Editorial
Delisting Nestle Lanka PLC

Except for perhaps some 6,000 plus Nestle Lanka minority shareholders and stock market participants including retailers, many of them pensioners with time on their hands and not much capital resources to play the market, would have been interested in the recent announcement by Nestle Lanka PLC which has been quoted on the local bourse for 40 years that they plan to delist. But the question arises whether such a decision by a multinational company which has had a global presence for over 150 years and is one of the world’s biggest food brands, is fair to the minority shareholders of their Sri Lanka incorporated company. Nestle boasts it has been present in this country for over a century and the brand is a household name not only here but in many parts of the world. That was a factor that attracted investors to buy its shares when it was first listed on the Colombo bourse. But now, four decades later, they plan to delist.
It must be said in fairness to the company that it has announced that it will be paying a dividend of Rs. 75 a share to its shareholders, probably the biggest ever declared on the Colombo Stock Exchange, prior to its delisting. Analysts and market observers believe that this is a way of paying out all the cash in the company to its present shareholders before it becomes an unquoted subsidiary of its Swiss parent, Nestle SA. Alongside its directors’ delisting proposal, the company has announced its intention to pay Rs. 1,500 per share to the minority which the company says is an “attractive and fair premium.”
But, as a correspondent to a financial daily wrote a few days ago, the mere announcement that the company, subject to regulatory and shareholder approval, will delist is not the end of the story. The directors recommendation can still be rejected by the shareholders, he has noted. This happened twice in recent times. First, the quoted Bank of Ceylon subsidiary, Property Development PLC (previously PDL) that owns the banks headquarters building, and AIA, the insurance multinational were rejected by minority shareholders on a ‘one man one vote principle’ against ‘one share one vote’ which generally happens where members are polled at company meetings. In AIA’s case, a price of Rs. 2,500 a share against an original exit offer of Rs. 1,000 was eventually paid.
The delisting of PDL was in limbo for as long as five years after the proposal was first announced. In the case of that company, it ultimately delisted by paying Rs. 183 per share, up 40% from Rs. 130 offered in 2018. The PDL share, of course, did not enjoy the capital appreciation that the Nestle share did, nor did it pay very high dividends like the latter. Finally PDL itself, and not the Bank of Ceylon – its predominant shareholder – bought out the minority.
Although Nestle was unable to pay dividends to its shareholders in the early years as a listed company, investors who were patient were delighted to see in later years capital appreciation of their shares and dividends that were among the highest declared by companies listed on the CSE. The company also did not make a great success of its spray drying milk powder project, something much needed by the country which has long been unable to make a dent in the import demand for this product. Nestomalt, Maggi, coconut milk powder etc. are Nestle products that have made their mark. Coconut milk powder has done very well in export markets. The company’s contribution to local dairy development is also not inconsiderable and its presence in the country has undoubtedly been for Sri Lanka’s benefit. It says it will maintain its presence here and development focus. But all things considered, remaining listed in Colombo and permitting nationals to have an ownership stake, though small, in the company would be considered desirable by many.
Around 2021, Nestle Lanka’s parent began to buy shares available on the market, a big block of slightly under 300,000 shares done at Rs. 1,200 a share. Some market participants, sensing or speculating of a delisting down the road began to focus on the share but acquiring quantity was difficult due to unavailability and the price per share being also high. So trading opportunities were limited.
Nestle has now announced that an Extraordinary General Meeting will be held in Colombo to consider the delisting resolution. It needs no rocket science to forecast that the company with over 6,000 minority shareholders, over 5,000 of them holding between one to one thousand shares, it will be possible to outvote the resolution on the ‘one shareholder, one vote’ principle. Given the experience of PDL and AIA, it is most likely that an effort will be made to force up the exit offer price. Other than for Nestle SA, the parent, no shareholder on the register holds more than one percent of the company. But institutions like the Sri Lanka Insurance Corporation, EPF and foreign and local funds are among the minority. Whether they would be satisfied with the exit offer or join the majority to up the ante remains to be seen.
Editorial
Arrests and duplicity

Friday 9th June, 2023
Speaker Mahinda Yapa Abeywardana finds himself in an unenviable position over the arrest of All Ceylon Tamil Congress leader and MP Gajendrakumar Ponnambalam, who was granted bail after being produced before the Kilinochchi Magistrate’s Court, on Wednesday. He is under fire from the Opposition, which says he did precious little to prevent Ponnambalam’s arrest, but the government MPs have endorsed police action. Opposition Leader Sajith Premadasa has said he does not approve of what MP Ponnambalam is alleged to have done, but the latter should not have been arrested on his way to Parliament. He thinks there has been a breach of parliamentary privileges.
Speaker Abeywardana insists that he is without power or authority to prevent the police from making arrests. The question is whether the police would have been allowed to arrest a government MP for berating the police, or whether any action would have been taken against Ponnambalam if he had been supportive of the ruling coalition. When MP Ali Sabri Raheem, who has crossed over to the government, was recently nabbed by the Customs at the BIA, with 3.5 kilos of gold and nearly 100 smartphones, he was allowed to walk free after paying a fine amounting to only 10 percent of the value of the contraband goods, which were confiscated. Pointing out that a smuggler without political connections would have been made to pay a fine equal to the total value of the illicit goods taken into custody, the Opposition has asked why no action was taken against MP Raheem for violating the exchange control laws.
