Cash advance from Treasury to repay depositors under consideration — Mahendran

Liquidation of Golden Key on the cards


by Suresh Perera

A liquidator will be appointed by the Central Bank to wind up operations of Golden Key (GK) by September 2015, a high-ranking official disclosed last week.

"The liquidation process will begin one month after the August 17 parliamentary election", Central Bank Governor, Arjuna Mahendran said.

He said that GK owns a wide range of assets. The company has under its wing varied properties, including hospitals and schools. "We need some time for a complete audit to be conducted on the assets of the company".

Asked by The Sunday Island whether the second tranche of Rs. 3.8 billion required to reimburse depositors in the follow-up round of repayments will also come from the government, Mahendran said that a cash infusion for this commitment will probably be sought from the Treasury as an advance against the assets of GK.

"We are looking at drawing an advance because we need to find buyers for these assets at the right market prices", the Governor noted.

"We don’t want to be hasty and dispose of these properties at low prices", he explained. "That is why the possibility of raising an advance is being actively considered".

Mahendran said the previous government had been operating GK as a "going concern" and under the present circumstances a liquidator will have to be appointed to wind up the company, raise funds through the liquidation of its assets and honor commitments towards depositors.

Responding to another query on the substantial wage bill GK has to foot, though the company itself is not generating an income, the Central Bank Governor replied, "With the proposed appointment of a liquidator, only a Chairman needs to be in place to oversee the process".

Asked whether legal sanction will be required to clear the way for a liquidator to be named, he said that it won’t be necessary as this aspect was incorporated in the submissions the Central Bank made to the Supreme Court.

"We have completed the process of reimbursing depositors with holdings up to Rs. 1 million", Dinesh Perera, the company’s CEO, announced last week.

He said that Rs. 544.3 million was disbursed under the first phase with Treasury funding. "All the cheques have now been mailed".

Asked whether the proposed second phase, where investors with deposits up to Rs. 10 million are expected to be repaid, will begin only after liquidating GK assets, the CEO declined to comment.

The best option is to appoint officials from the Central Bank to the management of GK, as done earlier, so that there is no separate remuneration involved, suggested Dushanthi Hapugoda, president, All GKCC Depositors’ Association.

The company’s Chairman, Priyantha Fernando, a former Central Bank deputy governor, works on a voluntary basis,

GK needs Rs. 2.5 million per month to meet the salary commitments of the CEO, six staff members and the security officers and the cash comes from fast-depleting GK finances raised after liquidating some assets of the former directors, she said.

Meanwhile, during last week’s resumed hearing of the High Court case, Sumadu Hewage, Counsel for the depositors, proposed that the former GK directors contribute 30% towards ongoing efforts to grant relief to aggrieved depositors.


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