Assets of former GK directors to be acquired

The president of the Golden Key Depositors Society and a new director of the Golden Key Credit Card Company Limited (GKCCCL) Vasantha Gunathilake said that he is hopeful of repayment of up to 80 percent of depositors' money in the future.

Although all the demands of the GK (Golden Key) depositors cannot be fulfilled at present, "we are in the process of acquiring the assets of the former directors of Golden Key including a large amount of hidden assets," he said.

"We agreed to a solution last year under the direction of President Mahinda Rajapaksa and the intervention of the Central Bank (CB) Governor Ajith Nivard Cabraal and officials and most of the depositors agreed to accept it.

A few are against it but some of their demands are not realistic. They demand 100 percent of their deposits and interest for the past five years, which is not realistic," Gunathilake said.

The value of the deposits defaulted by GKCCCL is around Rs. 26 billion. According to the repayment plan proposed by the CB all identified assets of Ceylinco Chairman Lalith Kotelawala and former GK directors will be sold and the money used to repay the depositors.

"However, we will be able to pay only 41 percent of the deposits with the assets identified so far.

At the beginning there were over 9,200 depositors and we have already settled depositors' money in three rounds and the amount was around Rs. 450 million," he said.

"There were a large number of depositors with less than Rs 100,000 deposits and their deposits have been settled in full.

We paid Rs.100,000 to the depositors who held amounts ranging from Rs.100,000-3,600,000," Gunathilake said.

He said that they agreed with this solution because there was no other way out and at least now they can recover a part of their deposits.

"At our meeting with the President, he stressed that the government cannot pay this money.

Therefore, the only way to get our money back is to find the hidden assets of the former GK directors and acquire them legally as agreed with the CB and in keeping with the Supreme Court (SC) ruling," Gunathilake said.

"We can pay more because there are hidden assets owned by Lalith Kotelawala which have not yet been identified. There are shares in the Seylan Bank and Ceylinco Insurance PLC (CIPLC) and we will find them and acquire them legally.

We have already seized the private assets of the previous directors of the GKCCCL who were responsible for the crisis," he said.

Lalith Kotelawala has many hidden assets. Some 22.86% of CIPLC shares were held by a company called CIESOT (Pvt) Limited and of them 50% was held by Lalith Kotelawala and 50 percent by a person known as Rathnadasa. CIESOT was the single largest shareholder of the CIPLC. According to the CIPLC annual report, this company had been set up in 2000 for the sole purpose of acting as a trustee for a trust fund created by CIPLC and CIESOT holds shares of CIPLC on behalf of and for the exclusive benefit of employees.

The SC ordered the transfer of this 50 percent of CIPLC shares in CIESOT owned by Lalith Kotelawala to GKCCCL.

In 2009, Rathnadasa had transferred his 50 percent of shares worth over Rs. 3 billion to two employees of the CIPLC. Gunathilake said that Kotelawala owns the remaining 50 percent of CIESOT shares and not the trust fund. There is reliable information that this 50 percent of CIESOT shares is now being distributed among the employees. This is a violation of the SC ruling.

There is another 10.68% of shares held by Pictet and Cie, an asset management company in Switzerland and it is also owned by Lalith Kotelawala.

The director board of the GKCCCL has obtained a Court order to freeze these assets.

"Pictet and Cie is not an independent investor in the CIPLC and it is connected to Lalith Kotelawala and his family. Therefore, it is clear that Kotelawala controls CIPLC through proxies such as CIESOT and Pictet and Cie and the present senior members of CIPLC directly hold less than 4 percent of its shares," Gunathilake said.

"Kotelawala holds only 0.27 percent of Ceylinco Insurance shares but he has the controlling power of the company through these proxies. The Supreme Court has ordered the CB and SEC to investigate this matter and report," he said.

GKCCCL expects to sell these shares of CIPLC owned by Kotelawala in the Colombo Stock Exchange and repay the depositors.

Gunathilake said that according to present share prices, GKCCCL will be able to earn around Rs.10 billion.

He said that Kotelawala and top officials of CIPLC had misled some of the depositors and the employees of the CIPLC.

Some depositors have not agreed to accept the solution we reached with the CB. "We urge them to join us and accept this realistic solution. We also urge CIPLC employees not to be misled and this 50 percent of CIESOT shares is not for employees," Gunathilake said.

He said that if GKCCCL acquires the remaining 50 percent of CIESOT shares it would get the controlling power of CIPLC.

After the GKCCCL crash in December 2008, over 9,000 depositors lost Rs. 26 billion in deposits. The Committee of Chartered Accountants failed to bring a solution to the issue and attempted to pay Rs. 100,000 per depositor.

In April 2013, a new Board of Directors was appointed by the Central Bank under the chairmanship of former Deputy Governor of the Central Bank, P.D.J. Fernando. The other directors were Dushanthi Hapugoda, V.K. Choksy, Aruna Lekamge, Vasantha Gunethilake and Jehan Fernando.

Dushanthi Hapugoda and Vasantha Gunathilake represent the depositors.

"We expect to a get court order this month to sell some of the fixed assets of the GLCCCL including a hospital building under construction on four acres of land in Narahenpita and some other valuable lands," he said.

"The eye hospital in Rajagiriya will not be sold because it earns revenue and that revenue is needed to run the GK office until this issue is solved.

A technical committee has been appointed to carry out all transactions in fully transparent manner and the CB and the SC are overlooking it," Gunathilake said.

According to him, under the present situation, 100 percent of GK depositors money cannot be settled.

"We hope that around 80 percent will be a realistic target.

We also need the support of the depositors and they have been waiting for over five years now and we urge them to give us time because this is a complex and time consuming task," he said. Gunathilake assured that this issue would not lead to the collapse CIPLC because they only want Kotelawala's assets.

Gunathilake thanked President Mahinda Rajapaksa, the CB Governor and officials for their continuous support to solve this issue.

GW