In a widely-circulated video, MP Ponnambalam is seen launching into a tirade against a group of policemen, one of whom pays him back in his own coin, in Vadamarachchi, recently. According to media reports, the incident took place near a GCE O/L examination centre; did it disturb the students sitting the exam, and if so, action should be taken against all those responsible for the commotion. Such behaviour is unbecoming to the so-called lawmakers and law-enforcement officers.
The Vadamarachchi incident would not have developed into a mega issue if MP Ponnambalam had made a statement to the police when he was asked to do so. In fact, there would have been no issue at all if he had refrained from confronting the police personnel, allegedly obstructing them in the process; the situation, we believe, could have been handled wisely. The matter, which is now before a Magistrate, is best left to the learned judge. We only discuss some political aspects thereof.
We usually do not have a kind word to say about the police, but they should be treated with respect, and must not be obstructed while on duty. All politicians, save a few, ride roughshod over the police albeit to varying degrees, but angry reactions from the latter are extremely rare. Will the police stand up to the unruly government MPs as well?
All MPs must be treated equally. What MP Ponnambalam is alleged to have done in Vadamarachchi pales into insignificance in comparison to charges against State Minister Diana Gamage; the CID did not arrest her even though the Colombo Chief Magistrate held that the police could take her into custody without a warrant. What made the police baulk at arresting her? Is it that the government thinks all MPs are equal before the law but the members of its parliamentary group are ‘more equal than’ others?
As for the clashes between the MPs and the police, one may recall that in late 2018, the Rajapakasa loyalists in the UPFA parliamentary group went berserk in Parliament in a bid to prevent the UNP and its allies including the JVP and the TNA from toppling the 52-day government, hurriedly formed by the then President Maithripala Sirisena and former President Mahinda Rajapaksa, in a questionable manner.
They turned violent in the House, and even lunged menacingly at Speaker Karu Jayasuriya, who had to be escorted to safety. They then damaged furniture and microphones in the House and threw chairs at the policemen protecting the beleaguered Speaker. It is a non-bailable offence to damage public property. But no cases were filed against those violent MPs.
What’s the world coming to when the MPs who throw projectiles at the police inside Parliament itself and smash up public property are let off the hook but legal action is taken against an MP for hurling verbal abuse against some police personnel and allegedly obstructing them? The government has made a mockery of its ‘one-country-one-law’ slogan, which it makes out to be its guiding principle. The aforesaid instances of duplicity make one wonder whether that catchphrase should be changed to ‘one-country-two-laws’.
Editorial
BAB irredeemably bad

Thursday 8th June, 2023
The Rajapaksa-Wickremesinghe administration has earned notoriety for trying to defend the indefensible. Cabinet Spokesman and Media Minister Bandula Gunawardena made a vain attempt at Tuesday’s weekly press briefing to defend the proposed Broadcasting Authority Bill (BAB) and dispel fears being expressed about it. Health Minister Keheliya Rambukwella, who was present there, stuck his oar in; he said there was no reason for the media organisations that neither committed any transgressions nor intended to do so in the future to fear the BAB. His argument is seriously flawed in that dealing with errant media outfits is not the primary purpose of the BAB, which is aimed at facilitating the suppression of the media in their entirety. It is also intended to have the same intimidating and unsettling effect as the sword of Damocles on journalists and media owners; if it is enacted, all electronic media institutions will be at the mercy of the government, which will exercise control over the renewal of their transmission licences among other things. The BAB will inhibit journalists from being critical of the government and exposing its corrupt deals, etc.
Why is the government in a mighty hurry to introduce broadcasting regulatory laws at this juncture? Its focus should be on stabilising the economy, resuming debt repayment and granting some relief to the public. One of the tasks that the SLPP publicly entrusted President Ranil Wickremesinghe with following the ouster of President Gotabaya Rajapaksa was to bring order out of chaos. He succeeded in doing so—credit where credit is due. He acted decisively and saved Parliament with the help of the military, who aborted an attempt by a mob to march on it, last year. If the hordes had been able to storm Parliament, the country would have been plunged into anarchy. Considering the positive impact the President’s bold action had on democracy and efforts being made to bring about political stability and revive the economy, only a hypocrite of the worst order will deny him credit for that. Unfortunately, a few months on, the government on his watch is trying to bring ‘chaos out of order’ by undertaking missions that are bound to endanger democracy and the semblance of political stability that has come about, and, worse, negate whatever gains the country has made on the economic front during the past several months.
The country has managed with the existing broadcasting regulatory laws during insurrections, a protracted war, and numerous socio-political upheavals including Aragalaya. So, why should the government make haste to bring in new media laws at present? It had better get its priorities right without biting off more than it can chew and inviting trouble.
