Copy of the personal Statement
Made by Mr. Moragoda 08.07.2005
A group of opposition parliamentarians submitted a no
confidence motion against the Minister of Tourism Mr.Milinda Moragoda.
But the facts of the motion are similar to one raised earlier and Mr.
Moragoda had replied to them in the parliament on 08/07/2005.
Mr. Moragoda's statement is given below.
Personal Statement by Milinda
Moragoda
8 July 2005
Mr. Speaker,
During the last sitting week of Parliament, while I was abroad, it
was brought to my notice that an interim report of the Committee on
Public Enterprises (COPE) had been tabled in this House. Sections of
this report referred to incidents that had their origins over 13 years
ago and sought to imply that some of my family members including my
late grandfather, Deshamanaya N.U. Jayawardena had been engaged in acts
which amounted to a failure in corporate governance. The very next day,
several newspapers ran sensational headlines. The Daily News for example
stated that "Milinda Moragoda's Mercantile Credit Owes Central
Bank Rs. 4.7 Billion". Besides the malicious connotations such
a headline implies, it is interesting to note that the fact is that
although I was an executive director at Mercantile Credit I do not hold
nor have I ever held either directly or through any company owned by
me a quantum of shares in MCL which could by any stretch of the imagination
be interpreted as giving me control over the company, much less as making
me its owner.
To clarify the situation, the lawyers representing the former directors
issued the following statement which was carried in the media soon thereafter.
"There have been misleading reports in the media with references to
Mercantile Credit Limited which require correction and clarification.
a. The Management of Mercantile Credit Limited was taken over as a
going concern by a Management Committee comprising of nominee Directors
appointed by the Central Bank of Sri Lanka on the 24th July 1991 and
a nominee of the Central Bank was appointed as Managing Director thereafter
by the then Governor of the Central Bank. The Directors of the Company
prior to this date were not members of the Management Committee and
the Management Committee ran the Company at its sole discretion.
b. The Directors of the Company, Mr. A.N.U. Jayawardena, Ms. Neiliya
Perera and Mr. Milinda Moragoda along with the late Deshamanya N.U.
Jayawardena resigned from the Board and the Company on the 5th February
1992 and the management and administration of Mercantile Credit Limited
was vested in the Central Bank on 6th February 1992 as per a Gazette
Notification.
c. The former Directors of Mercantile Credit Limited have no knowledge
or awareness whatsoever of the operations of the Company from 6th February
1992, i.e., for a period of more than thirteen years.
d. Mercantile Credit Limited did not get any facilities from the Central
Bank whilst the former Directors were managing the Company and all borrowings,
if any, from the Central Bank were probably granted at the request of
the Central Bank's own Management Committee, when they were managing
Mercantile Credit Limited."
Mr. Speaker, owing to my family background and to a lesser extent my
own capabilities, I did not have to enter politics in search of fame,
fortune or power. I could have enjoyed a more secure and more financially
rewarding life, with less stress, effort and less slurs on my character,
if I had remained outside of the political sphere. However, I chose
to try to make a difference to my country by engaging in public service.
When I entered active politics, I expected to face my fair share of
character assassination and dirty tricks campaigns. I have chosen to
be silent on many occasions when malicious allegations and aspersions
have been made against me. However, given that a report has been tabled
in this distinguished House, it is proper that the record be set straight.
Mr. Speaker, a wise person once said that in politics your opponents
are in front of you, but your enemies are behind you. I must state that
the malicious and misleading manner in which this particular COPE report
has been drafted is proof of this observation. I am not going to waste
the time of this House or to dignify those who seek to malign me by
addressing every aspect in this report. However, I will highlight a
few salient areas as examples of some of the gross misrepresentations
that appear in the Report.
1. It is a fact that Mercantile Credit Limited in 1990, like several
other leading private financial institutions, including banks, sought
to obtain a facility from the Central Bank of Sri Lanka to cover debts
that had gone into legal recovery as a consequence of lendings that
had been affected by the disturbances in the North and East and the
civil disturbances of the late 1980s. Mercantile Credit was to pay back
this facility with interest over a period of time. A Cabinet sub-committee,
based on the recommendation made by a high level committee of officials,
approved this facility on the basis that the Central Bank would carry
out the disbursement of funds. Unfortunately, the then Governor of the
Central Bank of Sri Lanka, Dr. Neville Karunatilleke, had a long-standing
hostility towards the founder of Mercantile Credit Limited, my grandfather,
the late Deshamanya N.U. Jayawardena. It is important to note that the
late Mr. Jayawardena, himself was the first Sri Lankan Governor of the
Central Bank. The then Governor used this opportunity to actively cripple
Mercantile Credit's operations by deliberately undermining and destabilizing
the institution. His actions in this context were in marked contrast
to the manner in which other private financial institutions which received
financial support were treated. In addition, he actively sought to destabilize
the Sampath Bank, which was also founded by Mr. N.U. Jayawardena. In
the case of Mercantile Credit, the state of affairs ultimately culminated
in the management of Mercantile Credit being vested in the Central Bank.
