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Aitken Spence goes public, LOLC takes off and July 1983 riots hit



by Charitha P. de Silva

1982 was an historic year for Aitken Spence. It was the year that we went public. Earlier in the years I had received a lot of prominence as a result of my photo appearing on the cover of “Asian Business,” a Hongkong-based magazine. I had been invited to deliver a lecture in Hongkong on “How a Traditional Agency House was converted into a Conglomerate”.

The business tycoon Upali Wijewardena had also been invited to speak at the same forum. Unfortunately, he and a small group of his key men went down in the Malacca Straits in his private Lear Jet. There was a lot of speculation that the accident had been engineered in some way. The upshot of this unfortunate accident was that the meeting in Hongkong was canceled.

It was with some misgivings that I promoted the idea of our going public. There were undoubted tax and financial advantages in going public. However, we would lose our privacy and some of our freedom and the feeling of being a close-knit family. In balance, it was a good move and well timed because we had grown to be one of the three biggest conglomerates in the country – the other two being John Keells and Hayleys who were friendly rivals. They were already public companies.

I consulted my good friend M.T.L. Fernando, senior partner of Ernst & Young (a leading firm of auditors) and he looked at our accounts and thought that we should revalue our assets (which had not been done for many years) and have a three for one bonus share issue to existing shareholders before we offered our shares to the public. During the 10 years that I had been Chairman any shares that became available had not been appropriated by the directors. At my urging they were distributed at par to senior executives on a paternalistic basis.

We – Michael (Mack), Norman (Gunawardene), GC (Wickremasinghe) and I – decided who would get the shares and how many each would get. That itself was a generous action because we were a private company and had every right to appropriate the shares ourselves. There was nobody to question us.

Looking back I realize that I must have exercised considerable moral authority over my senior co-directors because they never once demurred at my proposals which involved sacrifice on the part of all of them.

The most extraordinary suggestion I made was when we were planning the Bonus Issue. It struck me that the junior directors, Stanley Wickremaratne, Ratna Sivaratnam and Lal Karunanayake had much fewer shares than the senior directors. I therefore suggested that we should sell them one tenth of our shares before the Bonus Issue. And what was unbelievable was that I suggested that we sell them at par! This was the very antithesis of Insider Dealing. Here was I suggesting that we give them a huge gift before a Bonus Issue! What is incredible is that not one of my senior co-directors protested or demurred! I remember Walter Wimalachandra telling me later that he was thrilled to see, in my actions, the finest principles of Buddhism being implemented.

I had a major decision to make myself. As a private company with a special set of Articles of Association we had a special class of shares called Management Shares. Each Management Share carried a hundred times the voting strength of an Ordinary Share. It thus gave total control of the Company to the holders of Management Shares. This would have been a device that the British owners had adopted to protect themselves. It happened that as a result of the departure of Roy Hinton and Eldsworth Van Langenburg and the death of Louis Samarawickrema, I was the holder of the largest number, by far, of Management Shares.

As they had the same dividend rights as an Ordinary Share and the question of votes had never arisen in the past I had never paid any attention to the fact that I had virtual control of the company. My style of control was based on my ability to persuade, and we had always made all our decisions on a consensual basis. I realised that if the voting rights of Management Shares were ever brought into play it would have been the end of the unity and camaraderie that I had built up over 10 years completely wiping out the memory of the attempted coup by Michael and Norman in 1972 when I was elected Chairman.

Now I was faced with the problem of how the Management Shares should be valued before we went public after which there would be only one class of shares – Ordinary Shares. It might easily have been argued that each Management Share was worth a hundred Ordinary Shares. Such a thought did not even strike me. I would have found it embarrassing. Looking back I cannot but realize that my attitude was positively saintly, and completely unbusiness like. Detractors would say that I was foolish – in the extreme! I decided that without any attempt to have the shares professionally valued I would place a value of eight times that of an Ordinary Share. There was no reaction from my co-directors. They may have secretly thought I was a little soft in the head.

