German investors to the rescue of failed CIFL
The German delegation at the airport.
Battered depositors of the failed finance company – Central Investment and Finance Co Ltd (CIFL) – appear to be on luck’s way when on Thursday a 5-member delegation from Vandell Financial Services SA, Germany arrived in Sri Lanka, partly with the intention of investing in and bailing out the local finance company. According to Wijaya Gunawardene, President, CIFL Depositors Association (CIFLDA), the German investors would be infusing Rs. 5 billion to revive CIFL. The delegation is expected to be in Sri Lanka for several days and if all goes well the investor has agreed to pay outright 50 per cent of the depositors’ deposits.
Speaking at the airport, delegation member -Joachim Spatz, former Member of the German Parliament/Advisor to Government and Private Financial Institutions in Germany and European countries, said they were planning to find a solution to the CIFL crisis and will have discussions with the authorities on this matter and other investment options. “We are interested in the development of the country and very optimistic. We are also interested in the development of the Northern and Eastern Provinces,” he said. Mr. Gunawardene, who was at the Katunayake Airport to receive the German delegation, told the Business Times that the total amount to be brought into Sri Lanka by this German investor would be around Euros 250 million out of which Rs. 5 billion would be pumped into CIFL and the balance for other investments in Sri Lanka.
While the investors are looking at other investments in the country and expected to have discussions with Reginald Cooray, Governor – Northern Province, to explore the possibility of investing in the north and also in the east. The German delegation is expected to have extensive deliberations in a bid to finalise the investment process with the Central Bank, Board of Directors of CIFL and the CIFL Depositors Association. The other members of the delegation are Prince David, Head of Delegation Team/CFO, VFS-Germany; Ms. Martina Skrezipietz, Chief of the Due Diligence, Investment Transaction Management; Rainer Kell, Assistant to the Investment and Transaction Management/Programme Manager and Volker Fehrensen,
Attorney at Law, Legal Advisor to Government and Private Financial Institutions in Germany and the European Countries. Several other CIFLDA officials were at the airport to welcome the delegation. Mr. Gunawardene said that this proposed investment is possible due to the intervention of C. Caldera, former Director, Finance & Guarantee Property Developers Pvt Ltd (also a collapsed finance company). Mr. Caldera is also the coordinator of the visit. The team is due to meet the media on 20th September. CILF was initially registered as a public limited liability company on 3 July 1968. Subsequently it came under the ownership of Deepthi Perera of ASPIC Group in 2004. It became a public liability company in July 2011 and is currently listed on the Colombo Stock Exchange with its share capital at Rs. 632 million.
As of December 2012, the public deposit liability stood at around Rs. 3.5 billion and around 4,200 depositors, many who are senior citizens and government servants. According to past records, the crisis – on top of the crash of finance companies after the Golden Key debacle in end 2008 – occurred in December 2012 as the Central Bank drew the attention of the directors to some irregular activities. Then the authorities brought in Roscoe Maloney, owner of another failed entity, Touchwood investments, as an investor in May 2013 but a month later the latter disappeared abroad and to this day is yet to be traced by the authorities. The matter is now in courts where a bail-out plan is being discussed.