Sunday, March 1, 2009

ASIA'S LARGEST EVER FINANCIAL SCAM: ETHICAL REPORTS

GOLDEN KEY FRAUD: CEYLINCO GROUP STEPS IN

By Jithendra Antonio

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/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=35865

Golden Key Depositors Confront Lalith

Lalith Assures Repayment

By Deepal V. Perera and Jithendra Antonio

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/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=35953


Golden Key Credit Card investigations now on

By Jithendra Antonio

Daily Mirror Financial Times learns that with regard to the ongoing investigations on the Golden Key financial scandal, the operations and the transactions of the Golden Key Credit Card holders have been stopped since Saturday the December 20th 2008 evening, just after a customer purchased on his card Rs. 9 million worth of gold jewellery from a shop in Colombo.

Furthermore, an official source from the Golden Key Group of Ceylinco Consolidated revealed that presently a senior level executive of Seylan Bank PLC is allegedly generating reports from the central IBM AS 400 computer system of Golden Key Credit Card Co. Ltd. in which the records of the customers and transactions are stored. Our source also said that the executive is allegedly creating a separate information environment for the auditors to use at Seylan Bank PLC and just after that, the operations of the machine will be shut down. Thereafter the machine that has customer transactions will be sealed and taken into the Chairman of Ceylinco Consolidated Deshamanya Dr. Lalith Kotelawala's office.

The source told that only after completing the whole audit of all the financial information of the Golden Key Credit Card Co. Ltd that a significant decision will be taken by Dr. Lalith Kotelawala to refund the depositors of the Golden Key Credit Card Co. Ltd.


http://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=36091



CEYLINCO BALANCE SHEET in question?

GOLDEN KEY CREDIT CARD CRISIS

By Jithendra Antonio

Soon after the Golden Key Credit Card debacle kindled fears among its depositors anxious to withdraw their funds last week, Chairman, Ceylinco Consolidated, Dr. Lalith Kotelawala announced his intention to divest the Seylan Bank PLC’s stake in Golden Key in order to settle refunds to Golden Key Credit Card Co. Ltd. customers. Daily Mirror Financial Times learns that Seylan Bank PLC has approximately 43,560,000 ordinary voting shares, 1,235,600,000 ordinary

Non-voting shares which are listed in the Colombo Stock Exchange as per Seylan Bank’s quarterly report dated September 30th 2008. At present, Seylan Bank PLC voting shares are traded at Rs. 15.75 per share and non-voting ordinary shares are traded at Rs. 5.00 per share.

Even if Seylan Bank PLC sells all of its ordinary voting and non-voting ordinary shares, it will only be able to raise just about Rs. 1,303,870,000 (approximately Rs. 1.3 Billion) which is only 5% of the requirement needed to settle Golden Key refunds. Furthermore, Seylan Bank PLC also has 33,901 non-redeemable, non- cumulative, non- convertible, non- voting preference shares issued to its stakeholders along with Share Premium of Rs. 837,319 as at September 30th 2008. Quarterly report confirms that the total stated capital of the Seylan Bank PLC is Rs. 2,542,420,000 (approximately Rs. 2.5 Billion).

At the time of Golden Key Credit Card crisis, an estimated internal review by Ceylinco Consolidated reflected that the total assets of the whole Ceylinco Group is only worth approximately Rs. 20 billion. These assets exclude the Seylan Bank PLC assets according to a senior executive of Ceylinco Consolidated.

Responding to Daily Mirror Financial Times, a senior employee of Ceylinco Group, told that a separate valuation of disposable assets of the Golden Key Group has been taken into account on last week in order to facilitate depositors. The source also stated that the Golden Key Group

Operations will be stopped "when the last depositor of Golden Key Credit Card Co. Ltd. is refunded" and that the subsidiaries of Golden Key Group have already been placed under other groups of Ceylinco Consolidated. Due to these factors about 1600 (CQ NUMBER) employees - aside from depositors - of Golden Key Group are at unrest since they have no assurance about their jobs. From another senior level source of Ceylinco Consolidated, Daily Mirror Financial Times learns that Ceylinco Consolidated is expecting to divest its stake in Seylan Bank PLC to a Singapore based investor.