The public Issue was a great success. At about this time LOLC also went public with Orix Corporation of Japan having 30% of the shareholding with the other large shareholders being Bank of Ceylon, National Development Bank, and Development Finance Corporation of Ceylon. Once again I gained no personal advantage from the fact that I was the first chairman of the company. My failure to look after myself can be judged from the fact that when I eventually retired in 2003 (21 years later) I owned less than 5% of the shares! This would sound incredibly foolish to any businessman. I can only attribute it to my abnormal lack of acquisitiveness, all part of my upbringing, and the example of my parents and brothers. This is my only excuse for depriving my children of the opportunity of inheriting great wealth.

Leasing became extremely popular, and a number of independent companies, finance companies and banks started leasing as a lucrative activity. What particularly attracted the banks was the fact that they could set off the depreciation on leased assets against their other income. The specialized leasing companies themselves did not have much other income against which they could set off their depreciation, so that they were in a permanent state of having taxable losses. They therefore did not pay any income tax which infuriated some tax officials who did not concern themselves with the thought that they paid large sums as Turnover Tax.

I saw the need for the leasing industry to protect itself from government action particularly in taxation. I therefore took the initiative in forming a Leasing Association. Quite naturally I was the Chairman and chief spokesman. All those involved in leasing became members. Thus there were representatives from banks in our membership, and our interests were not always congruent. I was not happy about the advantage that banks had with their ability to use depreciation (which could be set off against their other income) to make themselves more competitive.

Specialist leasing companies like ourselves were at a competitive disadvantage because we were dependent on banks for long-term funds, and we had no other income of any magnitude. I decided to do something about it. I made inquiries from the Asian Leasing Association that we had joined by that time, and discovered that Pakistan had introduced legislation that prohibited depreciation being set off against other income. Through Orix Pakistan I got the text of the legislation and wrote to our own Department of Inland Revenue strongly recommending it. It was seized on eagerly as an excellent source of revenue. The banks that had gone into leasing (like Hatton National Bank and the DFCC) were very upset, and Maxi Prelis (DFCC) and Rienzie Wijetilleke (HNB) wrote strong letters to Government attacking me and LOLC.

The Asian Leasing Association (ALA), headquartered in Singapore, had as its head, Mr Miyauchi, the CEO of ORIX Corporation that had created us and still had their representative, Mr Yoshio Ono as our Managing Director. Mr Miyauchi who had developed a healthy respect for me invited me on to their governing council.

LOLC had performed very creditably with A.F. Nizar as Ono’s deputy ever since its inception, doing much better than projected and expected. At this stage I came to the conclusion that we did not need a Japanese MD any longer. I felt that Nizar was ready to take over provided ORIX would agree to it. Under the original agreement with ORIX and the IFC (International Finance Corporation – a World Bank affiliate), ORIX which had 30% of our shares had the right to have their own MD.

When I sounded out the IFC director on our board, P.M. Mathew, he scoffed at the idea saying that Japan would never agree to it. ORIX had associate companies like us all over the world and in every one of them they had a Japanese as the MD. Ours was one of the youngest of these associate companies and it was most unlikely that they would change their worldwide policy for us. I had confidence in myself, and decided that I would broach the question with Miyauchi with whom I had an excellent relationship.

I did so on the next occasion that we met, and was not at all surprised when he agreed to my proposal that Nizar should take over from Ono when his term was over. He obviously had great confidence in my judgment, and the fact that I would be there as Chairman.

And there were obvious cost advantages to them in that they would save on Ono’s salary which would have been much, very much, more than Nizar’s. And so it came about that LOLC was the first associate company in the ORIX empire that did not have a Japanese as its MD.

Meanwhile at the ALA Miyauchi indicated that he wanted to retire. Among the other council members were representatives of South Korea, Taiwan, India, Hong Kong, Pakistan, Phillipines and the other important countries in Asia. Miyauchi wanted me to take over from him (I had been making a bigger contribution than the others at council deliberations) but thought it would be wiser not to rush it as it would appear to be nepotism and I was probably the most junior council member there. So Kenneth Lo of Taiwan was elected President. When Lo indicated that he could not go on for more than two years the Council unanimously decided that I would be President thereafter.

This was a great honour (indirectly) for Sri Lanka which was the newest and smallest country in the Association. It had of course more to do with my ability as a committee man than with Sri Lanka’s economic significance in Asia. In 1988, I took over as Chairman of the ALA and continued for two years which became the standard term.

