Hopes of depositors fade over early solution to CIFL crisis

The hopes of depositors of the failed Central Investment and Finance Ltd ( CIFL), lifted last week with the arrival of German investment group to revive the company, are turning to despair, a week later.

Depositors say they have been sidelined from key meetings the 5- member delegation of Vandell Financial Services SA, Germany has had so far with the President, Finance Minister and other officials.

The September 15 arrival of the investors was exclusively reported by the Business Times ( BT) as an effort to finalise a plan to rescue CIFL. In addition the delegation also had plans to invest in the North and the East.

W. Gunawardena, President, CIFL Depositors Association ( CIFLDA) said that a preliminary MoU between the German investors and the authorities is yet to be signed on the way forward. Earlier it was stated that the investor would pump in Rs. 5 billion to rescue CIFL with the bailout plan being to pay 60 per cent of the depositors’ money outright, 20 per cent to go as a compulsory saving and the other 20 per cent to be converted into shares.

In the meantime, CIFL director Lakshman Rupasinghe, who has been associated with the visit, in a notification to the Colombo Stock Exchange said that the delegation met with several VVIPs. He said the investors have expressed a desire to acquire 100 per cent ownership of the company.

“We have submitted all the clarifications to the investor delegation and awaiting their response from them in the form of a MoU indicating the future plan of action setting the milestones in reaching the final objective of reviving CIFL and handing over the management to the new investors,” the note said.

He also told the Business Times that he received a letter on Wednesday from the Central Bank stating that the Monetary Board has the authority to give controlling interest of the company provided certain conditions are fulfilled.

Mr. Gunawardene said that they met the German delegation on Thursday for discussions and it is likely that the team would return to Germany over the weekend. He could not say whether a MoU would be finalised by then.

The team is led by Joachim Spatz, former Member of the German Parliament and an advisor to Vandell Financial Services and includes Prince David Yogeesen, Sri Lankaborn financial advisor at Vandell Financial Services.