The plan to nominate former directors of the Golden Key (GK) Credit Card Company including Lalith Kotelawala who are still considered suspects in alleged misappropriation of GK funds, as members of the 5-member board of directors of the proposed holding company to be set up to settle depositors is raising several legal issues, Attorney General’s Department sources said.
The names of five nominees including Khavan Perera and Saradha Sumanasekera, former GK CEO and Finance Director respectively, to serve as directors of the new company have been approved by GK depositors associations and these names along with the 10-member supervisory committee comprising representatives of the two depositors’ associations are to be submitted to the Supreme Court (SC) for approval on April 1.
Dushanthi Hapugoda, President of GK Depositors’ Association, has, in a petition, sought the intervention of the Supreme Court to also appoint Mr Kotelawala on the board of the new company saying the latter is in a better and stronger position to raise funds to take the repayment initiative forward. She told the Business Times that Mr. Kotelawala has the ability and the intention to provide relief for depositors.
But a high ranking official of the AG’s Department said these former directors are not fit and proper persons to hold any position in financial institutions according to Central Bank regulations. Regulations governing the finance industry have clear provisions on ‘fit and proper’ persons serving as directors.
“Given their failure to run many companies, these former directors are clearly not fit to serve in top positions of any financial institution,” he added.
“It would be scandalous if they are given director posts,” he said. He revealed that the AG’s Department will soon file indictments against former directors of GK including Mr. Kotelawala
The AG is yet to file indictments against Mr Kotelawala and other former directors of GK and two other subsidiaries despite the crisis exploding more than two years ago in December 2008.
Mr Kotelawala and his co-directors are out on bail after a period in remand. AG’s department sources said that indictment was being prepared to charge the accused under the Penal Code but pointed out that the delay in filing indictment was due to the collection of evidence and auditing process which is still going on.
These suspects are to be indicted in the Colombo High Court under Section 388 of the Penal Code for criminal breach of trust, on Section 386 for embezzlement and Section 398 citing fraud.
However several lawyers appearing in the GK cases argue that former directors can be appointed as the directors of the new holding company as the depositors and these directors have entered into a settlement and agreed upon a new payment plan which was endorsed by the Supreme Court.
However AG’s department sources said that charges will be framed against the former directors even if there is a settlement between depositors and directors.
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