In July, 1983, I was presiding as Chairman of the fifth Joint Committee Meeting of the Sri Lanka-Japan Business Co-operation Committee at the BMICH. Sejima was by my side, as Co-Chairman and we were approaching lunch time. Suneetha Jayawickrama who was joint Secretary-General came to me and whispered in my ear that Colombo appeared to be burning. The now infamous “July Riots” had broken out and smoke was visible on the skyline in the direction of Fort. We bundled our Japanese visitors into vehicles (I had Sejima in mine) and drove them to the Hilton Hotel.

I remember being stopped at the Bullers Road, Galle Road junction by bands of youth who were collecting petrol in cans for their deadly work. The meeting was aborted, but I will never forget how calm Sejima was. At a hastily summoned Press Conference he described the whole affair as “children’s fireworks”. Despite his effort to play it down, the violence in the streets made the climate for investment in this country unhealthy.

The pogrom that followed was the provocation for the formation of the Liberation Tigers of Tamil Eelam (LTTE) and the warfare that was to plague the country until 2009 when President Mahinda Rajapakse succeeded in crushing the movement militarily.

(Extracted from the Memoirs of CP de Silva)

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Solidarity and Aragalaya: A few thoughts from an educationist’s perspective



by Harshana Rambukwella

Very little in Sri Lanka at the moment inspires hope. We are facing an existential crisis that was inconceivable just six months ago. Sri Lanka is also, ironically, just a year away from marking the 75th year of its independence. As we reflect on these seven decades of postcolonial nation building, and as we confront a future of extreme precarity, our scorecard as a country is not a proud one. Much blood has been spilt in the name of postcolonial nation building and the ethno-nationalist conflict that shaped almost three decades of that history and two youth rebellions against the state speak to a history of division and enmity. While our current predicament cannot be entirely attributed to this conflictual history alone, it surely played more than a small role in shaping our present misery. It is within this context that I want to offer this brief set of reflections on what I feel is an unprecedented form of solidarity that has emerged in Sri Lanka as the aragalaya took shape. While I do not want to romanticize this solidarity because it is a highly contingent phenomenon and is shaped by the extreme nature of the current political and economic conditions, it offers us as a society, but more specifically as educators, something to reflect on as we try to imagine our role in a society that faces a painful process of rebuilding and recovery (though my hope is that such rebuilding and recovery does not mean the repetition of the tired old neo-liberal script we have followed for decades).

Before I explore what I mean by solidarity within the aragalaya, let me briefly reflect on solidarity as a concept. Solidarity is a term sometimes deployed in geopolitics. Particularly in this time of global turmoil where not just Sri Lanka, but many other countries are experiencing serious economic challenges, we see nations expressing solidarity with or towards other nations. However, such solidarity is almost always shaped by instrumental motives. This is what we might call a form of ‘vertical’ solidarity where more powerful and wealthy nations extend a ‘helping hand’ to their more unfortunate counterparts. Therefore, when India says ‘neighbourhood first’ and expresses solidarity with Sri Lanka in this time of trouble one can easily discern this as a hierarchical gesture shaped by instrumental motives. It is in reality, India’s strategic geopolitical interests that largely dominate this narrative of solidarity though one cannot disregard the critical importance of the assistance extended by India and other such ‘powerful’ nations in this time of national distress.

Another form in which solidarity manifests is through what some scholars have termed ‘enchanted’ solidarities. This is literally and metaphorically a distant form of solidarity where intellectuals, activists and others extend solidarity towards a struggle they perceive as deserving their support but without truly understanding the context in which they are intervening. This has often happened with ‘first world’ academics and intellectuals expressing solidarity towards ‘third world’ struggles which they felt were ideologically aligned with their beliefs. One example is how many liberal and leftist intellectuals supported the rise of the Khmer Rouge in Cambodia, believing it to be an anti-imperial liberation movement, only to become disillusioned with the movement as they began to see the full horror of the repression and violence unleashed by the Khmer regime. I think if we reflect on Sri Lanka’s postcolonial history, we can also find many such moments where enchanted solidarities were expressed towards various movements from people in the ‘metropolitan’ center with little understanding of the nuances of the politics on the ground.