It may be that the government is trying to make the most of the current situation and introduce oppressive laws to consolidate its hold on power. One may recall that in the early noughties, Wickremesinghe, as the Prime Minister, endeared himself to the media by doing away with criminal defamation laws and received praise from journalists, and deservedly so. But all the good he has done will be gone in a jiffy if the proposed broadcasting laws are enacted.
The UNP has a history of suppressing media freedom. It had journalists assaulted and murdered. The Jayewardene and Premadasa governments even did not allow the privately-owned television stations to carry local news bulletins. It was President Chandrika Bandaranaike Kumaratunga who granted the electronic media that freedom, soon after the 1994 regime change. The UNP lost and opted to avoid presidential elections for about three decades, and having secured the presidency fortuitously, it is apparently reverting to its old totalitarian ways, ably assisted by its partner in crime, the SLPP, whose leaders had journalists killed and media institutions torched.
There is no way the government can justify its efforts to introduce the BAB. Some ruling party politicians have said there could be an extensive discussion thereon before it is presented to Parliament, but what is there to be discussed about an irredeemably bad Bill?
The media continues to draw public criticism, and calls are being made for new laws to enable better regulation thereof, especially in view of the phenomenal expansion of social media. But introducing oppressive laws as envisaged in the BAB is certainly not the way to set about it.
Pressure must be cranked up on the government to deep-six the BAB. Journalists and all others who cherish media freedom and democracy must not rest until that goal is achieved. Boot, saddle, to horse, and away!
Editorial
An indictment of SLPP leaders

Wednesday 7th June, 2023
The easiest task in Sri Lanka is perhaps to distract the public. In ancient Rome, the patricians used bread and circuses to take the plebeians for a ride, but there is no need for bread to hoodwink the masses in this country, where a mere political circus can make them forget even the pangs of hunger. In fact, not even circuses as such are necessary here to divert public attention from the many burning issues that the government has failed, or not cared, to solve; only a propaganda gimmick will do the trick. A stand-up comedienne, who is far from outstanding, a self-styled prophet, and a cantankerous Buddhist monk have found themselves up a creek for having failed to exercise control over their tongues, and the SLPP-UNP government has undertaken to protect Buddhism for political reasons. Besides, everybody is now talking about the next presidential election, which cannot be advanced without a constitutional amendment; the much-delayed local government and Provincial Council polls have apparently been forgotten. The SJB has already named its presidential candidate, and the SLPP remains indecisive with a section of its MPs offering to throw in their lot with President Ranil Wickremesinghe, who, the UNP has said, will run for President.
State Minister of Finance Shehan Semasinghe has, in a television interview, declared that President Wickremesinghe is the best leader around and deserves to be popularly elected at the end of his current term. Politicians know which side their bread is buttered, and never miss an opportunity to ingratiate themselves with the powers that be. So, it is only natural that Semasinghe is fawning over the President, but his statement at issue is proof that the SLPP has become so politically bankrupt that it considers none of its own leaders fit to be the next President! His statement therefore serves as an indictment of the SLPP leadership.
We don’t intend to discuss the possibility or otherwise of a snap presidential election, but Semasinghe’s statement is of interest and much political significance. What it signifies is that the SLPP stalwarts have had to hitch their wagons to Wickremesinghe, whom they condemned vehemently until mid-2022, and even had gone all out to oust as the Prime Minister in 2018, albeit in vain. The claim that the UNP-led Yahapalana government had compromised national security and ruined the country became the SLPP’s rallying cry at the last presidential and parliamentary elections. The SLPP leaders vilified Wickremesinghe and condemned his policies as being detrimental to the country’s interests, and the popular mandate they are flaunting at present to legitimise their hold on power despite their many failures was obtained to ‘save the country from the UNP’. The SLPP has made a mockery of its mandate by elevating the person it used as a foil to promote its leaders as capable patriots, to the highest position in the country. More importantly, it is doing the very obverse of what it undertook to do in its election manifestos. Inveighing against the Yahapalana regime for the sale of state assets, the SLPP leaders declared that never would they resort to the divestiture of public enterprises, which they promised to protect and develop. Today, the SLPP has made a volte-face and is going hell for leather to sell state ventures and other public assets at fire-sale prices.
By making Wickremesinghe the President and helping him carry out his economic policies, the SLPP has unwittingly caused the people to conclude that the UNP-led Yahapalana government would have done what the current dispensation is doing and therefore should not have been voted out. It has thus forfeited its raison d’etre, delegitimised itself well and truly, and lent much weight and credibility to the Opposition’s call for an early general election. In fact, it lost its right to wield power, the day it declared the country bankrupt and began inflicting unprecedented suffering on the people, especially those who had reposed their trust in it, expecting a better future for their children. Efforts being made to straighten up the ailing economy with the help of the very politicians who bankrupted it are as futile and stupid as enlisting Lalith Kotelawala’s support to revive Golden Key and grant relief to its depositors crying out for justice!
Whether Semasinghe has rendered any noteworthy service to the public, as the State Minister of Finance, may be debatable, but he certainly deserves praise for his indictment of the SLPP leadership, unintended as it may be.
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