Whilst these sentiments may be honourable, the FT feels that the golden question that still remains is how soon and to what extent will depositors, large and small, be refunded? Furthermore, the repercussions of this troubling situation on the other (perhaps much sounder) financial institutions of the country is yet to be known and the Central Bank (which so far has abstained from committing regulation on what it defines as "unauthorised institutions") is only now getting into gear.

SEYLAN BANK PLC-Largest Share Holders as at 2007-12-31

Ordinary Voting Shares

Name of the ShareHolder ,No. of Shares ,Percentage (%) :Dr. T. Senthilverl 2,178,000 5.0 Dollar Distribution (Pvt) Ltd. 2,178,000 5.0 Seyfast (Private) Limited 2,177,996 5.0 Seyshop (Private) Limited 2,177,900 5.0 Seybest (Private) Limited 2,177,900 5.0 Sesot (Private) Limited 2,177,900 5.0 Esots (Private) Limited 2,160,857 4.96 Ceylinco Financial PLC 2,140,226 4.91 Ceylinco Insurance PLC 1,756,460 4.03 Ceylinco Limited 1,680,896 3.86 National Savings Bank 1,510,900 3.47 The Finance Company PLC 1,473,223 3.38 Ceylinco Developers Ltd. 1,394,400 3.2 Softlogic Holdings (Pvt) Ltd. 1,200,000 2.75 Sotse (Pvt) Ltd. 1,002,331 2.3 Lanka Milk Foods (CWE) Limited 769,380 1.77 Mr. R.K Seenivasagam 538,800 1.23 Dr. J.L.B Kotelawala 529,525 1.22 Mr. S.K Sivakumar 498,700 1.14 Ceylinco Asset Management Co Ltd 455,000 1.04.


http://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=36292





Inside manipulation ?

Golden Key Credit Card Crisis

By Jithendra Antonio

The Financial Times has learnt that there were only two directors existed at the golden Key Credit Card Company at the time when the crisis really began before Christmas.

The directors namely the Finance Director, Golden Key Group, Saradha Sumanasekara, and Niranjan Fernando (A Group Director of Golden Key), were entrusted to attend the days to day affairs of the company since other members of the board commenced tending their resignations starting from the month of October 2008.

“Dr. Sicillle Kotelawala resigned on October 31st 2008,” a senior official from Ceylinco Consolidated and further stated that initially there had been 9 directors in the Golden Key Credit Card Co. Ltd including the former Deputy Chairman, Golden Key Group, Khavan Perera and Founder Chairman, Ceylinco Group, Dr. Lalith Kotelawala.

The Financial Times has learnt that Board of Directors of Golden Key had tried to obtain a loan facility of Rs.25 million from the Commercial Leasing Co. PLC on December 1st 2008 in order to financially accommodate Golden Key customers.

As per the balance sheet of the Golden Key Credit Co. Ltd. as at March 31st 2008, the company has an authorized share capital of 50,000,000 Ordinary Shares valued at Rs.10 per share (Value Rs.500 million) and an issued share capital of 2,025,325 Ordinary Shares valued at Rs.10 (Value Rs.20,253,250). For this issued share capital, Golden Key has nearly 63 shareholders. The share premium of the company is Rs.1,375,812 as at March 31st 2008.

Furthermore, the fixed assets of the company are valued at Rs.361,558,874 and current assets are valued at Rs.434,543,671. The balance sheet of the company reflects that it has a bank overdraft worth approximately Rs.801.4 million and the turnover for the financial year ended on 31.03.2008 is approximately Rs.940 million.

In the balance sheet the customers deposits have been listed under trade debtors (liability) which are valued at Rs.5.7 billion as of March 31 2008, whereas the actual deposit portfolio of the Golden Key is Rs.26 billion according to our sources.

Top Share Holders of Golden Key Credit Card Co. Ltd.

