made the next sri lankan high commissioner in australia. such a brilliant soul

    • 1
      0

      The name Chandra Jayaratne registered in my dull mind only a few months ago; since then I’ve classified him (may be rather patronisingly) as a “nice guy”. From other comments I have now concluded that he is also a well-known and quite distinguished man.
      .
      However, that may be, these are the people who should be giving leadership to our country. But then, obviously he doesn’t pull back his punches; politicians rarely like such people.
      .
      As for Peter’s rather envious comment, I assume that it comes from a guy who is poor (like me, a retired village schoolmaster managing on my paltry pension). To us Rs 10 million (or whatever) is an amount of money that we cannot even comprehend, but it would be peanuts for many in the business world. We must understand the context in which figures are bandied about.
      .
      What Sri Lankan Airlines (and even the “humble” CTB – more properly, SLTB , which runs buses) lose must be many hundred fold what was paid to Weliamuna or Jayaratne. Our problem is that after decades of socialism, any guy with culture and a certain style of living and speaking is suspect. But if they are thugs like the Rajapaksas we don’t speak up.

  • 0
    1

    This is completely a out of place article. The security commission is responsible for all corruptions going on under them. IT is their responsibility to make it function properly. What does this article says is SEC is corrupt.

  • 2
    0

    baby singho

    I’ve heard Chandra will take up the appointment subject to high committee sanctioning it and there is one person who want to disrupt the whole thing

  • 1
    0

    My personal gut feeling is that Chandra Jayarathne is better than Rusiripala Thennakoon as our next High Commissioner to Australia. May be I’m wrong, I’m saying this due to empirical evidence. Rusiripala will be the ideal Governor of the Central Bank

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