‘I was held at gun point at home during peoplisation of United Motors’
From corporate governance to national governance!November 14, 2011, 9:04 pm
It has been a rich and variegated, yet chequered career for UNP Deputy Leader Karunaratne Jayasuriya. From the blue chips CW Mackie and Ceylon Trading to the Power and Energy Sector he once headed as Cabinet Minister and now to national governance, both of which the chips are down right now.
Picture by Saman Ranaweera.
United National Party Deputy Leader Karunaratne Jayasuriya reminiscences his illustrious days as a private sector icon where he served either as Chairman or Director/ CEO of 50 listed/ unlisted corporates, trade chambers and others. He also became the first Chairman of the first peoplised company- United Motors Lanka PLC , his initial rise through the ranks at CW Mackie and Ceylon Trading and his pioneering efforts in the Expo 92 international exhibition were remarkable.
It is no secret that United National Party Deputy Leader Karu Jayasuriya once held the position of either Chairman or Director of 50 listed, unlisted corporates, trade chambers and others prior to his entry into politics. But what he would describe as the bullwalk was being the Chairman of United Motors Lanka PLC the first corporate entity to be "peoplised" under the Ranasinghe Premadasa Presidency.
"When I look at the private sector, I could always recall with satisfaction the discipline, hard work, the commitment and the contribution to the nation building that went into it and especially the work that went into the privatization of United Motors, he told The Island Reminiscences at an interview at his Dawson Road, Colombo 5 residence.
It was during the dark days of the JVP insurgency of the Ranasinghe Premadasa Presidency in 1989 and one of the severest constraints that the then government had to encounter was foreign exchange, consequent to the slow movements of exports triggered by the JVP terror antics. External Reserves had declined and with that the burden of the essential imports, which, at that time were done on 360- day deferred terms. The government of the day had to resort to external borrowings and had to turn to the International Monetary Fund. One of the preconditions imposed by the IMF, in lieu for the releases of the tranches, was the privatisation of the Government Owned Business Undertakings and as they were vested with the public, it was the term coined by the slain president himself as peoplisation! United Motors was the first in the pipeline.
Karu was also a member of the Presidential Privatisation Commission appointed by President J.R. Jayewardene which was chaired by Baku Mahadeva (Member of the then prestigious Ceylon Civil Service, United Nations Civil Servant and former Chairman of the then Development Finance Corporation of Ceylon and National Development Bank). President Premadasa was keen that the challenge of "peoplising" United Motors was given to Karu. That was also the time that the country’s private sector was totally debilitated with threatening letters and telephone calls to close down , resulting in foreign exchange shortages . The company came under the purview of Industries Minister Ranil Wickremesinghe and the President wanted the process expedited. Karu was inundated with at least four telephone calls daily from the President. The then board comprised Mahendra Amarasuriya, Eraj Wijesinghe from the private sector, Secretary to the Industries Ministry Vincent Panditha and a Treasury nominee. That was the manner in which the board was constituted for the privatization to be implemented.
There were the looming death threats from trade unions within the company but the officials worked hard. Some officials resigned due to such threats.
There were no takers for the company from any part of the world due to the business and political environment in the country. It was with a great deal of persuasion that Mitsubishi Motors Ltd of Japan , whose general sales agent in Sri Lanka at that time was United Motors, agreed upon buying a 5 % stake of the shares of United Motors. The rest of the shares were acquired by the financial institutions due to the then inactivity of the share market. That was the time that people were repatriating funds due to the political uncertainty.
Karu recalls with nostalgia and horror, the chilling experience of a night, three days prior to the completion of the United Motors privatization how 14 armed JVP gunmen arrived at his then Conniston Place , Colombo 7 residence at around 7.30 pm with AK 47 rifles, wanting him to resign from the United Motors and come with them!
Karu shuddered at the mere thought of that day, being the day after Chairman of the Independent Television Network’s Chairman Thevis Guruge and News Editor Kulasiri Amaratunga were shot dead and the day before Sri Lanka Rupavahini Corporation’s Programs Producer/Announcer Premakeerthi De Alwis was gunned down.
Being the dutiful father, Karu’s first line of duty by the family was to pack his two little daughters, then 13 and 11, overseas for their security and studies. Elder daughter Lanka is now a Medical Doctor with the World Health Organization in Colombo and is the wife of Minister Naveen Dissanayake and the second, Indira, now an Economist in London married to Human Resources Manager Martin Dicker.
Karu also recalls with nostalgia, how the trade union leaders and especially the SLFP Trade Union leader who walked up to him at the time that the traditional oil lamp was lit and said: "Sir, we are dead against privatization, but we know that you will not do anything that is rash and we know that you will look after us."
The peoplisation was, by itself a success story with the employees getting 15% of the shares! No other privatized institution got that many shares at that time! There were also the career advancement programmes which were initiated for the graduates who were in the minor staff cadre. They eventually became millionaires and they yet come and see me, he chuckled.
