CHAPTER 15

(Excerpted from N.U. JAYAWARDENAThe first five decades)

I am like that elastic piece of rubber which bounces up highest when it is pressed and trampled most.

(NU’s letter to his father-in-law Norman Wickramasinghe, Dec. 1931)

Finding Solace in Religion and Community

Earlier, when NU’s workload was so enormous, he found little time for religion. However, during the difficult time associated with the Commission of Inquiry, this changed. As Neiliya relates:

At this time, he became seriously involved with religion and a great supporter of the Lunava Temple. This gave him great strength and courage in his work no matter what crisis he faced.

This temple was located on the outskirts of Colombo in Lunava, where NU had lived until the mid-1930s. Its chief monk was Thero Galkisse Sri Visuddhananda of the Amarapura Nikaya. The temple had a devale devoted to the deities, Kataragama and Suniyam. NU took part in the pujas and rituals of the temple, humbling himself as required by sweeping the temple grounds. He also visited the Rector of St. Aloysius’, Father Morelli, who boosted his morale and restored his confidence (N.U. Jayawardena, 1990, “Down Memory Lane”). It is interesting to note that, according to S.W.R.D. Bandaranaike’s biographer, James Manor (1989, p.307-8), SWRD and his wife Sirimavo, too, frequented this temple in times of crisis during SWRD’s premiership.

Although NU had been the only one of the Durava caste to reach the top of the administrative hierarchy at the time (de Silva & Wriggins, 1988, p.286), caste did not play a part in his way of thinking; but throughout his life, it was to him whom relatives and clan members turned for help. Now, when in his hour of crisis they rallied around to support him, he learned to fully appreciate the value of community.

Bouncing Back – Move to the Private Sector

If Kotelawala had intended to crush and humiliate NU, the former underestimated NU’s resilience and tenacity – as well as how indispensable he was to others. As Neiliya observed, “The Central Bank crisis was an event that changed the future of our family for the better in a way.” A mere six months after NU’s removal from the Bank, announcements appeared in the local and British press that NU had been appointed as the joint managing director of the J.H. Vavasseur Trading Company. This was another landmark in his life and career, and a major turning point. He became the first Sri Lankan to be given such a position in a British-owned company.

Newly-elected Prime Minister S.W.R.D. Bandaranaike crossing the floor of the House of Representatives to greet John Kotelawala

Vavasseur, an old established British firm founded in 1884, was the first in Sri Lanka to process and export coconut products. The firm’s Colombo office was engaged in the production of desiccated coconut, coconut fibre, and shell charcoal for its parent company in London to export to Europe (Villiers, 1940, pp.230-31). Geoffrey Buxton, Chairman of the UK company, had heard that NU was available to take up an appointment in the private sector, and he was recommended by C.F. Cobbold, Governor of the Bank of England. Vavasseur was looking for a managing director for their Colombo office and offered the post to NU. Before accepting the position, NU went to London to study the internal systems of the company. While there, NU suggested several changes, which Buxton and his Board accepted.

The Wellawatte Spinning and Weaving Mills

At the age of 48, NU then embarked upon a new career in the private sector – another realm in which he would dominate for several decades, with what Exter termed his “unrivalled view of the economy.” NU’s long participation at both the ground and policy levels, provided him with insight into banking, finance, and commerce, enabling him to extrapolate beyond the present, and forge new trails. The private sector gave him far more scope for the exercise of his energy and acumen than his 28 years in the public service had. He was no longer hemmed in by a web of regulations and controls, which curbed quick decisions and action. The marketplace was

where one could sink or swim, and NU found this challenging. In NU’s career in the world of business, 1956 was a landmark year. With the help and advice of F.C. Rowan, Chairman of the law firm, Julius & Creasy, NU formed Mercantile Credit Limited as a finance company, while remaining Managing Director of Vavasseur. NU recognized the need for an institution that would provide finance to small businesses and individuals, and Mercantile Credit would become the leading private-sector institution offering hirepurchase finance for several decades to come. The private sector gave

him scope to apply his knowledge of finance towards the development of this sector.

