'I couldn't refuse President Rajapaksa the fourth time'
It was the post presidential polls period in 2010. President Mahinda Rajapaksa invited former Chairman of the Securities and Exchange Commission (SEC) of Sri Lanka Thilak Mahendra Karunaratne to be Sri Lanka's envoy to the Japanese capital of Tokyo. He flatly refused. Karunaratne said, "Sir, I am no diplomat. I am a politician and I am quite used to calling a spade a spade".
He was offered the first option, ahead of retired Commander of the Sri Lanka Navy, Admiral Wasantha Karannagoda, one of those sparse instances where a serving Navy Commander was promoted to that rank.
Then, a few days later, Presidential Secretary Lalith Weeratunga phoned him and said: "His Excellency wants you to go to London as Sri Lanka's High Commissioner." The offer was ahead of Mackwoods Chairman Chris Pinto. Yet, the response was the same.
"The President's thinking may have been that I could have promoted investments for the country given my background in business and that I was also a stock market investor," Thilak reminisced.
Not willing to take no for an answer, President Rajapaksa persisted, using all his persuasive powers. He got Weeratunga to phone Thilak the third time, offering him the Chairmanship of the Ceylon Petroleum Corporation. That was ahead of business magnate Harry Jayawardena. Thilak thundered: "How can the President or you expect me to take over the CPC when it is almost the most corrupt State institution in the country? The telephone receiver was slammed in poor Weeratunga's ear for the second time within a few days!
Then, a few days later, it was President Rajapaksa himself who phoned again and offered him the post of Chairman of the Securities and Exchange Commission. The President had told him that he was aware that Thilak was a stock market investor and that he was offering him the job as the market had to be regulated properly. Thilak did not want to refuse the President the fourth time. So, with the greatest reluctance, he accepted the job.
"The less we talk of the Securities and Exchange Commission, the better it is! The day I announced my resignation, which was on a Friday in August last year, which was due to severe pressures from the higher ups to resign, I did not resign immediately. I took a week to expose what was happening. When I left, there were 17 going investigations. Then, the latest Annual Report of the SEC has added two more which made it 19. It was also on that day that I sent a report to the Chairman of the Committee on Public Enterprises (COPE) D.E.W. Gunasekara. I was acceding to the request of COPE for a report, Thilak reminisced."
This columnist was blunt. The next pointer was: "Please tell me bluntly without talking in riddles and parables. Was it stock market's high networth investors who got you to resign?
There was pin drop silence. What the writer encountered next was, raised eyebrows, and followed by a mild frown, which later contorted to a grimace! That was possibly some atavistic warning that this columnist had encroached into sacred territory!
The SEC being a government institution was also full of praise for the work that the SEC under the stewardship of Karunaratne was doing and they wanted him and the Commission to carry on regardless. They also pledged all the logistic support for the work of the Commission. All that Karunaratne pleaded with the COPE Chairman, was, "Please make the SEC an institution which is free of political interference. All they did was a report on the ongoing investigations.
He was extremely tightlipped on the report submitted to COPE on the number of corporates listed to be under the microscope for probe. But the 2012 SEC Annual Report said that there were only six investigations that had been completed.
He said: "It is tragic that no serious action has been taken against the offenders and the wrong doers up to now. They have only been warned and discharged. That is totally wrong, but that is how these institutions function today. They say that I called these manipulators the mafia, which everybody also does, and that is a damning fact. I have made presentations about these matters at various forums without naming them individually."
"I have shown how these shares have been manipulated, the methods which used to skyrocket them and also to crash them. Meanwhile, they also made their billions. It is also not right for me to mention the names of the corporates without real proof.
"The SEC Act says that the main regulatory function is to engage in market development, and they are abusing the word 'development' big time. But, they are abusing it to the hilt. The regulatory function is gradually disappearing, but they are engaged in promotions which is the mandate of the Colombo Stock Exchange and the functions are overlapping into each other. Development is all right but what they are doing is promotions, which is the mandate of the CSE."
He also said that the ideal situation for the SEC to have in terms of market development was to have a well-regulated market with controls such as right risk management systems for the Exchange.
He also sagely remarked that the main function of having a disciplined, racket-free market was not on the agenda of the current management of the SEC. "They are gallivanting all over the world and moreover, no one has even shown the results of these promotions. They had road shows in both Singapore and Dubai and also Bombay, but, no one has shown us the results of these tours or how much of money they have brought in or the new investors or the investments which have come in. Now, they are going into other countries as well," he said.
He also issued a note of caution in the dangers of investors coming to an emerging market such as Colombo, which is not even properly regulated. He believed that going on road shows and promotions, without installing the regulatory mechanisms as a priority, was akin to placing the cart before the horse!
He also paid glowing tribute to the staff and was deeply touched by a document that the staff had presented to him on his departure, which he said, he was confident that no other Chairman had ever got as an endorsement. They had even sent a petition to President Mahinda Rajapaksa as well. Karunaratne had said: "Please don't waste your time. As usual, nothing will happen."
He also quipped: "I did not go as SEC Chairman to continue to draw a salary and a pension and to be bestowed with car permits. I can well afford to buy a car of my own without the permits."
