Issues

Shriram — Ceylinco’s saddest story 

R. Wijewardene

They gathered last Sunday, from an assortment of far flung provinces, groups of impoverished  men women and children, ill clad, and disoriented, making motley  throngs under the trees of the Viharamahadevi Park.    

Not a group of  refugees somehow freed  from the camps in Vavuniya but depositors at one of the lesser known branches of Ceylinco’s network of shame – Shriram.

In the whirlwind of publicity  surrounding  Golden Key however their story has been largely forgotten.  

The story at both Golden Key and Shriram  is much the same, depositors received  over the odds interest rates from companies that turned  out to be fronts for an elaborate financial scam, but the victims could not be more different. 

The ragged crowd  that assembled in Viharamahadevi Park presented the starkest possible contrast to the well turned out men and women who emerged from their Mercedes  and Monteros to attend the infamous meeting convened by Golden Keys management at the    BMICH.   

But ultimately it is Shriram’s depositors who are  the real victims of the  Kotelawalas’ confidence trickery and while  Shriram might be a lesser known entity in the man made catastrophe that is Ceylinco  it represents  perhaps one of the darkest  chapters  in the Ceylinco story.

  While Golden Key was a vehicle to prey on the  greed and the black money of the rich, Shriram had an entirely different purpose – to take advantage of the financial insecurity of  the poor and modestly well off.

Vulnerable people

Operating primarily in Kurunegala and  Anuradhapura,  Shriram’s life blood was money deposited  by the vulnerable people of the provinces.

With uncanny timing Shriram salesmen would  arrive after a civil servant had received a gratuity, or an office worker had collected an EPF payment. 

They would then whisk their victims away, not in a white van, but in a sleek saloon  car  to a well appointed  office and offer them the highest possible interest on their deposits — 23% and upwards.   

Brandishing glossy portfolios, they explained that Shriram was of course  a registered finance company and  that deposits  would be backed by an Indian finance company —  Shriram. 

Of course they added that the Ceylinco group was behind the initiative and retiring civil servants, teachers, and shopkeepers,  with small amounts of capital were all happy to leave their hard earned cash in the hands of such a reputed company.  

“It was our  job to operate  in Kurunegala, Puttalam and Anuradhapura, rural areas but places where there was some disposable income; it was our job  to convince ordinary people – farmers, teachers, civil servants…  to invest with us,”  said Isuru a former Shriram salesman. “We weren’t really after big deposits – just savings from ordinary people.”

But of course it all adds up and when like all the other finance companies in the Ceylinco group Shriram  stopped paying interest and began preventing customers from withdrawing their money late last year, the company  held over 8 billion rupees worth of deposits  – from over 6000 depositors.

Powerless

Without the knowledge, influence or power of the depositors at Golden Key,                     Shriram’s customers were left destitute, robbed of their paltry  savings but without any understanding of their legal position and how  to mount a case against the company that defrauded them. 

They quickly  learned that the guarantees and promises they had been given by glib sales people had been false — there was no involvement from any Indian company and Shriram was certainly  not a registered finance company.  

A list of Shriram’s directors reveals  the usual suspects — Kotelawala, the Lady Doctor, Daniel Jegasothy and a cohort of other Ceylinco big wigs. 

The appeals made by Shriram’s desperate depositors  to these  directors were met with the usual false promises. 

Shriram’s Deputy CEO, H.K. De Silva promised the depositors a grand meeting at the Sugathadasa  Stadium to address their concerns. However just days before that meeting was scheduled to be held  depositors  discovered that  the company’s  management  was attempting to put the company into liquidation, which would have left depositors with no hope of recovering the value of their deposits.

No assets

Shriram unlike other Ceylinco group companies has virtually no tangible assets – as a fund management vehicle it invested in other companies and not in real estate etc. 

But unlike legitimate fund management companies  it invested principally in other Ceylinco  group companies. 

The value of these companies  has of course collapsed over the last few months and nothing it seems is left of the Rs. 8 billion deposited at Shriram but shares in worthless companies.

While liquidation was halted by legal action Shriram’s depositors remain at a complete loss as to how to recover  their deposits. 

Without the means  to afford  lawyers and struggling to mount a case against as murky an organisation as Shriram, depositors  had little idea of how best  to take their case forward  – hence the meeting at Viharamahadevi Park.  

But even there they struggled to agree on a common course of action, some still holding on to the hope that a settlement could be reached with Ceylinco, and others pushing for immediate legal action. 

Depositors associations from Kurunegala, Anuradhapura and Colombo had different ideas on how to proceed and all they had in common were stories of loss.

Beggars

“They’ve made us beggars. I invested my pension fund just months before it collapsed – now I’ve had to disconnect the electricity at my house  as I can no longer afford to pay my bills,” lamented a teacher from Kurunegala. 

“We asked to withdraw the money as my wife’s father needed heart surgery it was a matter of life and death but the  money is gone, and all our letters to directors have  been  ignored,” claimed another depositor. 

Stories of lost deposits and financial  hardship are all too  familiar from the extensive publicity given to Golden Key and F & G, but  the poverty, the innocence  of these depositors gives these  tales of  woe a  particular edge. 

The scam  central to Shriram was particularly repellent — for the company was devoted   to leaching  funds from the vulnerable. 

Like the Kotelawalas and Ceylinco  as a whole Shriram was based entirely on show  – flashy offices, slick sales people, glossy brochures all creating  a front of legitimacy that hid a calculated and vicious scam.

On their publicity and their boards  everything said Shriram but any correspondence came from  the capital management. The company had no real  assets and the money  taken from depositors was funneled into other subsidiaries.  Even its name was a sham. “We deposited our money with Shriram but the interest was paid by another company.  But we  never thought to question… it was a registered company, with an Indian partner and of course there was the Ceylinco name.” The company had no relationship   with the Shriram Group of  India.   The company it appears  was  designed  to vanish without a trace, and  given that Shriram’s assets  are largely worthless   how precisely depositors will ever be compensated remains  unclear. 

All the efforts made by depositors association  to trace the Rs. 8 billion of deposits held by Shriram  have  been unsuccessful.

It emerged  however  that Shriram’s  deposits were held in an account at Seylan Bank. 

However the bank has refused  to cooperate with depositors who are keen to  trace their deposits which again raises question about the extent of the banks’ involvement in Ceylinco’s schemes.

  “Our deposits were held by Seylan Bank, they are responsible we want our money back they must have a record of  what happened to it. But they are  aren’t cooperating” insisted Sanjay. “So many people need this money to survive. ” 

 But so far  the  only offer depositors have received is a vague verbal promise that if they keep their deposits at Shriram for five years they will have 45% of  their deposits returned.

 Such absurd promises and meager offers are clearly unacceptable to Shriram’s  depositors.

In fact the offer itself borders on extortion. Asking people to keep their money at an organisation the defrauded them  in order  to have  any hope of getting even 45% of their  money back.

 And last Sunday as the crowd at Viharamahadevi Park dispersed, clambering into buses and vans for the long journey home,  they were left to  wonder why  the directors of Shriram – including H.K. de Silva and Rajiv Wijetunge remain free when Golden Key’s directors have already been incarcerated.

  In fact the fraud in this case was even more profound as the company itself was ultimately a  fake.  

Ceylinco Shriram it turns out is not a single company but a network of different Ceylinco subsidiaries. Depositors had been receiving their  payments not from Shriram but from  Ceylinco Capital Investments Limited, explained Sanjay  whose wife  had deposited her entire retirement fund at Shriram. 

Everything  about this case suggests that Shriram  was a carefully thought out scam.