Name No. of Shares Percentage

Alagiah Danial Jagasothy 14,039 0.69%

Asian Finance Ltd 226,000 11.16%

Ceylinco CISCO Security Corporation (Pvt) Ltd. 2,75 0.14%

Ceylinco Hotels Ltd. 4,000 0.20%

Ceylinco Investment Co. Ltd. 8,500 0.42%

Ceylinco Ltd. 839,000 41.43%

Ceylinco Securities and Financial Services Ltd. 55,030 2.72%

(Ceylinco Finance PLC)

Daya Ranjith Senanayake 13,764 0.68%

Jivakka Lalith Bhupendra Kotelawala 40,330 1.99%

Padmini Kamaladevi Karunanayake 4,260 0.21%

Shanthikumar Khavan Michael Perera 6,535 0.32%

The Finance and Guarantee Co. Ltd. 10,000 0.49%

The Finance Co. PLC 757,500 37.40%

Intial Directors of Golden Key Credit Card Co. Ltd.

Dr. Jivaka Lalith Bhupendra Kotelawala (Founder Chairman, Ceylinco Consolidated)

Dr. Sicille Priya Carmini Kotelawala (Deputy Chairman, Ceylinco Universal Group)

Padmini Kamaladevi Karunanayake (Deputy Chairperson, Ceylinco Homes Group,Chief Executive Director, The Finance Co.PLC)

Shanthikumar Khavan Michael Perera (Former Deputy Chairman, Golden Key Group)

Alagia Daniel Jagasothy (Deputy Chairman, International Consultants & Corporate Services Pvt LTD)

W. G. Bandula Manthinatha Ranaweera (Deputy Chairman, Ceylinco Finance Group)

J. L. Niranjan Fernando

Suramya Taranatha Karunaratne

D. G. Saradha Prasanna Sumanasekara



http://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=36622



Employees of GK to hand back company vehicles

By Jithendra Antonio

Employees of the Golden Key Credit Card Co. Ltd. (GKCC) were yesterday informed by the officials of Ceylinco Consolidated that their vehicles given by the company will be taken over.

“Five officials from chairman’s office came to our office in the morning and said that we will have to hand over our vehicles by 5.00 p.m. stating we are also responsible for what Khavan Perera did,” a senior level employee of Golden Key added stressing that their salaries for the month of December including the bonuses and allowances were not paid by the company.

“They said that our letters of resignation will be given to us by our Administration General Manager, Priyantha Jayasekara,” another staffer of Golden Key told Financial Times.

Even though, the Golden Key staff has been informed by Ceylinco Consolidated, that they will be placed under Nihal Peiris (Director) according to our sources the Golden Key staff is at unrest due to the non assurance of their jobs.

However, later in the evening Golden Key staff had been called to Ceylinco Consolidated Chairman Dr. Lalith Kotelawala’s office. “Chairman told us to set up a Management Committee and that our jobs will be guaranteed,” our source from Golden Key Credit card Co. Ltd. said they will be meeting Group Director, Golden Key Group, Niranjan Fernando.

http://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=36813






Ceylinco Fast Cash service suspended?


By Jithendra Antonio

Financial Times learns from sources within Ceylinco Consolidated that the Ceylinco Fast Cash remittance service has been stopped from operating from January 1st 2009. Internal investigation by another party at Seylan Bank PLC has apparently identified a misappropriation worth approximately Rs. 4 to 5 billion according to our sources. This has happened due to the fact that Ceylinco Fast Cash office in Singapore has not reimbursed the money back to Seylan Bank PLC which paid for the customers’ transactions. Ceylinco Fast Cash system operates in such a way that when cash transferring party sends money to the receiving party, the money is initially transferred to Singapore based office of Ceylinco Fast Cash and then the receiving party is paid by the Seylan Bank PLC.

When Financial Times contacted Ceylinco Fast Cash, a customer service agent said that the remittance service has been suspended temporarily since January 1st 2009 afternoon (12:30 p.m.) and a final decision will be taken today by the management of Ceylinco Fast Cash.

Ceylinco Express Remittance Pte. Ltd, (CER) was incorporated to establish a technology based global money transfer system facilitating two-way "Person-to-Person" money transfer service across the globe. CER is a member company of Ceylinco Consolidated, the largest business group in Sri Lanka with its international headquarters based in Singapore. CER positioned its product brand as "Ceylinco Fast Cash" (CFC) and launched its services in October 2006.

