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23rd July, 2006  Volume 13, Issue 2

First with the news and free with its views                                     First with the news and free with its views                             First with the news and free with its views                                    

Spotlight

Conflict of interest and the Gold Quest saga

A company search of CopyQuest in Malaysia establishes Gold Quest Chief Vijayeswaran to Jagaiah, CopyQuest company search shows the same address of Jagaiah as that given in his affidavit to NDB, Capital Reach Holdings Limited minutes of 11-04-2006 with excerpts on decision to bid for the management of EPF, ETF, Mahapola etc. , Jagaiah’s affidavit to NDB which has the same address as his Copy Quest address and Nivard Cabraal are in the picture

By Sonali Samarasinghe

If you thought the evidence on Gold Quest we provided last week was dynamite, then today you'll be blown out of your seat.

 Evidence has now come to light that GoldQuest and A.P.Jagaiah have in fact acted in concert to buy shares of the National Development Bank with company search records now in our possession showing a direct link between Jagaiah, Goldquest and Vijayeswaran, the monarch of the Quest group. 

The question is this. The NDB is a public quoted company. What action will the Securities Exchange Commission (SEC) now take to ensure that GoldQuest alias Quest International does not take over one of the country's assets through the Colombo Stock Exchange in contravention of banking laws?

The more telling question is therefore also this. For ironically, while Ajith Nivard Cabraal ostensibly a friend of the GoldQuest team sits on the Central Bank Governor's seat, his sister Shiromi sits as a member on the SEC Board.

Indeed it was through Shiromi, who knew Mahinda Rajapakse during Law College days, that Nivard first met the man who was to be President.

Meanwhile, the regulator whether it is the Central Bank, the Securities Exchange Commission, the Colombo Stock Exchange or the Registrar of Companies must be able to act independently in the public interest and in the interest of the long term economic stability of the nation.

 All in the family

Funnily enough the regulators themselves are curiously if uncomfortably interconnected. The SEC Chairman is of course Gamini Wickremesinghe, nominated by Cabraal to replace Dr. Dayanath Jayasuriya who was a nominee of Treasury Secretary P.B.Jayasundera. Shiromi Wickremesinghe, Nivard's sister also sits on the board of the SEC. Apart from Shiromi, D.K. Hettiarachchi, Registrar of Companies is also a SEC member as is Ranee Jayamaha of the Central Bank.

While Hettiarachchi and Cabraal go back a long way, Jayamaha may be compelled to conform to the wishes of her boss.Whether she is made of sterner stuff, we will have to see.

The Chairman of the Colombo Stock Exchange is Nihal Fonseka, CEO of the DFCC Bank and NDB's primary competitor. Fonseka is also, hold on to your hats, Nivard's cousin.

Jagaiah further exposed

In the past weeks The Sunday Leader revealed that GoldQuest in their own name bought 10% of the shares of NDB. Apart from that Magandran Rajadurai, Director, International Operations for QI, operating from 5/F Mass Mutual Tower, 38 Gloucester Road, Hong Kong also bought 4.9 % of NDB Bank Ltd. in his own name.

The NDB and NDB Bank Ltd were later merged in August 2005. As at present the GOSL owns 21% of the NDB shares. Of this 21 percent the Bank of Ceylon owns, 14% with the Secretary Treasury, Employees Trust Fund (ETF) and Employees Provident Fund (EPF) holding the rest. GoldQuest in its own name as per the NDB Annual Report 2005 holds 10%. For now recall that The Sunday Leader revealed the following with regard to the NDB:

(1) That according to the Companies Act and Commercial Banking Act a single shareholder cannot hold more than 10 %. It would thus be illegal to hold shares in concert under different names.

(2) That while GoldQuest was buying into NDB, interestingly enough Ravi Thambaiah, owners of Renuka Hotels, Cargo Boat Dispatch etc. were also buying into NDB. In fact on April 26, 2006 Ravi was made a director of the board by virtue of the fact that he was a substantial shareholder. The Renuka Group has 9.68 %. Also interesting is that Ravi Thambaiah is the brother in law of Nivard Ajith Cabraal, Governor of the Central Bank and Chairman of the Monetary Board.Nivard himself was an advisor and director of the Renuka Group.

