Why take Ceylinco Insurance employees’ money to pay Golden Key depositors?

Following is a letter sent to Mirror Business signed by Ceylinco Insurance Employees Union Life and General Division Presidents.

Efforts are being made to drag the Ceylinco Insurance Employee Share Ownership Trust to the Golden Key issue and rob the entitlements of thousands of employees of Ceylinco Insurance and their families.

Since its inception, Ceylinco Insurance had nothing to do with Golden key Credit Card Company. Ceylinco Insurance is a well regulated company listed in the Colombo Stock Exchange. The contribution of its employees were and continue to be vital to elevate the company to its present status as the market leader in the insurance industry in Sri Lanka. They were encouraged by the fact that they are shareholders of the company through the CIESOT scheme.

CIESOT stands for Ceylinco Insurance Employees Share Ownership Trust and this fund was created in the year 2000 only for the purpose of managing the shares owned by the employees of Ceylinco Insurance. Hence, CIESOT does not have any ownership of any shares and non of the trustees own any shares either. CIESOT is governed by a trust deed prepared in line with the Trust Ordinance and this deed was registered in the land registry on the 17th of August 2000. Prior to the establishment of the trust, the approval of the then Controller of Insurance was obtained and the Colombo stock exchange was also informed.

Mr Lalith Kotelawala was appointed as a trustee of CIESOT in his capacity as the then Chairman of Ceylinco Insurance and this does not mean that he owns any of the shares managed by CIESOT. Further, he has not being enjoying any dividends as a trustee and no other benefits were given to him at any stage. The role of the board of directors of CIESOT were to perform the administrative functions related to the trust on behalf of the beneficiaries who are the employees. The Shares are owned solely by the employees of Ceylinco Insurance. The purpose of formulating this scheme was to reward employee loyalty and accordingly employees were given dividends every year.

Similar employee share ownership schemes are in operation in several corporate entities. The employee share ownership scheme of Seylan Bank is identical to that of Ceylinco Insurance as both schemes were established under the same guidelines. When the Golden Key issue erupted, the authorities strongly said that employee shares of Seylan Bank cannot be touched as the shares are owned by the employees. We cannot understand as to how the employee share trust of Ceylinco insurance is vulnerable and not the trust of Seylan Bank as the only difference is that Seylan uses a ‘S’ and is called SESOT instead of the ‘CI’ of Ceylinco Insurance. Moreover, five of the former Golden Key Directors still perform their duties as Trusties of the SESOT of Seylan Bank.

At a time when efforts are being made to promote FDI’s to the country, what the country needs is more prudent measures to safe guard corporate entities and to win the trust and confidence of investors. By destabilizing a corporate entity such as Ceylinco Insurance, what would be the signal we give to the potential investors and the capital markets ? What is the agenda behind this move? Isn’t it an effort by some unscrupulous individuals acting for personal gain and the end result would be ‘robbing Peter and paying Paul’.

Hence, we earnestly request the authorities not to destabilize the mindset of the employees of this great company which has done a yeoman service to its over three million customers for a period spanning two and a half decades.