GK rules out withdrawing SC case:

‘Will fight to the end’


by Suresh Perera

In a dramatic development, Golden Key (GK) vowed to "fight the legal battle to the end" without caving in to pressure to withdraw the ongoing Supreme Court (SC) case to clear the way for former Chairman Lalith Kotelawala to introduce a repayment plan to reimburse struggling depositors, a senior official said last week.

The GK board of directors has come under tremendous pressure to allow Kotelawala into the picture to make a fresh bid to grant relief, but "we totally oppose such a move because Kotelwala has lost credibility", says Dushanthi Hapugoda, a member of the GK board of directors.

When the former Chairman had every opportunity to reimburse depositors, he failed to produce concrete results. After the company crashed in 2008, Kotelawala personally met depositors in the BMICH premises and pledged to "repay every cent", but nothing happened, she recalled.

"We wouldn’t be fighting a court case today if he had initially honored his word", she pointed out. "Depositors were left out in the cold and legal redress was the only option".

She recounted how Kotelawala, CEO Kavan Perera and the then GK board of directors placed a repayment plan before the SC on June 29, 2011, which was supported by depositors’ associations, but it didn’t see the light of day.

As Kotelawala failed to support or cooperate to implement his own repayment solution, the then Central Bank Governor, Ajith Nivard Cabraal, submitted to the SC a fresh proposal, which was accepted and the fourth stage of which is now being implemented, Hapugoda explained.

"With this track record, how can we convince ourselves that Kotelawala will not retract again if the legal action is withdrawn and the onus of reimbursing GK investors is placed on his shoulders again?", she queried. "What guarantee do we have that history will not repeat itself?"

She said that a firm decision has been made to push ahead with the SC case and the door is open for the former Chairman to team up and help jointly implement the Central Bank’s repayment formula. "That’s the most viable option at this juncture".

With the collapse of the Rajapaksa regime, Kotelawala, who maintained a stoic silence since GK folded up in 2008, appeared in a recent television program, where he promised to settle all the dues if the "legal impediments are removed", Hapugoda said.

"As we can no longer take his word, he can come before the SC and give an undertaking to reimburse the Rs. 26 billion the company owes its depositors", she noted. "That’s a more credible alternative".

Hapugoda said that approximately Rs. 1 billion has already been disbursed to depositors under the repayment strategy and the fourth phase is now underway with one-third of the holdings based on the 41% calculation being repaid.

For example, an investor with a Rs. 1 million holding, who has so far received Rs. 300,000 (under the earlier three phases which brings down the percentage to 38) will receive the balance 33,000 under the ongoing fourth stage (i.e. balance of Rs. 110,000 x one-third = Rs. 33,000). Under the proposed fifth stage, the final Rs. 66,000 will be reimbursed.

"Though we were earlier talking in terms of settling the balance 59% through a share issue, we are now confident that cash repayments can be made as we have discovered more ‘hidden assets’ of GK in many countries, including Australia, Maldives and Bangladesh", Hapugoda explained.

"Though he referred to the present Maithripala Sirisena dispensation as "our government" in his television appearance, we can assure him that the court case will not be withdrawn until justice is done to all suffering GK depositors", the director stressed.

Kotelawala was invited three times earlier for talks to sort out this critical issue, but he chose not to come. That invitation is still open. He can join us to collectively work out a solution and close the tragic GK chapter, she underscored.

She said that if not for the intervention of the then Central Bank Governor, Seylan Bank and The Finance Company would have also collapsed making life miserable for thousands more investors. "The Central Bank had to inject Rs. 6 billion to resuscitate The Finance Company".

"No public funds were pumped into GK. What we asking for is not money from the government, but our own funds, which we placed in Kotelawala’s care because the people believed he was trustworthy at the time".

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