(3) That the NDB has refused to register the shares of three others on suspicion that they are GoldQuest fronts.

(4) The first of these front names is one A.P.Jagaiah with 9.3% shares which the NDB has refused to register.

(6) The second is Fast Gain International Ltd. with 9.9% shares

(7) And Credit Suisse which has bought a further 9.5% shares through nominee accounts.

Jagaiah's big lie

Last week The Sunday Leader revealed Jagaiah's big lie and how he has attempted to dupe the Government of Sri Lanka, the Central Bank regulator and the National Development Bank by even swearing to a false affidavit. (See box)

 In his affidavit dated January 27, 2006 he says inter alia:

"I, A.P.Jagaiah (NRIC No.630215-11-5099) of No. 18 Jalan SG 9117 Taman Sri Gombak, 68100 Batu Caves, Selangor Malaysia being a Malaysian citizen and of full age do affirm/swear and state as follows: ...

"I further state that I have no direct and/or indirect association and/or relationships of whatsoever nature with GoldQuest International Limited. I am unaware of parties connected to or with the said GoldQuest International Limited and I am also unaware of who the other members of the NDB are. I am also unaware of other persons with direct or indirect association and/or relationships with NDB."

Smoke screen

In an attempt to create an elaborate smoke screen A.P. Jagaiah calls himself as such to the NDB while going as J.Anand Prakash when dealing in GoldQuest matters. J.Anand Prakash (A.P.J) is in fact the director of Copyquest SDN BHD having its office at No.12, Jalan TIB 1/1, Bolton Industrial Park, 68100 Batu Caves, Selangor Daru Ehsan, Malaysia. Copy Quest as we proved last week is a part of the Quest International Group. (See box)

GoldQuest, Questnet and Quest International are all aliases while Suntex International Holdings Limited is the front company for GoldQuest operating in Sri Lanka. It is through Suntex that GoldQuest bought into the companies owned and managed by Nivard Cabraal and later his wife Roshini.

That J. Anand Prakash alias A.P Jagaiah is inextricably linked to GoldQuest is now abundantly clear.

 Smoked out

The company search proves irrefutably that they are one and the same. (See box) It says Anand Prakash A/L Jagaiah and Jaganathan of No.18, Jalan 9/17 Seri gombak 68100 Batu Caves. Note the address given to the Companies Commission of Malaysia by J. Anand Prakash and the address given in the affidavit sworn to by A.P.Jagaiah to NDB. It is one and the same. But one need not look so far to find prima facie evidence of his  deception. Just look at the list of shareholders (see box)

(1) Vijayeswaran alias S.Vijayaratnam, the Malaysian national who controls Goldquest owns 199.999 shares of CopyQuest SDN BHD

(2) Anand Prakash A/L Jagaiah alias Jaganathan owns one share.

Therefore now A.P.Jagaiah alias J. Anand Prakash not to mention GoldQuest, stand exposed for acting in concert. And Jagaiah has also got caught lying in a sworn affidavit.

Conflict of interest

It now remains to be seen if the country's regulators so clearly standing in conflict will act now in the public interest. The main mission of the SEC is to promote, maintain and develop a securities market that is fair, efficient, orderly and transparent. But will the SEC turn a blind eye to the GoldQuest multinational conglomerate under investigation by the Central Bank but attempting to swallow the nation's economy through the Stock Exchange.

It's own website states that the Securities and Exchange Commission of Sri Lanka (SEC) was established for the purpose of regulating the securities market in Sri Lanka; to grant licences to stock exchanges, stock brokers and stock dealers who engage in the business of trading in securities; to set up a Compensation Fund and for matters connected therewith or incidental thereto. 

The SEC now issues licences to the Stock Exchange, Stock Brokers / Dealers, Unit Trust Management Companies and registers Underwriters, Margin Providers, Credit Rating Agencies, Investment Managers and Securities Clearing Houses.

