Praise over a generous dividend payout to shareholders at Commercial Bank and concern over conflicts of interest among board directors figured at the bank’s annual general meeting (AGM) on Thursday.
It was also revealed that current chairman Dinesh Weerakkody would retire next year having completed nine years as a board director, the maximum one can serve as a bank director under tough Central Bank rules.
His place is expected to be filled by deputy chairman Dharma Dheerasinghe, a former Central Bank Deputy Governor and said to be a Government-nominee to the bank board.
Good governance activist and bank shareholder, K. Vignarajah was off the blocks praising the generous dividend payout (after post-tax profits accounting) of 54 per cent but raised concerns over conflicts relating to two directors – Dr. Dheerasinghe and Prithi Jayawardene. Both are chairpersons of finance companies – Dr. Dheerasinghe at Bartleet Finance and Mr. Jayawardene at The Finance Co (TFC). This among others, Mr. Vignarajah said, was in conflict with their position at Commercial Bank.
He didn’t comment on the role of another director, Lakshman Hulugalle, a staunch Government supporter, but in general explained that shareholders were averse to nominee directors from the Government or the Central Bank since their independence becomes questionable.
“We are all good friends but we also need to maintain good (and ethical) management practices,” he told the meeting. Bank chairman Mr. Weerakkody defended the board saying there were no Government nominees while legally, it had been established that there wasn’t any conflicts of interest involving directors.
The bank also has provision to avoid conflicts of interest, saying “the governance structure of the bank ensures that the directors take all necessary steps to avoid conflicts of interest, or the appearance of conflicts of interest, in their activities with and commitments to, other organizations or related parties”.
Mr Vignarajah, who praised the bank management and the chairman for the 2012 performance, said there was a need for those set to take over as chairman at the bank to be experienced bankers or absolutely independent. Opposition MP and economist, Harsha de Silva was also present at the AGM.