24 September, 2020

Blog

Stock Market Mafia: “It’s A Wild Wild Market” Says Tilak Karunaratne

By Azhar Razak –

Clamour for credit and indirect pressure exerted to stop investigations have been the main demands of the so called ‘stock market mafia’ existent on the Colombo Bourse, says Tilak Karunaratne, who tendered his resignation as the Chairman of the Securities and Exchange Commission (SEC) on Friday.  Reluctantly stepping down barely nine months after taking over the position, the former Chairman said that he had tried to fast track investigations into market malpractices under his tenure so as to bring sanity to what he described as ‘a wild market where some people were shooting  from the hip’.
In what could be his first interview with The Nation Gain following his resignation, Karunaratne explains the sequence of events that led him to call it a day and his expressions showed that his main disappointment was that he could not effectively take some of those real perpetrators of the Colombo’s Stock Market to task.

Q: What made you accept the position in the first place?

Well, I’ve known the President for a long long time. We’ve been in the same party for a long time together. We’ve been buddies and in a way that we’ve worked together to strengthen the party when it was in the doldrums and to bring it back to power. But unfortunately, I had to leave when  Anura Bandaranaike joined the UNP in 1994. I’m a very close friend of Anura and at that time I thought I shouldn’t let my friend down and crossed over whereas, the President decided to stay on. When you look back, I would say he took the right decision. Anyway, since I rejoined the party, the President had been offering me many posts. Before Admiral Wasantha Karannagoda went to Japan as an Ambassador, he offered me that post. However, I very politely turned down (the offer) saying that I want to be in Sri Lanka and I’ve other involvements.  Anyway, I’m no diplomat. You can see from the way I behave. I’m not inclined to satisfy all the parties which is part of the game in diplomacy.

Then after some time, before Harry Jayawardena was appointed Chairman of Ceylon Petroleum Corporation (CPC), he offered me that post. Again, I said very politely I don’t want, because petroleum has been a den of thieves and rogues. And I did not want to go and make my henchmen. Then, there was a vacancy in the High Commissioners Post in London and the President offered me that. Again I rejected that offer. So I’ve been constantly saying no to all the offers that came my way.

However, last year, when the President came as the Chief Guest to the 125th Year Anniversary celebrations of Ananda College on my invitation (as I’m the President of the Old Boys Association), he said “Tilak, don’t say no this time. I think this is an ideal opportunity for you. You have been an investor for a long time in the stock market and you know the workings of the stock market, therefore accept the position as SEC Chairman.”
Since, I’ve been saying no to him all this time I was at the time reluctant to say no to him, so I said, give me 48 hours to decide. So I thought about it and consulted my wife and children about it who were not in favour of it at all. But, still I thought about it and I said I will accept it and work purely in an honorary capacity. No job, no car, no chauffeur, no petrol, no mobile phone, nothing….and I also said that I want my independence and I said I would like to do as per the objectives of the SEC Commission’s Act and want to achieve those objectives impartially without fear or favour. So the President said “no issues Tilak, at all. I know the way you conduct yourselves and just sign it”. So on  December 7,  last year, I assumed duties.

Q: When do you think you faced your first obstacle after you took over?

At the first commission meeting itself, I knew what was happening. There were some investigations which had been put into cold storage. So when Director, Investigations came and reported that he had not been doing very much during the last six months or so, I asked him why? And he said I was made to understand that I should not proceed with these investigations! So I asked the Commission Members whether there was a Commission decision like that. They said no, but said an unofficial indication was given that we must go slow on those. Then I said No and this can’t happen like that because as a regulator, it’s our job to bring to book the wrongdoers in the capital market and therefore we have to restructure.

