F&G Group, collapsed company saga continues with deceptions
Almost nine years after the collapse of the F&G Group of companies (F&G Real Estate and F&G Property Developers) along with the Golden key Credit Card Company debacle and the fall of the Ceylinco – Lalith Kotelawala empire, another attempt to mislead the judiciary has been revealed recently to the dismay of depositors and investors of the company.
Most of the 7,000 depositors affected by the financial crisis are still struggling to make ends meet and some of them are no more, after undergoing sufferings for almost a decade, a very senior leader of a now defunct depositors association who wished to remain anonymous, told the Business Times.
He noted that the F&G saga still continues over the streams of tears of disgruntled depositors with sorrowful memories but it has opened avenues for several opportunists who stepped in or were appointed by the authorities to become rich during the process of the so-called company resurrection process.
Ceylinco Chairman Lalith Kotelawala is now leading a peaceful life after failing to meet his obligations to depositors even after court orders, Deputy Chairman Mervyn Jayasinghe and director K.A.S Jayatissa who were in remand prison for a few weeks have been bailed out as they had complied with the court directive in adopting a resolution to make payments to depositors at that time.
Executive Director Mohan Perera who came forward to defend the company supporting a restructuring plan with the intention of protecting depositors has passed away after a brief illness sometime back, heartbroken after spending several weeks of bitter life in remand prison.
This was the gist of F&G saga’s humanitarian angle running into hundreds of pages at present and there was no sign of its ending.
A group of depositors outlined the details of the present attempt to mislead the judiciary and the following is what they had to say:
The F&G Group of companies (F&G Real Estate and F&G Property Developers) was liquidated in early 2009 due to financial crisis and failure to pay off the total depositor’s liabilities of over Rs. 6 billion. The estimated asset base was approximately valued at Rs. 7 billion as of 2013.
Since the hard-earned money of innocent depositors was mismanaged the depositors filed a fundamental rights petition (FR 317/2009) in the Supreme Court seeking help from the judiciary to recover their money.
After examining the FR petition the Supreme Court instructed the Central Bank (CB) to submit a plan of action to settle the depositor’s liability.
The CB submitted the plan of action in 2012 and recommended the pay back ratio of 51 per cent for depositors who invest in F&G Property Developers and 61 per cent for depositors who invest in F&G Real Estate with the total liability to settle the amount being Rs. 3.7 billion and the interest payment was frozen as of 2009.
Based on the CB recommendation the Court ordered the F&G Board of Directors to call for an Expression of Interest for a potential investor to take over the F&G Group of companies, revamp the operation and pay back the depositor’s liability of 51 per cent and 61 per cent of the total deposit, respectively.
The F&G Board issued an EOI notice on October 20, 2017 for the revival of the group and four investors sent their expressions of interest by way of investment proposals and the settlement plan as per the CBSL guidelines.
They are JMC Ltd (Japan), HWI Saltwater Pty Ltd, NLH Holdings and Lemuria Impex.
The CB did an evaluation dated February 28, 2018 and recommended either JMC Ltd or HWI Saltwater subject to proof of funds by way of bank confirmations and rejected the other two investors (NHL Holdings & Lemuria Impex), stating the reasons for rejecting their proposals.
As a result, the F&G Board hired KPMG to do the evaluation and give their recommendation to select a suitable investor to take over the group.
But only JMC Ltd, managed to submit company audited financial accounts, tax return and proof of funds, etc while HWI Saltwater failed to submit any required documents.
However, lawyers for NLH Holding convinced the Court and managed to bring their party in for re-evaluation of their proposal. The Court accepted the request and ordered the F&G Board to include NLH Holdings investment proposal for the re-evaluation and submit the report.
As per KPMG’s final report dated September 26, 2018, they have recommended a third party company called “ZRA Holdings” in which ZRA Holdings will be the joint venture partner of NLH Holdings to take over the F&G Group of companies and collectively show their proof of funds to invest and revamp the said companies.
However, when some depositors conducted a background check of ZRA Holdings surprisingly they could only find a bare land in their business registered address (163, Muhandiram Road, Colombo 3). It was also only incorporated in March 2018 and not currently in operation.
Depositors questioned as to how the reputed accounting firm (KPMG) has recommended a company/ entity which is incorporated on March 2018 and currently not in operation to take over the F&G Group of companies with such a great value of public funds.
“It is clear that this was an attempt to mislead the Supreme Court and recommend a fraudulent company to be the suitable investor to take over the said companies and pay off the innocent depositor’s hard-earned money back,” one depositor alleged.