The entire IT infrastructure of the Ceylinco Fast Cash remittance system is hosted in Singapore, taking advantage of the superior information communication technology capability available in that country according to company’s website. The Company Profile says that the remittance system provides for very "high level" up-time, meeting the standard industry norms with a sophisticated disaster recovery plan implemented in Singapore. The system is developed as a web enabled thin-client system with network connectivity provided via the internet. The system security is maintained at the highest possible levels using 128-Bit SSL Protocol and the data is transmitted in encrypted format. In addition, the application has also a built-in dual user log-in control to minimize any unauthorized transactions by the potential users. The system had developed by NCS Pte Ltd (NCS), one of the largest software houses in Singapore and a subsidiary of Singapore Telecommunications (SingTel). The system is integrated to the SingTel mobile network to provide a two way text messaging facility enabling the system to generate text messages between the remitter and the beneficiary, advising each party of the details of the transaction and its status at no additional cost.

An official from Ceylinco Group, who wanted to remain anonymous, said that NCS has charged approximately US $ 2 million for the development of the Remittance Management System (RMS) software of Ceylinco Fast Cash. He stated that NCS had charged approximately US $ 230,900 for the hosting and management services of the RMS of Ceylinco Fast Cash for the period starting from October 16th 2006 to October 16th 2007. Another agreement has been signed by Chairman, Ceylinco Consolidated, Dr. Lalith Kotelawala and Dr. Chong Yoke Sin of NCS, Singapore (no longer an employee of NCS) for the period April 16th 2007 to October 15th 2008, referring to the application maintenance, support and enhancement of the same system in which NCS has quoted approximately US $ 185,000. Similarly, the next agreement has been signed relating to infrastructure, maintenance and hosting services of the Remittance Management Software for the period October 16th 2007 to October 15th 2008 in which NCS has quoted for US $ 500,000, according to our sources.

http://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=36894


Seylan responds on Ceylinco Fast Cash

Responding to our article titled 'Ceylinco Fast Cash Suspended?' on January 5th 2009 Chief Executive Officer, Seylan Bank PLC, Ajitha Pasqual has informed the Financial Times that there had not been any misappropriation of funds and that Ceylinco Fast Cash is now in operation.

But at the time of going to press when Financial Times contacted Ceylinco Fast Cash hotline 0112452666 last evening, Customer Service said that "We are paying foreign remittances which were sent until January 4th 2009 and new transactions are not accepted."

http://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=37006


MEANWHILE ANOTHER WEDNESDAY PAPER IN SRI LANKA SAID:

Wednesday, January 07, 2009












Kotelawala demands Rs. 10 b from journalist

Business leader and Ceylinco Chief Lalith Kotelawala has demanded a whopping Rs. 10 billion as damages from a journalist in a private newspaper over an article written about Ceylinco Express Remittance.

Mr. Kotelwala’s lawyer had issued a letter of demand to the journalists concerned alleging that the article was false and damaging. He has also threatened legal action in the event of failure to make the payment by the journalist.

http://www.thebottomline.lk/2009/01/07/index%2043.htm

Ceylinco offers exclusive hospital for sale

By Jithendra Antonio

The Ceylinco Group has placed advertisements in last Sunday's newspapers offering a valuable partly-completed hospital for sale. The site area of the project spans 3 acres 3 roods and 16 perches (approximately 3.85 acres) and is held by Ceylinco Hospital Limited (CHL) on a freehold basis at No. 61, Kirimandala Mawatha in Nawala, a suburb just outside the Colombo city limits. The area is identified as the 'health district' where a number of hospitals have come up for the last few years. Sri Lanka has a shortfall of 8,000 hospital beds in the private sector, according to Ceylinco Consolidated, and they noted that the health care sector was usually resilient to economic slow downs while occupancy in key private hospitals is at full capacity or beyond.

When Financial Times contacted a senior Ceylinco Consolidated official yesterday, he explained that this is a very attractive investment project but they are selling it with the sole intention of paying back Golden Key depositors. He further added that the project was started about one and half years ago with the idea of building a specialised hospital referred to as 'Golden Key Hospital for Women and Children' after market surveys revealed a demand in the niche health care sector.

'Golden Key Hospital' will comprise of a ground floor and five upper floors with a total square area of 214,945.4 square feet and car park area of 78,408 square feet according to the project proposal summary. "We have completed the superstructure up to three floor levels and the pilling work of the car park" the official from Ceylinco Consolidated added. He also said that the hospital project had been granted all the approvals from relevant government authorities. The official did not comment on any expected value of the bid but the Financial Times learns that Ceylinco Group is expecting at least Rs. 1.5 billion for the exclusive hospital project.

