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The ghosts of Sakvithi seem to be revisiting IFL
Industrial finance admits to cash-flow problems.
Chairman insists depositors will be paid next week.
R. Wijewardene
Industrial Finance Limited, established in 1962, is one of the oldest and most respected independent finance companies in the country.
IFL offers a remarkably wide range of financial services, from housing loans to vehicle leasing, to pawning services.
However, its core business has traditionally been high-interest fixed deposits. The company holds several hundred million rupees in fixed deposit accounts that yield between 19-22% in interest.
Run by a series of respected chairmen and controlled for a long period by the Tudawe group, IFL was a model finance company, registered with the Central Bank.
However, in 2008 control of the company passed to a group of businessmen led by IFL’s current Chairman Upul Soysa, a well-connected businessman with connections in the UK.
The year after Soysa’s takeover has seen a dramatic reversal in the company’s fortunes.
After decades of reliable payments the company began experiencing cash-flow problems in late 2008, and the company’s credit rating was drastically downgraded by rating agencies.
Depositors at IFL claim that they have received no interest for the last six months and that they have been unable to withdraw their deposits, a pattern familiar from the collapse of other finance companies.
Depositors claim they are prepared to resort to legal action to secure the return of their deposits.
When contacted, Upul Soysa insisted that IFL was not on the verge of collapse.
“We had a cash-flow issue but it has been addressed,” Soysa said. “Depositors will receive their payments, in full, next week. We have new revenue streams and two new directors from the UK will be joining the board shortly.”
Despite this assurance there is a further twist in the plot. Soysa himself is alleged by a number of sources to have been intimately involved with Vibhave Fonseka, a.k.a. London Sakvithi. Fonseka was charged in the UK with running a pyramid scheme and defrauding 25 million pounds from unsuspecting depositors.
This revelation, of course, casts serious doubt on Soysa’s credibility and his claims that IFL’s depositors will be repaid shortly. Whether the regulatory authorities in Sri Lanka are aware of Soysa’s unsavory London connection is unknown, but given the current state of IFL an investigation is surely in order.
Discuss this article at www.thesundayleader.lk
Did Central Investment and Finance Ltd: ( CIFL ) own IFL before it was bought over ????
Has IFL bought over some of the properties which were owned by CIFL .
Answers to both questions of Vibhu Perera is YES.
First of all I want to thank you for the publishing of the Article re. the current situation of the IFL. on your newspaper
The above named both of us,(Mr. Jinendrasinghe Walpita and Deepika Jayalath Haputhanthiri) are the depositers of the IFL. (Our tel Nos. are 034-2262856(Residence) Mobile 071 8127636). The IFL failed to pay our interest from Last four months. At least they do not know how to calculate the interest. The Agents are always cheating us. My Agent is not facing us. His name is Chamila. One day my husand (Mr. J Walpita) teleohned him and asked about the interest. He replied as follows:
“Meka Harima Mala Wadayak Ne. Thamuseta Pulawan Widiyaka Gannawako OOi”
Last week I went to the office at Gregory’s raod and they did not allow me to meet the Chairman. One Mr. Sarath Dias explained the situation and he discuused with me very kindly . After that he allow me to meet the Chairman and I explained to him the difficulties faced by us. He promised me to pay one month’s interest on 3rd November. On 4th November they paid only one month interest and the calculation of the interest is wrong.
We are awaiting for our withdrawals . Still they are unable to pay our withdrawals. They issued a letter to my husband and they promised to release the money on July 2009 and however, still we are awaiting for our withdrawals.
(I can submit you the documents relating to prove my reply at any time)
My Agent extended our account from one year without our knowledge. Do you know
I am a Public Servant. and My husband is working in the Coconut Cultivation Board as a Coconut Development Officer at the Kalutara Regional Office, Nagoda, Kalutara. The total amount of our account is 01.3 Rs.Mn. My yonger son is studying at Institute of Asia Pacific Computer Technology(APIIT), at Colombo 2. Last term I requested the extension for (four months – a term) him because I faced financial problems. Now you can understand the situation of IFL depositers.
All depositers who came to IFL Office are middle class people. The agents are not facing them.
If, you want any details in this regard please contact me or my husband over the above mentioned telephone numbers.
One again I thank you to publish the article re. the IFL.
Deepika.
Thanks for highlighting this matter at last. I wrote to the editor on 12.08.09 (under the heading “The Next Golden Key “) asking the Sunday Leader to investigate this matter. I reproduce below a section of that mail for your reference
“I want to bring to your notice of the next Golden Key/The Finance Co./Asian Finance. The outfit I am referring to is the Industrial Finance Limited based at 30, Maitland Crescent, Colombo 7.
Industrial Finance is an old established company, previously owned and well operated by Tudawe Brothers. Recently, this has been bought over by another smooth-talking “Lalith Kotelawala” or “Sakvithi Ranasinghe” and have stopped paying interest to depositors since May 2009 nor will they allow you to withdraw your deposits.
My 85 year old mother in law has some deposits (her late husband’s provident fund payments) and the monthly interest is being used for her nursing care and medication. When it was owned by Tudawe Brothers, the interest payment will be in the Bank account on or before the last day of the month. However, since change of ownership payments for June and July are still outstanding. We have been talking to several officials including the Chairman on several occasions over the last three weeks but everytime they tell you a different story. In brief, no payment, no withdrawal.
What is also worrying is that most of the telephone numbers they give you to call are not in operation and even if you managed to get through on a number, the person at the other end cuts you off before you can speak to the Senior Official.
I urge you to please investigate this outfit and highlight the plight of the unfortunate customers.”
The situation has got worse since then. They have not paid any interest for the last 5 months and they will not allow you to withdraw your capital either. Whenever you call, you are transferred from person to another but all are evasive and everytime the answer is that the “money will be paid next week”. We are still waiting for that “elusive next week”. It is unfortunate that our Central Bank is incapable of doing a research on all these ’shady’ characters who want to invest in this country and weeding them out. As a result more and more unfortunate Sri Lankans will lose their hard earned savings due to some unscrupulous vultures.