Bonanza For Golden Key Depositors Full Asset Sale Ordered
By Faraz Shauketaly
Depositors of the collapsed Golden Key Credit Card Company are set for a virtual ‘bonanza’ thanks to an order that has been made by the Supreme Court of Sri Lanka. The Sunday Leader first revealed the existence of what appeared to us to be an inalienable link to assets held by the disgraced former Chief of the so-called and somewhat grandly called ‘Ceylinco Group’ of companies, Lalith Kotelawala – The assets to which we referred involved a fifty per cent shareholding in a company called CIESOT Limited held by Lalith Kotelawala in his own name. In turn CIESOT Limited owns a substantive and significant chunk in Ceylinco Insurance PLC – a shareholding of approximately 22.86%. Fifty per cent of that holding was valued recently at Rs. 2,889,435,112. (Rs 2.88 Billion)
We also identified a shareholding of 10.64% of the voting stock of Ceylinco Insurance PLC held by a company that was sued by the liquidators of the failed Ponzi-schemer Bernard Maddoff (US$ 156 Million). This shareholding which we urged the authorities in Sri Lanka to fully investigate – we ourselves having written directly to the Swiss wealth management company, Pictet&Cie – was valued at Rs 2,661,580,600 (Rs 2.66 Billion).
Together with shares in Ceylinco Insurance PLC held by Lalith and Secille Kotelawa amounting to Rs 62,972,840, the total valuation of those shares we estimated at Rs 5,613,988,552 (Rs 6.61 Billion) – significant amount of monies which once realised would go a considerable distance in settling the hapless depositors of the Golden Key Company. All the while Kotelawala has, in the opinion of many of his erstwhile customers, done little but ‘twiddle his thumbs’ whilst the Directorate of Ceylinco Insurance PLC have sought to distance their company from the troubles at Golden Key and Lalith and Secille Kotelawala. Ajith Gunawardena told us in a brief conversation that “they have nothing to do” with an advertisement taken out by the Ceylinco Group in which Kotelawala was pictured along with all senior personnel of the Group (including Gunawardena), in which they sought to assure the public that their funds were safe within this one ‘family’ of companies. Historical events have since shown that these were mere words with the depositors having to rely in the judiciary to engineer thus far partial payments.
The Sunday Leader understands that the written order of the highest Court of the land will be available next week. The initial repayment plan of the Central Bank was met with scepticism by the vast majority but this order from the Supreme Court is likely to vindicate the action plan proposed by the Central Bank and accepted as workable by the Supreme Court. “It is fair to say that at long last there is some light at the end of a very long and dark tunnel”, said a depositor who had lost over Rs 10 Million with Golden Key.
The involvement of Pictet&Cie is most interesting. The collapse of Golden Key was in December 2008. The Annual Report for Ceylinco Insurance for 2008 makes no mention of Pictet&Cie as shareholders of any note. In the annual report for 2009 onwards Pictet&Cie have acquired a notable shareholding of 10.68% voting stock and a smaller non-voting stock. Pictet&Cie since 2009 has consistently held its shareholding in Ceylinco Insurance.
Pictet&Cie lists itself as: “Since 1805, Pictet&Cie has advised clients and families in the complex business of protecting and enhancing their wealth through the generations”. They manage wealth for clients in essence. It would be interesting for Sri Lanka’s Central Bank to find out quite how Pictet&Cie made the investment in Ceylinco Insurance, trace the route of the funds and establish from Pictet&Cie that these funds are not in any way connected to funds that have disappeared from Golden Key customers and or other Ceylinco companies and or its various Officers, Managers, Directors and Managers. A failure by Pictet&Cie to ‘Know Your Customer (KYC)” will be viewed rather dimly by the Swiss banking authorities as global awareness of secret off shore companies and holdings come under the spotlight
Earlier The Sunday Leader spearheaded the lobbying of Pictet&Cie to reveal the true ownership of their holding in Ceylinco Insurance PLC. This led to a number of depositors also writing independently to the Swiss wealth management company. Colleagues in the United Kingdom with connections to Sri Lanka were readying themselves to initiate legal action against Pictet&Cie for the return of Kotelawala coterie monies, which the journalists maintain, are managed by Pictet&Cie under trust arrangements. Pictet&Cie for their part are no strangers to such proceedings – when serial Ponzi-schemer Bernard Madoff went down, the liquidator sued Pictet&Cie for USD 156 Million on the basis that Pictet&Cie must have had knowledge of the fraud that Madoff was perpetrating against his investors.
