SLT-Hutch Mega deal

How the shareholders of SLT will be affected by this news?

https://www.colombotelegraph.com/index.php/expose-president-sirisena-in-the-thick-of-a-multi-billion-kickback-scandal/

Exposé: President Sirisena In The Thick Of A Multi Billion Kickback Scandal

President Maithripala Sirisena has effectively violated all norms of good governance, gone back on several key election pledges including a vow to end nepotism and cronyism, and severely dented investor confidence in moves associated with a deal between the troubled telecommunication service provider Hutch and Sri Lanka Telecom (SLT), the latter now chaired by his brother Kumarasinghe Sirisena. The process revealed by the newspaper ‘Ravaya’ will no doubt disappoint the international community which saw in Sirisena a symbol of change, a champion of democracy and a harbinger of good governance.

MaithripalaKumarasinghe Sirisena is set to strike a deal that would see Hutch being bought by SLT for almost double its current market value. Colombo Telegraph learns that President Maithripala Sirisena is in the thick of this scandal which could yield kickbacks of a magnitude that would make the Central Bank Bond Issue scam seem like a petty theft.

To this end, the President, on the bidding of his brother, has appointed to the SLT Board, two ‘safe’ persons (Rohan De Silva and K.H. Wegapitiya), both former Rajapaksa loyalists and beneficiaries of the previous regime and owners of questionable track records. Rohan De Silva used to be a staunch Rajapaksa supporter who after January 8 struck up a friendship with Harin Fernando. The duo has now replaced the ‘troublesome’ Krishantha Cooray and Firo Farook. Meanwhile Thusitha Haloluwa, a person who played a key role in Maithripala Sirisena’s presidential election campaign and an outspoken political activist, was removed from the Mobitel Board of Directors. He was replaced by Heshana De Silva, a partner of Rohan De Silva and the son-in-law of Udaya Nanayakkara. He used to be a close friend of the Rajapaksas’ and is currently one Harin Fernando’s main financiers.

Hutch, which has been in the market for a while, is in the unenviable position of there being no takers. With Dialog being out of the picture, SLT remains the only viable buyer and is excellently positioned to dictate the purchasing price. Experts in the industry claim that Hutch has been unable to sell even at US $ 60 million. Sirisena, however, wants to start bidding at around US$ 95 million envisaging a purchase in the region of US $ 130 million.

Interestingly, this deal was first dreamed up during the Rajapaksa Presidency. However, Lalith De Silva, the former Group CEO hesitated because there was division in the Board with regard to the then upped-price, which at the time was in the region of US $ 135 million. Some Board members thought that the purchase should actually be at half this figure.

Colombo Telegraph learns that these moves have been vehemently opposed by the SLT Board of Directors. Sirisena, however, has acted in an authoritarian manner insisting that his decision must stand regardless of majority opinion.

It now appears that the scam has been plotted for quite some time now, dating back to the appointment of the President’s brother as SLT Chairman.

Despite pledges to put an end to nepotism, President Maithripala Sirisena appointed his bother Kumarasinghe as SLT Chairman merely days after assuming office. This was done without even informing the subject minister at the time, Mangala Samaraweera.

The man’s incompetence made worse by insufferable arrogance became apparent to all very quickly. Kumarasinghe is not averse to dropping his presidential brother’s name whenever necessary. His chairmanship has been marked by a determination to protect staunch loyalists of the previous regime. For example, he did his utmost to protect the incumbent CEO, Lalith Silva, a political appointee and a Rajapaksa loyalist. Ranjith Rubasinghe, the man appointed by the previous regime as CEO-Mobitel and a personal friend of Namal Rajapaksa, was suspended considering a plethora of allegations against him. Sirisena consistently defended him and essentially scuttled the investigation.

The Board finally decided to bring in Dileepa Wijesundera as the Group CEO. Wijesundera is a professional and his only known political connection is his friendship with Mangala Samaraweera.

Undeterred, Sirisena brought in K.H. Wegapitiya to the Mobitel Board even without informing the minister in charge at the time, Mangala Samaraweera. Wegapitya, after being made a Director of Mobitel, attempted to sell generators to Mobitel in a clear case of conflict of interest. Wegapitiya maintains that this was before he was appointed to the Mobitel Board. However Colombo Telegraph learns that Wegapitiya threatened the Financial Controller who objected to this and forced him to resign. This individual had also given evidence against Rubasinghe. Wegapitiya is also facing charges for fraud in a number of court cases.