The hospital has intensive care units, operating theatres and support services as well as diagnostic services and laboratory investigations along with a car park for 250 vehicles.

Financial Times learns that the provisional approval to open and operate Golden Key Hospital for Women and Children was granted by the Ministry of Healthcare,

Nutrition and Uva Wellassa Development on August 13, 2004. An agreement was then entered into with the Board of Investment (BOI) of Sri Lanka to set up and operate a specialised two hundred (200) bed hospital. The agreement was made and entered into between the BOI and Ceylinco Hospitals Limited on December 11, 2003 and an extension had been granted till June 11, 2008 for the completion of the project. The Kotte Municipal Council has already granted approval to commence piling work. The Hospital premises fall within the mixed development zone as per the development plan of the Urban Development Authority for the Sri Jayewardenepura Kotte Municipal Council area. Preliminary planning clearance had granted by the UDA on September 22, 2003, subject to adherence to guidelines of the Sri Lanka Land Reclamation and Development Co-operation and environmental clearance had granted by Central Environmental Authority on October 22, 2003. The Ceylinco Hospitals Ltd.'s project proposal suggests that the cost of the whole project is approximately at Rs. 3,411.3 million, according to published sources.


http://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=37700

GK depositors protest

Large number of depositors of the now collapsed Golden Key Credit Card Co. Ltd. of Ceylinco Group marched towards the Ceylico Consoldiated Chairman Dr. Lalith Kotelawala's residence at Elibank Place, Colombo 04 and protested over the non-payment of their deposits since December 23rd 2008. The depositirs were gathered at the premises just after the court hearing on last Friday (January 30) chanting slogans and holding posters against in protest. The depositors said that they have sheduled another protest on February 13th at the next hearing day of courts. On Last Friday CID investigation into the Golden Key credit card scam, the Attorney General informed the Court that of the Rs.26 billion reported to be deposited with the Golden Key Credit Card Co. Ltd. Rs. 6 billion had been invested in related companies while Rs. 1 billion appeared to have been used for 'illegal' payments and further Rs. 14 billion had been misappropriated while Rs. 5 billion had gone missing. Meanwhile, a senior official of Golden Key told Daily Fiancial Times that Ceylinco Group is in the process of the retrenchment of the employees of the Golden Key Credit Card Co. Ltd."They are in the process of terminating staff and we are supposed to receive a compensation package, we will be receiving our salaries up to date on today" said the senior official of the Golden Key.

http://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=39379

Golden Key : Slow Moves Afoot to Identify Repayment Funds

By Jithendra Antonio

In the latest court proceedings on Sri Lanka's largest ever financial debacle over the Golden Key Credit Card company, the Mount Lavinia Chief Magistrate Harsha Sethunga was formally informed by Deputy Solicitor General (DSG), Sarath Jayamanna that this is one of the 'White Collar Crimes' that happened in the country. Based on the facts revealed by CID investigations, DSG Jayamanna representing the Attorney General's Department stated that they needed more time to analyse and investigate the many corporate associations of the Founder Chairman of the Golden Key Credit Card Co. Ltd. with a view to arresting him. "Though we have certain facts to arrest Chairman, Golden Key Credit Card Co. Ltd, Dr. Lalith Kotelawala, we need to investigate Golden Key's money outflow which has been used by Chairman for personal reasons and many other donation activities."

Corporate

Responsibility

He went on to questioning the technical know-how of a businessman who was unable to take any action being a Chairman of GKCCCL and its subsidiaries until that company accumulated a liability of Rs.26 billion on behalf of its depositors. "If we request to arrest Kotelawala now, then the depositors will say that they will not be repaid since the AG has directed the court to arrest him" DSG Jayamanna stated. He added that Chief Executive Officer, Golden Key Software Mr. Suramya Karunarathna (Director of GKCCCL), had used US $ 5000 from the funds of Golden Key to open another company called Golden Key Australia (in Australia) with assistance of Dr. Lalith Kotelawala. Mr. Karunarathna was one of two new executives who were to be remanded now.