The IMF, hot on the heels of the United Motors peoplisation, released the first tranche at that time, which saw the revival of the economy.
Karu- the shipping professional turns trader
It was soon after Ananda College, Colombo that Karu ventured into the shipping industry and his career was to be at Ceylon Trading, owned by the Danish. He also sat for the examinations of the Institute of Chartered Shipbrokers of UK and was later an Associate of the Institute. He was to be absorbed into the shipping cadre of Ceylon Trading Company, but that being the trading company, his boss, being a Dane, thought that Karu had a flair for trading. The Principal of the Danish company were hell bent on having a Dane to head the Shipping Department of the company and his boss- the then Ceylon Trading Managing Director Eric Staarup, believed that Karu had a better future in trading. He said that he was himself a trader and that the sky was the limit. That was 1965 and Karu, the fledgling shipping professional, just 25.
Karu was soon with the Exports Department and having shown good results, was promoted Export Manager soon with his adventures and forays into tea, rubber and coconut exports. There were the restrictions imposed for foreign companies in their exports to the East European bloc and China.
That was the time that they ventured into acquiring the largest rubber exporting company- CW Mackie and Co, which was owned by the De Soysa family. The company was losing with Indian equity participation at that time, and therefore the management deal went though with Ceylon Trading acquiring CW Mackie.
Karu was asked to go there and reorganize the entire production and trading operations of CW Mackie. The Danish had acquired the management control having purchased 51% but there were still Indian Directors on the Board. Within a year, the company was restructured to make a profit oriented organization. Karu, who went in as the Stores Manager, had a rapid rise and went to be General Manager, Director/ General Manager, Managing Director and finally the Chairman!!
Travelling was extensive where he had visited Russia well over 50 times where rubber contracts had to be signed every three months and also almost all the East bloc countries. One of the pioneering ventures of Mackie was sugar trading under the subsidiary Mc Grains.
Mackies was by far the largest rubber exporter then, having opened up exports to the Socialist bloc- Russia, Rumania, Bulgaria, Czechoslovakia and Poland and controlled the rubber exports out of Sri Lanka while dealing with desiccated coconut, being one of the largest suppliers to Mars chocolates et al. Synergies were merged with some of the largest global tyre manufacturers. Exports were leveraged into coconut and non- traditional products and they were paid an incentive called FEECS (Foreign Exchange Entitlement Certificates). Exporters were also allowed to remit 2-3% of their Dollar earnings to convertible rupee accounts, through which vehicle imports were also allowed.
Ceylon Trading and Mackies were also keen to invest into human capital and Karu was the first Sri Lankan to be trained at the premises of the Danish Principals. He was sent to INSEAD in France for the advanced management programs where it helped him to look at matters from different perspectives.
He also struck gold within the Ceylon Trading Group as well rising to be the Deputy Managing Director to Managing Director P.G. Rasmussen with the death of Eric Staarup and what preventing him being the Chairman was that slot was reserved for Danish, working at the Head office in Denmark. Ceylon Trading was the General Sales Agents for Maersk Shipping Lines and a host of others.
The birth of Korea Ceylon Footwear
It was during the Jayewardene Presidency that he wanted a tie up for the Leather Corporation and investments were invited from two Korean companies- Tom Yang Rubber and Doosan, a large trading company. The venture was failing and that was the time that President Jayewardene summoned UNP Chairman NGP Panditharatna (then also Senior Partner KPMG Ford Rhodes Thornton and Co, Director General of the Mahaweli Authority of Sri Lanka and Member of the Central Bank Monetary Board) who took Karu to him.
Karu agreed to restructure the company on the strict understanding that there will not be any political interference and that he be given a free hand. The Industries Minister of the day was Cyril Mathew. Korea Ceylon was on the brink of closure with a share at Rs. 2. The company under Karu saw phenomenal growth within two years where the share zoomed to Rs. 280. The secret to the turnaround was Karu’s management concepts and motivational theories as the then Chairman. Korea Ceylon Footwear then, became the largest footwear exporter in Sri Lanka.
Merchant Bank, Merchant Credit and Ceybank Unit Trust
He also served as Chairman of the Bank of Ceylon subsidiaries – Merchant Bank and Merchant Credit. Karu also recalls with pride having been the Chairman of the first unit trust in Sri Lanka – the Ceybank Unit Trust which was a joint venture of the Bank of Ceylon and the then largest unit trust of India.
Grand half century of ventures!
