The Sunday Leader

Ceylinco: Further Payment To Golden Key Depositors

  • Growing Calls For Return To Remand Of Ceylinco Directors

By Faraz Shauketaly

Central Banker and CEO Golden Key Credit Card Company Migara Handunge: Hopeful of an equitable and expeditious settlement for depositors.

Security deposit holders at the failed Ceylinco Company – Golden Key (GKCC) – are to receive a further payment imminently. This latest move is seen by many as a ‘quick-win’ for the efforts made by the Central Bank-appointed Task Force and the Central Bank led management team in place at Golden Key.

Many depositors were mindful of the ‘tremendous progress made by the Task Force’ which was appointed by the Central Bank after an order made by the Supreme Court of Sri Lanka. The newly appointed CEO of Golden Key, Central Banker, Migara Handunge said, “we are very pleased that a further payment can be made. We are committed to ensuring the best possible settlement given the very difficult circumstances.”

The imminent payment will need to be formally approved by the Central Bank and The Sunday Leader Investigations Desk understands from valuably placed sources that the approval is a formality. Recently the Supreme Court gave the nod to a plan which will see security deposit holders ultimately receiving reimbursement of up to 41% of the initial deposit made with the Golden Key Credit Card Company. Many depositors were perturbed by the seemingly low payout but were grateful that the intervention of the Central Bank has seen ‘at least this plan for a repayment based on 41%”.

The figure of 41% is the yardstick or measure of one of Sri Lanka’s greatest ever financial disasters to afflict its citizenry. The near-Ponzi style scheme of the Golden Key Credit Card Company (GKCC) saw an astonishing loss of Rs 26 Billion or USD 260 Million simply vanish into literally thin air. The fall out of the so-called ‘Ceylinco Affair’ threatened the stability of the country’s financial sector with many reverberations and plain heartache and headaches the norm rather than the exception. Yet, as a former close aide of Tricky Lalith said, “GKCC accounts showed it to be a profitable venture.”

The latest payout planned – the so called “Phase 3” – subject to both Monetary Board and Supreme Court approval is aimed at settling smaller security deposit holders initially, specifically aimed at those with deposits upto Rs 1 Million. Our table below explains the proposed repayment calculation.

The 41% repayment plan will need approximately Rs 7.8 Billion of funds to settle. According to the CEO Migara Handunge, this is not by any means the ‘last’ payment but it is what they expect to realistically be able to pay when considering the assets they have been left with after the Committee of Accountants had finished selling assets earlier.

In the meantime the CEO – who has been released from the Central Bank to Golden Key and is in fact paid not by GKCC but by the Central Bank – has confirmed that there are a number of issues of mismanagement that they are investigating and looking into very closely.

One of the issues is to do with credit card holders who have defaulted on their repayments. A debt collection agency has been appointed to recover these dues for the greater benefit of the GKCC depositors.

Another aspect has been that they have become aware that some former employees of GKCC have not handed in their company vehicles although their entitlement and mandate to continue using those vehicles had long expired. In this instance too instructions have been issued to seek and recover those assets, with the possibility of legal action not being discounted.

Investigations have also revealed that related party transactions have not been conducted in the prescribed manner. The Central Bank has in place guidelines for such transactions and the essence of any such transaction is that they must be maintained at “arm’s length”.

A prima facie case of accountability against those officers that authorised such transgressions has been identified by GKCC. GKCC have been steadfast in their refusal to meet claims arising from such transactions, citing a very blatant disregard of the Central Bank directives. Most of these claims arise from companies within the so-called “Ceylinco Group” which in violation of regulatory guidelines had granted loans against the security deposit of GKCC card holders.

This practise is fatally flawed and would well be held to be ‘ab initio’. Bad in law from the beginning. The cardholders of GKCC gave GKCC funds which were in essence a ‘security deposit’. In exchange GKCC issued depositors a credit card. Inter-alia this meant that GKCC had a lien over the deposit against possible spend. Sources have pointed out that to then use the same deposit, already covered by a lien, was unacceptable if downright irregular.

Meanwhile the public at large have been galvanised into sharing various information to help track the modus operandi and perhaps ultimately find where the funds have ended up. There is a growing call for the directors already named as well as other Ceylinco Group Directors to be questioned again by the CID with more specific questions now that a more detailed picture has emerged of the activities of Lalith Kotelawala and his team of personnel. One person who called The Sunday Leader – an erstwhile employee – said that “once you get appointed to the board of Ceylinco Group companies, life became rather gilded”. One became he said, rather like an oil-rich Sheikh.

Separately a former Director, identified last week as having made a last ditch effort to save some of her assets from being taken in by GKCC, Padmini Karunanayake was spotted at a property which was being revalued by GKCC with a sale in mind. Although spotted previously riding in high-end vehicles, she turned up for the inspection in a rather old car.

For many depositors, the idea that they will in effect receive a net return of approximately a mere 13.66% in cash (after having made all-cash security deposits) is an anathema of the most gigantic proportions. Many have complained that having been virtually robbed by Lalith Kotelawala and his fellow officers, now receiving just over 13% in cash is tantamount to criminal breach of trust and not only a breach of the fundamental rights enjoyed by all those in Sri Lanka.

The call is growing for Lalith Kotelawala and his fellow directors – who most certainly had the most detailed information about their various myriad companies and would have been privy to the looming cash crisis but continued to hold valuable remittances outside of Sri Lanka and conspired to move vast sums of monies outside of Sri Lanka outside of the established procedures – to be charged for criminal breach of trust. Many of these Directors claim to know nothing but have amassed vast fortunes.

They managed to wheedle their way out of remand by assuring the fullest co-operation. Yet not one of these so called ‘Directors’ have come forward to explain where the monies went and the names and numbers of accounts and trusts under which these monies are hidden away. Included in this is lawyer and company secretary Alagiah Jegasothy who would have been privy to such information.A large number of former Ceylinco customers are calling for Kotelawala to be returned to remand jail for breaching his conditions by not fully co-operating with the GKCC Management including in one documented instance appointing Directors of his choice to Ceylinco Limited. Others call for all the Directors and Deputy Chairmen of the Ceylinco companies to be arrested and returned forthwith to remand prison.

As the bell tolls for the Ceylinco Men and Woman, over 9,000 depositors place their faith at the doorstep of the much beleaguered Central Bank: it is on them that they pin their hopes for an expeditious and equitable settlement to a problem that is significant for its need to be supportive of the weak – who seek the assistance of the Central Bank and the Judiciary in their quest for justice and fair play.

1 Comment for “Ceylinco: Further Payment To Golden Key Depositors”

  1. willows

    what happened to Karunanayke’s Porsche, transferred to Punarjeeva???

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