Wednesday, May 9, 2012

What were they thinking? – the TFC share purchase by NSB

CJ on one side and Chairman of NSB her Husband on the other side, flanking the President

“Kalpanakaranna” my dear readers is the theme of this blog, so we can all live ‘serendipitous’ lives in Serendipity (a name given to Sri Lanka in days long gone, by foreign travelers) So any person with half a brain would have realized that a transaction of this nature is bound to arouse suspicion.

Put simply, they realize they are above the law. The NSB Chairman is the husband of the Chief Justice, so they are obviously above the law. Just like in my case when the perpetrator of the vehicle crash that put paid my farming was the Minister of Justice. It was his police jeep driver’s fault for keeping pace with the convoy, the reason the unfit vehicle crashed into me. I cannot sue him, as all Judges are paid by his Ministry, and will not want to give a judgment against their paymaster.
This sort of cocky behavior which is part and parcel of the deals done by Stock Brokers, ( I worked at one for two years when the worst of the cowboy excesses took place and have documented many in this blog) knowing they can get away with it as they have political patronage. So the story in the Media that the President is taking a personal interest in this is all HOGWASH. He is doing as he always does, what is the best PR for the situation at present. Not what is best for the Country. The damage has been done, there is no one taking responsibility.

AT LEAST the Chairman of the NSB MUST take full responsibility for the decision of his executives for agreeing to purchase and then failing to pay for the shares. He should resign. The CEO of the stock broker who was part of the deal and who profited from it MUST also resign. This is a given before any investigation takes place. We know about investigations in this country. The report will come out on a day that has other more important news and will be swept under the carpet and the perpetrators will get off scott free.

It is important that there are rules, which are enforced. The SEC has dickheads who run the respective departments, I know their competencies or lack of them. Has anyone taken them to task for their inadequacies. I rather think not. Further the Stock Exchange is no better, more like a gentlemen’s club, more versed in the art of fine whiskies than in knowing how to regulate their own (Stock Brokers own the CSE) It is just this sort of lack of credibility, that WILL NOT draw overseas investors in the numbers we require to obtain the needed foreign investment.

We fail to understand, those who invest in Sri Lanka, desire to build a company that becomes part of the CSE, which in turn permits them to withdraw some of their investment at a market price in the future. They must have faith in the system!

It appears that no amount of transgressions in the areas of Governance seems to permeate into the establishment. It comes out of a feeling of invincibility that they can do anything and get away with it. This attitude sadly is not a cause for people to agitate, I believe due to overwhelming complacency and the lack of awareness of what is right and wrong!


Sagara Nanayakkara said...

This will be the same if there will be an UNP government tomorrow. The both parties have a remarkable consensus on corruption. The mass does not care. That’s why people like Mervin and Sujin Vass get a massive number of preferential votes. UNP is yet to put forward a plan on how to establish “good governance” in this country. The first step is to abolish “executive presidency”. Who is willing to do it?

Jack Point said...

You are right about abolishing the presidency but don't fool yourself on corruption.

The UNP was corrupt but there have been sea changes in corruption over the years.

JRJ took it to one level.

CBK took it to a new level.

The Chinthanaya has taken it to still further levels.

They have also removed whatever impediments to corruption that existed including reversing the 17th amendment, defeating the freedom of information bill, cracking down on the press etc etc.

The EPF/ETF?SLIC were buying shares during the UNP regime but the portfolios were properly run. The latest instances:

GRAN bought at 250 (now 41.90)
DIMO bought at 1800 (now 615)
CFIN bought at 1400 (now 140)
BLUE bought at 9 (now 4)

Now even to get an appointment with a minister you need to pay 1-2m to the secretary.

True UNP was corrupt but Chinthanaya is many times more. Moreover Chinthanaya marries corruption with incompetence to a remarkable degree.

They are telling people to switch off lights to save power, why not go for daylight saving time and save a lot more, as reported by the CEB engineers themselves? Why are we doing stupid things for the sake of astrologers?

Ratmale,Minneriya,Sri Lanka said...

I agree with you Jack and my earlier blog entries also refer to the CFIN fiasco, especially as they could have been bought at 800 a few weeks earlier. One point though you have not taken account of the share splits in some of your calculations

On the electricity issue, I also noted in an earlier blog entry on CEB about the daylight saving and astrologers nightmare!!

Thanks again. Comments either way are appreciated. It helps clarify some issues and illustrate some points by way of example.

Jack Point said...

Thanks for pointing out the error, had missed that. The CFIN price today is not a correct comparison of the price prior to the split.

Glad to comment on political posts, but very few people write about or even comment on politics any more, which is a pity.

We need more debate and the mainstream media provide very little.

Jack Point said...

You may find this of interest

Sagara Nanayakkara said...

Jack Point, you’ve missed my point. UNP does not accept that JR/RP governments were corrupt. Then, the real problem is to find a solution for a non-existing problem. The next one will be more corrupt whether it will be an UNP or SLSP.

Jack Point said...

Why do you say so?

The way to reduce corruption would include thing such as:

1. Reduce the footprint of the state. The less the state is involved in business, the less opportunity for corruption.

2. Similarly, easing regulations will also reduce corruption. If no permit or license is needed then there is no need to pay a politician to get it. If duty structures are simplified there is little or no incentive to reclassify imports under a different HS code to reduce duty-and no need to pay the customs officers to do so.

Restoring institutional checks on Government by repealing the 18th Amendment (which nullified the 17th) would also help.

Steps on these lines were in fact taken by the UNF regime of 2001-3. Their political philosophy has not changed so I would reason that corruption would ease under a UNP regime.

Jack Point said...

To elaborate a bit on reducing the footprint of the state, there is opportunity for corruption in procurement and other areas when running a business, eg Sri Lankan Airlines or Lankaputhra Bank.

There is nothing to be gained by running yet another state bank or running an airline, so these should be sold off, so that losses do not become a burden on taxpayers. UNP privatised many things, Chinthanaya has nationalised many things including SLIC (now getting robbed on the stock market), SriLankan, Lankaputhra Bank (60% bad debts, due to the fact that loans have been given to political cronies who do not have to pay back), the latest TFC deal (NSB being the victim).

Why does the EPF have a loss making subsidiary called the Salt Corporation -? Because Mahinda Rajapkse got the EPF to bid for it in the privatision in the 1990's? Is this fair use of our retirement funds.

Cutting the gross excess of corruption is not that difficult, eliminating it completely is.

Sarath Amunugama, one of the more sensible ministers says much the same thing but no one listens to him.