CIFL depositors lament that President, Harsha have not kept promises

Despite promises made more than a year ago from President Maithripala Sirisena to resolve the crisis at the failed CIFL (Central Finance and Investment Ltd), the woes of many small scale depositors continue.

These issues came to the fore at the AGM of the CIFL Depositors Association (CIFLDA) held this week at the Colombo Public Library Auditorium. On the sidelines of the event, some CIFL depositors told the Business Times that after the January 8, 2015 Presidential Elections, President Sirisena and Deputy Minister Harsha de Silva had promised relief but disgruntled depositors are still waiting, several months after that promise. The total liability of the company is Rs.3.5 billion which is owed to depositors.

According to what transpired at this AGM, it was stated that a German investor, Vandell Financial Services SA - Asset Management has pledged to infuse funds to the tune of Rs. 5 billion with a matching loan required of Rs. 2.5 billion from the Liquidity Support Scheme of the Central Bank (CB).

At this AGM the membership unanimously resolved that the (Exco) Committee should be authorised to sign any legal or other documents.

K.W. Gunawardena, President, CIFLDA told the Business Times that while the investor is willing to pump funds to revive CIFL, the CB is still unwilling to grant the matching loan, though in principle CB has accepted the German investor’s proposal.

He said that the CB has granted such type of loans to earlier failed finance companies like the People’s Mercantile Finance Ltd and Entrust Ltd.

Once the CB releases the loan, the German investor with the resumption of CIFL, is ready to release 60 per cent of the depositors’ money, while 20 per cent goes to a saving account for one year on the current interest rate. 10 per cent would be converted to preferential shares while the balance 10 per cent of the deposits would be converted into ordinary shares. After five years passes these shares could be encashed by the shareholder.

With regard to the pending court case on the fraud charges against Deepthi Perera, a former chairman of the company, Mr. Gunawardena said that the restructuring proposal submitted by Mr. Perera was rejected by the CB in court. The court then ordered Mr. Perera to submit another suitable proposal in consultation with the CB and the CIFLDA. However Mr. Gunawardena said the second proposal was no different to the first one and has been rejected by the depositors again. However the matter will be taken up in court on the next day of hearing - August 5.