Ag­grieved de­pos­i­tors cry foul over CB liq­ui­da­tion move

Sunday Times (Sri Lanka) - - INTERNATIONAL - By Quin­tus Per­era

Dep o s i t o r s o f failed fi­nance com­pa­nies are weep­ing in de­spair, ac­cus­ing the ‘ hear tless brute’ – the Cen­tral Bank ( CB) - in de­cid­ing to liq­ui­date some of these failed fi­nance com­pa­nies, de­spite the re­peated prom­ises and as­sur­ances of even Pres­i­dent Maithri­pala Sirisena and some Min­is­ters.

The re­port “3 ail­ing fi­nance com­pa­nies to be liq­ui­dated” in last Sun­day’s is­sue of the Busi­ness Times sent shock waves through these dis­grun­tled de­pos­i­tors. Many were panic stricken and some of them called at the Busi­ness Times of­fice to give “their side of the story”.

The three com­pa­nies pro­posed to be liq­ui­dated are Cen­tral Fi­nance and In­vest Ltd ( CIFL), The Stan­dard Credit Fi­nance Ltd (SCFL) and City Fi­nance Cor­po­ra­tion Ltd (CFCL).

These help­less de­pos­i­tors in­di­cate that al­ready a con­sid­er­able number of de­pos­i­tors have died either due to heart break or un­able to meet their med­i­cal ex­pen­di­ture while there have also been some sui­cides due to heavy fi­nan­cial dif­fi­cul­ties and they have been suf­fer­ing for some as much as 10 years and, all based on false prom­ises by the gov­ern­ment and the Cen­tral Bank.

In these ear­marked fi­nance com­pa­nies alone there are around 10,000 de­pos­i­tors and ac­cord­ing to W. Gu­nawar­dene, Pres­i­dent, CIFL De­pos­i­tors As­so­ci­a­tion ( CIFLDA) the de­pos­i­tors, share­hold­ers and sav­ings ac­count hold­ers would be a mas­sive 25,000 and the can­cel­la­tion of the busi­ness li­cence would af­fect all of them.

De­pos­i­tors of CFCL in­di­cate that they were ma­nip­u­lated and de­frauded by Deepthi Per­era alias Chu­laka Gu­nawar­dena, Chair­man, Aspic Group and after nine years many of their mem­bers are dead or lying in bed with­out money for med­i­cal ex­pen­di­ture, their chil­dren’s ed­u­ca­tion is lost. Some who can­not meet their daily ex­penses have be­come pau­pers. Now the Cen­tral Bank has ig­nored the multi- pronged suf­fer­ings of these de­pos­i­tors and try to cover- up by liq­ui­dat­ing these com­pa­nies, they al­lege.

They ac­cuse Aspic- owned CIFL of run­ning a com­plex fi­nan­cial scam and the ploy adopted by hav­ing an un­reg­is­tered CIFL and reg­is­tered CIFL with dif­fer­ent colour lo­gos. De­posits have been col­lected for the un­reg­is­tered com­pany on the pre­text of ob­tain­ing de­posits for the reg­is­tered one which is 40 years old. The un­reg­is­tered firm ran into dif­fi­culty in 2008 due to gross mis­man­age­ment and no funds.

Ac­cord­ing to the CIFLDA the li­cence of reg­is­tered CIFL was can­celled last week. In 2008 CIFL As­set Man­age­ment ( un­reg­is­tered) de­posits were used to buy a li­censed fi­nance com­pany called In­dus­trial Fi­nance Ltd ( IFL) and the li­a­bil­i­ties of the col­laps­ing CIFL was trans­ferred to IFL. In 2011 IFL and CIFL As­sets Man­age­ment were re­named as City Fi­nance Ltd and given Rs. 100 mil­lion to an­other al­leged scam­mer to be in­vested in CFCL. Some di­rec­tors of IFL were al­leged to be pun­ished by for­eign courts for fraud.

Ms. Son­ali Dunuwila, Sec­re­tary, City Fi­nance De­pos­i­tors So­ci­ety quot­ing me­dia re­ports in 2011 in­di­cated that the Colombo Com­mer­cial High Court noted that the in­ten­tion of the di­rec­tors of the com­pany was to de­fraud the cred­i­tors and de­prive the avail­abil­ity of suf­fi­cient as­sets to meet the debts to be set­tled in the course of the im­pend­ing wind­ing up ap­pli­ca­tion in ac­cor­dance with the pro­vi­sions of the Com­pa­nies Act .

Ad­duc­ing many de­tails to sup­port their state­ment, she in­di­cated, “How did the CB al­low such peo­ple to be re­spon­si­ble for a li­censed fi­nance com­pany? This is the same thing they are try­ing to do to CFCL, they have changed the name, writ­ten off the as­sets and now CB is try­ing to liq­ui­date the com­pany. CB seems to be part of the whole cri­sis."

Mean­while, fu­ri­ous over the CB is­su­ing no­tice to can­cel the busi­ness fi­nance li­cence of the CIFL, a del­e­ga­tion of the CIFLDA met J. T. R. Karunarat e, CB As­sis­tant Gover nor Novem­ber 22 and has reg­is­tered their ve­he­ment protest against the can­cel­la­tion of the li­cence.

Mr. Gu­nawar­dene told the Busi­ness Times that they have pointed out to the CB that the CB has bla­tantly vi­o­lated the fun­da­men­tal rights of the de­pos­i­tors, vi­o­lated the law and acted against pro­vi­sions of the Fi­nance Act. He said that they have in­di­cated to CB that it has vi­o­lated the pro­vi­sions of the Fi­nance Act from Sec­tion 25 to 37 and pre­ferred to act on Sec­tion 37 (1) of the said Act.

They are now pre­par­ing to com­plain to the Hu­man Rights Com­mis­sion against this in­jus­tice and would also be tak­ing le­gal ac­tion where pos­si­ble against the rights vi­o­la­tion of their mem­bers.

He said that the Swiss in­vestor, Chan­cen­tal Works GmbH had promised to bring the money to the lo­cal Se­cu­rity In­vest­ment Ac­count (SIA), in the first in­stance US$ 10 mil­lion and the bal­ance $ 15 mil­lion eq­uity cap­i­tal to be trans­ferred to the SIA to­talling $25 mil­lion. He said that Mr. Karunaratne has in­di­cated to them to ask the in­vestor to bring the money first and then they would con­sider with­draw­ing the li­cence can­cel­la­tion no­tice.

He said that the de­pos­i­tors have in­vested in CIFL purely based on the li­cence is­sued to the com­pany by the CB. There is no fi­nal­ity of the in­vestor pro­pos­als and ac­cused the CB of not con­sid­er­ing all these facts, and in­stead al­legedly vi­o­lated their rights.

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