Slow discussions

Counsel C.R. De Silva and Romesh De Silva appearing behalf of Dr. Lalith Kotelawala agreed to meet on February 19th at 2:30 p.m. and February 25th 3:30 p.m. with AG's department officials to discuss the critical and long outstanding issue of a repayment plan for the depositors since earlier meetings planned for this task had not been successful.

Since the Golden Key crisis erupted around December 22nd - two months ago, no precise pronouncements on repayment elaborating amounts and repayment dates have been made by any senior member of Ceylinco despite the multiple involvements and statements of the Central Bank and various government institutions.

Depositors therefore continue to wait with great anxiety.

DSG Jayamanna also questioned the non-appearance in court of Mrs. Sicille Kotelawala who is now in Bangkok (also a Director of GKCCCL). Daily Mirror FT learns that Sicille Kotelawala had resigned from several listed companies from Ceylinco Consolidated as far back as on October 31st 2008, according to Colombo Stock Exchange reports.

Moves to repay depositors?

A document titled 'X 2' has been handed over to AG's Department on Thursday which hopefully starts the process of asset sale to settle liabilities - a long affair to be sure. According to the payment plan suggested by Ceylinco Consolidated to repay Golden Key depositors, the document highlights that there are 7,181 'security deposit card holders' as per their records. Furthermore, it says that 5,379 (75% of card holders) are persons who have deposits of Rs.2 million (Capital only) or less. The document says that the total of the said security deposits (Capital only) is Rs.13,660,734,146 (Rs 13.6 billion) as per the statement which has been submitted to the AG's Department. And the total attributed to the 5,379 card holders is Rs. 3,773,543,663 (Capital only).

The Golden Key Company, on the other hand, has submitted a list of assets totalling to (-upon Ceylinco Consolidated's estimation) Rs.13,312,300,000 (Rs 13.3 billion) in which some assets are ear marked to be sold in order to repay debts. It has been stated in the document that as at January 29th 2009, a sum of Rs. 95,686,207.83 (Rs. 95.6 million) has been paid back to depositors - no further details were available readily to Daily FT. Additionally it says that in the meantime, a sum of Rs.50 million per month would be paid to depositors by Ceylinco Consolidated in any manner stipulated by the Attorney General's Department. These are welcome signs by the Ceylinco group and would help release some of the pent up frustrations and worries hitherto undergone by depositors.

Another document has been submitted by Ceylinco Consolidated titled 'X 1' also listing the detailed value of assets which could be disposable in order to refund the depositors of Golden Key. It has further defined several notes for the listed entities. A statement says that the diversification of Seylan Bank shares of Ceylinco Consolidated will be needed to repay the some of the depositors. "Right now majority shares of these shares are held by public quoted companies. Therefore, if we sell these shares with the management right/controlling interest as a big parcel, we may command a premium prices on these shares. “That premium component of the selling price only will be transferred to Golden Key Credit Card Co. Ltd. by those respective shareholding companies,” Ceylinco says in the statement.

What price assets?

Furthermore it says that the pricing of assets have been decided by the 'Working Directors' and the Executive Directors/CEOs who are in charge of GKCCCL subsidiaries. It also says that if they try to sell equipment in piecemeal fashion, some of the big assets such as GK ENT Hospital, Teak Plantations, Ceycom Global Communications Ltd. etc. will not generate suitable sales proceeds. "Therefore, we are in the process of issuing shares of these companies to Golden Key Credit Card Co. Ltd. and will take every effort to list all these companies in the Colombo Stock Exchange and that will be used as an exit mechanism for Golden key Credit Card Co. Ltd." said Ceylinco Consolidated in the statement.

Hundreds of Golden Key depositors thronged the Mount Lavinia Court premises to hear the prospective rulings on yesterday afternoon. The Court ordered to remand Golden Key Group Director, Niranjan Fernando and Chief Executive Officer, Golden Key Software Suramya Karunarathne in addition to Former Deputy Chairman of Golden Key Group, Khavan Perera, Director Finance Saradha Sumanasekara and Manoj Chaminda Jayalath of Ceylinco Insurance who were remanded earlier in the court rulings.

The next hearing is scheduled on February 26th at 2:00 p.m. in the Mount Lavinia Court by which time it is hoped that parties to these discussions would have discussed details of the repayment plan more fully.




