Aitken Spence plans rebranding hotels

By Duruthu Edirimuni Chandrasekera

Aitken Spence Hotel Holdings is looking to restructure its hotel brands in a bid to better elevate its properties, officials say. “We now have Heritance, Aitken Spence Hotels and Adaraan. We may go for two or three tiered branding and we are trying to overhaul our brands and make them more uniform,” a top official told the Business Times.

He added that plans are being drawn to construct a 20-room heritage property in the Galle Fort by the company on an 80-perch land which houses the original Shipping Head Office of Aitken Spence which was called Clark Spence Company.

The property will be tentatively called Clan House, he said, adding that since this is located in the UNESCO World Heritage Site at Galle Fort, the developers will have to abide by stringent architectural regulations for buildings within the Fort. The official added that this will be a Rs. 600 million hotel. The company also has medium term plans to develop 100 acres of land in the Eastern coastal area.

“In its South Asian sector Aitken Spence Hotel Holdings which has received regulatory approval to expand buildable area on the Maldivian archipelago is currently on the lookout to explore opportunities to increase its room inventory. We acquired an island recently and a 160 room resort is on the drawing board,” the official added. He said this US$ 50 million project will break ground within the next six months, adding to the increased leasehold property portfolio with four hotels (600 rooms) in this high end tourism destination.

The managed hotel portfolio was expanded in 3QFY15 where the 50- room Japab Akbar Hotel in Oman was added to Aitken Spence’s management. This year, the company began revisiting its strategy of managing properties in India where it scaled down to two properties, although acquiring a 143-room brand new 5-star hotel in Chennai, South India. 

“We acquired this at an investment of $22 million and we will start operations in May.”
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Some stockbrokers seen ‘jittery’ at CSE event

By Duruthu Edirimuni Chandrasekera

Some stockbrokers resembled ‘cats-on-hot-bricks’ at a high profile event at the Colombo Stock Exchange (CSE) on Thursday, the Business Times observed.


Dato’ Seri Utama S. Samy Vellu, Special Envoy (Ministerial Rank) to India and South Asia on Infrastructure, Prime Minister’s Department, Government of Malaysia rang the ceremonial opening bell at the start of trading on Thursday, while at the same time Deputy Minister of Policy Planning and Economic Affairs (Dr.) Harsha De Silva and Chairman of the Securities and Exchange Commission (SEC) Thilak Karunaratne made their first visits to the CSE following their appointments. Many CEOs of broking houses were also present at this ‘Bell Ringing Ceremony’, to signify the opening of trading for the Day at 09.30 am.

Some CEOs were seen shifting from one foot to the other when seeing the top regulator in the flesh – the very same person ‘some of them’ connived with the stock market mafia to oust from this same position he held over two years ago.“The regulator should distance itself from promotions,” Mr. Karunaratne noted, addressing the gathering to which one of them, at this reporter’s earshot remarked, “Apita pita rata yannath ne” (now we can’t even go abroad). Mr. Karunaratne was alluding to the fact that the previous team led by SEC Chief Nalaka Godahewa had been organizing promotion campaigns in overseas capitals. He was making his first public comments since taking over the SEC chair, about few weeks ago, for the second time in three years. He served an earlier stint as SEC chief and was forced to resign under pressure from mafia-type investors who dominated the market.

Adding that “all investors should be given a fair deal”, Mr. Karunaratne noted that more amendments to the SEC will be presented giving it more teeth.

“We have to correct shortcomings not only in the act of all areas of the capital market,” he noted.

This was observed by the alleged mafia cronies – some of whom were present – in pin drop silence. Many are acutely concerned about the probes and were seen questioning some scribes on whether it will happen soon. Some brushed this away saying nothing will be investigated. Dr. de Silva in his address reiterated that wrongdoers need to be punished and everyone given an equal chance of winning and losing. This perked up the attention of some cynical naysayers. “We want to create an asset owning middle class. People in peripheries and rural areas should be able to trade in high value stocks as well and we want people to trade in corporate debt,” Dr. De Silva said, adding that the intention is to broad-base the exchange into the villages.

He added that the new regime’s economy will be built on the pillars of competition and justice. “When we say justice we mean economic, political and social justice.”

Vajira Kulatilaka, Chairman CSE and CSE Board members, acting Director General/ Officer-in-Charge of the SEC Dhammika Perera and Chief Executive Officers of member firms and trading members of the CSE were also present at the event.

