Positive developments on re-paying Golden Key depositors

The Central Bank last week reported positive progress in the ongoing process of identifying and valuing the properties and assets of the Golden Key Credit Card Company and its directors to be auctioned to re-pay depositors of this collapsed Ceylinco subsidiary.

"The first lot of assets is already being valued for disposal to meet depositors’ liabilities", a senior Central Bank official said. "Initially, we need to raise at least two billion rupees in liquid cash to start settling dues".

The re-payment plan is expected to be placed before the Supreme Court (SC) on July 13 for sanction, when the Fundamental Rights (FR) plea filed by a group of Golden Key depositors, resumes.

The SC earlier directed that the process of settling depositors begin on the basis of the lowest value with those who were wholly dependent on the interest earned to be given priority, but the final overall mechanism to be employed is expected to be determined at the next hearing.

"With the re-payment plan, the list of depositors processed by the Central Bank will also be forwarded to court", the official noted.

Despite the SC order to report Golden Key directors who had failed to declare their assets so that they may be penalised, some of the 112 persons named as directors of the crisis-hit company have not done so up to last Friday, he said.

Ceylinco Chairman, Lalith Kotelawala, now on remand in connection with this 26 billion rupee scam, has submitted a ‘near compliance report’ on his properties and assets to the Central Bank, he said.

Earlier, Kotelawala and his wife, Sicille, had forwarded two interim declarations which were found to be incomplete as they did not include their wealth overseas, he explained.

In continuing their task of identifying and valuing Golden Key assets, Central Bank officials have discovered that some of the valuable properties in Colombo had already been mortgaged, he pointed out. "Most people had been unaware of this".

"Under the law, we have to settle these primary mortgages on auctioning the properties and utilize only what’s left to settle depositors", the official said. "In case of the other assets, we need to ensure clear titles to dispose of them".

Fortunately, the directors have sufficient assets and properties which, on being properly identified, will be seized on a judicial order to meet depositors’ capital liabilities amounting to 13 billion rupees, he noted. "But, it’s important that we sell at the market price".

He said it was the re-capitalization of interest by most big-time investors that had pushed up liabilities to a staggering 26 billion rupees. "A separate audit is also being done to identify those who had taken loans against their deposits and also made credit card purchases".

The worst affected now are those who supplemented their meager incomes with the interest earned, the official pointed out. "With their life-long savings gone, they are helpless".

He said the payment of due interest to depositors since Golden Key folded up in December 2008 is a matter for court. "Admittedly, this is a dividend they are entitled to on their investments".

Meanwhile, the Golden Key Depositors’ Association met with Deputy Finance Minister Ranjith Siyambalapitiya and Inland Revenue Commissioner General E. M. M. Medagoda over attempts to tax depositors at a time most of them are struggling to eke out a living.

"It was a very cordial meeting", said Ms. Dushyanthi Hapugoda, the Association’s treasurer. "Both of them were very understanding and assured their support to ease our burden".

"The Deputy Minister said that whatever taxes due could be levied at the time deposits of investors are settled", she said. "He conceded that it’s unfair to demand taxes when people are going through a nightmare without neither their capital nor interest".

"We told him that Golden Key had deducted only 1% tax from the interest earned by depositors when it should have levied the applicable withholding tax, which depositors do not or cannot pay directly to the Inland Revenue Department", she noted. "It is the responsibility of the respective financial institution to do it".

The Association urged the government to take over profit-making Ceylinco companies and pay a reasonable interest to Golden Key depositors for their sustenance, she said.

"Six depositors have already died without an income to survive".

She said that the Inland Revenue chief had also assured that depositors will not be unduly burdened when they are going through a difficult time and whatever taxes due will be levied at the appropriate time.

The Association called off a planned demonstration near the Inland Revenue Department last Thursday morning following the meeting with Siyambalapitiya.

The Association has also sought a meeting with Central Bank Governor Ajith Nivard Cabraal to discuss the possibility of expediting the re-payment plan. "We are awaiting a response".

Deputy Solicitor General (DSG) Sarath Jayamanne said that there is still no information on the whereabouts of Mrs. Sicille Kotelawala who is believed to be in Australia.

"We are awaiting a feedback from the International Police (INTERPOL)", he told the Sunday Island. "They have been unable to trace her so far".

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