The deep division between the owners of the Stassen and Milford Exports Groups, with relations between Managing Director Harry Jayawardene and three of the other founder directors including Dr. V. P. Vittachi, who is Chairman of both companies plunging to near zero, was publicly signalled last week with the non-publication of a Chairman`s Review in the annual report of the Distilleries Company of Sri Lanka Ltd. (DCSL), one of the country`s richest conglomerates.
Milford (41.49%) and Lanka Milk Foods (12.65%) are the controlling shareholders of DCSL in which the Sri Lanka Insurance Corporation`s Life Fund (SLIC is a subsidiary of DCSL) and Stassen Exports are among the top 20 shareholders with 3.26% and 0.70% respectively.
Stassen and Milford directly and indirectly have substantial stakes, often controlling interests, in some of the country`s biggest and richest businesses including, DCSL, LMF, Aitken Spence, SLIC, Lanka Bell, HNB, DFCC and many more conservatively estimated to be worth billions of rupees.
These companies recently bought into the healthcare sector taking control of Lanka Hospitals, owners of the Apollo Hospital, and a significant stake in Asiri.
The owner/shareholders of these two holding companies are Jayawardene, Vittachi, Obeyesekere and Zaki Alif. The break-up of holdings in Stassen is Jayawardene with 50% plus two subscriber shares he acquired after the company was founded and the other three shareholders holding the balance. At Milford, the break-up is 60 ? 40 in Jayawardene`s favour, well informed sources said.
Asked why there was no chairman`s review in the annual report, Vittachi said that as has been customary, a draft review was sent for his approval. He made some handwritten amendments and sent the papers back and he did not hear thereafter from the company.
Jayawardene said that the chairman`s review was not included in the report as it had been decided to have a new format. Asked whether there were any differences between himself and Vittachi, he said there were none.
Vittachi rejected this claim saying that Jayawardene had taken the decision to `delete the chairman`s statement` from the annual report and had announced it at an `improperly summoned board meeting` at which neither he nor R. K. Obeyesekere, who is the only other director who is a shareholder of the holding company, were present.
He accused Jayawardene of `usurping` the chairmanship of DCSL and this had led to the belief that Jayawardene is the chairman of the company. The company had even carried a press advertisement with a photograph of Harry J describing him as the chairman of DCSL.
`Mr. Jayawardene occupies the chairman`s room at DCSL and sits at the chairman`s desk. He has marginalised the chairman and Mr. Obeyesekere and runs the company with the assistance of the finance manager, whom he has appointed a director of the company without proper board approval, and the company secretary,` Vittachi fumed.
The Secretary, Mrs. V. J. Senaratne, has been appointed alternate director to Mr. Niranjan Deva Aditya, a member of the European Parliament, who is an absentee director living abroad, `ignoring the conflict of interest`.
Asked whether he will be attending the DCSL annual general meeting on November 30, Vittachi said `certainly not, neither I nor Mr. Obeyesekere will be present at any improperly convened meeting.`
Analysts believe that differences between Jayawardene and the other three directors are irreconcilable and the only way out is for one side or the other to buy out the opposition.
Both sides who founded and developed the company do not relish an exit and there are questions of whether the true value is realisable in any buyout. Separating the conglomerate is another option, analysts said.