Depositors appeal to new CB Governor
All those despondent depositors who had been put to untold misery and helplessness following the collapse of registered Finance Companies, in which they had invested money, welcome the appointment of a new Governor of the Central Bank of Sri Lanka. They have enormous trust in the new Governor, namely renowned banker Arjuna Mahendran, to rectify a grave injustice caused to them by the previous administration due to no one being held accountable and responsible for the collapse of the RFCs and loss of depositors’ money amounting to millions of rupees.
As a senior citizen who had deposited his gratuity payments and hard-earned savings in RFCs that collapsed and is now left in the lurch with no hope of ever getting the money back, I wish to appeal to the new Governor, in unison with several other depositors like myself, to appoint a commission of inquiry to ascertain the reason(s) and those accountable for the collapse of these RFCs.
I had invested a substantial amount of money with the now defunct Central Investment & Finance Co (CIFL) and with Ceylinco Investment & Reality Co Ltd (CIRL). Both of these companies were under the direction, supervision and control of the Central Bank, yet the collapse could not be averted which, it has now come to light, was due to large scale corruption, bungling and mismanagement. The depositors had enormous trust in the Central Bank, whose supervision and control was the hallmark on which the public reposed trust when placing money in deposit with finance companies. Now that these RFCs have collapsed, nobody seems to be answerable and those responsible have apparently taken the easy way out by giving vague and unacceptable answers saying it is now subjudice or in the hands of the Central Bank etc, etc.
In the case of the CIFL, it is alleged that a wrong decision of the Central Bank to disallow its chairman to continue in office had a catalytic effect on the collapse. This had prompted him to withdraw his shares in the company and his near and dear ones following suit thereafter. The rumour of the chairman’s departure spread like wildfire and there was panic withdrawals having a domino effect on other deposits, resulting in the company being left with a cash crunch to continue its operations. The Central Bank’s attempt at resuscitating the company by converting 60 per cent of the deposits to non-voting shares at the Colombo Stock Exchange and 40 per cent to be treated as new deposits with a paltry interest rate of 5 per cent was thwarted by depositors going to courts and obtaining an interim injunction against the move. The directors who are responsible for mismanagement and eventual collapse of the company are said to be at large, beyond the reach of the long arm of the law. Persistent efforts by the Central Bank to resuscitate the company have not been successful and after more than two years since collapse, the company is now in a state of limbo.
As for CIRL, which now functions as The Standard Credit Lanka Ltd, a unilateral decision had been taken as directed by the Central Bank to convert 68 per cent of the deposit base into non-voting shares at the stock exchange and treat the balance 32 per cent as new deposits, for which an unrealistically low interest rate of 8 per cent had been fixed arbitrarily. The depositors rejected this move and to date the company is unlawfully holding back 68 per cent of the depositors’ money in a frozen account without paying any interest thereon. When queried as to when they propose to return the money, they have no answer to offer and no hierarchy of the company is reachable to elicit an answer. As for the meagre interest of 8 per cent, this too came to an end as at December 2013 and nobody has got even this pittance for the whole of 2014. When questioned about the non-payment of interest they say it was stopped because they are unable to continue with any further interest payments and are instead collecting money to pay all depositors 20 per cent of their deposits subject to a ceiling of Rs. 200,000 as directed by the Central Bank. This move is being seen as the ‘swan song’ of the company before declaring insolvency. Lo and behold, this is the result of the Central Bank-initiated resuscitation programme on a company which they had killed by their own negligence, callousness and indifference to apprehensions of the public. The restructuring programme paved the way for rogues responsible for the mess up to go scot-free and ensconce themselves abroad beyond the reach of the long arm of the law, whilst subjecting the depositors to a state of despair, misery, humiliation, helplessness and hopelessness.
With all earnestness, I beseech the new Governor to appoint a truth-seeking committee to ascertain the actual cause of the collapse of these companies, which had been shrouded in secrecy by the previous regime to safeguard their henchmen. I hope the new Governor would bring to book those responsible for defrauding the RFCs and mete out justice to their hapless depositors who are now living in squalor and helplessness.
Nihal Fernando,
Moratuwa