Ceylinco Chairman Lalith Kotelawala last week sought time to inject more funds to repay Golden Key depositors amidst moves by the Supreme Court-appointed Committee of Chartered Accountants to auction his personal assets and properties.

"Yes, we have granted his request for a reasonable timeframe as we prefer the cash infusion to happen with his consent", a senior official said. "There are of course other legal options if this bid fails".

Asked for a figure on the quantum of money Kotelawala had assured he would initially inject, he replied, "There was no indication, but it will have to be substantial".

The biggest stumbling block the Committee has run into is the gross inadequacy of liquid cash to settle depositors as the amount raised so far from seizing bank accounts is only around 400 million rupees.

"If more funds are injected by Kotelawala, we can complete the payment of 75% of deposits up to one million as directed by the Supreme Court", the official explained. "Otherwise, we will place matters before court when the FR case resumes on December 17, 2009".

With mortgages on most of the assets in the list submitted by Kotelawala, the focus has also turned to the formation of a holding company to transfer the shareholdings of Kotelawala, his wife Sicille and related parties to be sold to strategic buyers, he noted.

This is apart from moves to auction the personal assets and properties of Kotelawala, his wife and other directors of Golden Key and its associate companies with the direction of court to raise urgently needed funds to honour depositor commitments, he said.

However, the proposed transfer of these shares has not found favour with depositors who, as Ms. Dushyanthi Hapugoda, a petitioner in the ongoing Golden Key FR plea argues, could expose the parcel to the risk of under-valuation by "interested parties".

"Why cannot the shares be sold directly by the Central Bank, which is handling the Golden Key repayment process and channel the funds to settle depositors?", she asked. "This will ensure the anticipated returns, which translates into more cash to grant relief to depositors".

"Why bring in a third party – a holding company?", Ms. Hapugoda queried. "Surely, the Central Bank can undertake that task".

"With cross-holdings, the company will be able to attract more investors", the official assured. "We will be able to get a good deal".

Ms. Hapugoda urged the Committee, which is now examining the shareholdings of the Ceylinco Chairman, to initiate immediate action to sell his controlling 23% stake in Seylan Bank, which was offered by Kotelawala for 10 billion rupees earlier.

In addition, Kotelawala’s shareholding at Ceylinco Insurance is also worth more than five billion rupees. Ceylinco Ltd., another company where Kotelawala has a 85% stake and his wife Sicille 14%, holds 13.6% of the shares of Ceylinco Insurance, she explained.

Amongst the other companies the Ceylinco Chairman has substantial stakes are Ceylinco Financial Services Ltd., 2.1 million shares (4.91%), The Finance Company 1.4 million shares (3.38%), Ceylinco Developers Ltd., 1.39 million shares (3.2%) and Ceylinco Asset Management 525,595 shares (1.22%), she noted.

"When there are shares worth billions of rupees, why has no action been taken so far to dispose of them to raise funds to resettle depositors?", Ms. Hapugoda asked. "Neither has a single asset been sold nor a single cent repaid to depositors yet".

Asked why no steps have been taken to sell these shares so far, the official replied, "We are trying to do it with Kotelawala’s consent".

Ms. Hapugoda said that when a depositors’ delegation met with Kotelawala at the Welikada remand prison, he promised to provide the required funds to repay depositors if he was granted bail. "But, the Central Bank still cannot find the cash to pay even 75% of deposits up to one million rupees in terms of the Supreme Court order".

With a maximum ceiling imposed, a depositor who had invested one million rupees would receive only 100,000 rupees instead of the 750,000 rupees as the full 75% will not be paid, she said.

The official said that the process of repayments under the first phase would begin after the audited accounts are handed over to the Committee tomorrow (7).

"The 3,863 depositors under this category would be individually notified", he noted. "With the maximum ceiling in place, they will receive either 75% or 100,000 rupees, whichever is higher".

"We don’t have the funds to meet the full 75% commitment".

Meanwhile, the first public notice to auction several vehicles which belonged to Golden Key is expected to be published this week.

More moveable assets are expected to go under the hammer in the weeks to follow to raise funds to repay distraught depositors with the preparation of the required documentation for their sale, the official said.

Kotelawala and Deputy Chairperson Padmini Karunanayake have been released on bail by the Supreme Court under stringent conditions. They have been directed by court to cooperate with any notice issued by the CID, the Committee of Chartered Accountants and/or the Monetary Board.

The Golden Key Depositors’ Society has organized a joint ‘peace march’ with F&G and Ceylinco Shriram depositors with the objective of meeting President Mahinda Rajapaksa tomorrow (7).

Depositors will gather at 9.30 am at Lipton’s Circus from where the march will begin for the proposed meeting with the President, a statement from the Society said.

"We have informed the President of this proposed march by suffering depositors and sought a meeting with him to discuss our grievances", the statement noted.

The Society has invited depositors of other organizations of the crisis-hit Ceylinco Group to also participate in the ‘peace march’ and join in efforts to end their agony.