The Central Bank (CB) this week announced that some boards in the troubled Ceylinco Group finance companies have been suspended from acting in any executive capacity but are there to respond to any situations they may have engineered or been responsible for.
CB Governor Ajith Nivard Cabraal said those directors who have been made non-executive will not be receiving emoluments. Moreover, Mr. Cabraal said the stimulus package for finance and leasing companies worth Rs.4.2 billion, recently approved by Cabinet, is needed particularly for Ceylinco finance and leasing companies following the loss of public confidence after the collapse of Golden Key Credit Card Company.
Mr. Cabraal said Ceylinco’s The Finance & Guarantee Co. Ltd has entered into a contract with Merchant Bank of Sri Lanka to act as their managing agent. Steps are being taken to return the company to normalcy and continue running the business.
Lankaputhra Development Bank has been made the managing agents for Ceylinco Investments and Realty Ltd and Asian Finance. Seylan Merchant Leasing was acquired by People’s Leasing Co. and will be functioning under new ownership and management.
Ceylinco’s The Finance Company will also be functioning under a new managing agent, the former Deputy General Manager of Bank of Ceylon Mr. Guy De Silva. Mr. De Silva is expected to work with four other individuals from the company’s board.
Mr. Cabraal added that steps have already been taken by the finance companies and its employees to ensure that business returns to normal. The higher management in particular has taken deep cuts in emoluments and some have even opened fixed deposits in their company as a sign of their commitment. He said the trade unions have also indicated that they will be cooperating very closely.
A mechanism for immovable assets will also be offered. The original owners will be given one month to claim their assets with no penal interest, ceasing charges or parking charges. Owners will be asked to make a 25% payment of the outstanding debt value at the date of seizure. Companies have been requested to offer a two year lease for the 75% balance.
Mr. Cabraal said the CB has finalized operating instructions for the transfer of land and immovable assets to Lankaputhra Development Bank. The package is ready to be disbursed but Mr. Cabraal said it is up to the finance companies to decide on if they will avail themselves to it. He added that the Cabinet’s request for an expert group to monitor the process has resulted in the appointment of the President of the Institute of Chartered Accountants of Sri Lanka Nishan Fernando, Attorney at Law Aritha Wickremanayake, Additional General Manager of National Savings Bank H.M. Hennanayake Bandara and the Deputy Chairman of the Browns Group of Companies Ajith Devasurendra. Mr. Cabraal said there may be one or two other eminent persons to join the expert group in time to come.
At the press conference, Mr. Wickremanayake said the perception is such that all Ceylinco finance companies are in trouble which is not the case. He said there are good assets in those companies. Mr. Wickremanayake added that they have been meeting with the companies on a daily basis in order to satisfy themselves that deposits are secure and to make sure there is no preferential treatment.
Mr. Cabraal said people moving in and taking charge restores public confidence, giving the broader signal that the government will intervene and take necessary steps if the need arises.
He said there are sufficient laws to take action against any staff in the company for mismanagement on their part but that investigations on misdemeanors and misappropriations will come after stability is restored and business continues as usual. Mr. Cabraal added that Ceylinco finance and leasing companies have not yet taken any steps to sell their assets. Companies should dispose of their assets on the market if they can get a higher price and should see Lankaputhra as a buyer of last resort. The government has allocated Rs.2.2 billion for the buying of these assets. |
E-mail