It is also on record that Wegapitiya behaved in a way that intimidated the Malaysian directors, refusing to allow them to speak. It must be mentioned that the Malaysian company Maxies owns 44% of SLT and that the purchase of the share volume constitutes the single biggest foreign investment in Sri Lanka.

Wegapitiya even told the Mobitel staff that Mobitel will not bow down to the SLT Board decisions: ‘mama kaduvak gaththoth le nethiva navathinne naha….pistolayak gaththoth….pathuram paavichchi karanne nathuva navathinne naha’ (if I pick up a sword I won’t stop until there’s blood on the blade; if I pick up a pistol I will not put it down until I use the bullets). Needless to say, he had the fullest backing of the Chairman.

Some of the Malaysian directors had made the following telling observation: ‘We thought the Rajapaksas were bad, but what we see now is even worse!’

Around this time the SLT Board had taken a collective decision that the Group CEO should be responsible for Mobitel as well, a fully owned subsidiary of SLT. The advantages of working together to make maximum use of synergies were considered in this decision. Wegapitiya, at this point, quite in contravention of protocol did his utmost not to implement the decision.

Wegapitiya was subsequently sacked from the Mobitel Board because the Malaysians insisted that they fond his behavior ‘uncomfortable’. Wegapitiya, however, told the ‘Ravaya’ newspaper that he is unaware that he was removed from the Mobitel Board of Directors.

Meanwhile, Kumarasinghe Sirisena , when he realized that the Hutch deal could run into trouble due to opposition from the Board, left no stone unturned until the Board could be reconstituted with directors who could be counted on or could be persuaded to keep their peace.

Opposition from Prime Minister Ranil Wickremesinghe was Kumarasinghe’s first big headache. Wickremesinghe, concerned about the complaints he had about SLT being mismanaged and that the foreign directors were unhappy, proposed to appoint Krishantha Cooray as the Deputy Chairman cum Managing Director. So he summoned the entire Board to Parliament and had a discussion, making this suggestion. When the meeting was announced Kumarasinghe went around saying that the PM and Malik Samarawickrama were trying to orchestrate the Hutch deal for personal benefit. So although having agreed to Wickremesinghe’s proposal, he later refused to implement it on the basis that appointing Cooray would undermine him and his authority. This was when he ran to his brother President Maithripala Sirisena.

The truth is that Kumarasinghe need not have worried for there were top ranking UNPers who were actually on his side. They first got Ranil Wickremesinghe to relieve Mangala Samaraweera of the telecommunications portfolio. His replacement, Harin Fernando, is younger and a first time minister. Events have proven that he would bow down to seniority.

The operators were already at work. Alex Lovel, an investment advisor, who was tasked to hatch the deal during the Rajapaksa regime, maneuvered to a position where he was speaking to both SLT and Hutch. Knowing all the parties, including those among the Prime Minister’s men and those of the President’s not averse to kickbacks, Lovel has been a key facilitator, working closely with a Singaporean broker.

Meanwhile, ‘Ravaya’ has revealed that in an attempt to make the deal look above board there is reference to a fake bid by a service provider named Lycamobile for US $ 128 million. Lycamobile is alleged to be controlled by LTTE sympathizers and a ‘nationalist imperative’ is being manufactured so that SLT can outbid Lycamobile.

It must be mentioned that President Sirisena said on TV, ‘I told the Prime Minister to remove the Central Bank Governor (over the Bond Issue scam)”. It was alleged Arjun Aloysius, the son-in-law of Central Bank Governor Arjuna Mahendran had made 500 million rupees. This deal involves an ‘over-bid’ going in the region of US$ 50 million or approximately a staggering Rs 7 billion. The question being asked by those vigilant about the deal is, ‘Will the President sack his brother or will he himself resign?’

As I remember, the deal almost got through last year. Any idea what the real reason why it didn't get materialized?

From what i heard, Hutch also asking for absurd numbers like USD 150 mill.
Dialog also had discussions on this earlier.

Future123 should find out how Hutch ended up with such spectrum while SLT didn't

We might soon see SLT explaining this gossip... maybe over newspapers.

HUNTER wrote:As I remember, the deal almost got through last year.  Any idea what the real reason why it didn't get materialized?

Here you go:

http://www.lankabusinessonline.com/mobitel-considers-strategic-acquisition-of-local-operator/

sashimaal wrote:From what i heard, Hutch also asking for absurd numbers like USD 150 mill.
Dialog also had discussions on this earlier.

Future123 should find out how Hutch ended up with such spectrum while SLT didn't  

We might soon see SLT explaining this gossip... maybe over newspapers.

HUNTER wrote:As I remember, the deal almost got through last year.  Any idea what the real reason why it didn't get materialized?