Golden Key credit card holders are not depositors: They are investors
The electronic and the print media recently reported that the government has decided to pay the 41 per cent of the investor’s monies in the Golden Key Credit Card Co (GK), using Rs.8.5 billion obtained from the Central Bank (CB).
The CB or the government is not obliged to pay any monies to these investors as GK at the outset was a ‘doubtful’ institution. All those who invested in a doubtful institution thus are not entitled to receive any decent treatment from the government as they knew it was an organisation that promoted a dubious scheme.
In Sri Lanka, only finance companies other than banks registered with the Monetary Board of the CB are authorised to accept deposits and issue certificates for such deposits. Such certificates of deposits shall be signed by two officers who are authorised by the Board of Directors of the finance or the bank, as the case may be, and should clearly indicate the registered name and address of the finance company or the bank, the date of deposit name and address and national identity number of the depositor, amount of money received as deposit in words and figures, annual rate of interest payable, date of repayment of the deposit, serial number of the certificate and account number of the deposit.
Therefore, by definition those who put money in the glittering (all that glitters is not gold) GK are not depositors. Instead of a ‘certificate of deposit’ they held a credit card issued as security against money invested on the company. As they do not hold a certificate of deposit they are not depositors and cannot be described as depositors.
On the other hand, they earned interest as high as 30 to 36 per cent per annum, contravening the CB directions to finance companies and banks from time to time. Such directions imposed a maximum rate of interest payable on all deposits. Therefore, the GK investors who accepted and GK Directors who offered high interest rates over and above the prescribed limits are both liable for contravening the law.
All GK investors avoided paying tax on their interest earnings in violation of the laws of the country. In spite of the failure of the company their liability to pay tax remains.
These investors should be directed to collect their dues from Lalith Kotelawala and his clan, not from the government.
D.P. Jayasinghe,