He said that the market was moving sideways with a few counters moving such as John Keells Holdings, Commercial Bank, Dialog Telecom and Ceylon Tobacco. The market would have been dead — other than those transactions and there would not have been a Colombo Bourse," he remarked.
There are plenty of corrective measures which could be taken and foremost among them was the regulator being right. Another Commissioner's name has been brought up in Parliament with allegations of shady deals. When the Commissioners do not command respect then it becomes a problem. However, there are three Commissioners — the representatives of the Treasury, the Central Bank and Institute of Chartered Accountants who are the ex-officio members of the SEC Board, and are respectable persons.
He also commended Dr. Prathibha Mahanamahewa who is the Dean of the Law Faculty of the Kotelawala Defence Academy and Chairman of the Human Rights Commission, also as one of the persons who were deemed above board.
When the market does not have respect for some of the Commissioners, (not all), the system, breaks down and one cannot expect the market to move and that is why it is down and there is no activity now. He is also of the opinion that the market should be regulated independently where the regulator should be made to do his job.
He also stressed the need for getting the amendments to the SEC Act for which he had the first draft ready at the time he resigned. The amendments were to be brought in so that the SEC could operate as independently as any of the modern stock exchanges in the world. Some of it has been on the lines of the Malaysian Stock Exchange which is doing superbly well as well as Canada. One of the long term ways is to be like the NASDAQ which is a long way to go, but Colombo was on the right track which has been dismantled, he believes.
He also said that it was tragic that the SEC was more interested in promotions when the development aspect was ignored. One of the main aspects of regulations was the lack of an Investors' Association which was meant to protect the investors, not only the big time ones but also the small time retail investors. He said that a grouping of people who had branded themselves as the Investors' Association had seen him, but the moment he knew that they were a part of a mafia, he sent them away.
He also said that the demutualization of the Colombo Stock Exchange and the risk management systems should have been done by now. This was long overdue. "Former Chairman Indrani Sugathadasa, despite being a novice in the management of regulatory affairs, made some headway, and I continued with it. The first draft of the amendments to the SEC Act was ready by the time I was ready to resign, but that too, has been put to the backburner. This was overdue from 2007 but nothing has happened yet ," he reminisced in disdain.
He said that there was a lot of turmoil with even the CEO Surekha Sellahewa also resigning, widely believed to be due to the appointment of a board member to the CSE. She must have resigned due to her belief that she would not be in an environment where she could have been working independently.
He also commended incumbent CSE Chairman Krishan Balendra, whom he described as an excellent person and with whom he had an excellent working relationship. He also did not have any issues with any of the other CSE directors as well. However, he said that SEC was a mere 10 months of his life.
Thilak, the chemist and businessman
It is back to business in importing of industrial chemicals for Thilak Karunaratne – the Colombo University chemistry graduate, chartered chemist and a member of the Institute of Chemistry of Ceylon.
This is highly technical where the imports of his firm Multiform Chemicals (Pvt) Ltd., go straight into the manufacturers' factories, he said, albeit being tightlipped about the names of the worldwide agencies that he was representing in Sri Lanka. He had so many businesses that had been liquidated which he said had undesirable elements. They were not listed on the Colombo Stock Exchange.
However, he said that he was quite content with the single business that he had.
"I do not want to be called a fabulously rich crook. I would rather be a comfortably off innocent man with a good name," he beamed. He has a 32-acre property on the banks of the Bolgoda Lake, which is one of the largest single-owner properties bordering the Bolgoda Lake. He is now creating a mini sanctuary for birds and especially, aquatic birds that have become a virtual permanent fixture there. There is also the Swamp Hen or the Water Coot and the Whistling Teel who have taken permanent residence on his property. He has also artificial ponds which he has dug and created and the birds have taken a great liking to these ponds. He has also over 5,000 Mynahs who are roosting in his property. It is in the afternoons of his weekends that he spends time in his arm-chair listening to the bird calls which lull him to sleep. "That is heaven to me," he says with satisfaction.
Asked whether he was heaving a sigh of relief without the rigours of officialdom, he said that he liked both rigours and officialdom, but without interference. He prefers to be in retirement now and enjoy life. At 69, he believes that he is in the evening of his life but walks over six kilometres a day at Independence Square with friends to keep fit and healthy.
Thilak, the Anandian
A bright student at Ananda College, Colombo 10, he has won prizes for history, geography and literature, prior to taking to the science stream. It was his parental influence that got him to the science stream. "Arts was my passion and if not, I would have ended up as a historian", he beamed.
Asked whether there were the possibilities of a shift in career gears in becoming a diplomat after a possible arts degree, he discounted that too.
"I am ruthlessly honest and straight forward, and I am not a sweet-talker, but I don't back stab. If I have to stab, I will stab in front," he said. He has given up politics. He also resigned from Parliament in 2000 vowing never to return.
Vineetha, his Colombo University batchmate was to be his lifetime partner. He was engulfed in the flames of romance until he decided to say 'I do'. His elder son is named after him with the two names in the reverse order as Mahendra Thilak. He followed the father's footsteps. He too graduated with a second class upper division honours also in chemistry from the Aberdeen University and running the business with him. Daughter Mihiri is a finance professional in Sydney, married to a banker. Thilak is a grandfather of two.