All the Commission Members, to their credit, agreed to this and we opened all these files. And that got ‘lot of people’ worried. If they are innocent, they do not have to worry, you know? So from that day in January, they have been working to somehow discourage me with the investigations through various close friends of mine whom they had contacts with. I don’t want to pick names but some of them who came to me were very powerful people who said, “Tilak, you know, go slow on these, he is a pal of mine. They’ve invested a lot, so you know, take it easy kind of thing”. So I said, I’ve come here to do a job and I cannot go easy or slow on anything. I am fast tracking in fact! That made them very annoyed. And from that time, they’ve spared no pains to push me out. I never gave it or entertained their pleas since investigations were necessary.

Q: Was all the management staff of SEC cooperative to the stance you took?

By and large they were cooperative. But, I might say that our Director Investigations was not very cooperative. That’s another story which I don’t want to elaborate on. Overall, he was very slow on the draw. So therefore I appointed a ‘surveillance committee’. The idea behind this was rather than one man handling it, I picked two other directors and we formed a committee so that this committee could go into the inquiries.

Q: Can you update on the inquiries the Committee has heard so far?

Now actually, most of the inquiries are at their final stages and there are 17 ongoing inquiries including the NSB – TSB deal.

Q: Despite the statistics that show that broker firms still have a large pool of unutilized credit, it is learnt that some broker houses have been demanding further credit expansion. Can you elaborate why?

Yes. It is only a very few brokers and not all, who have been working hand in glove with this ‘mafia people’ who have been agitating for credit. Actually there is almost Rs. 7 billion of unutilized funds in the system that is still available. But, some of these brokers have fully used and even exceeded their limits.  So they have been clamouring for more credit.

Q: What happened at the recent meetings you had with the President and Dr. P B Jayasundera?

Yes. the President called up the brokers, these ‘so called’ investors, Chairman and Commission Members of SEC, Chairman and Directors of CSE for a meeting.  We didn’t know what it was about but we were asked to come. However, when we went there we found that the ‘other side’ was asked to come with a powerpoint presentation. It was made by Dilith Jayaweera. But we were never told about this presentation beforehand and we thought it would just be a discussion involved.

One more thing, I don’t think the President was aware of this at all and I don’t blame him at all. But, even the seating arrangements, the brokers were called in first and they occupied the main head table. Except for me and the CSE Chairman, Krishan Balendra, whom I quickly got to sit next to me, except the two of us and the stockbrokers, none of other stakeholders were seated on the main table. My commissioners and the CSE directors were all over the floor. So you see, that is not the way to treat respectable people. I don’t know who made these seating arrangements but it clearly showed that it is going to be one-sided.

Then the President invited Dilith to make the presentation and the presentation itself was a full blown attack on us. Very unreasonable and unjustifiable attack on the SEC with full of hatred and venom. I replied to as much as I can, because I was the last man to speak after listening to all of this patiently where some investors and brokers also spoke. But, because their’s was a powerpoint presentation and mine was a verbal presentation, I could not meet everything. The playing field was not level.

After that meeting, Dr. Jayasundera had another meeting as a follow up to the previous meeting. In that meeting, both Mr. Krishan Balendra and I didn’t speak and the brokers spoke. That meeting was more or less on the budget proposals, the pre-budget meeting.

Q: How was your meeting with COPE?

We got huge endorsement from the COPE. Normally they do not give any government institution such endorsement. The Chairman of COPE, DEW Gunasekera, at the time came to me congratulating saying that we have done an excellent job. He wanted me to continue and assured their fullest support. I told them what I wanted was more teeth. The present SEC Act, which is way too old, compared to the regulatory Acts in the Asian region, has to be amended as a priority to give more independence to the regulatory body.

Q: Some allege that during your tenure, you had concentrated too much on the regulatory aspect and not the development aspects which led to the pressure being exerted. How would you respond to this criticism?

That is not true at all. Despite my short stint of eight months, some of the things that we have done to develop the market, what is in the pipeline and what needs to be done for the future were far more greater than what has been done during the same span of time previously. We have done a lot to develop the market. On the other hand, the regulatory aspect is also important. Going into the wrong deals and inquiring and restraining them are also important. Then only foreign investors will come.

