Daily Archives: May 27, 2007
Controversy surrounds the sale of Sri Lanka Telecom (SLT) shares purportedly to a Malaysian company, orchestrated by none other than President Mahinda Rajapakse himself, with allegations highly placed individuals stand to gain from the pointless private transfer that would bring no revenue to the state.
by Sonali Samarasinghe
With even top government officials and politicos surprised and silenced by the audacity of the Rajapakse clan, allegations also abound President Rajapakse forced NTT to sell out a large number of its shares to a company of his choice.
In fact when NTT Communications Chief Suzuki, former CEO Shuhei Anan and CEO Shoji Takahashi were to pay a courtesy call on President Rajapakse last year during a visit to Sri Lanka, they were in for a rude shock.
Unimpeachable sources told The Sunday Leader Rajapakse had inquired of the NTT team if they had plans to sell the shares. On receiving a negative answer Rajapakse allegedly strongly advised them they should sell their shares and followed this advice by triggering off a series of unfortunate events that eventually forced the hand of NTT.
Forced to Sell
Following Rajapakse’s advice to sell and leave, NTT were allegedly subjected to harassment that included arbitrary decisions on hiring and firing SLT personnel by the government, and decisions on certain issues taken over the head of the NTT appointed CEO in violation of the management agreement. SLT CEO Takahashi was out of the island and couldn’t be contacted.
With a disgusted NTT now willing to sell its shares in SLT, all President Rajapakse had to do was table a cabinet memorandum and gain cabinet approval. This he easily did by his curious style of ’one a minute’ without even consulting the minister in charge of the subject, Rauf Hakeem.
Even a blue chip company like John Keells that showed an interest in getting into the business could not get a look in for reasons that will not be gone into here because of the fears entertained by its top management.
The controversial deal between GTH and GOSL is expected to be closed this Thursday, May 31 according to documentation in our possession.
GTH a Green Horn
The sale is to be made by NTT to Global Telecommunications Holdings (GTH), a company recently incorporated in Netherlands solely for the purpose of buying out a large chunk of NTT shares in Sri Lanka Telecom. It is to be done contravening sale conditions including that a company doing so must have been established for a minimum 25 years and have at least 15 years experience in telecommunications. GTH is hardly a few months in existence without a single employee in its pay roll.
That the Public Enterprises Reform Commission (PERC) no less has raised eyebrows at this deal in written comments speaks volumes for the behind the scenes goings on.
The present shareholding structure has the government with 49.5 % shares, NTT with 35.2 percent and the public representing some 28,000 shareholders with 15.3 percent.
The present deal is for NTT to divest 25.3 percent holdings to GTH leaving a minority stake of 9.9 with them.
Allocation of Directors
The question naturally arises why NTT will sell only 25.3% and hold on to 9.9%. The answer is simple. In terms of the termination clause in the current shareholders agreement signed in November 2002 between NTT and the government, the agreement lapses if the shareholding of either party drops below 10 per cent and therefore to give GTH full management control, NTT’s stake must drop below the magical 10%.
Furthermore for every 10% of shares held a shareholder is entitled under the current Shareholder Agreement to one director and if there is a part thereof over 5% again the shareholder is entitled to one director.
Technically however if NTT holds less than 10% they are not even entitled to a director on the board. However GTH with 25.3 % shares will be entitled to four directors in terms of the deal struck with the President, and the government with 49.5 % will be entitled to five directors.
However nowhere in this agreement did it state that if NTT wanted to sell its shares it had to get prior approval from the Government of Sri Lanka.
Coming Events Casts their Shadows
There is of course another consideration. If perchance at a later date GTH is able to buy the remaining NTT shares (possible under the new Draft Shareholder Agreement in terms of the exit clause) bringing their share of this high profile public quoted company upto 30% then they would trigger the mandatory provisions of the Takeovers and Mergers Code and will have to make a mandatory offer to the rest of the shareholders. GTH can therefore easily increase its share in this national asset.
