“Saga of the depositors of failed companies”
Apropos W.K. Ruberu’s letter which appeared in the Business Times on 28th May 2017 under the above heading, as the present chairman of the companies referred to, namely Finance and Guarantee Property Developers (Pvt) Ltd and Real Estate Co Ltd and their subsidiaries (F&G PDL 7&RECL), may I please be permitted to piece together the facts in their correct perspective.
At the outset, after the collapse of these companies, the Supreme Court (SC) appointed two boards of trustees to take over and settle the depositors.
After more than two years, as they made little or no progress, the SC dissolved the trusts and directed the Central Bank (CB) to draw up a payment plan and find an investor. In the interim, the day-to-day affairs of the companies were to be managed by the three principal staff officers overseen by the Independent Association of Depositors of F&G PDL and RECL. I was the chairman of this association at the time. SC gave limited powers to the firm of accountants -SJMS – to operate the accounts to meet administrative expenses only. Please note SC gave no authority to pay depositors their money during this period.
As the chairman, I gave all assistance to the CB to draw up the payment plan. It was ready in October 2013. According to the plan, PDL depositors would receive 51 per cent of their deposits and RECL depositors 61 per cent considering the assets left over at the time of the collapse of these companies. Again as the chairman of the largest association of depositors, I placed the plan before the depositors the following month, November 2013 and urged them to accept it.
One depositor, Mr. Caldera stood up and condemned the plan; criticised the CB as being corrupt and accused me of acting in collusion with these corrupt officers of the bank to play out poor depositors. He promised that he can give 110 per cent starting January 2014 – just two months away; and all he wanted from the depositors to fulfill his promise is to be elected president of the association. Depositors were swept off their feet by his oratory. So Mr. Caldera was elected president by a landslide. Mr. Ruberu is one of those depositors who supported Mr. Caldera. Nobody present asked him how he can pay 110 per cent from two failed companies; or from where he will find the money to pay this.
Mr. Caldera et al appealed to the SC for appointment as directors of PDL and RECL claiming to be the legitimate representatives of the depositors.
Accordingly in May 2015, the SC appointed the new board of directors comprising Messrs Caldera, Upali Rajapaksa, Ashley Vilathgamuwa and Mahinda Wijesuriya. They chose Mr. Rajapaksa as their president. Only 16 months later in September 2016, the SC removed all of them after reproaching them severely for their corrupt practices. One such corrupt practice was an attempt to sell a very valuable property down Frederica Road, Wellawatta worth over Rs. 100 million without giving sufficient time to the general public to make their offers.
Two months later, in November 2016, the SC appointed five new directors to the two boards – Messrs Dixon Nilaweera, Jayantha Jayawardena, D.L. Katuwawala , N.E. Dissanayake and Brigadier Ranjan de Silva (myself). I was elected chairman.
Within two months of taking office in January 2017, the new board was able to submit to the SC for approval, a plan to generate at least Rs. 1.1 billion along with a time plan to commence payments to depositors. (We sought SC approval, to ensure transparency and leave no room for anyone to allege any malpractice). This is record speed unmatched by the trustees or the directors who preceded us. Had depositors only cooperated, payments would have begun easily by September this year. But, instead of cooperating, some depositors have sought to obstruct and delay obviously in pursuit of their personal agendas. Among these are the very depositor – directors whom the SC removed. So this plan is languishing in court for the last four months now.
We also started real talks with an investor. Before us, all these nine years, there was much hype about investors coming. But this is the first time directors met an investor. The whole country knows the difficulties the country is facing to attract investors to our shores. They prefer to go to countries like Vietnam, Cambodia, Bangladesh but not Sri Lanka. In such a backdrop, this is a creditable achievement.
In 2015/16 the CB and the Ministry of Finance held several rounds of talks with representatives of depositors of Golden Key and F&G PDL and RECL. The CB and the Finance Minister offered to take over this problem. (I was present at these talks). Representatives of GK accepted the offer. But representatives of F&G7 PDL and RECL rejected it saying they have an investor and can give a better deal to the depositors. Mr. Caldera claimed he is representing over 3000 depositors.
Can you blame the CB or the government of the country if they are unwilling to get involved again? Depositors must elect as their leaders persons who are sincerely representative of their cause and not be carried away by self-seekers who promise “rice from the moon.”
Brigadier Ranjan de Silva Chairman F&G Group of Companies. Â