NSB-TFC deal: CID questions Kariyawasam

As part of investigations, the Criminal Investigations Department (CID) has begun questioning Pradeep Kariyawasam, the former Chairman of National Savings Bank (NSB), in connection with the controversial decision to invest in The Finance Company Plc (TFC), a move which was revoked subsequently.

This is following the Commission to Investigate Allegations of Bribery and Corruption last month commencing an investigation into the NSB’s investment of Rs. 394 million in a 13% stake in TFC via the stock market, which was later reversed by the Securities and Exchange Commission (SEC) when Tilak Karunaratne was the Chairman.
Kariyawasam was also summoned by the Bribery Commission to record a statement last month.
NSB originally purchased 7,863,362 shares of TFC at Rs. 49-50 per share when the latter’s price in the market was trading lower. The reason for the higher price was since the block of shares was strategic. However, there had been allegations that the NSB at that time didn’t follow proper procedure with regard to the decision to invest in TFC, an allegation which Kariyawasam and connected parties have denied.
The transaction also triggered a few other issues such as settlement risk as NDB refused to pay after the transaction went through. The SEC subsequently reversed the transaction, whereby sellers bought the shares back at the same price.
Last week UNP MP Dr. Harsha de Silva bemoaned that despite many months having passed, no specific action had been taken against those responsible for the NSB-TFC deal. Kariyawasam and a few other NSB Board members resigned a few weeks after the deal.