GK still awaiting Treasury funds to begin 2nd repayments phase

‘It will happen soon’ assures senior official

by Suresh Perera

The second phase of reimbursements to Golden Key (GK) depositors was scheduled to begin last week in terms of the repayment formula, but the process could not get off the ground as the Treasury has still not transferred funds to meet the commitment.

Around Rs. 4 billion is required to repay 2,739 depositors with holdings ranging from Rs. 2 – 10 million. They are due to receive 41% of their credit balances minus Rs. 300,000 settled in three different stages earlier.

Asked what was holding up the Treasury funding, a senior GK official expressed optimism of pushing ahead with the reimbursements with the money expected to be transferred shortly.

"We still have about one month to clear up the repayments", he said, referring to the October 4 deadline to wrap up the second phase.

The Fundamental Rights (FR) plea filed by a group of GK depositors before the Supreme Court was terminated on the assurance by the Central Bank that 41% of the holdings of investors will be repaid within a specific timeframe.

The third and final stage, which will concentrate on reimbursing depositors with investments over and above Rs. 10 million, should begin on November 4 and completed within a one year period.

The Treasury has undertaken to inject Rs. 8.5 billion for the all-round repayment of 41% of deposits, but the funds will come as a cash advance against GK’s assets, the official explained.

"We will have to liquidate GK’s assets and settle the advances secured from the Treasury", he elaborated. "It is a misconception that state finances are being used to settle depositors of a privately-owned company".

On whether there are sufficient GK assets to meet the liability, he said that an audit will be done and thereafter the liquidation process will have to go through the district court.

"We have taken up this matter with the Central Bank and awaiting advice on the next step", he noted.

When told that Lalith Kotelawala and the other directors have already filed motions to repossess their personal properties, the official said that he is aware of the former GK Chairman, who owns the chunk of the assets, seeking judicial intervention to recover them.

"During our meetings, both the Finance Minister and Central Bank Governor gave us a categorical assurance that the GK operations will be acquired by the Central Bank to save costs", said Dushanthi Hapugoda, president, All GK Depositors’ Association.

At a time every cent counts to repay struggling depositors, it is a crime to spend Rs. 2.5 million per month to maintain an office, which does not generate an income, she noted. "Why run an office at such considerable cost when the Central Bank can take over its functions?"

As it stands, there are no funds to maintain the GK office, she asserted. "There has to be rethinking on this issue, as at the end of the day, depositors have been deprived of 59% of their savings".


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