Tremors over Tilak’s talk!

• Analysts allege SEC Chief's action and remarks implicated and compromised President and Finance Ministry; others hail Karunaratne as a hero

By Nisthar Cassim

Despite having the opportunity to directly vent his frustration at his appointer - the President cum Minister of Finance, the SEC Chief’s decision on Monday to tell the world via Reuters about his agony of being under pressure to quit was telling and understandably whipped up commendation as well as condemnation.

Some analysts said the fact that SEC Chairman Tilak Karunanaratne took the Reuters route reinforces the “seriousness” of his predicament and the overall status quo. They also said that his decision to speak up was justifiable and comments to Reuters were valid too. “As an independent regulator, he can speak up, issue warning or express concern and there is nothing wrong in that,” they argued. “Given the fact that anti-SEC forces are very powerful, the Chairman’s course of action is commendable,” another added.

However, other analysts said Karunaratne’s act of using international media to globalise a domestic issue was clearly uncharacteristic of a public official as well as a regulator, with some alleging he had certainly overstepped the limits.

The SEC Chief’s inference that higher-ups (possibly suggesting the Finance Minister or Treasury Secretary) were being misled by “false information” fed by “a mafia” was also cited as a serious indictment on the President and Finance Ministry.

“This suggests that the Finance Minister and Secretary are gullible to be misled or are incompetent to comprehend the truth versus falsehood,” these analysts opined.

Ironically, the very allegation of the President being misled or being under pressure resulting in the exit of Karunaratne’s predecessor Indrani Sugathadasa surfaced at the President’s Forum with the capital market in late July, but it was summarily dismissed by President himself, who emphatically said, “No one can mislead me”.

“In any case, if he wished to, Karunaratne could have presented all findings in his possession as regulator to the Minister of Finance and pressed his case directly rather than sensationalising it via the media,” they emphasised. The fact that the SEC Chief is telling the world the regulator is under pressure from a group of investors also implies that the President, who is also the Minister of Finance, is incapable of addressing the issue.

Be that as it may, other observers also noted that the SEC Chief’s comments on Monday to Reuters were unwarranted because previously he had raised his concerns at the well-publicised recent COPE meeting, the President’s Forum in late July and at least three meetings with Finance Ministry Secretary Dr. P.B. Jayasundera since then as part of the follow-up.

In fact at the meeting with legislators, COPE Chairman D.E.W. Gunasekera assured that he would convey to the President the importance of ensuring the capital market regulator was independent and free of outside interferences. It was after these several opportunities of flagging off his concerns that the SEC Chief took the international media route.

Some brokers and investors, who flagged off the loss of Rs. 300 billion in market’s value as a major concern, were quick to allege that SEC Chief's comments were highly damaging to the market, apart from bringing disrepute to the country.  

Other market participants lamented the looming exit of the SEC Chief, whom they described as a hero and man of integrity. “He was serving the SEC on an invitation from the President and wasn’t using official perks like some State sector bosses. He was building consensus and support for greater regulation to quell manipulation by a group of investors who are not only of high net worth but also ‘highly networked,’” they said.

Independent analysts have repeatedly warned that the integrity and development of the Colombo bourse have been compromised by extreme courses of action by both select investors and the regulator.