The 50 ventures that he served either as Chairman or as Director were: Chairman Supervisory Board, Pima Holdings (Pvt) Limited which was Managing Agents and Major Shareholder was: Plymouth Industries (Pvt) Limited. Michelangelo Footwear (Pvt) Limited, Asia Industrial Enterprises (Pvt) Limited, Classic Footwear (Pvt) Limited, and Raphael Classics (Pvt) Limited, Chairman, K J Holdings (Pvt) Limited, Chairman, Merchant Credit of Sri Lanka Ltd, Director, Merchant Bank of Sri Lanka Limited, Alexandra International (Pvt) Limited, Plantation Investment and Management Company (Pvt) Limited, Director, Royal Fernwood Porcelain (Pvt) Limited, Chairman, Korea Ceylon Footwear Manufacturing Co. Ltd, Chairman, United Motors Lanka Limited, Chairman, Sri Lanka Expo (Pvt) Limited, Chairman, Unit Trust Management (Pvt) Ltd., Ceybank Unit Trust, Chairman, Organizing Committee, Sri Lanka Expo Fair 1992, Chairman, Advisory Board Plymouth Industries (Pvt) Limited Chairman, Colombo Rubber Traders Association, Chairman, C.W. Mackie & Co. Ltd, Chairman, C.W. Mackie (Coconut Products) Ltd, Chairman C.W. Mackie (Non-traditional Products) Ltd, Chairman, Mackgrains Limited, Chairman, Orient Silver Co. Ltd, Chairman, Cocomac (Pvt) Limited Chairman, Ceymac Rubber Co. Ltd., Chairman, C.W. Mackie (Managing Agencies) Ltd, Chairman, Rubber Convertors Limited, Chairman, Woodmac Limited, Chairman, Sri Lanka Business Development Centre
The other similar offices he held were: Chairman, SAARC Committee Federation of Chambers of Commerce & Industry of Sri Lanka, President, National Chamber of Commerce, Sri Lanka, President, Sugar Importers Association, Sri Lanka, President, Sri Lanka Korea Association, President, Plastics & Rubber Institute of Sri Lanka, President, Sri Lanka East European Business Council, Deputy President, Federation of Chambers of Commerce & Industry of Sri Lanka, Deputy President, Colombo Business School (Organizing Committee), Director, Ceylon Trading Co. Ltd, Director, General Superintendence Co Ltd, Director, Association Intercon Ltd. Director, Ceytra Limited, Director, Scan Imports Limited, Director, Scanships Limited, Director Ladyhill (Tourist) Hotels Limited, Director, Serendib Coconut Products Limited, Director, Prodcarry Limited, London, Director National Development Bank Venture Investments (Pvt) Ltd, Director Michelangelo Footwear (Pvt) Limited Member, Federation of Exports Association of Sri Lanka, Presidential Commission on Privatization, Rubber Council, Human Resources Development Council, Member, National Steering Committee - Year of Exports, Public Investment Management Board (by Presidential Appointment) and Member, Sri Lanka Export Development Board.
Pioneer of Expo 1992
Karu was in the habit of meeting President Premadasa in the wee hours at Sucharitha. At one such meeting, the President was wanting Sri Lanka to host the first international trade fair. The motto was: "export or perish." The slain President, having read books on the Korean resurrection, had wanted Karu to invite 1001 visitors, just one more than the first Korean international business exhibition! He had also pledged a small percentage of the government funds and it was up to Karu to find the remainder. There had been a magnificent board with leaders in the calibre of Singer Chairman Hemaka Amarasuriya, former FCCISL President Patrick Amarasinghe, EDB Chairman K. Gunaratnam. However, the fascinating aspect of the Expo 92 international exhibition was that Sri Lanka was successful in procuring 5600 plus foreign visitors, far in excess of President Premadasa’s expectations. There was a constraint in the hotel rooms. All hotels from Bentota to Kandy were fully booked. President Premadasa was so keen and there were three or four rehearsals as well to ensure the success.
One of the constraints was serving alcoholic beverages to foreigners. Both President Premadasa and Trade Minister A.R. Munsoor wouldn’t hear of it. But Karu, being the astute businessmen that he is, told the President that there would be a total Sri Lankan identity at the exhibition and that there were going to be local astrologers and soothsayers as well and also with that the promotion of the locally brewed alcoholic beverages such as gin, beer, rum and arrack!! President Premadasa had smiled and asked: "Is that so?"!! He neither declined nor agreed. Karu assumed that the answer was yes!! That was also at the time of the exhibition that former Sri Lanka Navy Commander Rear Admiral Clancey Fernando was assassinated.
It was also at that time that President Premadasa invited Karu to become Sri Lanka’s envoy to Germany which he originally refused. The thinking was to have a private sector personality to promote German investments here. Germany was the second largest donor and the largest export cum tourist market Karu nominated Rienzie Wijetilleke and others, but Premadasa wouldn’t hear of it. Presidential persuasive powers saw Karu relenting.
Karu’s private sector career ended in 1992, a very fulfilling one with his departure to Germany as the Ambassador with accreditation to Austria. There were persuasions from President Premadasa for Karu to succeed Ranjan Wijeratne as Minister of Plantations Industries and Minister of State for Defence after the latter’s assassination but Karu declined. Otherwise, he would have to resign from all the Boards that he was serving in starting from CW Mackie and Ceylon Trading. By the time he retired from Mackie’s, the company was responsible for 5-7% of Sri Lanka’s overall export earnings.
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Last Updated Jul 02 2015 | 10:30 pm