In the same year, NU became Chairman of the Wellawatte Spinning and Weaving Mills, which had been established in the late 19^th century. The mills had been engaged primarily in the production of cheap fabrics, mainly for estate workers, and had become rundown. The main shareholder of the mills was the Maharajah of Gwalior, who was anxious to ‘Ceylonize’ his company in view of the changing times. NU, with the knowledge he had obtained from his time in the Department of Commerce overseeing the running of several factories, found local subscribers who had confidence in his managerial abilities, who along with him took up the majority of shares held by the Maharajah. NU then set out to improve and expand production

by introducing new products and engaging the services of a foreign technologist (de Zoysa, pp.74 & 78).(NU would later manufacture synthetic textiles in 1960, when – fortuitously for NU – the government banned the import of synthetic fabrics. However, the tables would be turned in 1970, when Mrs. Sirimavo Bandaranaike’s government took over the factory, which had over 5,000 employees at the time. Sadly, shortly after nationalization, the mills were permanently closed down.)

The Fall of Kotelawala

Mara Yuddhaya: cartoon from the 1956 election campaign

While NU’s fortunes revived swiftly, John Kotelawala’s were beginning to wane. Kotelawala’s disposition and political style did not match the times, and he made some serious miscalculations, which resulted in the UNP’s crushing defeat at the polls. According to Wriggins: “There was a growing popular feeling of irritation and impatience at the U.N.P. leadership in general and [Kotelawala] in particular” (Wriggins, 1960, p.336). Kotelawala’s lifestyle and apparent disregard and lack of sensitivity for Buddhist values caused much consternation and indignation among the population. His memoirs, which were published at the time, aggravated the situation further. They “depicted him as a playboy of Western European capitals rather than a serious-minded statesman.” Buddhist monks read chapters from Kotelawala’s memoirs at temple gatherings, to “show how unfitted the prime minister was to rule Buddhist Ceylon”

(Wriggins, 1960, pp.336 & 346).

During the election campaign of 1956, a “devastating political cartoon” attacking the UNP appeared, effectively capturing the popular perception of the UNP among many Buddhists and galvanizing public opinion for the Opposition. The cartoon bore clear allusions to the Mara Yuddhaya (War of Mara) – a pivotal event in the life of the Buddha – depicting Kotelawala as Mara, the evil adversary of the Buddha. ( This episode, well known to any Sri Lankan Buddhist schoolchild and often depicted in temple wall paintings, represents the triumph of the Buddha through his purity and righteousness, over the evil of Mara. For an explanation of the context and figures

depicted in the cartoon, see Wriggins, 1960, p.356. After the UNP’s sweeping defeat in June 1956, Kotelawala left for England, and began what would turn into “regular summer and autumn visits to England,” becoming a “mere part-timer in Sri Lankan politics” (de Silva & Wriggins, 1994, p.16). S.W.R.D. Bandaranaike had allowed Kotelawala to “bend currency regulations” to

purchase a farm in England (Manor, 1989, p.255).

Exoneration

With the coming to power of the SLFP government (and its allies forming the MEP), NU lost no time in seeking to clear his name. In January 1957, he drafted a 17-page appeal to Governor-General Sir Oliver Goonetilleke, protesting the “perverse” findings of the 1953 Commission of Inquiry. As NU wrote, it had been a “grave miscarriage of justice”:

The Commissioners have not found any single instance in which it was established that I had received an illegal gratification for showing favour in the official discharge of my duties not only while I was in the Central Bank, first as Deputy Governor and later as Governor, but also in my long and varied career in the public service, the entirety of which came within the ambit of the inquiry… I wish to urge, that the findings of the Commissioners are perverse and are based on a prejudiced view of the facts established. (N.U. Jayawardena, Personal Files)

NU claimed he was a “victim of [Kotelawala’s] private revenge,” because of the latter’s “grave displeasure at [NU’s] official actions… when he was Minister of Transport and Works, and later when he was Prime Minister.”

In regard to loans NU and his wife had taken from banks, he held that there had been no necessary impropriety, in that “such transactions [are] an ordinary feature of normal life in every country today,” and that overdrafts and loans are taken by:

…even Prime Ministers, Finance Ministers and others having authority over banks, [without allowing] such transactions to influence their judgment and official conduct in relation to these institutions.

