The 3-member Committee of Chartered Accountants appointed by the Supreme Court to examine the assets of the Golden Key Credit Card Company (GK) and submit a payment plan for depositors has unearthed several serious irregularities in financial transactions of the company.
A report of their findings and recommendations, submitted to the Supreme Court by Attorney General Mohan Peiris on Monday, revealed a possible fraud in the sale of shares of GK to Ceylinco Insurance PLC Gratuity Trust Fund and in a deal relating to the GK Eye Hospital.
“Sale of shares of GK need to be investigated as we were informed that Rs 500 million has been received by the Ceylinco Insurance PLC Trust Fund from the sale of shares. A sum has been credited to the Ceylinco Consolidated Bank account to repay depositors of GK. However the transaction has not been registered in the name of the party that has advanced the funds. On perusing the accounts of Ceylinco Insurance PLC, it was revealed that the purchase consideration was only Rs. 250 million,” the report, a copy of which was received by the Sunday Times FT, said.
Another GK issue was the loan granted to GK Eye hospital amounting to Rs 843 million which is being investigated. The committee has also detected details of two sets of accounts maintained by GK. One set of accounts has been prepared by extracting accounting information generated from the IMAS system, and the other set of accounts prepared on an excel sheet. Therefore, it has become necessary to verify the accounting information to assess the correctness of the figures reported, it said.
It also reported that 62 directors of GK and its subsidiaries and 24 companies of the Golden Key Group have so far failed to make their asset declarations to the Central Bank in accordance with the court directive. Ceylinco Chief Lalith Kotelawala has made only a partial declaration.
The committee has found that there are 46 local companies and nine foreign companies in the group and the total dues from these companies and other related entities amount to Rs 5.9 billion. It has been revealed that most of these companies are not in operation and employees of those companies have already left. The committee noted that there is no way to recover this money from these defunct companies.
Meanwhile at the GK fundamental rights hearing, Attorney General Mohan Peiris told Court that the GK Chairman and its Directors should within two weeks make a threshold payment of Rs. 1 billion to commence repayment to depositors on sums below Rs 1 millin based on a percentage varying from 25% to 50% from the smallest deposit first going upwards on a committee-approved criteria. For the balance payment a scheme of payment will be submitted within a period of four weeks.