The Lalith Kotelawala-Daya Senanayake row escalated to a new high when Kotelawala called a press conference on Friday to clarify the position of the Seylan Bank with respect to action filed by Senanayake in the Magistrate’s Court (Case No. 54360).

Mr. Senanayake charges Kotelawala (Chairman), R.Renganathan (Deputy Chairman), Ms. R. Nanayakkara (Director/General Manager/CEO) of Seylan Bank as well as four others of misappropriation and criminal breach of trust based on a civil transaction concluded by the Seylan Bank to recover a debt owing to the Bank by a company registered in Grenadines by the name of Gold Lada Ltd.

While it is unusual for a press conference to be called regarding civil litigation, Mr. Kotelawala stated that they were forced to do so in order to preempt any adverse publicity that might result from this case. He alleged that the litigation was little more than a publicity stunt on the part of Mr. Senanayake and pointed out in a separate press release that Senanayake’s passport had been impounded and he had been enlarged on bail of Rs. 75,000 in connection with a CID investigation alleging credit card fraud.

Gold Lada Ltd., which Senanayake says is his company (according to Kotelawala) had borrowed monies worth 694,000 US dollars (approximately Rs. 50,000 million) from Seylan Bank by pledging shares of Blue Diamonds Ltd., of which company he happened to be the Deputy Chairman and Managing Director. The loan had been approved by Senanayake himself at a time when he was acting Chairman of Seylan Bank. Apparently the Chairman, Mr. Kotelawala had at that time been recovering after the Central Bank bomb blast. Matters pertaining to this transaction too are currently under investigation by the CID.

Seylan Bank had sold these shares in order to recover a portion of the loan given to Gold Lada which had been in arrears for over a year. The Bank’s actions have been taken bona fide by its directors in the interests of its shareholders to recover the losses resulting through the alleged fraudulent transactions, Kotelawala said.

A press release from Blue Diamonds explains the circumstances in which Mr. Senanayake was granted bail by the Fort Magistrate. The full text of this statement follows:

"Blue Diamond complained to the CID early this year alleging a credit card fraud, falsifying vouchers, committing forgery and causing breach of trust of funds of Blue Diamonds committed by Mr. Daya Senanayake, former Deputy Chairman and Managing Director of Blue Diamonds.

"CID commenced investigating the said fraud and consequently produced an employee of the former Managing Director in the Colombo Fort Magistrate’s Court. In the course of investigation it was found by the CID that she had in her possession jewellery and household articles which were beyond her income. Later the articles were released on a Bond.

"Subsequently the said employee made a confession to the CID that the articles that she had in her possession and far in excess of her legitimate income had been purchased by following fraudulent practices initiated by her boss, Mr. Senanayake, and on his instructions. Mr. Daya Senanayake too had benefited from the fraudulent transactions.

"CID called Mr. Daya Senanayake to record his statement on the 16th of November, 2000. Mr. Senanayake failed to turn up and sent a fax to the CID (mentioning) that on the same day he was scheduled to attend the Anamaduwa Magistrate’s Court in connection with another Case (No. BR 168). It was subsequently found that Mr. Senanayake had not attended the Anamaduwa Magistrate’s Court on that day. He was given a further date to come to the CID office, November 27th.

"Meanwhile Mr. Daya Senanayake had rushed to court on Friday (November 24th) to obtain anticipatory bail on an imminent arrest of himself by the CID in case bearing No. 53467 and the Fort Magistrate granted him bail on the following conditions:

"1. That Mr. Daya Senanayake surrenders his passport to court;

2. That he does not leave the island without the prior permission of Court;

3. That he would report to the CID between 6.00 a.m. and 6.00 p.m. on any day that the CID requires him;

4. That he does not tamper or interfere with any evidence or documents, which are required by the CID for their investigation;

5. That he does not interfere with any of the witnesses;

6. Rs. 75,000 bail was allowed."

Mr. Daya Senanayake could not be contacted, his listed phone number was unanswered.