Seylan Bank Strong and Stable

At a historic meeting held at the Central Bank of Sri Lanka, Governor – Mr Ajith Nivard Cabraal chaired a meeting comprising the CEO Mr Ajita Pasqual and the Corporate Management of Seylan Bank along with the Bank’s new Directors Mr E Narangoda (Chairman), Mr Lalith Withana, Mr Nihal Jayamanne PC and Mr Neomal Gunawardena. Also present at this meeting were Mr W A Wijewardena , Deputy Governor and Dr (Mrs) Ranee Jayamaha, Deputy Governor along with the officials of the Bank Supervision Department of the Central Bank of Sri Lanka while members of the Senior Management of the Bank of Ceylon headed by Dr Gamini Wickramasinghe, Chairman and Mr B A C Fernando, General Manager and Ms W A Nalani, Senior Deputy General Manager also participated at the discussions.

Since recent events had created concern among depositors of the Seylan Bank, the Monetary Board had decided on the course of action that finally resulted in the management of Seylan Bank being vested with the Bank of Ceylon, appointment of a new Board of Directors for Seylan Bank as well as the full backing of the Bank of Ceylon and the Central Bank of Sri Lanka. He also mentioned that the steps taken by the Central Bank of Sri Lanka and the Monetary Board were to maintain stability of the financial system.

The new arrangement is intended to provide confidence to the public in the banking sector in general, and Seylan Bank in particular. The Bank of Ceylon, being the largest commercial bank, will add strength to the banking business of the Seylan Bank, it was noted by the participants. Therefore, the public in general and Seylan Bank customers in particular are assured that the banking business of Seylan Bank would continue uninterrupted and smoothly.

The Governor also thanked Deshamanya Dr Lalith Kotelawala for having made a significant contribution to the banking industry and to Seylan Bank with his innovative thinking and entrepreneurship.

http://www.eseylan.com/Seylan_Bank_Strong_Stable.php

CB on Golden Key Issue

Read Central Bank Press Release

Measures Taken to Ensure the Stability of Seylan Bank PLC and the Financial (29.12.2008)
http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20081229e.doc

THIS IS WHAT I SAW AT KOLLUPITAYA JUNCTION TODAY [29-12-2008]

MORNING. ACCORDING TO THESE POSTERS

CBEU NOW DEMANDS GOVERNMENT TO TAKE OVER SEYLAN BANK.

WONDER HOW MR. KOTHALAWALA IS GOING TO PAY US NOW ?

I FEEL VERY MUCH DISAPPOINTED.

Golden Key not registered in Central Bank

The credit card owners and the depositors of the crisis ridden Golden Key Credit Company are facing difficulties including withdrawing their deposits, as a result of the massive fraud in the company. One of the major reasons is that Golden Key Credit Company is not registered in Central Bank. Therefore, the Central Bank bears no responsibility regarding the security of the clients of this company. The Central Bank's department related to administering the non-bank financial institutes has published a number of newspaper announcements stating that this company is not a registered financial institute. A spokesman of the Central Bank said that an investigation regarding the fraud in Golden Key Company is now underway.

Lanka-e-News learns that the fraud in this company amounts to Rs. 26 billion. Sakvithi Ranasinghe who swindled one billion rupees has left the country and the depositors had not been refunded a single cent yet. The depositors of the Golden Key Credit Company are also in fear of facing the same fate.

Meanwhile, the owner of Golden Key Credit Company Deshamanya Lalith Kothalawala published a newspaper advertisement Monday (22) and stated that the company Chief Executive Director S. Carvan M. Perera had admitted the responsibility of mismanagement. He had resigned from the director boards of both Seylan Bank and the 'The Finance' companies on December 18 and he had surrendered his passport as well, the statement said.

