Duminda dumps Touchwood

Tuesday, 1 October 2013 01:33 -     - {{hitsCtrl.values.hits}}

Controversial MP Duminda Silva has submitted his resignation from the Board of Touchwood Investments PLC (TWOD) as a Non Executive Independent Director with immediate effect. His decision was conveyed to TWOD Directors and Company Secretaries as well as the Securities and Exchange Commission (SEC). In an apparent late yet welcome realisation, Duminda in his letter announcing the decision to step down has said the economic and social impact of what TWOD is striving to achieve were key reasons for his original decision to accept the invitation to join the Board. However unfolding events currently reported in the print media have highlighted issues which Duminda said the TWOD management and Board need to resolve on an urgent basis. Duminda has noted with concern the suspension issued on the trading of shares of TWOD with immediate effect following the company’s AGM; media reporting that yet another investigation has been instituted by the SEC and media reporting intimating that both the Chairman and the CEO (and Deputy Chairperson) of the company have relinquished their respective executive offices thus remaining as Non Executive Directors. “Under these circumstances I am reluctantly compelled to submit my resignation as a Non Executive Independent Director of the company with immediate effect. I wish the company and Board of Directors the very best in its future endeavours,” stated Duminda’s letter. In the letter however he has acknowledged the core objectives of TWOD encompassing the development of sustainable harvestable timber resources, reforestation and agricultural products as “laudable” initiatives in the context of global warming, climate change and improving Sri Lanka’s export agricultural performance. Company analysts welcomed the move by Duminda whose appointment last week raised serious concerns over issues of good governance. This is on account of Duminda being accused in the murder of Bharatha Lakshman Premachandra in a political fracas two years ago. The MP has pleaded innocent in the case which is still ongoing. TWOD didn’t go public with Duminda’s decision yesterday though the Daily FT learns the resignation letter was dated 29 September (Sunday). Soon after his appointment last Tuesday, some investors took strength and hoped for a decisive revival fuelling a sharp rise in TWOD’s shares. On the same day the TWOD share price shot up by 72% to Rs. 3.10. Some shareholders at TWOD’s AGM on Thursday even hailed Duminda’s appointment. TWOD finished the week at Rs. 4.80, up by Rs. 3.10 or 182% with 105 million shares (almost the entirety of shares in issue) transacted via 7,919 trades for Rs. 371.2 million.  Yesterday the TWOD share closed at Rs. 5.10 up by 6.25% or 30 cents. It hit an intra-day high of Rs. 5.60. It will be interesting to see how retail investors would react to the resignation of Duminda, who despite his wide notoriety remains popular among his electorate. Some analysts viewed Duminda’s resignation to saner counsel prevailing given the fact that TWOD is embroiled in litigation following action filed by a defrauded customer whilst auditing and accounting standards regulator as well as the SEC have previously filed cases against TWOD as well.