The Central Bank (CB) has ruled out any investigation or intervention into the Golden Key Credit Card Company scam because it is a credit card company and does not come within the supervisory framework of the Central Bank.
The CB is not conducting any investigations into the Golden Key financial crisis, officials said, when asked to respond as to why the CB didn’t seize the books and documents at Golden Key, similar to what was done in the Sakvithi case.
A senior CB official told The Sunday Times FT as far as the Central Bank is concerned they are satisfied with the company’s audit report submitted to them during their investigations in 2006 and had only learnt that it was a forged document after recent newspaper reports. He added that the Golden Key Co had functioned without any supervision of the Central Bank and it is not a registered finance company.
He said the company had no authority to obtain money from the public, as deposits or to grant loans on interest, or invest money in any way, as per financial regulations. The official said Golden Key had accepted security deposits to issue credit cards but that the CB was unaware of large sums being accepted from depositors paying them high interest rates ranging from 12% to 30%.
Golden Key had invested these deposits in around 40 different projects including the Golden Key Hospital in Rajagiriya. However he said that according to company officials, difficulties had arisen when paying interest to depositors and also when supplying money for withdrawals and this was one of the major reasons for the financial crisis in the company. He added that he was not aware about any court directive to the Central bank to conduct an inquiry and submit a report on the company.
Legal experts said that the officers of the Central Bank including its Governor cannot abandon their responsibilities with regard to the Golden Key crisis as they are now made aware of the fact that the company was accepting deposits from the public without a license under the Banking Act and or the Finance Companies Act.
They said the CB is responsible in maintaining financial stability and has extensive powers to intervene in various ways where the stability of the financial system is at any risk at any time.
The experts expressed concern as to why the CB had allowed Golden Key to continue its dealings without a fuller probe after the 2006 inspection.
Golden Key has 9,200 depositors
The Golden Key Credit Card Co handed over a list of 9,200 credit card depositors to the CID on Tuesday when Ceylinco Consolidated Chairman Lalith Kotelawala and 10 other directors of Golden Key were summoned to record their statements in connection with an alleged fraud at the company. Mr Kotelawala is also chairman of Golden Key.
CID officials said the total amount of the deposits, as revealed in this list, was around Rs.15 billion. However it was explained before the Mount Lavinia Magistrate Court last week that around 10,000 depositors had invested their money amounting Rs.26 bllion at Golden Key and their details cannot be obtained within a short period as the main computer which was used to store data had been busted.
No details were available of what is contained in the statements. Police have filed a case of fraud in the Golden Key case in which hundreds of depositors are demanding that the company returns their money. Four persons including the company’s Deputy Chairman Khavan Perera are in remand prison over the alleged fraud.
In a related development, a preliminary discussion was held at the Attorney General’s Department to form a special trust with the aim of refunding the money of the depositors. Two lawyers representing the depositors, directors of the company and other relevant parties, were present. The modalities of the trust and the repayment procedure were discussed at the meeting. These details will be presented before court on January 30. |
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