It is in this respect that the SEC must be doubly careful.  Alarming to note is that GoldQuest itself has ideas to take over the EPF and ETF and the Mahapola accounts. (See last week's Sunday Leader.)

Board minutes

The Sunday Leader had already established that Nivard Cabraal's Capital Reach Holdings was bought into by Suntex International which is of course a front company for GoldQuest. Nivard on November 26, 2005 resigned from the board of Capital Reach Holdings to take on lucrative government posts but installed his wife Roshini Cabraal in his place as chairperson.

On April 11, 2006, at 9.30 am the board of directors of Capital Reach Holdings met at No. 1, Lake Crescent, Colombo 2. By this time Nivard Cabraal had already agreed to be taken on a luxurious trip to Monaco courtesy Quest International. Roshini Cabraal herself would have known that her own two sons were also scheduled to make the trip later in May. In fact it was her company Cabraal Consulting Group that on April 2 sent the names of her husband and children to Anura Fernando to prepare for the trip. (See previous Sunday Leader newspapers.)

Anyway present at this meeting were Roshini Cabraal, Nivard's wife as chairperson, Mayura Fernando managing director, Daya Muthukumarana, S.C.Weerasooria and of course Anura Fernando the GoldQuest agent in Sri Lanka and director of Rhythm Collection Pvt Ltd. who were all directors of the company. The minutes stated as follows inter alia: (See box)

MINUTE NO.2006/03/03:

PORTFOLIO MANAGEMENT (B/P 2006/03//01)

"The board was also informed that the projections contained in the paper were based on the discussions held with Mr. Anura Fernando on the portfolio of the foreign client represented by Mr.Anura Fernando (whilst negotiations were in progress in regard to the fee) and on the assumption that the totality of the funds would roll over twice every year.

"The board deliberated further on the matter and noted that - foreign clients should pay for the purchased direct to the broker through SIERA Accounts and therefore passive fund management referred to in the paper would not be applicable to foreign clients. Engaging in portfolio management as recommended by the managing director could be used as an entry point to position the company in the field of fund management and create a track record, to bid for the management of larger funds such as EPF, ETF, Mahapola etc.

The board decided that;

(i) A company under the name of Capital Reach Portfolio Management (Private) Limited (CRPM) be incorporated as a subsidiary of the company to engage in portfolio management business as outlined in the paper with an issued and paid up share capital of Rs.1,000,000.

(ii) Staff for CRPM be recruited on a need to have basis and initially, services of the staff attached to Mr.Anura Fernando be obtained on payment.

(iii) An application be made to the SEC to register CRPM as an investment manager. Mr. Anura Fernando disclosed his interest in the arrangement referred to in paragraph (ii) above, which was noted by the board."

Anura Fernando's foreign interest was of course the fact that he was the GoldQuest agent in Sri Lanka. And he was seeking through Capital Reach to control for his foreign account the funds of such local giants as the Mahapola, EPF and ETF.

 However will the SEC which states  in its own website they are the regulators  of fund managers now independently investigate even these minutes?

Nivard, let's have a chat

The Sunday Leader dispatched a letter seeking a face to face interview with Nivard Ajith Cabraal, Central Bank Governor - a copy of which was also sent to him by email and fax.

The letter stated Thus.

Dear Mr Cabraal,

Further to the interview we had with you which was published in The Sunday Leader of June 4, we now request a more detailed interview with you where we may be able to put to you any questions of public interest we may have on the ongoing matter of GoldQuest and your involvement with the company and also on any other matters arising therefrom.

We are unable to appreciate your bland statements to other newspapers, which seek to avoid the issue and deal with extraneous and trivial matters of little public interest or value while avoiding the various issues brought up by our newspaper which we have based on documentation in our possession.

Neither can the public accept a blanket statement that your dealings will be above board considering that you do not seem to have acted above board in your dealings with GoldQuest and Quest International.

If you are willing to grant us an interview where we may pose questions to you which you may then obviously answer as you wish, we can assure you that your answers will not be truncated or edited for want of space and you will be afforded as much space as is needed.

Thank you

Sincerely

The Sunday Leader  


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