Premised against both vertical and enchanted solidarities, scholars have also proposed what is called ‘disenchanted solidarity’. By this they mean a situation where diverse groups, sometimes with very different political and ideological agendas, come together to fight for a common cause. They are often critically conscious of their differences but face a common precarity that pushes them together to struggle and align in ways that were not possible before. Often such moments are also underwritten by anger, though the sources of anger or the objects towards which the anger is directed could be different. I would like to read the aragalaya through this lens of disenchanted solidarity. Particularly at the height of the Galle Face ‘Gota go gama’ protests – before the brutish May 9th attack symbolically ‘killed’ something of the ‘innocence’ of the struggle – there was a sense in which the different groups represented in that space were expressing solidarity towards a singular goal – getting rid of the Rajapakasas and a political system they saw as deeply corrupt – there was anger and a gathering of disenchanted solidarities. For many middle-class people, the aragalaya was a way in which to express their frustration at the lack of the basic necessities of life – be it gas, electricity and fuel – and how a corrupt political class had robbed them of their future. For those with longer histories of political activism such as the IUSF (the Inter University Students Federation) or youth activists from the Frontline Socialist Party or the JVPs youth wing or the many trade unions that supported the aragalaya, this moment in some ways represented the culmination, and perhaps even a vindication, of their longstanding struggles against a political, social and economic order that they consider fundamentally unfair and exploitative. Of course, within this larger narrative, there were and continue to be pragmatic political calculations, particularly from groups affiliated with political parties. At the same time, we also witnessed ethnic and religious minorities, often historically marginalized in Sri Lanka’s social and political mainstream finding a rare space to express their anger at the ways in which they have been discriminated against. However, the argalaya gave them a rare space to do so by channeling their anger as a form of solidarity towards the common goal of getting rid of the Rajapaksa dynasty and the corrupt political system as a whole.

But at the same time, we also saw the tenuous nature of these disenchanted solidarities in the aftermath of the 9th May attack on ‘Gota go gama’. Initially we saw another spectacular display of organic and spontaneous solidarity when health workers and office workers abandoned their workstations and rushed to ‘Gota go gama’ when news of the attack broke. But by the evening of that day the story had turned more insidious with a wave of attacks against the properties of politicians and others thought to have been involved in the attack against the peaceful aragayala participants. While we may understand and even empathize with this backlash, its violent nature and what appeared to be other instrumental motives driving it, such as the looting and revenge attacks, made it difficult to associate it with the moral principles that had animated the aragalaya thus far.

Thereafter, at the current moment I am writing, the aragalaya also appears to have lost some of its vital energy as the political configuration has shifted and the tragi-comedy of Sri Lanka’s realpolitik with its underhand deals and political mechanizations seems to have regained the upper hand.

However, what does this mean? Does it mean post May 9th the aragalaya has lost its meaning and purpose or can we push our analysis a little deeper. At this point I would like to introduce one final way in which scholars have discussed solidarity which I feel is appropriate to understand the aragalaya and the spirit that underwrote it and continues to underwrite it. This is what some scholars have called ‘deep solidarity’ – a situation where in today’s neo-liberal context where the vast majority of the population come to a realization of their common social and economic predicament and realize their common enemy is the symbolic ‘one percent’ or an insidious nexus between crony capital and political power that disempowers them. This is of course an idealistic conception but one which I feel holds true at least partially to this moment in Sri Lanka. People from widely varying social and economic strata, from different religious persuasions and people with wildly different ideological and political beliefs have been suddenly pushed together. They are all standing in the never-ending petrol and diesel queues, they are desperately hunting for the next cylinder of gas and increasingly many of them are going hungry. The privileges and the divisions that once defined them, no longer seem to be so ‘real’ and the one stark reality confronting them is a form of existential annihilation. I believe within the aragalaya we can glimpse traces of this deep solidarity and as an educationist I think it is our vital task to think of creative ways in which we might sustain this solidarity, grow it and nurture it, so that we can at least ‘imagine’ a better future. These are idealistic sentiments, but at least for me, such hope, is a political and pedagogical necessity of the current moment.