Banks such as Pictet&Cie – as indeed any well regulated financial institution anywhere in the world – have in essence a fiduciary duty of care. KYC – Know Your Customer – requirements are imposed upon financial institutions to combat fraud, money laundering and other unauthorised uses including the funding of terrorism for example.
Sources close to the Golden Key Task force reveal that they feel vindicated after the latest Supreme Court order which includes a resolution to hear all cases daily in an attempt to truly hasten the s on these matters. This was the original intention of the Courts when they released Kotelawala and others on bail – to expedite a repayment plan for the depositors. The singular drawback and disappointment has been the failure of the authorities to secure the repatriation of Secille Kotelawala from the United Kingdom where she lives on a visa granted to persons of ‘independent’ means.
Locating The Assets: How & What Was Done:
Since July 2013 considerable effort has been expended to bring an expeditious resolution to repaying depositors. Included amongst these efforts was to bring in someone with ‘inside’ information. This manifested itself in the form of Daniel Jegasothy a long time confidante of Lalith Kotelawala. Although Jegasothy would have been privy to much of the corporate information that would eventually help to trace funds that have clearly been ‘spirited away’ by members of the grandly called ‘Ceylinco Group’ Jegasothy has not been as forthcoming as would have been appreciated.
He has consistently maintained that he has disclosed whatever it is that he knows and that nothing else within the realms of his considerable knowledge would help to further unravel the mystery behind the missing monies. In one instance for example an officer of the company Mr S. Sumanasekera is said to owe his charge card with up to Rs 40 Million. Investigations are underway to find out if this could be the largest amount ever owed by an individual on any type of card – debit, charge or credit.
Kotelawala for all his mega-phone delivered assurances to the depositors has stated that he had ‘no knowledge’ of the main businesses stating he had over 450 companies under him. That really is rather rich of Kotelawala who actually benefitted from the vast number of businesses.
Others like Padmini Karunanayaka have only ‘forgotten’ to mention smaller amounts, like Rs 50,000 in the NAMAL fund and a ‘few shares’. Nadula Ranaweera has also declared his asset declaration to be true which incidentally so did Kotelawala. However Kotelawala in spite of a string of businesses all over the world including Singapore, Malaysia, Australia, New Zealand, the United Kingdom and the United States, has not mentioned any foreign affairs. The implication being that he has zero assets overseas. The hunt is on to locate any overseas assets which of course once found will leave Kotelawala open to charges of perjury.
Smaller amounts for example like S&L Investment Company unearthed a sum of Rs 467 Million; Whilst Mrs Kotelawala is said to be in residence in the United Kingdom with her sister Sherrene Patitance Christabel Wijeratne, shares in S&L appear in her name as well as those of her siblings Anusha Tahire and Sonali Arundhini – completing the involvement of the Mrs Kotelawala family in the entire scheme of investments within the Ceylinco Group. The total here was Rs 15.9 Million – small change in comparison to the overall amount involved. A further sum of Rs 42.9 Million was obtained through Trillium Residencies.
Sankha Wijesingha has agreed to purchase a small amount of shares held by the Kotelewalas worth approximately Rs 1.5 Million in Certis Holdings whilst doubt remains as to Kotelawala’s interests in Fingate Apartments.
Although Kotelawala owns 50% of CIESOT Ltd. he has claimed no knowledge of what that company does. It may be a measure of how blasé the former mentor Chairman of Ceylinco has been and become, as the ultimate value of those shares is quite a ‘cool’ Rs 2.9 Billion.