Carvan Perera is the son of the former Army Commander Dennis Perera who is an adviser of Defense Secretary Gotabhaya Rajapakse. Meanwhile, Lanka-e-News learns that the depositors of the Golden Key Credit Company surrounded the Ceylinco founder chairman yesterday afternoon (23) at the meeting of the depositors held in Committee B Hall of Bandaranaike Memorial International Conference Hall and urged him to pay back their money.

Lanka-e-News, December 24, 2008

Angry golden Key depositors manhandle Deshamanya Kothalawala

The angry depositors of the Golden Key Credit Company who are facing an indefinite future regarding their deposits surrounded the Chairman of the Ceylinco Group of Companies Deshamanya Lalith Kothalawala and manhandled him yesterday (23). An unexpected crowd gathered to the Bandaranaike Memorial International Conference Hall (BMICH) for the meeting summoned to make aware the clients of Colombo area. Kothalawala was uneasy and one person in the group knocked on the head of the well known businessman whilst another person threw water at him.

The tea table arranged for the clients had to be removed stealthily since the crowd was too large. Kothalawala promised to pay back the deposits less than Rs. One million immediately and he said that the deposits over Rs. One million would be paid back by June 2008.

(Lanka-e-News, December 24, 2008, 9.10 AM)

Golden Key Depositors Confront Lalith

In what could have been termed as the saddest day of one of the country’s thriving and iconic business leaders, the Chairman of Ceylinco Consolidated Deshamanya Dr. Lalith Kotelawala yesterday pleaded with thousands of deposit holders of the Golden Key Credit Card Company to give him time to sort out the company’s present liquidity crisis: and inability to settle its many depositors in full. Dr. Kotelawala addressed a packed Committee Room B of the BMICH with the entire directorate of Ceylinco Consolidated in attendance. Depositors of every hue had gathered here: these ranged from housewives to engineers, pilots, business professionals and even former members of parliament of Sri Lanka.

Chairman listens to Depositors’ Tales

At the beginning of the meeting, the depositors of Golden Key were given the opportunity to address the Chairman. Many presented their stories and pleaded with Dr. Kotelawala to provide immediate relief for them. “I have deposited my life-long earnings in your company, trusting you and your company. Next month my daughter is getting married and I went to withdraw money but I was turned away. Now I am in a great difficulty in paying off my daughter’s hotel bill. Please help us!” said one depositor. Another lady depositor addressed the Chairman, saying “We have deposited all our money in your company.

We were depending on the interest income for our children’s education. Now all of a sudden, we have found out that our money is lost and our children’s education is in danger. We trust you and you can keep our money but pay our interest accordingly”. “We know how hard you worked to bring up Ceylinco, and we have invested based on you. We have kept our trust in you, please do something.” another depositor stated.

After hearing these stories, Dr. Kotelawala as the Chairman of Ceylinco Consolidated which owns Golden Key addressed the gathering saying “Today I came here with a great pain in mind to address you over what has happened. Let me assure you that I will not run away from this crisis and I will look after you,” Dr. Kotelawala said.

Referring to his letter dated December 3rd which was circulated amongst deposit holders, Dr. Kotelawala said that he would like to remind all depositors of his request for two months to settle all outstanding monies. “Khavan [Perera, Chief Executive Director of Golden Key, now resigned] told me that we are not breaking the law by taking deposits from people but I found later that all the accounts and the audits were wrong and I informed the CID. Now they are conducting an investigation. I am not confident of the data base that we have in the company. It cannot be trusted. That is why we have given you a new form for you to fill in order for us to get your correct information.” Former Member of Parliament Somaweera Chadrasiri, a depositor, then objected to Dr. Kotelawala’s statement by asking “How did a Director Board that was conducting monthly meetings looking after every detail and activities of the company failed to understand there is a fraud is going on?” “We trust you Dr. Kotelawala and have deposited our money trusting you and not any other director of the Board. This is not a beetle shop that we deposited our money and don’t tell us that that data is wrong.” he countered.

