MERRILL FERNANDO AND THE TEA INDUSTRY IN SRI LANKA Part 3
Posted on June 10th, 2023
KAMALIKA PIERIS
Like most business men, Merrill also faced problems with unreliable business partners. He has described one partnership with a Sinhala family firm, that of the Fernandos, as a ‘prickly partnership’
Merrill was full of praise for Victor Santiapillai, the first Chairman of Export Development Board. Merrill said he was the only person in a dismal array of ignorant government servants, who understood what Merrill was trying to do.
Santiapillai was Trade Commissioner for Ceylon for four years in the United Kingdom in the early 1960s. He was the Head of the International Commercial Relations Division of the Ministry of Commerce in Colombo, after which he joined ITC, so he knew trade. He had done much to develop the EDB.
As a schoolboy Merrill had spend holidays on the estates in the Punduluoya and Kotmale districts belonging to KR Mathavan and his brothers and uncle S. Thondaman.While training as a tea taster in 1950 Merrill bought tea from Medetenne and Meddeloya estates in Kotmale owned by the Thondaman/Mathavan family and sold bulk tea to shops and restaurants in Negombo . Merrill also speaks of a friendship with a Mr. Murugiah who owned Kelaniya and Braemar estates in Maskeliya.
Merrill’s business relations with several other Tamils was not so pleasant. Merrill was working in the tea trading firm of A F Jones, a small family business owned by father and two sons. The Jones family decided in 1962 to leave Ceylon. They offered the firm to Merrill for 6 lakhs. Since he did not have so much money, Merrill asked Sarath Wijesinghe and S. Nadesan to join for a third each of the shares.
Both were well known personalities in Sri Lanka. Sarath Wijesinghe came from a family of wealthy planters and graphite mine owners. He was Chairman of several companies. He was Cabinet Minister of Nationalized Services of S. W. R. D. Bandaranaike Government and was a member of the Senate of Ceylon from 1956 to 1965.
S. Nadesan was a leading lawyer, civil rights activist and member of the Senate. He was a founding member of the Civil Rights Movement. The Nadesan Centre for Human rights through Law was set up in 1987 to perpetuate his memory.
The transfer was made and Merrill took over the running of the company. The AF Jones tea business went well, under Merrill with support from the bankers, National and Grind lays, whose Managing Director, W.I. Gash supported Merrill to the hilt with loan after loan.
Before the Jones family finally departed, they had offered Merrill the balance 5000 shares they still held in the company. Gash agreed to loan money ,at a very low interest to purchase these shares .Instead Nadesan offered to buy the shares and hold them in trust for Merrill to be sold to Merrill at a future date. Gash advised against this. Gash had pointed out that the additional shares would increase Merrill’s clout in the company. But Merrill agreed to Nadesan’s suggestion and the shares were transferred to Nadesan.
Then, said Merrill , Nadesan brought his son and brother on the Board and also prevailed on me to employ more of his relatives. His son, somewhat arrogant and confrontational tried to impose his will in business matters he did not know much about. At a board meeting in 1962 the son had presented suggestions which Merrill thought were not in the interest of the company.
At this point Merrill had asked Nadesan to transfer to him, on payment, the shares Nadesan was holding in trust for Merrill . Nadesan then stated that he had purchased the shares in his son’s name and the son was refusing to part with them. I realized that I had been deceived by a man I trusted, respected and looked on as a mentor, said Merrill .
Things got unpleasant at AF Jones and Merrill decided to resign from the Board. He asked that the flat that he had leased out to the company and transferred to company be transferred back to him, also the motor car he was using. He then received a letter giving him just 7 days to leave the apartment and send the car for valuation. He got the lease of the apartment re- transferred to him but was told that the car would not be sold to him.
The Nadesans transferred the Eastern Agencies division of the AF Jones firm, to the Satyendra family , from where it went to Maharaja Group. This deprived A.F.Jones of a valuable asset at no great benefit to the shareholders observed Merrill . My first exposure of the modus operandi of supposedly reputed legal luminaries was an eye opener, he said. ( p 87-90)
Later, Merrill got another shock. Inland Revenue department sent him a charge for Rs 50,000 in additional taxes and also impounded his passport saying that Merrill had illegally invested in GBP 600 in UK shares. Merrill knew how this had happened.
An American tenant of his was paying rent in dollars which Merrill had invested in Ceylon tea estate company shares in UK stock exchange. An employee, Joe Silva who had created many problems at A F Jones had , apparently on the instruction of Nadesan, sent an anonymous letter to the Exchange Controller, some time ago, alleging that Merrill had overseas investments.
When the Exchange controller requested me to submit details of such investment, I showed the documents to Nadesan, who drafted a reply on my behalf. He also kept in his custody the related file of documents for safekeeping, he said. That was the file that had found its way to the Inland Revenue.. That matter had ended satisfactorily. The Inland Revenue officials who inquire into the matter accepted Merrill’s explanation and helped to get Merrill back the monies due to him. (p 95)
Merrill had more to say. There was an executive named Chuck Wijenathan in the Eastern Agencies division of the import arm of A.F.Jones, said Merrill , who was to outward appearances, a very nice man. When Merrill was appointed Managing Director of AF Jones Merrill had propose that Chuck be appointed a director. When I left the firm, Chuck was the first person to call up various people and announce that I had been fired from the company, stated Merrill (p 91)
In 1979, Merrill and some others decided to set up a tea trading and supply centre in Singapore, the company was called TECOF. They appointed Ganendra Balasingham, as Head of Operations. He was quite unsuitable for the job, and four years later when they terminated the operation, he had lost quite a lot of our money including USD 25,000 from the business that I had asked him to bank on my behalf. But because he was unemployed Merrill had recommended him to another company, he was soon removed from there.
Merrill then had another brush with investors. Two long standing friends”, Teuton Soysa and Subhodini Tambiaiyah, among others, persuaded him to return to the tea trade. So, Merrill in 1976 launched a new company MJF Exports Ltd. Subhodini and Teuton invested in the company and served as directors.
Teuton offered to look after Merrill estate, Melton, and persuaded Merrill to give him work in his office where he was made Supervisor of the Accounts Department. Sometime later Teuton had filed action against Merrill claiming that Merrill was defrauding the company and depriving Teuton of his rightful share of the profits. Merrill was asked to settle the matter to avoid embarrassment but Merrill decided to let the matter go to Courts. The case collapse in court.
Merrill had later come to know that Teuton had been persuaded to institute this action by Nadaraja , Merrill’s accountant and Lakshman Jayawardene, one of the tea buyers. Merrill thought Teuton was a decent man who had been mislead. Merrill bought Teuton’s shares in the company at Rs 50 though they had been valued at Rs 10. Merrill had then given a loan to the Jayawardenas to start a business .
It also appears that Nadaraja had appealed to Merrill for protection during the 1983 riots and protection which was readily given. That is my inference. The text says during the 1983 riots a key person in the episode had been in danger and sought Merrill protection”. ( P 156-158)
Meanwhile, continued Merrill , my friend and fellow director of MJF Exports, Subhodhini had purchased some shares in the name of her son Dhiren. Dhiren sued Merrill demanding a huge sum for his shares on the grounds that Merrill was mismanaging the company. Merrill allowed the matter to come to court. As matters dragged on in the courts, Merrill bought back the shares held by mother and son and got them out of the firm. (p 159)
The information given in this essay can be found at pages 87-92,94-95,114, 156-159 of The story of Ceylon tea maker Merrill J Fernando. ( concluded)