Q: Was the SEC contemplating on taking legal action against the offenders?

Yes, we could have filed action against them if we found that they were guilty. Another impediment we have is that according to our jurisdiction, such malpractices can only be heard in criminal courts and not civil courts. As you know it is hard to prove a case under criminal action compared to the civil cases.  In the other countries, we have both.

Q: Some say that you were over regulating the market which created a sense of fear psychosis?

It’s a myth created by this stock market mafia. I totally reject that. We have not come with anything. From the time I took over, we have been relaxing rules. Regarding the credit rule, earlier it was T+5 then we went up to T+30 and recently we even relaxed it upto T+120.

Q: Some say that you were not diplomatic and secretive about the investigations?

That’s completely false. We have been secretive. Even when COPE asked me to come up with the names, we have not revealed anybody and we have been secretive.

Q: Any final thoughts?

I would like to thank all the members of my staff including my commission members for all the support they gave me to achieve the objectives of my organization. I am also thankful and grateful to the Chairman and Directors, the Chief Executive and members of the staff of the Colombo Stock Exchange who helped me to carry out my duties during my tenure. Except for one or two all the others have been 100% behind me and very enthusiastic and very keen to work for the betterment of the organization. It was a great time we had together and I was very happy to have been there.

The Nation

Print Friendly, PDF & Email

Latest comments

  • 0
    0

    Dr. Tilak Karunaratne says, after turning down many an offer for old friendship sake with MR, finally he agreed to accept the Post of Chairman SEC, with no perks attached, to be Independent. He did not want to take up Diplomatic Posts as he was no Diplomat because he is blunt and straight forward. He had not taken the post of Chairman CPC because he says that the CPC is a den of thieves and rogues.(Show me a place that is not Corrupt) Considering the above, may I ask a couple of Questions from this Dr. Tilak Karunaratne.

    Question 1. :- Were you aware that this friend of yours Mahinda Rajapaksa the President of Sri Lanka faced allegations of Corruption on the Tsunami Funds? He was never tried and exonerated but only the investigations were halted?

    Question 2. :- Being actively involved in the Stock Market your self, were you not aware that the MR Govt. was dabbling with EPF/ETF Funds to keep the Stock Market Buoyant?

    Question 3. :- Are you Naive or Blind or both, to believe there is HONESTY, LAW and ORDER remaining to have accepted a Post under this MR regime?

    Thank you!

    • 0
      0

      [Edited out] Gamini. Flood becoz MR, Corrupt- bcoz MR, Collapse of market- bcoz MR,War crimes-bcoz MR. anyway Gamini’s [Edited out]

      Part of this comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy
      http://colombotelegraph.com/comments-policy/

      • 0
        0

        Zaheer, your ire seems more than ‘a political’, but I understand. Whom do you want to blame for the chaos in the country, for the hatred you have towards myself? Anyone else other than MR. Is it? Good for you.

    • 0
      0

      Quite right! Mr clean Karunratne if he is so clean should reveal the names and information he has and stop being so coy about naming names!
      If he wants to really serve the country put the info and report in the public domain and declare himself a WHISTLE BLOWER!
      To arrest the deterioration of the public psyche Sri Lanka and civil society needs to promote a culture of WHISTLE BLOWING – encouraging those with inside information on the regime’s (particularly Rajapassa Bros and sons and Basil 10 percent, Damika Perera the casino, president’s secretary Lalith – another corrupt bugger along with Jayasundara and Nivar Cabraal and other cronies’ corruption and crimes), should not be frightened of NAMING AND SHAMING the wrong doers. People need to be told the truth! Those who hold responsible jobs should hold their bosses accountable and should be ACCOUNTABLE.
      Unfortunately, Right now people who know the facts of regime fraud act very coy – like the two ex-SEC heads – rather than putting out the information they have on individuals involved in dirty deals in the public domain. Given that the justice system is in tatters due to political interferance the court of public opinion is the best way for experts who have inside knowledge to seek accountability while educating the public in a society reeling from filthy political corruption of the presidential family in all sectors – from education, to energy, to attacks on magistrates, to rapes by politicians etc.