After refreshments the CEOs went to the second floor of the exchange to say ‘hello’ to the SEC chairman, which lasted less than half an hour. A top SEC official who was in the ‘other camp’ during the last regime was appearing to be mollycoddling Mr. Karunaratne as he was leaving the exchange.
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SEC: Catch the manipulators

Until this week, there had been absolute silence in the Colombo stock market over the dismal happenings in the past where alleged mafia-like traders controlled the market and also certain officials at the Securities and Exchange Commission (SEC).

It is painstakingly clear to all and sundry – regular investors, brokers, analysts and the culprits themselves – how pressure was brought to bear on two former chairpersons, Indrani Sugathadasa and Thilak Karunaratne forcing them to resign in disgust. These two principled individuals, rather than bow down to corrupt traders and businessmen who used the stock market to launder black money, chose to quit. Such was their integrity that Ms. Sugathadasa, wife of former Presidential Secretary Lalith Weeratunga, was asked to continue as Chairperson of the Insurance Board while Mr. Karunaratne was persuaded to return to the SEC and clean up the place.

However since the latter’s return to the SEC, there has been very little pronouncements or revelations about the misdeeds of the past or how investigations against the corrupt were either delayed or ‘cannot proceed due to lack of evidence’ or something on those lines which was a ruse used to close the files.

While there is concern over the inordinate delay in the SEC taking the bull by the horns and proceeding speedily to catch the culprits, the reason for the slow process must also be given due consideration. While Mr. Karunaratne has shown reluctance to speak to the media, until he has – as he says – something tangible to talk about -, the corridors of the SEC still reverberates with some of the favourite officials of former SEC chairman Nalaka Godahewa continuing in their positions and no proper enforcement mechanism in place. 

Getting rid of them is not easy for a Government that has been elected to do the right thing and not hound its opponents.

The new SEC commissioners are now seen putting strong governance and ethical guidelines in place and at its first meeting recently, decided to advertise for a Director General with more advanced qualifications. This position has been vacant for a long time. 

The present acting Director General is Dhammika Perera, a long-standing employee of the SEC, who is also likely to apply for the post even though the commission chose not to appoint him for reasons best known to the new administration.

At a ‘bell ringing’ ceremony at the Colombo Stock Exchange on Wednesday attended by a visiting Malaysian dignitary, Mr. Karunaratne and Economic and Planning Deputy Minister Harsha de Silva, brokers – who were in tow with the former hierarchy at the SEC and probably involved in manipulating stock prices – were seemingly jittery, according to our reporter. They were even more uncomfortable when Mr. Karunaratne and Dr. De Silva referred to the sordid happenings in the market not too long ago.

During the week too, the Prime Minister reportedly told a meeting outside Colombo that some businessmen would be probed over their irregular dealings in the stock market.

Some years back, the power of a group of new-rich investors, who benefited under the Mahinda Rajapaksa administration and who were allegedly behind stock manipulation, was clearly seen when they met the former president and persuaded him to revamp the SEC to make it ‘more market friendly’, which was one of the reasons claimed as to why the market had collapsed. Their definition of ‘market friendly’ was to turn a blind eye to irregular deals on the bourse!

Mr. Karunaratne was eased out and cronies brought in, not only looking the other side but also putting all the investigations on shady deals on the back-burner or declaring there was no evidence to proceed. Attempts to form small investor associations to protect independent minority shareholders also failed as efforts were made by manipulators to infiltrate these groups.

Much of the foreign money that came into the stock market, cheered by the authorities as “foreign investors” convinced of the sound policies of the then Government, was partly black money by local investors re-cycled through foreign-interest groups. Money laundering took place not only on the stock market but in many deals outside where powerful business interests close to the regime used ‘friendly’ foreign companies to recycle the money for Sri Lankan projects. Using local PR agencies, these ‘foreign’ investors got high-profile publicity through media conferences and media releases!

With Mr. Karunaratne’s first public remarks this week after assuming office as SEC chairperson with a mandate to clean up the regulator, protect all investors – mainly the small ones who are at the mercy of big-time manipulators -, and genuine foreign investors who are concerned about inconsistent policies (particularly on taxes), transparency and clear-cut rules and regulations, hopefully the stalled investigations will re-start in the next few weeks after a new Director General is appointed and a reliable probe team put in place.

