Japanese buyer in BOCSeylan deal shell-shocked

The Japanese buyer in the deal that went sour involving Seylan Bank’s 7.5 per cent stake in Bank of Ceylon (BOC) this week is shell-shocked.

Murtaza Jafferjee, CEO JB Securities which did the transaction, told the Business Times that his client, the Japanese investor is in Colombo now and is not a happy man. “The Japanese investor is totally shell shocked as to what has transpired. One is not sure in future when transacting with state controlled institutions as to where lies the ultimate authority,” he said. Largely dealing with foreign and local institutions and high net worth investors, Mr. Jafferjee said that what occurred is a blow to the capital market.

Meanwhile, the BOC directors except its chairman, who’s still in London, have made statements to the Criminal Investigations Department (CID) on this deal.

The BOC’s chairman left for London on Friday, Dec. 16. The board compris- es Ronald C. Perera (chairman), S.R. Attygalle, Ranel T. Wijesinha, Charitha Nissanka Wijewardane, Asela Sanjaya Padmaperuma and Ajith Gunawardana.

None of the board members was available for comment but a source close to the BOC board told the Business Times that the directors had told the CID that this sale was to augment the capital augmentation plans of BOC. “These plans are discussed at board meetings.

The Seylan holding is a potential divestment as was stated in BOC’s annual report. It was a unanimous decision by BOC’s Investment Committee which was given the autonomy to dispose stakes in their portfolio,” the source explained at length.

He added that the capital augmentation strategies of the BOC at each board meeting are duly communicated to the Ministry of Public Enterprises on a separate document by the BOC. “So the Ministry was aware of it – more or less,” he said. However when queried about the Ministry of Public Enterprises circular that’s in question prohibiting acquisition or disposal of business assets or significant transactions in state entities without ministry permission, he said this 7.5 per cent in Seylan isn’t ‘significant’.

He refuted all claims that this was an ‘under-the-table’ transaction saying that the miscommunication is on the government’s part for not being clear about disposing state assets.

Analysts say that this transaction shrouded in controversy is raising issues about state policy, unclear direction and bad signals to the capital market.