  • 0
    0

    Sri Lanka is gong through what USA went through 100 years ago. IT is wild and wild west there.

    that shows that Sri Lankan politicians have no any positive influence on anything in SriLanka except they are part of that wild and wild west system.

    If the Sri Lankan politicians wanted to exert positive influence on the SL Security exchange or in that respect on any system in Sri Lanka they should have and would have learned it from many positive things from other countries.

    The positive aspect is at least handful are enjoying this pro-“development” govt and they are becoming multi billionaires. IT does not matter if the local investment for the SEC comes from narcotics industry.

  • 0
    0

    President has over 40 years of experience living and thriving among the worst of human beings. Politicians are, worse than the worst wild animals. So, president pretending to his friends and to everybody that he is unaware of most hings should be his survival tactics or, in other words, simply his way of supporting who he wants to support.

    Because, he is very update with respect to information and he knows what to accept and what not to accept.

    On the other hand, even the Writer of this article, the assertion by him that president did not know what was happening when they all went to the meeting and president just went through the sequence of events and allowed what happened to happen may be a president -saving step by the author.

  • 0
    0

    Tilak Karunaratne may have fallen to the Rajapakse scheme of enticing those outside their loop to accept high positions to join them and then to throw them out. Those who had fallen to this trap are tainted for the rest of their political lives and lose their capacity to manouvre for political positions thereafter.

    Those who are convinced MR has no brains will have to calculate again.

    Senguttuvan

  • 0
    0

    “..I’ve known the President for a long long time. We’ve been in the same party for a long time together. We’ve been buddies…”!!!!

    Well buddies!! Look at his face, it is like a blown out balloon! This is the face of a straightforward and conscientious person who has accepted an important assignment and initiated important steps towards discharging duties and obligations and achieving results after repeatedly turning down requests from his “buddy president” in various other potential spheres of responsibility and performance!

    Notwithstanding his total failure and uselessness in the task and responsibility entrusted to him, he goes on to inflate his deflated and tarnished failed image mentioning his unaccepted assignments and “comparatively higher achievements” in the SEC although only god knows what these “lot of things to develop the market” he has done to save the SEC. He quite unnoticeably passes the ball to “unethical to mention unnamed culprits and manipulators” behind the scene but lamentably fails to mention the root cause and the base evil spirit behind all these corruptions that is the president himself. His buddy president appointed him and it is the same president who is capable of removing him from the post. So despite his roundabouts and irrelevancies it is ultimately the president who is behind and protecting these criminals. And his face says the entire sorry.com story behind a facade of verbiage! Thilak K cannot exonerate himself from the responsibility and the blame that his buddy president is liable because they are all part of Mahinda’s madamulana chinthanaya!

  • 0
    0

    Tilak could have faltered in the past but his courage to expose the present corrupt state of affairs, despite being close to the President, should be appreciated. His voice adds to many growing voices of opposition to the situation.

  • 0
    0

    Ex-SEC Chairman is politiaclly clown and economics in the dark; poor reader principle of economy theory and applied and no knowdladge of history of Capitalism and its developement of MARKET CAPITIALIZATION. These are Buddies Late grandson of Solamaon R.Dias Banadarake- Anura Banadarake associate and accompany during SLFP RULE OF FAMILY NEPOITSIM so many yeras.
    To public cover up his (Tilak K) knowlegde,he has mention of The theory Gravity of Newton of Phyisis,in certan newspaper.
    He was unable to deliver what assinge by President of GOSL,give excuse of demise his position of SEC,blaming MAFIA’S IN STOCK MARKET.
    Capitalism ever-never eliminiated MAFIYA untill syatem of regime come to collpas.
    Here Mafiya mean monoploy of market of brokers.
    He as a person very very weak CHARCTER OF POLITICALLY, economic is concern POOR & DARK OF KNOWLEDEGE OF CAPITAL and STOCK MARKET OPERATOIN;to challnge a such Mafia by HIMSELF as a Capitalist ENTERPUTRENURE of BRACKFROUND NOT ALLOW HIS CONSCIOUNESS FIGHT AGAINST SUCH FORCES.That is how Sri Lankan Capitalism developement!