Harshana Rambukwella is attached to the Postgraduate Institute of English at the Open University of Sri Lanka

Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies

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No solutions to nation’s problems from draft constitutional amendment



by jehan perera

The three-wheel taxi driver did not need much encouragement to talk about the hardships in his life, starting with spending two days in the petrol queue to get his quota. He said that he had a practice of giving his three children a small packet of biscuits and a small carton of milk every morning. But now with the cost tripling, he could only buy one packet of biscuits and his three children had to share it. This is because their beloved country is facing one debacle after another for no fault of those kids or the larger nation. The latest is the failure of the government to make headway in accessing either IMF funding or other funding on any significant scale. Several countries have made donations, but these are in the millions whereas Sri Lanka requires billions if it is to come out of its vicious cycle of a dollar shortage.

There was much anticipation that the appointment of Prime Minister Ranil Wickremesinghe would bring in the billions that are desperately needed by the country if it is to obtain the fuel, food and medicines to keep the people healthy and the economy moving. But things have not worked out in this manner. The pickings have been slim and sparse. The IMF has given the reasons after the ten day visit by its staff to Sri Lanka. They have specifically referred to “reducing corruption vulnerabilities” in their concluding statement at the end of their visit. The international community in the form of multilateral donors and Western governments have prioritized political stability and a corruption-free administration prior to providing Sri Lanka with the financial assistance it requires.

The pressing need in the country is for the government to show there is political stability and zero tolerance for corruption in dealing with the prevailing crisis. It is not enough for government leaders to give verbal assurances on these matters. There needs to be political arrangements that convince the international community, and the people of Sri Lanka, that the government is committed to this cause. Several foreign governments have said that they will consider larger scale assistance to Sri Lanka, once the IMF agreement is operational. So far the government has not been successful in convincing the international community that its own accountability systems are reliable. This is the main reason why the country is only obtaining millions in aid and not billions.


The draft 22nd Amendment that is now before the parliament (which will become the 21st Amendment should it be passed) would be a good place for the government to show its commitment. The cabinet has approved the draft which has three main sections, impacting upon the establishment of the constitutional council, the powers of the president and dual citizenship. However, the cabinet-approved draft is a far cry from what is proposed by the opposition political parties and civil society groups. It is watered down to the point of being ineffective. Indeed, it appears to be designed to fail as it is unlikely to gain the support of different political parties and factions within those parties whose support is necessary if the 2/3 majority is to be obtained.

In the first place, the draft constitutional amendment does not reduce the president’s power in any significant manner. The amendment is drafted in a way that the reduction of presidential powers will only occur with the next president. The president now in office, who has publicly admitted failure on his part, continues to be empowered to appoint and sack the prime minister and cabinet ministers at his arbitrary discretion. He is also empowered to appoint and dismiss the secretaries to ministries, who are the highest-ranking public service officials. In short, the executive arms of the government are obliged to do the president’s bidding or risk their jobs. This indicates the Prime Minister Ranil Wickremesinghe, whose party has only a single seat in parliament, has no independent strength, but is there at the will and pleasure of the president.

In the second instance, the draft amendment was expected to set up a system of checks and balances for accountability and anti-corruption purposes. The pioneering effort in this regard was the 17th Amendment of 2001 that made provisions for a constitutional council and independent commissions. According to it, the members of all state bodies tasked with accountability and anti-corruption functions, such as the Bribery and Corruption Commission, the Human Rights Commission, the Police Commission, the Public Service Commission and the appointees to the higher judiciary were to be appointed through the constitutional council. The 17th Amendment made provision for seven of the ten members of the constitutional council to be from civil society.


Unfortunately, in a manner designed to deal a death blow to the concept of checks and balances, the draft amendment sets up a constitutional council with the proportions in reverse to that of the 17th Amendment. It reveals a mindset in the political leadership that fears de-politicisation of decision making. Seven of the ten members will be appointed by the political parties and the president in a way in which the majority of members will be government appointees. Only three will be from civil society. This ensures a majority representation in the Council for government politicians, and the ensures government dominance over the political members. The composition of the constitutional council proposed in the Bill undermines the independence of the institutions to which appointments are made through the Council who will be unable to stem the wildly growing tide of corruption in the country.

