Business Times

Kotelawala, GK depositors meet tomorrow

Dues now listed at Rs 13 bln from Rs 26 bln earlier
By Bandula Sirimanna

In a fresh turn of events in the Golden Key Credit Card Company (GK) saga, all its former directors including former Ceylinco Chief Lalith Kotelawala and Khavan Perera are meeting representatives of GK depositors tomorrow to find a solution to the crisis following a court ruling.

A 3-member Supreme Court (SC) bench headed by Justice Shirani Thilakawardena on Wednesday ruled that all connected parties should meet and settle the grievances of depositors through consultation and compromise and noted that their decision should be conveyed to court at the next hearing of the case on January 27, 2011.

This effectively suspends any sale of properties owned by GK or its related companies until disputes over the modalities of the proposed GKCC Special Purpose Vehicle Company Ltd (SPV) are worked out to the satisfaction of the depositors, who are opposed to shares being offered to them instead of full repayment of their lost deposits.

Monday’s meeting will be the first between all these parties since the collapse of the company in December 2008 and they will be joined by the 3-member Accountant’s Committee, and Central Bank officials under the patronage of the Attorney General.

On Wednesday it was revealed in court by the Accountants Committee that the total amount due to 7,100 depositors is Rs.13 billion and not Rs.26 billion, which is the figure widely published up to now. GK Depositors Association President Anusha Emmert welcomed the meeting saying that it will be a good opportunity for them to present their grievances but expressed surprise about the new liability figure which is half the original dues.

The depositors have so far been paid a total of Rs 700 million (at Rs 100,000 each), as part of their deposits. The depositors are opposed to the plan to issue share certificates in the SPV equivalent to the proportion of the amount outstanding. Under the new plan, the assets will be sold but ploughed back to the company and channeled to investments that would eventually increase profits and earnings.

Meanwhile when an application for review of a SC order on August 6 canceling the issue of 500,000 shares belonging to the Merchant Bank of Sri Lanka and its former chairman Janaka Ratnayake in Ceylinco Investment Ltd, came up before court on Wednesday, M.A. Sumanthiran Attorney-at-Law Counsel for the former MBSL Chairman, informed court that the earlier order against Ratnayake was made without following the principles of natural justice and without hearing him, and as he was not a party to this action he had no opportunity to present his position.

Counsel urged that the order be set aside to which the court suspended the order pending submissions from Mr Ratnayake. Inquiry in this matter was fixed January 28, 2011. In the August 6 order, the SC said it was brought to the notice of court that Mr Ratnayake had issued 500,000 shares worth Rs.5 million to himself. The Attorney General had investigated the matter and found that this is an illegal transaction.

he transaction was then cancelled and the Rs.5 million reversed. On an application by concerned parties, the court had then ruled that Mr. Ratnayake should not serve on any of the boards of the Ceylinco Group nor on the board of Merchant Bank in view of this transaction which the Attorney General said had been found to be fraudulent.

In a related development, angry GK depositors tried to manhandle Dushyanthi Hapugoda, President of the breakaway GKCC Depositors Association outside the court premises on Wednesday for giving her consent to the Central Bank move to offer shares to depositors instead of full repayment, witnesses said.

A large number of depositors told the Businesses Times that they need money and not share certificates. They blamed Ms Hapugoda for betraying their struggle. When contacted by the Business Times, Ms. Hapugoda said that depositors had questioned her about this issue and she explained to them that not only her but also the GK Depositors Association President Ms Emmert had agreed to the modalities of the new venture. Ms. Emmert however rejected the claim saying her association had filed an affidavit in court opposing the share issue.

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