Public interest seminar on debacle of finance companies on Jan. 31
The failure of Sri Lanka’s Central Bank to prevent the failure of finance companies and the evolving crisis are among a host of issues that would be discussed at a provocative public interest seminar on Friday, January 31.
To be held at the Winchester Hall, Kingsbury Hotel from 3 pm onwards, the event will feature presentations and a discussion with the Chairman of the Human Rights Commission, former Supreme Court Judge Priyantha Perera; chairing this seminar,, eminent lawyer K. Kanag-Isvaran PC; Ranjit Fernando, banking expert and lawyer cum accountant and Nihal Sri Ameresekere, the well-known public interest activist and professional consultant.
This is the first in a series of public interest seminars being organized by C21 Seminars dealing with provocative topics and troubled issues in governance to be held this year.
A statement by C21 Seminars said failure on the part of the Central Bank to supervise and manage the Finance Companies has been perennial. The COPE Report to Parliament presented, as far back as June 2005, exposes the failure on the part of the Central Bank to
 Priyantha Perera |
 K.Kanag-Isvaran |
 Ranjit Fernando |
 Nihal Sri Ameresekere |
have effectively supervised and managed Finance Companies, which crashed during the late 1980s and early 1990s. These included, among others, Mercantile Credit Ltd., Trans Lanka Investments Ltd, House & Property Traders Ltd, Union Trust & Investment Ltd and Homes Finance Ltd. These finance companies alone had been advanced Rs. 2700 million by the Central Bank, which stood, as per the said COPE Report, as defaulted outstandings of Rs. 7300 million as at December 2004.
COPE in its June 2005 Report to Parliament faulted the Central Bank, as having failed in its responsibilities and had identified the following lapses on the part of the Central Bank:
(1) Lack of proper scrutiny in relation to companies in the finance business on a regular basis.
(2) Failure of the Central Bank in the exercise of due diligence in granting banking licenses to the same individuals, who have been associated in failed companies in finance business.
(3) Failure to recover advances granted to such finance companies at the appropriate times.
(4) Failure to adopt suitable measures and actions to deal with individuals, who have been responsible for such failures and take proper legal action connected therewith.
(5) Failure in paying due attention to administration and management of finance companies that have been brought under its purview.
The statement added that with such a COPE Report tendered to Parliament as far back as June 2005, how is it then that the country is witnessing thereafter further failures of finance companies, particularly in the recent past, with public protests and outbursts, and a spate of Fundamental Rights Cases filed in the Supreme Court, thereby bringing this major issue, affecting the hapless depositors of their sole savings and livelihoods, before the highest judiciary of the country?
“Therefore it is only natural to ponder upon the question, as to how the Central Bank could be relied upon to supervise and manage the finances of the Government and advent to even opine on the conduct of business by the private sector, when the Central Bank, itself, has so failed to supervise and manage a few finance companies, a small segment of the business of the country?” it asked.
“It is patently clear that there is no purpose in enacting Statutes and making Regulations, if there is no will and/or ability and/or capability, to enforce the provisions of such Statutes and Regulations. The burning question necessarily has to be answered, as to how such failure of finance companies had repeatedly occurred? Would not the Central Bank stand accountable and responsible, particularly after having issued licenses to persons to operate finance companies, and listing in newspaper advertisements names of finance companies, with whom the public have been encouraged to place deposits,” the organisers said.