President: Please meet helpless depositors

By FS

(September 27, Colombo, Sri Lanka Guardian) Where does Sri Lankans, particularly those who earned their money through sweat and tears or got a lump sum through a pension scheme after years of hard work, put their money in?

Is there a safe, easy, protected and structured way of making one’s money earn more bucks and bring in a reasonable return given today’s cost of living and monthly bills to pay?

Since December 2008 after the Golden Key Credit Card Co collapsed throwing a large percentage of the 8,200 investors into dire straits – following up from the crisis at Sakvithi (an unregistered finance company), questions as where to invest still dog the public.

The crisis that has hit the finance sector and would take some time before public confidence is restored, has added to the economic woes of the country at a time when a quick post-war recovery should have taken place.

The end of the battle with Tamil Tiger militants in May this year should have perked up an economy that has under-performed for more than a quarter of a century. However apart from grand seminar-circuit statements of ‘bouncing back’ or ‘good times ahead’, the economy apart from the stock market is yet to witness the glitter often seen in other post-war economies.

While uncertainty in the finance sector is one reason, the global financial crisis which has affected Sri Lanka’s export markets is another. Political uncertainty over a string of elections – parliamentary, presidential and provincial – too will not hasten investments. Rising government spending connected to traditional hand-outs and vote-catching gimmicks ahead of the various forthcoming elections, has triggered a discussion at the highest levels of government whether a vote-on-account (mini budget) should be presented in November for 3-4 months or a calendar year budget. Some of the issues raised are that election-related spending could over-step economic targets set under the IMF loan facility or that development needs and their financial costs may change when parliamentary elections are held and a new cabinet is sworn in.

Nevertheless, at a humane level, the plight of thousands of depositors deserves more government attention than what it gets. Their plight was explained in a moving, emotional presentation by Neelanie Goonetillake, President of the Association of Depositors at F&G, during a discussion on the crisis facing the depositing public, at the Sunday Times Business Club on Thursday.

Goonetillake, a former high profile advertising executive who once headed JWT’s Colombo office, related tales of woes faced by depositors. “Some don’t have money for their drugs; some don’t have money to continue their children’s education in universities overseas; some don’t have a square meal a day,” she said, adding that hundreds of these depositors meet in Colombo every week in the hope of receiving some ‘news’ that they would get their money back.

“Why can’t the authorities treat this as a humane problem and provide some relief? Why can’t they at least provide a special police team to track the fraudsters that have duped the public into believing that they were investing in companies that are safe, trustworthy and regulated by the Central Bank?” she asked. Many depositors, she said have pulled their children out of international schools but were faced with fresh problems as local schools are not accepting these students.

On and on the tale of woes went. Leading corporate lawyer Arittha Wikramanayake, prefacing his comments at the session saying he may be heartless but that facts are stubborn, noted that the depositors have themselves to blame for investing in companies that were unregulated or collected deposits for dubious projects.

“Shouldn’t depositors have checked whether real estate projects for which monies were collected were really getting off the ground?” Across the discussion in which Shirley Perera, President of the Association of Finance Houses, also took part, it was evident that people trusted Lalith Kotelawala, the bigger-than-life Chairman of the Ceylinco Group. Kotelawala, now in remand custody, it was stated in no uncertain terms by Wikramanayake, is most unlikely to bail out his depositors, numbering thousands. “Mark my words, I don’t think depositors (from Golden Key) will get their money back,” said.

Wikramanayake, suggesting that depositors should have quickly sought a winding up action against the company where a court-appointed liquidator or administrator would have quickly seized the assets of the company and the directors, before they were frittered away as seen in recent months.

The argument was also put forward that public money shouldn’t be spent on bailing out depositors. “In that case, what about farmers who are in serious trouble (year-in-year-out)? Shouldn’t public money be spent on them too, to pay their debts?” asked Wikramanayake. But Goonetillake pleaded on humanitarian grounds for state intervention to resolve the payment issue and stop the fraudsters from gradually moving their money out before it could be seized. Her plea is understandable and not without reason. While there have been collapses of finance companies and banks (HPT and Pramuka) in the past, the ripple effect of the current crisis in the finance sector is the worst ever. Depositors have been pleading for a hearing from the President. This is a reasonable request.

Finance companies were given a hearing and it’s only fair and just that the President extends an invitation to representatives of the various depositors’ associations to hear their side of the story. If Mahinda Rajapaksa can meet thousands of supporters at pre-election meetings at Temple Trees, then it’s an obligation by the head of state to listen to a group of people who are helpless.

-Sri Lanka Guardian