He argued that abroad, even officers of Central Banks borrow money from these Banks, and that: …in the absence of such a provision, no law or rule of practice has been laid down anywhere that the Governor of a Central Bank cannot resort to normal banking facilities ordinarily available to the general public, including other members of the Governing Body of the Central Bank, whether it be a Monetary Board, as is the case in Ceylon, or the Court or Board of Directors as may be elsewhere.

NU stressed the point that:

It is also significant that no evidence that such transactions are against any unwritten code of conduct in any country was placed before the Commissioners; nor was any precedent to this effect from any country cited.

NU detailed some of his reasons for resorting to overdraft facilities and his expenditure on building for his family:

My wife and I had obtained overdrafts and Bank facilities even during the period as Deputy Governor of the Central Bank. In fact, I had occasion to apprise the then Governor, Mr. John Exter, and also the then Minister of Finance and even other Ministers of these transactions. No one made any secret of this fact. Not one of them made any adverse comment on, or warned me, against these transactions, all of which had been undertaken purely for the purpose of financing the purchase of two building sites, and the construction eventually of a dwelling house for our own occupation and, later, of another house convertible into two flats in case of need, so providing three housing units for the benefit for the three children composing our family. Neither was it considered then that the action of my wife or myself in availing ourselves of these facilities constituted a breach of some unwritten code of conduct, which the Commissioners hold up against me in their report.

NU lucidly summed up his early struggles and meteoric rise in the public service through his own abilities – an achievement undone by one stroke of injustice:

Letter of support from Peri Sunderam, NU’s first mentor

I had risen from very humble beginnings, indeed, to one of the highest offices that the State can offer its nationals and I had achieved this, not through influential connections or patronage, but by sheer dint of industry, intelligence, ability and character and, without being immodest, I believe I could claim that I had won the respect abroad of those in a position to judge my competence in Central Banking. But everything that I had striven for in my working life was destroyed by perverse justice meted out to me.

On 7 March 1957, he wrote again to the Governor-General, pressing for justice against this “great wrong”: if it be that there is no provision in law to annul this order, I should be grateful… your Excellency… grant me a measure of redress for the great wrong done to me, by causing a public statement to be issued exonerating me altogether from any imputations of blameworthy conduct.

NU reassured him with these words:

I wish to say that I have no intention of taking legal action of any kind in respect of the order removing me from office or making any claim on the footing that the order of removal was illegal and to give your Excellency the assurance that I shall not take such action or make such claims.

In reply, N.W. Atukorale, the Secretary to the Governor-General, on 20 March 1957 wrote that, despite a different view, which the new Prime Minister might hold from his predecessor:

His Excellency has no power to annul the order of removal from officemade… before the present Prime Minister assumes office.

NU’s case was sent to the Attorney-General, Noel Gratiaen, QC, whose opinion stated that an injustice had been done. On 10 August 1957, Atukorale announced the news of NU’s exoneration:

I am directed by the Governor General to inform you that the Prime Minister has carefully considered all the relevant material regarding this case and is of the opinion that you, as Governor of the Central Bank, had not done any act or thing which was of a fraudulent or illegal character or was manifestly opposed to the objects and interest of the Bank. (the above correspondence is from N.U. Jayawardena Personal Files)

This was the redress for which NU had been waiting. The news was flashed locally, and in Britain in the Daily Telegraph and Times. Letters and telegrams poured in from people who had known and supported him. Cyril Hawker of the Bank of England wrote to NU, that he was: … delighted to read in the press that you had been cleared of any improper conduct during your Governorship of the Central Bank of Ceylon… I can assure you that everybody in the Bank of England who knew you feels the same as I do. (N.U. Jayawardena, Personal Files)

An influential local left-wing journal, Tribune (30 Aug. 1957), expressed its approval:

We welcome the present ‘exoneration’ because it became clear in the course of the proceedings of that Commission (in the way inquiries were limited and circumscribed) and in the verdict, which was pronounced, that NUJ had been made a scapegoat to shield the activities of bigger fish. (emphasis added)