  • 0
    0

    It is abundantly clear from this interview that Mr.Tilak Karunaratne was fixed by non other than Mr.Dilith Jayaweera and his BZ circle.
    I recollect what Mr.Shan Wickremasinghe, chairman TNL network said some time back on his daily morning programme that one Mr.Dilith Jayaweera is heading the pumping and dumping game and manipulation in the Colombo stock exchange.He further said that Mr.Jayaweera was a person who used to travel by bicycle to his work place some time back who had a bank balance of RS.2000/- in his savings account now travels in a BMW 7series has brought over number of companies investing billions of rupees lately.I salute Mr.Wickramasinghe for his ability to gather such inside information who disclosed the stock market mafia much before Mr.Karunaratne.

  • 0
    0

    “……Yes. the President called up the brokers, these ‘so called’ investors, Chairman and Commission Members of SEC, Chairman and Directors of CSE for a meeting. We didn’t know what it was about but we were asked to come. However, when we went there we found that the ‘other side’ was asked to come with a powerpoint presentation. It was made by Dilith Jayaweera. But we were never told about this presentation beforehand and we thought it would just be a discussion involved.

    One more thing, I don’t think the President was aware of this at all and I don’t blame him at all. But, even the seating arrangements, the brokers were called in first and they occupied the main head table. Except for me and the CSE Chairman, Krishan Balendra, whom I quickly got to sit next to me, except the two of us and the stockbrokers, none of other stakeholders were seated on the main table. My commissioners and the CSE directors were all over the floor. So you see, that is not the way to treat respectable people. I don’t know who made these seating arrangements but it clearly showed that it is going to be one-sided.

    Then the President invited Dilith to make the presentation and the presentation itself was a full blown attack on us. Very unreasonable and unjustifiable attack on the SEC with full of hatred and venom. I replied to as much as I can, because I was the last man to speak after listening to all of this patiently where some investors and brokers also spoke. But, because their’s was a powerpoint presentation and mine was a verbal presentation, I could not meet everything. The playing field was not level…..”

    Dear readers, can you believe this? This is kindergarten stuff! And this has happened under the very nose, auspices, direction, supervision and guidance of the President of this country! And this provides a clear and precise window of observation into the ignorance, irresponsibility, callousness, narrow and shallow outlook and mindedness with which the president conducts the activities and responsibilities of this power house of Presidency created by late JR, a man of wisdom and principles! Look..! In a nutshell the Presidency has gone to the dogs and dhobis! The President has called up the meeting but the regulator and his team of this important institution did not know nor was not informed what for! They just went there to have a cup of tea for which the President is well known especially during a pre-election period! However the President clearly instructed the “other side!!!” (the accused and the culprits) to come well prepared and buttressed with a Power Point Presentation! Very hilarious, isn’t it!!!? The regulator and his team were all over the place singled out, vulnerably placed and strategically targeted for the deliberated and planned onslaught by the Stock Exchange plunderers! Oh my foot..! This funny “buddy” then goes on unfolding the great story of unblemishedness that the president was so innocent, pure and of untouched persona that the president did not know anything about these things-the power points, seating arrangements, the regulator’s role etc.! Alas! What a kitten of a president! And then came the culmination of the event, the “full blown, very unreasonable and unjustifiable attack on the SEC with full of hatred and venom”. Undeterred, Mr. TK replied and fought it as much as he could! What a brave man! And Sri Lanka must have more and more of the great soldiers of this caliber to defend it from the devils international and local, assassins economic and national pride and plunders CSE and EPT ETF NSB etc.! However Mr. TK had been handicapped, there was a hitch and the playing field was of no evenness: he was overrun by a power point presentation! A power point presentation? What the hell was that? Was it something like the Aladdin’s wonder lamp which had the power to invoke a powerful spirit which when touched in a certain way could solve any problem in the world!!!? Hah.. this is the wonderful explanation and response of a wonderful Securities Exchange Commission Controller! Nowhere else on earth would we ever hear of such naïve regulators! You can just kick him away! It took just a Laptop, a silly PPP, a full blown, very unreasonable and unjustifiable attack coupled with some seating arrangements all of which were witnessed and in front of the Executive President of the country! Can you just imagine what will happen to UN’s panel of experts conferences, UNHRC council cessions and even to the UN Security Council meetings of Head of States if we send this team of Power Point Presenters and furniture handlers!!!?