It is no wonder that the furious people in the endless queues for petrol and diesel should believe that there is corruption at play in the continuing shortage of basic commodities. The government promised that ships would come in laden with fuel a week ago. Then, inexplicably, the information was disseminated that no ships were on the horizon. In any other country, except in a country like no other, the concerned leaders would have resigned. Due to the lack of fuel, perishable farm produce rots in rural farmhouses and markets in urban centres are empty and prices are rocketing up. In the meantime, the media has exposed rackets where the privileged, politically powerful and super rich, are given special access to fuel. It is patently clear that the government has failed to deliver on the results that were expected. The situation is getting worse in terms of corrupt practices.

To the credit of the Sri Lankan people, they are being patient. The bonds of social solidarity still prevail. But the anger at the self-seeking and incompetent political leaders is reaching the boiling point, as it did on 09 May. President Gotabaya Rajapaksa pledged to set up an interim government in consultation with party leaders in parliament. However, he did not do so but appointed UNP leader Ranil Wickremesinghe as Prime Minister and thereby ended efforts of other parliamentarians to form a national unity government. The president’s pledge, made in the aftermath of the cataclysmic and unexpected violence that took place that day, was to reduce his presidential powers, transfer those powers to parliament and to appoint an all-party and interim government of no more than 15 ministers. These pledges remain unfulfilled and need to be implemented to be followed by elections as soon as the situation stabilises.

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Kehelgamuwa’s football skills and President Premadasa’s political sagacity



By Hema Arachi

T.B. Kehelgamuwa, the cricketer who needs no plaudits from anyone, is well known. He represented then Ceylon and, later, Sri Lanka as a fearsome fast bowler during the pre-Test era. His contemporaries still talk about Kehel with great respect. Once S Skanda Kumar, the well-known cricketer, cricket commentator and former High Commissioner for Sri Lanka to Australia, proudly told me about his playing cricket with Kehelgamuwa. Bandu Samarasinghe, a Sri Lanka film star, on a TV programme vividly demonstrated how he faced Kehelgamuwa in a Sara Trophy game. That was the top-level tournament in the country.

This note is to share my watching Kehelgamuwa playing soccer when he was not so young. Then, though his grey hair was visible, he ran fast and played hard like a teenager. This was during President Ranasinghe Premadasa’s tenure. Returning from The Netherlands, after my postgraduate studies, I lived in Pelawatta, near the Sri Lanka Parliament and my workplace – International Irrigation Management Institute headquarters. I used to enjoy walking on Parliament grounds. That day was unique because the game between the President’s soccer team, comprising parliamentarians, and the Sri Lanka Police team, was played there.

President Premadasa was well known for his political sagacity, especially in manipulating any situation in his favour. For instance, the day Anura Bandaranayake became the Opposition Leader, Premadasa, praised Anura stating, “Anura is the best Opposition Leader we have.” He further requested that Anura join the ruling party and become a minister and also marry a girl from a prominent ruling party family. But within weeks, he was critical of Anura. One day an Opposition member asked him, “You said Anura was our best Opposition leader a few weeks ago but now criticise.” His reply was this: “Yes, I said so because Anura is the best Opposition leader for us, the ruling party, not for the Opposition. For the Opposition, the best leader is Sarath Muththetuwegama!”

A few weeks before the scheduled encounter between the Parliamentarians and the Police football team, there was a game between the Parliamentarians and the Colombo Municipality team. Premadasa captained the Parliamentarians and kicked the winning goal. I remember a cartoon in a newspaper where the Municipality team goalkeeper withdrew so that Premadasa could score the goal at his will.

During the game against the Police, Premadasa did not play but visibly played the role of the coach of the Parliamentarian team. Unlike the Municipality players, the Police played the game seriously. Kehelgamuwa represented the Police team that scored five goals by halftime, and the Parliamentarian team was nil. At halftime, Premadasa replaced the Parliamentarian goalkeeper with Jayawickerama Perera. Yet, the Police team recorded a sound victory.

I thought Premadasa was upset due to this defeat for his team. But no. Premadasa claimed victory: “I am happy that my team won the game by beating the Parliamentarians today! Being the Executive President, I do not belong to the Parliament. However, as the Commander-in-Chief, the Police come under my purview, so my team won today!”

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