The Government has been dogged by delays in bringing alleged crooks to book and testing public patience beyond reason. While the delay could be attributed to the authorities trying to put together evidence to fix the perpetrators beyond any reasonable doubt, the special inquiry unit set up needs to work speedily to file charges in at least 2-3 high profile corruption cases before the next poll.

The week- to-10-day gap between the conclusion of an election, induction of a new President and Prime Minister, and the appointment of a cabinet of ministers, resulted in many confidential files, documents on computers and hard drives being secretly spirited away by corrupt officials.

The new administration was slow in meeting this emergency and taking preventive measures while the continuation of some officials, close to the former administrators, didn’t help.

Missing files have stumped investigators, delaying the process, while lack of good forensic investigators to deal with white collar crimes, particularly money laundering, is also a stumbling block.

Cleaning up the stables is a gigantic task at institutions like the SEC and deserves the support of the public by coming forward to provide information to nab the crooks and ensure the marketplace is clean and equally protects all investors – big or small. This is the era of whistleblowers.
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Govt. vows action against pump-and-dump traders

By Duruthu Edirimuni Chandrasekera

SEC action : slow but (hopefully) steady

Spending Rs. 36 million in a year on overseas promotional roadshows, donating Rs. 4 million for Namal Rajapaksa’s Tharunyata Hetak political youth scheme and Rs.5 million on promoting the Government’s 20-20 vision! This is only the tip of the iceberg in unnecessary spending at the Securities and Exchange Commission (SEC) during the tenure of former chairman Nalaka Godahewa.

SEC sources said that the organisation should never have got involved in funding political organisations, dumping millions of rupees in promotion amidst a series of haphazard appointments, all of which are being scrutinised by the new administrators.“A regulator’s mandate is to regulate the market and facilitate the process, not get involved in expensive promotions,” said one source, endorsing SEC Chairman Thilak Karunaratne’s public comments on Thursday, where he said, “the SEC should not be involved in marketing and promotions”. This was the same scenario at the Central Bank, where the banking regulator unnecessarily got involved in non-bank functions like promoting political projects of the previous regime and spending millions of dollars on foreign advisors like disgraced former IMF Managing Director Dominique Strauss-Kahn for promotions.

While a new Director General is due to be appointed soon, the SEC is looking at the recruitment and appointment process which has broken many rules. In one case, a favoured applicant whose application was received days after the closing date for a particular post was chosen for the job. “In addition to the chairman, all the commissioners also have to share the blame for the previous state of affairs,” the source said.

The SEC has also asked, among other directives, the Citrus Resorts group to explain the delay in the construction of its hotel at Kalpitiya, more than a year after it secured funds from the public through an IPO. Complaints by investors have been flowing into the SEC since the new administrators took office.

Five meetings were organised in Colombo hotels and outside by the SEC to promote the Government’s 20-20 vision spending Rs 4 million, an exercise which was not within the regulator’s mandate, the source said.

Meanwhile Policy Planning and Economic Affairs Deputy Minister, Dr. Harsha de Silva told the Business Times that all investigations on stock market manipulation which were shelved in the previous regime will be revisited.

Responding to a question on market manipulation and insider trading on the sidelines of a ceremony where the Special Envoy (Ministerial Rank) to India and South Asia on Infrastructure, Prime Minister’s Department, Government of Malaysia Dato’ Seri Utama S. Samy Vellu rang the ceremonial opening bell of the Colombo Stock Exchange (CSE) at the start of trading on Thursday, he stressed that stern action would be taken against those who dealt in pump and dump in the past. “We will find out who was responsible for shelving them and get to the bottom of things,” he said, adding that this regime will not allow ‘only a few’ wheeler dealers to dominate the market in the future.

He added that compounding an offence was not on. “This compounding business (by SEC) is all nonsense. You just warn (the offenders) and that’s it,” he said, adding that if an offence is compounded, then the perpetrator admits to guilt.

“Such person shouldn’t be allowed to serve on any board (of directors) at least for 5-10 years,” he said stressing the importance of taking stern action.

He said that such a person should also be barred from trading for at least five years and reiterated that the punishment should fit the crime.

Dr. de Silva condemned corrupt practices in the market saying, “they (manipulators) cut deals with corrupt politicians and get away. So the confidence in the capital market has been waning and this should not be so in the future,” he added.
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