7 August 2018 10:08 am
The minority shareholders of Ceylon & Foreign Trades Plc have filed a case at the Commercial High Court of Colombo for oppression and mismanagement of the company affairs by Director-Executive Chairman Ali Asger Shabbir Gulamhusein in concert with Director Malayandi Jeyapragash, Auditor A.I. Macan Marker and Co. Charted Accountants and secretarial company Adam Corporate Secretarial Ltd. which is owned and controlled by Ali Gulamhusein.
Dr. Shabbir Abbas Gulamhusein was the Executive Chairman of the company Ceylon and Foreign Trades Plc until his sudden demise on 9 June 2017. He was a renowned businessman who had built and owned numerous business enterprises in Sri Lanka. Among other businesses, he had acquired shares of CFT and gradually gained control of the company in the late 1980s. The company has been listed on the Colombo Stock Exchange as a Public Listed Company since 1 January 1979. The company diversified its operations to include spice and desiccated coconut exports and with its continuous success became an asset-rich organisation by acquiring a number of very valuable lands and assets.
The petitioners, who include the eldest son and two daughters of the late Dr. Gulamhusein, claim that after his death, his youngest son Ali deceitfully obtained control of the company and is mismanaging it in collusion with the other respondents mentioned in the case.
The petitioners alleged that Ali has alienated the assets of the company at massive losses and some of those funds have been used to secure the loans obtained by him in a personal capacity. It has also been claimed by the petitioners that Ali has caused the company to mortgage the premises bearing assessment No. 258 and No. 260 Grandpass Road, Colombo 12 and premises bearing assessment No. 414/18, K. Cyril C. Perera Mawatha, Colombo 13 owned by the company to LOLC for a sum of Rs. 500,000,000 on 28 September 2017. However, the company has not received any financial or other facility from LOLC to offer such land and premises as security.
It has been further claimed that Ali has caused the premises bearing No. 260, Grandpas Road, Colombo 12 to be sold to LOLC for a sum of Rs. 1,537,200,000 at a loss of Rs. 362,800,000 compared to the book value stated in the Annual Accounts of 31 March 2016.
Furthermore, it has been claimed that Ali has caused the company to sell the premises bearing assessment No. 414/18, K. Cyril C. Perera Mawatha, Colombo 13 to LOLC on 13 November 2017 for a sum of Rs. 444,750,000 at a loss of Rs. 205,250,000.
It has also been alleged by the petitioners that on or around 25 September 2017, Ali had sold 4,032,755 shares held by the company in On’ally Holdings Plc, with a net value of Rs. 390,000,000 at a rate of Rs. 43 per share.
The proceeds of the sale totals a sum of Rs.173,408,465, thereby causing a loss of Rs. 216,591,535. The aforesaid sales are estimated to have caused the company a total loss of Rs. 784,641,535 on the book value as at 31 March 2016.
The petitioners have also claimed that under Ali’s management the company had failed to comply with the critical listing rules of the Colombo Stock Exchange including non-compliance of minimum public holding and non-compliance of corporate governance requirements set out in rule 710 of the CSE listing rules.
It has also been claimed by the petitioners that due to the mismanagement of the affairs of the company, the company has failed to service its facilities obtained from banks and finance institutions.
Further, it is alleged that the company is in violation of the Companies Act as it did not hold its Annual General Meeting within the six months after the balance sheet date of the company or within the 15-month period after the previous general meeting.
The Annual General Meeting of the company for the financial year ended 31 March 2017 was held on 1 June 2018, 14 months after the date of the balance sheet and 19 months after the previous general meeting.
In the current circumstances, the petitioners in the case have, among other things, requested a full investigative audit of the affairs of the company and interim orders against the respondents to safeguard the company. Notices have been served on the respondents and the case has been fixed for hearing today.