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Right of reply

ETF not reaping what it sowed


The news article published on 13-06-2006 in your newspaper under the above heading is totally false and misleading.

Since this news will mislead the members of the Employees’ Trust Fund Board where I am the Chairman/CEO and the public, I have decided to forward all the details of this transaction to you.

Even though Ms. Vinitha M.Gamage has met only Mr. Sagara Hewagama on 12-06-2006 who is on the 8th floor of Labour Secretariat Building, she should have also met me on the 1st floor of the same building too. So that I could have explained the correct position to her.

Section 17(1) of the Housing Development Finance Corporation of Sri Lanka Act No.07 of 1997 stipulates that the Employees’ Trust Fund Board shall contribute Rs. 50 Million to the capital of HDFC.

Accordingly, General Manager of HDFC by his letters dated 05-09-2000 and 29-09-2000 requested ETFB to forward Rs. 50 Million to HDFC

Mr. G Jinadasa the then Chairman of ETFB by his letter dated 16-10-2000 has written to the Ministry of Finance and Planning consulting them whether ETFB is bound to make this investment. Prof. Wisva Warnapala successor to Mr. Jinadasa too has written to Ministry of Finance and Planning on the same matter by his letter dated 10-07-2001.

General Treasury by their letter dated 12-09-2001 has informed that the investment of Rs. 50 Million in HDFC is a statutory requirement and the Treasury has no objection for ETFB acting on its own in this regard. Accordingly, Board of Directors of ETFB at its meeting held on 06-11-2001 has decided to invest Rs. 50 Million in HDFC as this is a statutory requirement.

HDFC has forwarded the share certificate dated 07-06-2002 in respect of 500.000 shares of Rs. 100/- each to ETFB.

Housing Development Finance Corporation of Sri Lanka was converted to Housing Development Finance Corporation Bank of Sri Lanka by the Housing Development Finance Corporation of Sri Lanka (amendment) Act No. 15 of 2003.

Under the period of Mr. Dinesh Weerakkody’s Chairmanship, the share certificate was lodged in the CDS account by letter dated 20-11-2003 in order to sell shares at a profit at the share market.

CEO/General Manager of HDFC Bank by his letter dated 24-11-2003 has written to Colombo Stock Exchange and informed that the shares held by ETFB are repayable by them after the sale of shares to the public as per Section 17 (4) of HDFC Act. Thereafter the Central Depository Systems (Pvt.) Ltd. has withdrawn these shares from the CDS account and returned to us.

General Manager of HDFC Bank by their letter under the heading of “Repayment of Capital contribution” dated 16-11-2005 has forwarded a cheque for Rs. 50 Million to ETFB.

This amount was invested in a short term Treasury Bill Repo deposit as a separate suspense account.

I have assumed duties as Chairman/CEO of this Board on 12-12-2005. I paid attention to this matter, obtained legal opinion and wrote a letter on 2 1-12-2005 informing HDFC that we have a right to sell these shares at the Share Market. There were subsequent correspondence on this matter between ETFB and HDFC Bank.

The Board of Directors has authorized me to take legal action against HDFC if we cannot sort out this matter by discussion.

Superintendent of Audit of Auditor General’s Department has queried by his letter dated 08-03-2006 from me regarding the acceptance of Rs. 50 Million from HDFC without obtaining a profit of Rs. 129 Million by selling these shares at the Share Market.

I am surprised to note that Audit Superintendent has never queried regarding non sale of HDFC shares prior to this query, although ETFB has received these share certificate in June 2002. I have replied promptly to Auditor General on 16-03-2006 attaching all documents relevant to this matter.

By publishing an article on the basis of information given by Mr. Sagara Hewagama who apparently obtained parts of information from an audit query might lead to destroy the image of this organization. Therefore you are requested to publish my report early, giving due prominence in your newspaper.


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