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Friday, 2 December 2011 00:00 - - {{hitsCtrl.values.hits}}
Indrani Sugathadasa yesterday quit as Chairperson of the Securities and Exchange Commission, a development which some viewed as expected after her Director General moved out, whilst others claimed it was accelerated by events in capital markets last week.
A retired top career civil servant who was handed over the mantle of the SEC one-and-a-half years ago, Sugathadasa tendered her resignation last morning to Dr. P. B. Jayasundera, Secretary to the Finance Ministry, the appointing authority, with the confidential letter detailing reasons for her move.
When contacted, Sugathadasa refused to elaborate but only said that she took the decision “in view of the unfolding circumstances and to uphold my principles of ethics, integrity and professionalism”.
She said she was awaiting the acceptance of the letter.
Among her colleagues she is known to be independent and fearless as well as someone who has worked according to her conscience. She also has an unblemished record of three decades in public service.
That of course is true and SEC insiders said Sugathadasa was above board, thorough, exemplary and strict on discipline even during her short stint. A Commission staffer described her as being among the last breed of par excellence civil servants. She is also the wife of Secretary to the President Lalith Weeratunga, another highly-respected top civil servant.
Others said that Sugathadasa found the “thankless” regulator’s job of late becoming increasingly and relentlessly difficult and complicated, whilst she was also keen to pave the way for anyone more capable, willing or preferred for the job to take over.
Speculation was rife that former MP and Managing Director of chemical importer Multiform Chemicals (Pvt) Ltd. Dr. Tilak Karunaratne would be appointed as SEC Chairman by President Rajapaksa.
There were also rumours that some of the other Commissioners would also resign as show of support to Sugathadasa. Her resignation, however, was widely speculated after longstanding staffer and SEC Director General Malik Cader was moved out in early November to the Finance Ministry following lobbying by influential investors and brokers due to the latter’s weight in pushing excessive regulation through.
Cader’s exit prompted some to point out that so-called bad regulation was out of collective action and the entire commission should quit as well.
Whilst that episode was a setback, Sugathadasa nevertheless was determined to carry on with rest of the Commissioners, comprising those appointed by the Finance Minister as well as Ex-Officio personnel.
Whilst the market toasted the exit of Cader with the All Share Index rising by 2.7% or 170 points to close at 6,452 points on 2 November, between that date and last Friday, due to external factors such as the Expropriation Bill, Budget 2012, 3% devaluation of the rupee, upward pressure on the interest rate, the global market situation and Colombo’s own weaknesses, the ASI had plunged by 10% or 647 points.
The SEC too was concerned over the dip and agreed to an urgent meeting early last week. At this meeting brokers presented two recommendations: 1) increase the broker credit limit to two times their net capital and 2) remove the price band.
Whilst the SEC took serious note of broker concerns, it had wanted additional information to make a final decision. Insiders said Commissioners were on the verge of making a decision on the credit rule when the brokers opted to seek a separate meeting with the President, which was last Monday. The extent of discussions over six proposals made by brokers, level of interaction and positive vibes boosted the market, with the ASI up 200 points or 3.7% that day, though it fizzled off the next day.
Daily FT learns that the brokers’ direct line of communication with the President had unsettled SEC Commissioners, when there was an ongoing dialogue at regulatory and stakeholder level. Some even viewed the SEC’s supportive role to the market being undermined.
Brokers sounded more empowered following the Presidential meeting, whilst investors were also active, sending text messages implying that the President’s Office had directed the SEC to implement broker recommendations, though only two concerned the regulator. These developments sent a chilling message to SEC that its existence may not be strictly necessary for growth of capital markets.
Brokers, however, defended the decision to meet the President, who is also the subject Minister of capital markets. At that unprecedented meeting (the first between brokers and the Head of State), the President had in fact told them that he was ever open for them and that they could direct any issues or recommendations to him, which he would refer to the relevant authorities for action.
Whilst brokers emerged stronger, the forum with the President also cast a lot of new challenges and responsibilities when Rajapaksa urged them to venture overseas to promote Sri Lanka and attract foreign portfolio investment, educate new and rural investor bases, minimise sharp fluctuations and safeguard hard-earned savings/investments of the public.
Independent analysts opined that the latest developments yet again perhaps exposed the extreme egos within stakeholders of capital markets.
Others noted that exits of regulators or influence of investors were common in other markets, but in the case of Sri Lanka, only time would tell whether the recent developments were good or bad.
Sugathadasa has been a very senior public servant who joined the Sri Lanka Administrative Service (SLAS) in 1977. After retirement, she was appointed Chairperson of the Securities and Exchange Commission of Sri Lanka in May 2010. She holds the position of Chairperson of the Insurance Board of Sri Lanka (IBSL) as well.
The last position she held in the mainstream public service was that of Secretary, Ministry of Plantation Industries. Prior to that, she had served in the Ministries of Women’s Affairs and Child Development, Plan Implementation and the National Youth Services Council (NYSC) in different capacities.
Sugathadasa holds a Bachelor of Social Sciences degree from the University of Colombo and obtained a Masters degree (MPA/MBA) from Monash University, Melbourne, Australia, on an Australian Government Scholarship.
She has also been awarded the prestigious Hubert H. Humphrey Fellowship (Fulbright) by the United States Government in 1990 and was attached to Hunter College, City University of New York during the one-year Fellowship period. In addition, Sugathadasa has participated extensively in various training programmes and consultancies in management and gender-related disciplines, both locally and internationally.
