The year was 2002-2003 and among those who coaxed him here were Hussein Esufally of Hemas Holdings and Murtaza Jafferjee, the former director of the Colombo Stock Exchange. They urged him to invest in Sri Lanka and he moved in.

Growing presence

Hayleys was his first investment. He bought a large chunk of shares in that company but sold those in later years. He also set up two funds — Explorer was managed by John Keels while Voyager was managed by Eagle-NDB Fund Management. They have since been liquidated.

Rajaratnam notified his employees, clients and friends last week that he would conduct an orderly wind down of Galleon’s funds while exploring various alternatives for their business. It is not immediately known what will happen to his investments in Sri Lanka. “I don’t think anyone can tell at this point,” said a market analyst, on condition of anonymity.

“An associate spoke to Raj on Thursday but he did not show an interest in selling. I think it is too early for him to decide in that sense. People here were initially nervous but they are slowly getting out of that because they have not seen any big selling after the arrest.”

Rajaratnam holds more than 8 billion rupees worth of stocks in John Keels Holdings while Galleon Diversified Fund Ltd has more than 4.5 billion rupees worth of stocks at NDB, Commercial Bank and DFCC. Galleon International Master Fund, SPC Ltd, owns more than 527 million rupees worth of stocks at People’s Merchant Bank, Ceylon Leather Products Limited, Riverina Hotels and Touchwood Investment Ltd. Among other personal investments, Rajaratnam also bought shares in the stock broking firm Lanka Orix Securities (which has since been renamed Capital TRUST Investments).

If one takes into consideration those companies from which he has since exited, his presence in Sri Lanka is large indeed. “He as hoping to invest much more in coming weeks and was selling certain funds,” said a close local business associate who did not want to be named. “His attachment to Sri Lanka was growing. He went to the extent of purchasing an apartment at Monarch Residencies. He wanted a second home here and was very much involved, though not physically present.”

There are reports that Galleon’s Asia unit may be sold en bloc to another party. In that event, the new fund manager will decide whether or not to dispose of its interests in Sri Lanka. “But it all depends on whether a total liquidation or a total sale happens,” the stockbroker said.

Friends in high places

Not only did Rajaratnam invest big money here, he made friends in high places. Authoritative sources said he was in Colombo in 2004, when the tsunami struck. Since then, he has visited Sri Lanka twice.

Closely involved with members of Ranil Wickremesinghe’s short-lived administration, Rajaratnam now also has ties with key players in Mahinda Rajapaksa’s government. Till the night of 16 October, 2009, (when news of his arrest broke here) his wealth was good enough for the Colombo Stock Exchange and for Sri Lanka. In September, he finalised an agreement to provide US$ 1 million to the child soldier rehabilitation project of Milinda Moragoda’s justice ministry. Moragoda was a key player in the Wickremesinghe administration. His relationship with Ravi Karunanayake is also well documented.

As for insider trading, it is an area that is only loosely controlled in Sri Lanka. It is illegal but not monitored to the extent it is in the US. “Actually, our market runs a lot more on inside information with earnings reports and important news coming out in so many ways,” said one stockbroker, who wanted to remain unnamed. “People have got used to it and it becomes a big story only if members of director boards are involved.”

If Rajaratnam did insider trading in the US, where the regulatory framework is exceptionally stringent, what might he have done in Sri Lanka where the exchange of sensitive market information is not uncommon?

This is where speculation about his ties with the LTTE has become relevant. Rajaratnam has repeatedly denied that he was a front for the Tamil Tigers but the lines have become blurred. One stockbroker, who also requested anonymity, advised investigators to study his past investment patterns to see whether there is a correlation with terrorist events.

“If someone does it, I’m sure you can see a correlation,” he said. “I remember thinking at one time that it was a distinct possibility Rajaratnam had insider information because such was the pattern of his activity. He invested heavily in our market during the ceasefire. He may have had information about peace talks and other events that helped him trade profitably.”

Within days of his arrest for insider trading, 30 people claiming to be victims and survivors of bombings committed by the LTTE filed a civil lawsuit accusing of him having provided financial support to the terrorist. They alleged that Rajaratnam and the family foundation headed by his father provided millions of dollars in funds used for terrorist attacks.

For the moment, however, such allegations are likely to without investigation in Sri Lanka. If anyone were to probe the terrorist ties that Rajaratnam allegedly had, it is not certain how many big names in various administrations will get dragged through the mud.

Charity

What we do know, however, is that Rajaratnam donated generously to various charitable causes. He gave considerable funds to Sunethra Bandaranaike’s Sunera Foundation. After the tsunami, he gifted five million US dollars through John Keels and Hemas to build tsunami villages. A settlement was constructed in Matara for the Sinhalese and in Ampara for the Muslims. The Tamil settlement was in Mullaitivu and, for this, he donated millions of dollars to the Tamils Rehabilitation Organisation, the LTTE ‘NGO’ that Ranil Wickremesinghe’s administration had fostered during the ceasefire. Not only was the TRO registered as a non governmental organisation at the time, the government allowed it to open branch offices - including its headquarters in Colombo - and encouraged donations.

