Business Times

Ray of hope emerges for GK, F&G and Shriram depositors

The Ceylinco saga – 11 depositors died this year
By Bandula Sirimanna

The Ceylinco Group ended the year 2008 on a crisis note and hit a climax point just before the Christmas festivities following the collapse of Golden Key (GK) Credit Card Company. Within a few months in 2009 three more companies of the Ceylinco Group -- F&G Real Estate, F&G Property Developers and Ceylinco Shriram met with the same fate leaving thousands of depositors struggling to cope with lost incomes.

With Lalith Kotelawala, the grand chieftain of the Ceylinco empire who was generally considered unshakable after building a conglomerate on confidence, in remand, the group was crumbling at an alarming rate. Now all over the country offices affiliated to these failed Ceylinco companies are either closed or in a state of disarray while 11 depositors, depressed over losing their money, have died due to natural causes or through suicide.

A ray of hope for disgruntled GK depositors emerged in December 2009 exactly after one year following the collapse of GK. The re-payment of the first installment of 3,863 Golden Key Credit Card Depositors worth Rs.351 million is now underway with 2,100 cheques being dispatched by registered post by the Central Bank as a direct result of the intervention of the Supreme Court in a Fundamental Rights petitions filed by aggrieved depositors. However some depositors told the Business Times that their names in the cheques were not written correctly and they were unable to cash it pushing them into further difficulties during the festive period.

The Supreme Court has ordered that the deposits be settled under a scheme starting with the lowest value subject to 75% of their capital and to the maximum of Rs. 100,000. The Supreme Court has reserved its order till January 13 on the seizure of assets of Mr Kotelawala to enable the 3-member accountants committee to sell his assets to continue the repayment process. The committee has taken measures to sell some assets belonging to Golden Key Credit card Company with the consent of the Supreme Court. Several offers have been received for Golden Key ENT hospital, which has been valued at more than 1.5 billion rupees, a Central Bank official said. A satellite earth station valued at 500 million rupees sitting on a two acre land, a teak plantation and a tea factory owned by Golden Key would also be advertised for sale.

The GK collapse set off a chain reaction affecting other Ceylinco companies with the F & G Group and Ceylinco Shriram particularly hard hit. A repayment plan to settle depositors of Ceylinco Shriram following the Golden Key debacle has now been formulated . The repayment plan includes capital as well as interest earned calculated according to the then agreed interest rates, effective up to February 2009 with Ceylinco Shriram intending to pay the full amounts outstanding to each client within a period of three years to 45 months. In the Ceylinco Shriram Fundamental Rights case the Supreme Court instructed the chartered accountants’ committee headed by Lakshman R. Watawala, to make necessary arrangements towards the implementation of the repayment plan.

The court also ordered the Attorney General‘s Department to arrive at a conclusion on the repayment in consultation with lawyers of aggrieved depositors. The Finance & Guarantee Company Limited (TFGL), a registered finance company, suffered liquidity constraints in the wake of the crisis in the Ceylinco Group. The Central Bank of Sri Lanka then appointed Merchant Bank of Sri Lanka PLC as the Managing Agent of TFGL from March to strengthen the TFGL and restore public confidence in the company.

inance & Guarantee Property Developers (Pvt) Ltd. (F&GPD) and F&G Real Estate Co. Ltd. (FRGE) are not companies registered with the Central Bank of Sri Lanka to carry on finance business and when the fundamental rights application was considered in the Supreme Court in October, the Attorney General informed court that the representatives of the F&G Depositors’ Association, having considered the options available to them to recover the investments made with these companies, had agreed to form a trust in order to protect the assets and secure the interest of the investor-depositors.The Supreme Court, having considered the representations, granted approval to form a trust each for FGPD and FGRE. It was also ordered that the trustees of those trusts should include three individuals among the members of the F&G Depositors’ Association and three others nominated by the association, including a lawyer, accountant and a valuer.

Meanwhile at least 11 depositors of the Golden Key Credit Company died since the collapse of the company in December last year. President of the GK Depositors Association Anusha Emmert told the Business Times that another depositor H.M. Wilson of Atthidiya, Dehiwala died last week of a heart attack due to mental stress and depression. A depositor in the Golden Key Credit Company Gayathra Sandarenu Manamendra committed suicide in August by hanging himself as he was depressed over the loss of his hard-earned money. A well known musician was another victim of the Ceylinco scam along with Bietrice Mendis of Kohuwela.

Another depositor who had invested Rs. 20 million, hanged himself in Mount Lavinia and M. Dhanapala was the seventh victim to meet his death due to the pain he suffered as a result of the scam. Actor Karu Dissanayake, husband of famous veteran actresses Soniya Dissa who was completely dependant on the GK interest met his death due to financial difficulties even to buy his medicine.

She asked as to why the long arm of the law is taking such a long time to bring the Ceylinco officials like Sicille Kotelawala who have fled abroad to Sri Lanka to face legal consequences. Ms Emmert also emphasized that other than a few individuals all the Ceylinco depositors have invested their hard earned savings. “Only one percent may have deposited black money,” she said.

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