Fighter to the end
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A sad ending. This was the fate of Lakshman Croos Moraes, a depositor of the failed Standard Credit Finance Co and one of the leaders of a campaign to recover their deposits, who died at the National Hospital, Colombo, last week a broken man.Moraes and a group of depositors campaigned vigorously on behalf of others to ensure their deposits and interest amounting to millions of rupees were duly returned to them.
A fighter to the end, Moraes died of heart failure, and will be missed by fellow depositors who valued his wisdom and his fight for what is right.
He is among 30 depositors from this company who died, just like scores of depositors from other failed finance companies, including lovable, female Sinhala comedian Mercy Edirisinghe, who struggled to the end to pay medical expenses among other bills.
Starting from the 2002 collapse of Pramuka Bank in which 80 per cent of its portfolio was non-performing loans and followed by the crash of Golden Key (GK) in 2008, the financial sector has never recovered.
The financial bubble burst with the fall of the Ceylinco Group, triggering a crisis that many finance companies have been unable to recover from as desperate depositors tried to withdraw their funds.
Most of the failed companies bit more than they could chew, offering very high interest rates on deposits on the presumption that there were borrowers willing to pay high rates on no-questions-asked loans. Many of the unscrupulous directors, who ran these bankrupt firms and would never have passed fit-and-proper rules if they were strictly enforced, like the artful dodger have escaped the long arm of the law, living a high life here or abroad.
It took years to track down Sicille Kotelawala who was hiding abroad and finally returned to pay for the financial fraud committed through Golden Key and its subsidiaries, faced with a liability of nearly 26 billion rupees. Even when she finally returned to Sri Lanka, it was rumoured that the Kotelawelas had struck a deal with the authorities.
When Pramuka Bank crashed, its founder Rohan Perera, pioneering CEO of Seylan Bank who then fell out with his mentor Lalith Kotelawala, Chairman of Ceylinco and Seylan, vanished abroad and is still at large.
Over the years, hundreds of depositors from various companies that collapsed with the fall of the Ceylinco empire, have tried everything within their limited power and resources to recover their lost dues but without much success. Unfortunately, many failed companies and their directors operated above the law.
Often it was heartbreaking to watch elderly depositors carrying placards in protest demonstrations at key public areas against the company and the authorities, some of them also carrying shopping bags containing their medication. The victims have moved the Supreme Court, slept in tents outside the Kotelawala residence, met Central Bank Governors on many occasions or banded together into associations to seek justice. Today they are still on the streets protesting.
Often their plea for justice from the authorities was met with a ‘you-should-have-been-more-careful’ attitude implying that people should invest in reliable, Central Bank-registered companies offering a reasonable rate of interest instead of hankering after finance companies paying high rates of interest.
While to some extent this argument is true, the reality at the time, and even today, is that with the high cost of living and costly bills to pay, particularly medical and children’s education, most people – in particular, retirees and pensioners – are unable to make ends meet from a meagre pension or low-interest yields from traditional finance companies.
As costs rise, the temptation and desperation to get a higher return on an investment leads many to finance companies offering a better deal. Most of the companies also came either highly recommended or belonged to ‘respected’ groups like Ceylinco.
Eventually helpless depositors without influence or money power were the ones who suffered the most. For instance in the case of Golden Key, some high net-worth investors including a famous cricketer and a ruling party politician removed their money just before the crash occurred, tipped off obviously by company officials of the emerging crisis.
Steps taken by successive governments to mitigate the crisis are more about ‘scoring points’ than relief. Depositor associations were formed either through self-interest or promises from a powerful government official to get relief, like those close to the then Central Bank Governor or Kotelawala. Promises have been made by politicians and Central Bank Governors and officials but the end to the pain of many an affected depositor is still far, far away. For many an elderly depositor, death is nearer than any solution.
In desperation, when the authorities fail in their duty to bring the culprits to book, the victims run to the politicians without much success there either.
To score brownie points, big tamashas are held when some portion of the lost funds are repaid to depositors. Promises are made. For example, on July 24, 2015 at an event where part payment to GK depositors was made, it was announced by the President that a special presidential commission will be appointed to investigate the GK debacle and those who were responsible for it.
Two years later, such a commission is yet to be appointed. While a special commission is unlikely to change the status quo, such pronouncements give hope to depositors like oxygen to a dying man.
While life is difficult for everyone earning a wage that doesn’t compensate for a monthly upkeep, the elderly are the worst affected particularly those who invest their lump-sum gratuity in a finance company. This newspaper has over the years profiled the struggles and travails of victims of finance companies, often breaking down when bad news hits them. For any hard-nosed journalist, this is as heart-breaking as it can get.
Here is one instance. One depositor, in a moving article in the newspaper in February 2016, wrote: “I remember going to Mount Lavinia courts being a victim of the GK scam, on the first day when the GK case was heard several years ago and meeting one of the thousands of depositors gathered there. Fifty-eight-year old ‘Anton’ (name fictitious) who travelled 210 km from Passara, carried with him two files marked ‘Golden Key Papers’; he sat on a concrete block under a huge tree in the court premises. The date was January 9, 2009. On hearing the bad news that the respondents (Lalith Kotelawala and directors of GK) were released with no settlement plan forthcoming in the foreseeable future, with shattered hopes, Anton broke down in despair.â€
The Government has said it was setting up a Financial Institution Restructuring Agency (FIRA) to bail out ailing finance companies. How this would help depositors recover their monies from failed companies remains to be seen.
For the second week running, there is silence from the kitchen, understandable however. Some relatives of Kussi Amma Sera also lost money in the scams. This column salutes the ‘fighter-to-the-end’ Lakshman Croos Moraes and others who have died watching unscrupulous directors run away with their money without any remorse.
The saga of many depositors struggling to come to grips with a crisis that no government seems to find a satisfactory end to, is bound to continue, unless, the authorities look at the issue in a more humane and compassionate way.