The policy changed with the Rajapaksa administration. As John Gooneratne, one-time secretary general of the Secretariat for Coordinating the Peace Process remarked with irony: “Whether you’re a good guy or a bad guy depends on how the sun is setting here.”

Was Rajaratnam a terrorist supporter? Depends on whom you ask. The business associate earlier quoted called him “a good-hearted person who donates lavishly to all communities in Sri Lanka and America”. “He hated any form of terrorism because he wanted all stock markets in the world to go up,” he said.

A close personal friend of Rajaratnam’s father, also rejected allegations that Raj was a LTTE supporter. “I am told that he initially liked the cause for which the LTTE was but no sooner they started killing people, he stopped supporting them or their cause,” he filled in LAKBIMAnEWS via email. “He was generous in his donations.

He funded orphanages in Mullaitivu, as much as he funded educational projects in Kalutara. He funded the Vanni Tech as much as he funded the Sunera Foundation.”

But others dismiss these arguments as simplistic and na‹ve. They point to how Rajaratnam openly funnelled money into LTTE front organisations and say it is impossible that these did not fund terrorism or other nefarious activities. They speculate whether Hillary Clinton’s controversial statements on Sri Lanka were made in return for generous donations from Rajaratnam and other LTTE proxies.

Judging by the speed with which the Rajaratnam fairytale is unravelling, speculation will transform into solid facts in soon. It will then be interesting to see how influential friends of the billionaire investor will react in Sri Lanka. They are already running shy of admitting they even knew him.

On the Rajaratnam family

A close personal friend of J M Rajaratnam - Raj’s father - filled in LAKBIMAnEWS via email about the family and the business:

“J.M.Rajaratnam, the father, is a product of the Ceylon University where he passed out with honours in chemistry. He proceeded to England on a scholarship and passed out fifth in the world as a chartered accountant. He was chief financial controller of Browns Group and left to become general manager of Singer Sewing Machine Company in Sri Lanka.

He was posted to the head office in America and was vice president in charge of Asia operations. His wife, Rajeswary, is also a university graduate and their marriage was a love affair. She, too, was a talented student. They have a happy marriage and raised their children in a modest, simple life.”

“They have five children — three boys and two girls. The boys studied at St. Thomas College and the girls attended Ladies’ College. The eldest, Raj Rajaratnam then went to Penn University Wharton School of Business, set up his own business and has not only been successful but is also known for his magnanimous heart, helping people and institutions in many countries. I know that he was friendly with the former US president: The Bush Family.”

“The second son, Kanthan Rajaratnam, studied at the London School of Economics and got direct admission to Cornell University where he passed the MBA with honours, worked for IBM and now holds a senior post in the private sector.

The third son, too, did his MBA and is now portfolio manager in Raj Rajaratnam’s company. The eldest daughter, Shanthi, completed her doctorate in bio chemistry in England and is now in the US with her husband, another Rajaratnam (same surname) who is a psychiatrist in New Jersey.”

“The second, Vathani, completed her master’s degree in England. Vathani is married to Arun Amirthanayagam son of Guy Amirthanayagam, former Sri Lankan deputy high commissioner in the UK. Vathani and husband are posted in Singapore right now. Vathani is attached to USAID while he belongs to the regular Diplomatic Corp. His brother too belongs to the US Diplomatic Corp. Vathani's youngest brother Ranjan did his MBA at Stanford. He works for his brother Raj Rajaratnam.

Raj Rajaratnam

“JM Rajaratnam and his wife, Rajeswary, are known to me for over 50 years. I have seen Raj Rajaratnam as a child. The last time I met them together was two years ago when the children came to Canada in December of 2007 for their father’s 80th birthday. Raj Rajaratnam’s sister and brother-in-law belong to US diplomatic service.”

“Their mother has been sick for a while, was hospitalized in Canada last month and has now moved to the US, residing in one of Raj Rajaratnam’s adjoining houses. Raj’s chartered flights transport them back and forth to the States. They are all American citizens. He was one of the first persons to donate US$ 500,000 to the fire fighters who succumbed on 9/11.

He is a simple guy and has to my knowledge donated monies to many a charity and cause without discrimination.

Being in business, and like all businessmen here, the companies contribute to all political parties - both Republican and Democrats. I am aware that he has donated in Sri Lanka as well, where he has some investments associated with companies locally.”

“Raj’s business methods were open to the best of my knowledge. There was an open invitation to investors to attend his morning meetings. He is a friendly, unassuming person. He and his wife are rarely seen in expensive clothes or fashion. Their children are also modestly dressed, even when attending functions. He is normally a jeans-and-t-shirt sort of guy. He is family oriented and not the club-going type. He is close to all his brothers and sisters family and takes them on vacations together on Thanksgiving Day, along with his parents.”

“He is resilient and would fight for a cause to prove himself. Yes, he does own a lot of property. I was told that he has over US$ 100 million in investments in Sri Lanka. I believe he has a fight on his hands and will wind down and disappear from the limelight for a while like Martha Stewart. Life is so unpredictable; ours can change for the better or worse within seconds.”

COURTESY:LAKBIMA NEWS