The Numbers

Commenting on the latest and the largest Credit Card fraud that has happened in Sri Lanka, a senior employee of Golden Key who wanted to remain anonymous said that the total deposit base portfolio of the company was valued at about Rs.26 billion as of November 26th 2008, though the Balance Sheet of the Golden Key Credit Card Co. Ltd only reflects Rs.5 billion as assets up to now. (The total net disposable assets of the Ceylinco Group is said very recently to be Rs 20 billion, by comparison.) He also informed the Financial Times that there are approximately 10,000 depositors in the company.

In his opinion, he stressed that the financial difficulties of the company had been going on for months while the issue was uplifted with the impact of the Sakvithi Scam as the depositors started to withdraw money also from Golden Key Credit Card Co. Ltd. After monitoring this, on December 18th Dr. Kotelawala requested an audit from Deputy Chairman of Golden Key Group of Ceylinco, Khavan Perera. According to the source, “Followed by the results of the audit on Friday December 19th, Mr. Khavan Perera was asked to resign by Dr. Kotelawala.” Some ascribed this as a political move taken by Dr. Kotelawala to protect his image. Moreover, the source pointed out that while Dr. Kotelawala had publicly raised questions on the integrity and availability of the customer data base and had stated that there were credit cards that had been issued without a record, the source countered that there was no such widespread damage to the database and that the information was by and large in order.

Responding to a question raised by the Daily Mirror Financial Times, the source also said that an internal transaction between Ceylinco Insurance PLC and the Golden Key Group had then taken place on December 18th or 19th to purchase the Golden Key ENT Hospital to facilitate the refund to depositors. On Monday December 22nd, the Dr. Kotelawala had assured and guaranteed employment of the staff of Golden Key Credit Card Co. Ltd. but later he had denied this, according to our sources. The source also said that there were lots of instances in which the Ceylinco subsidiaries have been pumping money to refund the depositors interest and funds. “On December 1st or 2nd Seylan Bank PLC granted Rs. 400 million to finance the refunds. The cash disappeared within a day since we used that money to pay customers’ withdrawals” he added stating that none of the employees of Golden Key was involved in the fraud. Also on December 3rd Dr. Kotelawala sent a letter to all customers of Golden Key assuring that customers should not be worried since the interest payments will be settled within a month. The source also said that the interest bill paid by Golden Key to its customers for October 2008 was approximately Rs. 500 million.

In the wake of these ongoing developments, some shop owners in popular shopping malls in Colombo and suburbs have removed the familiar Golden Key Credit Card “Accepted Here” insignia from their doors.

Golden Key Credit Card Company statement

GKCCCL yesterday informed the general public that today’s scheduled meeting has been cancelled.

“A meeting of the customers of the Colombo Branches was held on 23rd December 2008 as scheduled. A large number of customers attended this meeting. Matters were discussed in detail. A decision was arrived to pay the card holders a payment on account. A detailed repayment plan will be forwarded to the customers as soon as possible. In lieu of the above decision the meeting scheduled for 24th of December 2008 is cancelled,” the Company said.

Meanwhile the company also said that it was decided to pay all the small depositors fast as possible and others to pay after going through audited accounts. The reason is that at a discussion there were many requests from the depositors where some wanted their monies deposited as others wanted only the interest. So we are hoping to talk to all the depositors in order to arrange prepayment,” an official told Daily FT.

Kotelawala still heads the public

quoted subsidiaries

Ceylinco Consolidated is Sri Lanka's largest and most diversified conglomerate, operating nearly 14 subsidiary groups including hundreds of companies under its umbrella. The Founder Chairman, Deshamanya Dr. Lalith Kotelawala continues to be the Chairman of public quoted subsidiaries of Ceylinco Group. He had appointed Deputy Chairpersons as his successors on his 70th Birthday on August 29th 2008 to head other subsidiaries of the Ceylinco Consolidated. Golden Key Group is another subsidiary of Ceylinco Consolidated has approximately 35 companies operating under its arm. Golden Key Credit Co. Ltd. was the first company to introduce credit cards to Sri Lanka and it isone of the oldest companies in the Group.

http://www.dailymirror.lk/December 24, 2008

GOLDEN KEY FRAUD: CEYLINCO GROUP STEPS IN

In the wake of the latest developments regarding the Golden Key Credit Card Company Ltd, the Founder Chairman of Ceylinco Consolidated, Dr. Lalith Kotelawala assured its customers payments and protection for its card holders.