The malice that the Governor bore towards Mr. N.U. Jayawardena, can
be demonstrated in the judgment subsequently given by the Magistrates'
Court and upheld by the High Court as well as the Supreme Court, which
convicted and sentenced Dr. Karunatilleke to one year's rigorous imprisonment
suspended for five years, for having criminally trespassed on Mr. N.U.
Jayawardena's family property in Nuwara Eliya during this period. The
judgments which I am tabling in this house today give an interesting
insight into the blind animosity that drove this individual.
2. As mentioned earlier, this conflict further spread to the Sampath
Bank. The then
Governor falsely spread the story that Sampath Bank was unstable and
through a series of machinations forced the removal of Mr. N.U. Jayawardena.
At this time, the Board requested that his son, my uncle, Mr. Nimal
Jayawardena, take over the chairmanship of the Bank. However, a unanimous
family decision was taken that all family members including Mr. Nimal
Jayawardena, the late Dr. Lal Jayawardena and myself resign. At no time
did the share holders seek the removal of the family directors as the
COPE report states. This can be easily and factually corroborated from
available documentation.
Mr. Speaker, it is an uncontested fact that it was owing to my grandfather's
vision that Sampath Bank became the pioneering institution in the financial
sector which many banks have since emulated, and which is still flourishing
today. During my grandfather's stewardship, Sampath Bank was the first
financial institution to introduce new banking technologies such as
automatic tellers and other automated banking services. Under my grandfather's
leadership, Sampath Bank had the most successful and most widely held
public share issue at that time, contributing significantly to the success
of the Colombo Stock Exchange, of which again my grandfather was a founding
member and one-time chairman. As you are aware, he was a self-made man
from humble beginnings in Tangalle who made his way up to the highest
positions in our financial and corporate sectors through sheer dedication,
hard work and ability.
It is also tragic to ponder what Mercantile Credit which was the largest,
and one of the oldest finance companies which dominated the market at
that time, would have been had this intentionally destructive interference
not been allowed to take place. It is clear that although all the depositors
were settled by the Central Bank's appointed management, the institution
which had been built up through hard work and visionary leadership was
brought to the ground because of a personal vendetta.
3. As far as National Mercantile Bank is concerned, the authors of
the COPE report, whoever they may be, have deliberately or otherwise
included malicious insinuations about me. The fact remains that the
banking licence for NMB was obtained in a transparent manner, but unfortunately
the authority to deal in foreign exchange (which a commercial bank is
explicitly entitled to receive) was delayed by some two years, as a
direct consequence of my own political affiliation with the United National
Party and was only obtained as a consequence of the filing of a Fundamental
Rights application. This was only one of the times when my political
activities adversely impacted my business interests. Because of the
losses incurred as a result of this unjust action by the Government,
the National Mercantile Bank had to be restructured resulting in financial
loss to the shareholders, but without recourse to Government financing.
Today it operates successfully as DFCC Vardhana Bank.
4. Finally, there has been reference to a report by the accounting
firm, Coopers and Lybrand. However, it failed to mention the other reports
carried out at that time by firms of equal stature such as Ernst and
Young and KPMG, which have expressed different opinions from those of
Coopers and Lybrand. Those concerned appear to have deliberately chosen
to omit these reports. Those who have attempted to cast aspersions on
my reputation and that of my family, even fail to mention that on page
63 of that very same Coopers and Lybrand report, it is stated categorically
that there were no monies outstanding to Mercantile Credit from companies
owned by the N.U. Jayawardena family.
Many more inconsistencies can be pointed out. However, my purpose in
presenting this statement in the House today is to provide insight into
the background of these past incidents. These events occurred nearly
15 years ago. If there had been any malpractices or misdeeds, we can
be certain especially given my political affiliations that one government
or the other would have taken action. To misrepresent facts, maliciously
casting aspersions on the character of decent persons in an effort to
attack one person for narrow political gain, is particularly reprehensible,
immoral and unjust. It is even more so especially when Deshamanya N.U.
Jayawardena and two of the other senior directors who were associated
with Mercantile Credit Limited and Sampath Bank are no longer living,
and unable to take issue with them.
Mr. Speaker, I am also convinced that this whole development would
not have taken place if I had not been seated in this House and in politics
today. I feel saddened that this House which you and I hold in high
regard, is being cynically manipulated for narrow personal objectives.
As you are aware I have always stood for creating a political culture
that does not tolerate character assassination, that focuses on substance
as opposed to personalities, that seeks to build rather than destroy,
that is founded on decency as opposed to vindictive conduct. I wish
to reiterate my commitment to these values as I make this statement
for the record.
Mr. Speaker, let me remind those who seek to malign me for reasons
best known to themselves, of some lines from verse 125 of the Dhammapada:
"To the fool who does evil…. the evil returns to him like
dust thrown against the wind."
This text available on the website of www.milinda.org
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