However the government in reality holds well over 50 % of the shares with the Treasury owning 49.5 % and small percentages held by EPF 1.98%, Bank of Ceylon 0.27% etcetera from the 15.3 percent. Therefore with the annulment of the existing Shareholder Agreement and management contract with NTT which would come into effect upon the share transfer, the government has the opportunity to take back full control of Sri Lanka Telecom – especially as many of the SLT officials themselves had gained enough managerial and skills experience during the NTT period of control.
But that is not to be and therein lies the multi million dollar question. Read the rest of this entry
Correspondents Report – Sunday, 27 May, 2007
Reporter: Graeme Dobell
ELIZABETH JACKSON: Australia has accused the Sri Lankan Government of violating humanitarian law on a regular basis, pointing to daily abductions and extra-judicial killings.
The very direct criticism of the Sri Lanka Government came in a statement from Australia’s Foreign Minister, Alexander Downer.
Mr Downer’s statement said both the sides of the conflict, the Government and the rebel Tamil Tigers, were committing human rights abuses.
The criticism is seen by some analysts as setting the stage for Australia to proscribe the Tamil Tigers as a terrorist organisation.
From Canberra, Graeme Dobell reports.
GRAEME DOBELL: Alexander Downer has toughened Australia’s public stance on the conduct of the Sri Lankan Government, saying all parties to the conflict, the Government and the Tamil Tigers, are violating international humanitarian law on a regular basis.
The Foreign Minister says abductions and extra-judicial killings occur daily. He points to what he calls an environment of impunity surrounding human rights violations.
His statement draws no distinction between the actions of the rebel Tamil Tigers and the Sri Lankan Government.
The criticisms were made in a statement announcing an extra $5 million in aid to help 400 000 people displaced by the conflict.
About $1 million of that aid will get to the International Committee of the Red Cross to protect civilians from human rights violations, to visit detainees and to act for families of missing persons. In the careful words of diplomacy, it is money to help the victims of a dirty war, being conducted by both sides.
The co-ordinating body for Australian non-government aid groups, the Australia Council for International Development, says the statement shows a clearer understanding of the conflict in Sri Lanka.
The executive director of the Council, Paul O’Callaghan.
PAUL O’CALLAGHAN: This is not a simple matter of one small terrorist group against a whole country; it’s a fundamental conflict dividing a whole nation. It’s involved 70,000 deaths so far of innocent civilians, it has involved two main parties, one of them the current government, the other the Tamil Tiger group, which control different parts of this country.
GRAEME DOBELL: Does it raise questions over how the Australian Government can actually deal with the Sri Lankan Government if Australia can denounce Sri Lanka for violating humanitarian law on a regular basis?
PAUL O’CALLAGHAN: This is not new to any international observers of Sri Lanka but it is really encouraging that the Australian Government has publicly noticed this and of course it’s happening on the other side as well with the Tamil Tigers.
It means, I think, that Australia can have more creditability internationally, especially in the efforts that are being made by a number of countries to help to bring these conflicting parties back to the table.
As long as we only behaved as though the Sri Lankan Government view was the pure truth and that the Sri Lankan Government had not been involved in atrocities and abductions of youth and so on, to make them, force them into becoming soldiers then we could never have creditability.
GRAEME DOBELL: The Australian Government’s attack on the Sri Lankan Government may clear the way for Canberra to act against the other side, the Tamil Tigers.
The Attorney General, Philip Ruddock, has advice from the security organisation, ASIO, on banning contact with the Tamil group under Australian law.
If nothing else, proscribing the Tamil Tigers would allow Canberra to argue that not all those on its terrorist list are Muslim extremists. But Paul O’Callaghan says proscribing the Tamil Tigers might mean Australian aid groups will pull out of Sri Lanka, for fear breaching the law.
PAUL O’CALLAGHAN: If the Australian Government proceeds now to formally proscribe or list the Tamil Tigers as a terrorist organisation this would effectively remove Australia from having the capacity in the next year or two, from acting as a peace broker, a party, a regional party with very good creditability that could try to bring both parties back to the table.
So we would strongly urge the government not to go down that path because it would inevitably be used as a propaganda tool by the Sri Lankan Government.
ELIZABETH JACKSON: The Executive Director of the Australian Council for International Development Paul O’Callaghan talking to Graeme Dobell.
via eMail ABC Online, Australia
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