The Chairman stated that on Friday 19th that he sought the advice of legal counsel and consulted the authorities including the CID because the Chief Executive Director of the Golden Key Credit Card Co. Ltd, S. Khavan M. Perera, admitted to mismanagement of the company and voluntarily handed over his passport. Mr. Khavan Perera also tendered his resignation from his directorates of Seylan Bank PLC and The Finance Co. PLC.

Furthermore, Dr. Lalith Kotelawala issued a public statement that during the last few days, he realised that the Golden Key has been involved in a major credit card fraud and that the employees of Golden Key are now beginning to reveal certain facts regarding the involvement of Mr. Khavan Perera.

In a press statement, Dr. Kotelawala stated that he has experienced only two such incidents in the past at very senior levels in the Ceylinco Group of Companies. “We survived and both companies are now strong and healthy, one of them even winning a Presidential Export Award this year. Many customers tell me that they placed money in the Ceylinco Group of Companies because of the trust and confidence they have in me,” he added.

Former (as of 19th December) Chief Executive Director/ Deputy Chairman, S. Khavan. M. Perera was functioning as the Deputy Chairman/ Chief Executive of 35 subsidiaries and was on the board of directors of approximately 20 other subsidiaries of Ceylinco Consolidated (Pvt) Ltd.

The Financial Times has been informed that Golden Key Credit Card Co. Ltd. was involved in accepting public deposits offering higher interest rates ranging from 24% to 28.5% per annum without being a Licensed Financial Institution approved by the Central Bank of Sri Lanka.

This was confirmed by a senior official of the Central Bank who also said that the bank is closely monitoring current developments.

One such depositor who wanted to remain anonymous stated that he realised certain interest payments by cheques were bouncing from the beginning of December 2008 and company officials convinced them that the payments will be settled by January 15th 2009. Further he stressed that from the second week of December 2008, Golden Key Credit Co. Ltd. had changed the conditions for the deposit withdrawals stating that the customer was to inform 45 days in advance in order to withdraw his money, whereas initially it was just 7 days notice. Another depositor (of over Rs.10 million) also claimed that he found out the resignation of Mr. Khavan Perera had taken place as a consequence of an internal audit conducted under the guidance of the Ceylinco Group Chairman, Dr. Lalith Kotelawala after finding out that depositors of Golden Key were withdrawing money on a large scale.

Last Thursday (Dec. 18th) when the Financial Times contacted Mr. Khavan Perera regarding the issue, he stated that “Though there have been lots of rumours that the company is having financial difficulties, there is no such major financial issue.” However after it was publicly announced on Monday Dec. 22nd that Mr.Perera admitted to mismanagement on Friday (19th), neither he nor the Finance Director of Golden Key Credit Co. Ltd. were available for comment.

The Financial Times has been informed that currently, control of the Golden Key Credit Co. Ltd. and its subsidiaries, (including Golden Key ENT Hospital (Pvt) Ltd.) have been handed over to the Board of Directors of Ceylinco Insurance PLC. However Chief Executive Director of Ceylinco Life, R. Renganathan said that he is not in a position to comment whilst Chief Executive Director of Ceylinco Insurance PLC Ajith Gunawardena stated on Thursday that he is not aware of such a change since he was out of country.

In a separate advertisement Golden Key customers have been summoned for a meeting at Colombo's BMICH at 2pm on Tuesday the 23rd December.

http://www.dailymirror.lk (December 23, 2008)