    What this TK joker in effect means is that he was and is a total loser, did not know how to ask for more time to present his discovered facts and figures in an another cession let alone presenting the findings of his inquiries and examinations then and there notwithstanding the Mahinda Chinthanaya escape routes and lies contained in PPP nor did he ever knew the strength and nakedness of facts and ground realities of the already committed CSE swindling, thefts and corruptions. The perpetrators of these corruptions are big sharks and whales observable and visible as the Mount Everest, the whole country knows about them, but this man could not drive home the weapons he possessed! And we now derive the result of the formula: the CSE swindling is a fact, “buddy” president is corrupt, he knew everything, the president always protects his “buddy” thieves at whatever cost to the country and its people, TK posed some resistance to president’s corrupt ways, TK knew fully well the President’s relationship to these thieves but he both wanted to protect his “buddy” president in default of the responsibilities of his post jeopardizing the country and its people and was afraid that some misadventure might happen to his life like a visit by a White Van, so he just fabricated a truth-lie mixed story and buggered off from the scene! This is the miracle of Asia, from a perverted and corruption perspective!

  • 0
    0

    Gabriel, thanks for the exposure, as many in this country especially the educated can not read between the lines. They have to be spoon fed. This bugger Tilak Karunaratne, although he pretends and parade as a parogan of virtue has also to be corrupt in trying to shield the corrupt as MR. These buggers should be named and shamed.

  • 0
    0

    How what was hyped as the best performing Stock market in the world is now described, by the same sources, as the worst performing Stock Market, reveals the real story. While the market itself and the SEC mechanism had the potential and right people to gradually grow into a market of some significance, what took over is the influence of the venal culture that has gripped the nation. There are only a few main players of recent
    origin of commercial success who engage in the pumping and dumping game. Their credbility and history are more of a buccaneering nature.
    To describe them as a Mafia is an under-statement. The shocking feature is they have the eye of the ruling clique whom they feed handsomely but this goes against the wider interest of the SEC and the country’s economic good. The main player has a gambling, prostitution and other shady background. He has managed to, as he probably miscalculates, sanitize himself with a high Govt position that he has acquired unduly. From Waiter in a tourist hotel to a high position in a ministry is a long way. Another group in the health sector found some of their main men caught for insider trading, which in any other decent country, would have seen both father and son in jail for a long stay. But here ??? Another leading figure in the stock market claimed in an open forum insider trading is a good feature – and was later to retract this
    amazing admission. With such men controlling the stock market there is very little chance leading global investing community will play ball with them around. But the tragedy is these crooks have caused the loss of billions of rupees of the resources of genuine retail stock market customers by their pumping and dumping rackets. These funds of the people came from savings, pensions, sale of valuable properties etc driven by the false picture created by a delusionary stock market.

    As they say in Russia, when the fish is rotten in the head it takes only a short while for the rest of the fish to perish.

    Senguttuvan

Leave A Comment

Comments should not exceed 200 words. Embedding external links and writing in capital letters are discouraged. Commenting is automatically disabled after 7 days and approval may take up to 24 hours. Please read our Comments Policy for further details. Your email address will not be published.