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Kananathan is sole signatory to Tristar dollar accounts

By Vision Reporter

Added 30th October 2006 03:00 AM

APPARELS Tri-Star managing director Veluppilai Kananathan is the sole signatory to the company’s dollar accounts with dfcu and Stanbic banks.

APPARELS Tri-Star managing director Veluppilai Kananathan is the sole signatory to the company’s dollar accounts with dfcu and Stanbic banks.

By John Eremu
and Felix Osike


APPARELS Tri-Star managing director Veluppilai Kananathan is the sole signatory to the company’s dollar accounts with dfcu and Stanbic banks.

Kananathan could also singly sign the two Uganda shillings accounts with the same banks, while the other two co-signatories needed to sign jointly, according to documents seen by The New Vision.
It is normal practice for companies to have dual or multiple signatories.
But Members of Parliament are alarmed that Kananathan became a sole signatory to the accounts of a company which draws money from the Consolidated Fund.
The troubled company, incorporated in Uganda in 2002 to export textiles to the US under the African Growth and Opportunities Act (AGOA), also took loans guaranteed by Bank of Uganda amounting to $7.5m (sh13.8b). The loans from dfcu also had the Government plant at Bugolobi put as additional security.
The company has been struggling to stay afloat, although it is heavily subsidised by the government.
Kananathan was made sole signatory to the company’s accounts in alleged extraordinary general meetings in February and March of 2004.

The March 22 resolution, filed with the registrar of companies on March 26, 2004, reads, “At an extra-ordinary general meeting of the members of Apparels Tri-Star (Uganda) Limited held at the company premises on the 22nd March 2004, it was resolved and agreed that:

“The company’s accounts numbers 02L250503900 and No. 02L2505038901, held with dfcu Bank, being United States Dollar Accounts, shall from the date of this resolution, be operated only on the signature of Mr. Veluppillai Kananathan.”

The same resolution drawn and prepared by Mugerwa and Masembe Advocates of Kampala also said the Uganda shillings accounts No. 01L2505038900 and 01L2505038901 with dfcu could be operated on the signature of either Kananathan or by the joint signatures of Sivaharan Rajasundaram and Vijit Ratnarajah.

In the February 4, 2004 resolution, Kananathan was also mandated to be the sole signatory to the Stanbic Bank local currency account No. 01400638958601 and dollar account No. 0240063958601.

Rajasundaram and Ratnarajah could only sign the same account jointly.

Yesterday, Kananathan said, “I am not the sole signatory because there are three others. But I can sign alone if they are not there.”

On information that there was no money on the accounts, Kananathan replied, “Money comes, money goes. We use it for operations.”

He also explained that the company had ordered raw materials from China that will be in the country in December. He denied that the company was limping.

“No way. We can’t limp. When the raw materials come, we will be in full operations by early next year,” he said, adding that Tri-Star was in the process of servicing its loans.

Tri-Star was incorporated with a share capital of sh200m divided into 1,000 shares, each valued at sh200,000. There is no evidence that the investors put in any capital apart from the sewing machines.

The Sri Lankan directors then were Kanitha Kumar Dewapura with 870 shares and Kananathan with 100.
But in December 2003, the shareholding changed, with Kananathan acquiring majority shares of 670 and Dewapura retaining only 300.

Others allotted shares were Sarath Srilal De Silva, Ranjith Charles Ekanayake and Shion Kumar, each with 10 shares.

Two years after its incorporation, a parliamentary report revealed that the Government illegally withdrew $5m (sh9.6b) from the consolidated fund to finance the setting up of Apparels Tri-Star U Ltd.

MPs recommended that the money be recovered as the company had made little profits since it opened.

No figures are available of how much profit the company has made. But by 2004, MPs said the firm had made a loss of sh2b although government had sunk over $15m into it.

There are reports that the Government plans to take over Tristar’s operations, an idea floated by the head of the export-led growth strategy unit, Onegi Obel, way back in 2003.

Kananathan is sole signatory to Tristar dollar accounts

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