The woes of ordinary, working-class Sri Lankan depositors who have invested their hard-earned money in finance companies and banks have been profiled by the Business Times and the Sunday Times over the years. This is for the simple reason that investments in finance companies, banks and other deposit collecting institutions are an established practice of [...]


The Sundaytimes Sri Lanka

Plight of ordinary Lankan depositors


The woes of ordinary, working-class Sri Lankan depositors who have invested their hard-earned money in finance companies and banks have been profiled by the Business Times and the Sunday Times over the years.

This is for the simple reason that investments in finance companies, banks and other deposit collecting institutions are an established practice of maximising one earnings to sustain day-to-day needs, fund a child’s higher education here or abroad (more and more being a necessity for middle-income parents rather than a choice) and ensure a reasonable pension on retirement.

The recent developments at the Employees Provident Fund (EPF) and Employees Trust Fund (ETF) have also made society uneasy with UNP opposition politicians Harsha de Silva and Eran Wickremaratne along with others from the JVP questioning the motives of the funds to invest in dubious companies in the stock market. The Central Bank has been at pains to explain the rationale of these investments but suspicion and doubt have grown over the viability of these investments especially since this is money that belongs to the people, and the people alone. As always there are two sides to the dispute but clearly current thinking in society is that people fear their money is at stake.

In this equation more and more investments are going into finance companies which pay slighter higher interest than banks. And that’s where the problem lies. While banks are, what would one say, are under absolute control, guided and protected (by the Central Bank) in the case of collapse, the same cannot be said about finance companies or the non-registered ones.

The Pramuka Bank collapse was a trying time for depositors, and as in the usual case, big time investors – alerted by high officials of the bank – withdrew their money just before the crisis exploded. Bank CEO Rohan Perera, an acolyte of Lalith Kotelawela, fled abroad and is still absconding. After many attempts, a depositors association was formed and sustained perseverance through the efforts of determined depositors like Ranjan Arambawela and governance activist K.C. Vignarajah contributed to their investments being recovered.

Kotelawela is in the thick of things once again in the collapse of Golden Key (GK) and its subsidiaries that sent tremors across many finance companies. And the same situation prevailed here – big investors including powerful politicians tipped off of a crisis by GK hierarchy – withdrew their entire investments.

While Kotelawela, who was in remand for a while and now bailed out, his wife, Sicille is absconding abroad and an Interpol warrant issued for her arrest.

While the directors involved in all Ceylinco companies that were associated with GK dealings and transactions are at large, some on bail, hundreds of depositors are in the lurch – getting a few pennies for their investments from various court-sanctioned mechanisms to return the money. The issue is that while the liability is over Rs. 26 billion, the assets that could be sold to repay depositors is just round Rs 7 billion.

But this is not the end of the story. When depositors Marco Perera and the elderly Malcolm de Silva walked into the Business Times office this week to explain the plight of the depositors, their version of assets was one of espionage, intrigue and secret siphoning off of assets by those at GK and its subsidiaries.

Through a maze of inter-company transactions, front organisations, power-of-attorneys, bogus names and so on, companies in Sri Lanka and abroad through Kotelawela and his men have enough assets to pay the Rs. 26 billion-plus dues, if only some will listen to them, these two depositors accompanied by Pushpa de Silva, from the newly-formed GK Women Depositors Association, said.
Digging up a load of documents, copies of deeds and other data, the trio pleaded with their only source of consolation today (in the absence of the rule of law) – the newspapers – to expose these wrongdoings and injustice. Digressing from this subject for a moment, newspapers reported this week where a senior magistrate was abused by a policeman even after identifying himself. If that is the case for a senior judge, what is the plight of the ordinary man on the street?

Back to the GK saga, over the years the Business Times has followed these issues – Pramuka included – with perseverance and sustained reporting in an effort to ensure that justice prevails.

In the investment scenario, as repeatedly pointed out, most depositors who have sold a property or taken out their pension or life savings opt to invest in finance companies for a better return. The inclination towards finance companies than more-safer banks is simply because today’s (bank) interest rates are totally insufficient to meet expenses that include food, housing, clothing, education, tuition and higher education – just the basics. This has been repeatedly pointed out over and over again and the astronomical cost of living, irrespective of the COL index figures trotted out by the Census and Statistics Department and the Central Bank. Figures are on paper, buying provisions and other needs in the marketplace are real!

Many depositors have committed suicide; depositors are on a fast-onto-death outside another failed finance company CIFL in Colombo. In this case an investor-couple the Maloneys’ agreed, with CB sanction, to resurrect the company with the promise of foreign investment. Mind you, this was at a time when their own Touchwood Plantations Investment company was in trouble. How this fact escaped CB authorities beats one’s imagination. Touchwood is in trouble, the Maloneys have decamped and the Securities and Exchange Commission (SEC) of Sri Lanka is looking for them. Just like the Interpol warrant on Sicille Kotelawala, a similar warrant should be issued to the Maloneys who are believed to be in South-East Asia. Justice must not only be done but also seen to be done!
Likewise dozens of depositors of GK-connected companies that have failed are in desperate situations. Abuse of power, fraud and mismanagement of funds should apply to all directors of companies dealing in collecting deposits and make it obligatory that if guilty their private assets would be seized. CB regulations or the little there is appears to have failed the depositing public in finance companies which may necessitate the need to establish a separate regulatory authority to handle this segment of finance.

Social justice fighters like Marco, Malcolm and Ranjan Arambawela are the real heroes of Lankan society campaigning for the rights of a group of desperate people. They are the “deshamanayas”, not the pseudo types that carry these honours today like the ‘Kotelawelas’ at present.

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