NU the Senator

While making significant strides in the private sector, NU also made his political debut. In December 1957, Prime Minister S.W.R.D. Bandaranaike appointed him to the Upper House (Senate), bringing NU for the first time into the arena of political debate and providing him with a public platform from which he could expound on his ideas for economic reform and many other issues. A condition for NU’s acceptance of the senatorship was that, if he disagreed with any of Prime Minister Bandaranaike’s policies, he should be at liberty to say so (de Zoysa manuscript, p.72). NU added lively and outspoken comment in the debates. As a senator he was now able to express his views freely, unconstrained by the restrictions he had been formerly bound by as a government servant.

The Hansard from his five-year term in the Senate is full of NU’s thoughtful and well-researched contributions to the various debates. He spoke authoritatively on a wide range of political and economic issues, such as fiscal and monetary matters, insurance, the banking system, and the development of tourism; and his views and participation on government committees were also widely solicited. It is interesting to note that, as far back as 1959, NU had proposed that the electoral system be changed from one based on “first-past- the-post” to one based on proportional representation. He did emphasize, however, that the proportional representation system could bring two disadvantages – the “loss of contact” between elected representatives

and the electorate, as well as the creation of “splinter groups”; noting, however, that these could be overcome through different measures (N.U. Jayawardena, 1959, p.3). He also submitted a memorandum in which he outlined his proposed changes to the composition of the Senate by electing a certain percentage of senators on a functional basis to represent specific interests, such as Education, Arts and Sciences, Agriculture, and Law (N.U. Jayawardena, April 1959, p.5). In this memorandum he noted that:

There is an obligation cast on a society calling itself a Social Democracy… to make the fullest use of those willing and competent to contribute to the process of political decision-making, instead of limiting that contribution only to those who happen to subscribe to a particular political creed. (ibid, p.5)

This was just the beginning of a new life for N.U. Jayawardena, the pragmatist, man of action and visionary. He would soon dominate the emerging private sector, providing the lead for its development. He was eager to create the institutions, which would help stimulate the economy and take the country forward. For NU, this heralded a still newer phase in the world of business, a sector that he had helped to develop during his many years in government service. He had, as one wag said, moved from “Resthouse to Bank House,” and now became both the chief of a Financial House, and a member of the “Upper House.”

EPILOGUE

In the next four decades of his working life, NU continued his relentless pace of work. He went on to establish a large business conglomerate, which included financing, leasing, tea-broking, stockbroking, shipping, logistics, tourism and travel. The companies he founded included Sampath Bank, National Enterprise Bank (now DFCC Vardhana Bank), Union Assurance, Mercantile Shipping, Mercantile Leasing, and Mercantile Credit. He was instrumental in opening up the island’s financial-services and commodity-broking sectors – which had been long closed except to a few companies. In 1982, he became a founding member of the Colombo Securities Exchange, serving as its second Chairman from 1988 to 1989. During these years, NU was in constant demand and served on an extraordinary number of government and private-sector committees as well as boards, contributing to the formulation of legislation and policy in a large number of areas, including banking, finance, capital markets, tourism, housing, and insurance. He was Governor of the Central Cultural Fund from 1987 to 1994.

NU proved to be a prolific writer, commenting on economic and political issues, and participating in the controversies of his time, writing over 200 monographs, essays and speeches over his lifetime. He became the private sector’s foremost champion as well as a vocal

advocate for open-market policies. His copious output included analytical commentary on government economic and fiscal policy which he circulated among policy-makers; his yearly analysis of the government budget became a well-established tradition, forming the basis for intellectual discussion and debate. In recognition of his outstanding service to the country, NU was conferred the title of “Deshamanya” in 1991. He continued to be active, working in his office almost up to the last days of his life. N.U. Jayawardena died, at the age of 94, on April 24, 2002.

N.U. JAYAWARDENA T H E F I R S T F I V E D E C A D E S Chapter 14 can read online on- https://island.lk/power-politics-2/

By Kumari Jayawardena and Jennifer Moragoda ✍️