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GK to terminate 500 jobs of employees

By Jithendra Antonio

The management of the collapsed Golden Key Credit Card Company Limited has apparently decided to terminate employment of approximately 510 of its employees recently. According to Daily FT sources, this was decided by the management after meeting with its employees. A senior official of the company who did not wish to be identified said that the company had presented a compensation package to the Chairman's Office of Ceylinco Consolidated shortly. "We have negotiated with Chairman's Office for a compensation package yesterday.

We at least expect a minimum [total] compensation package of approximately Rs.200 million as per the labour law of Sri Lanka to furnish the termination of approximately 500 members of staff of Golden Key Credit Card Co. Ltd. But they have requested for a maximum time frame (Number of Days) for us to suggest in order to settle our package, simply they need a bit more time to pay back." Our source added.


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KOTELAWALA STILL CONTINUES AS THE CHAIRMAN OF LISTED COMPANIES?

Blue Diamonds Jewellery Worldwide PLC, Ceylinco Insurance PLC and The Finance Company PLC informed Colombo Stock Exchange (CSE) on yesterday that “Mr. Lalith Kotelawala, Chairman of the aforesaid Companies has been remanded until 11/03/2009 by the order 26/02/2009 of the Magistrate's Court of Mount Lavinia.” And companies have further stated in the same statement that “Mr. Kotelawala will take suitable legal action. Mr. Kotelawala remains the Chairman / Managing Director of the above Companies.”

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F&G real estate arm faces difficulties

By Jithendra Antonio

Daily FT learns that another subsidiary of Ceylinco Consolidated is facing a liquidity issue due to the increased number of withdrawals of depositors’ funds in that company. Finance & Guarantee Company Limited of Ceylinco Group is a company which is involved in financial services including leasing, hire purchase, housing loans, personal loans, educational loans, business loans, accepting fixed deposits and savings accounts, real estate development & property development and housing construction. In the wake of concern by depositors of Golden Key Credit Card Co. Ltd., the investors of F&G have also started to withdraw their funds since December 2008.

F&G Co. Ltd. heads the Finance & Guarantee Group of Ceylinco Consolidated, along with its own subsidiaries. Ceylinco Consolidated took over in far back 1980's the original Finance & Guarantee Company at the behest of the Central Bank of Sri Lanka, since it was marked for liquidation 20 years ago. Since its resurrection, the financial institution was however well on its way to success. It is an approved finance company by the Central Bank of Sri Lanka.

Apart from F&G Co. Ltd., Daily FT learns that F&G Real Estate Company Ltd. and F&G Property Developers (Pvt) Ltd. have been also involved in accepting fixed deposits as a ‘Return on Investment’ (ROI) scheme. F&G Real Estate Company Ltd. and F&G Property Developers (Pvt) Ltd. are not registered as financial institutions under the Central Bank of Sri Lanka.

When Daily FT spoke to the key officials of the F&G Group they said that they have been accepting funds from people on the strength that both F&G Real Estate Co. Ltd. and Property Developers Ltd., related entities, are operating mega scale apartment projects and real estate projects which have been a solid investment opportunity for the last 20 years. “We offered an extra 2% to 3% per annum more than a registered financial institution’s interest rate as we had a higher return on investment in our real estate projects on sale. “ Deputy Chairman, F&G Group of Ceylinco Consolidated, Mervyn Jayasinghe told Daily FT adding that investors of such projects were offered an interest payment annually based on their invested value. He went on say that company is strong enough to payback depositors on a timely basis as both subsidiaries have assets more than the deposit portfolios in all three companies.

“In all three companies the total investments of depositors are valued at Rs. 10 billion and there are approximately 6,000-7,000 depositors. We can definitely pay them back. We are not going to runaway from this country or companies. But if every investor comes to get their refund at the same time, we cannot sell our assets overnight ;not even a registered bank in the world would be able to dispose their assets immediately” Mr. Mervyn Jayasinghe said.

The official noted that there is a trend in global markets where the real estate market value comes down in every 20 years. “Now we are facing the same situation when considered the present market context. Real estate prices come down but this is the best time for real estate investments. According to Mr. Mervyn Jayasinghe the F&G Group’s real estate investment portfolio is approximately 60% of its investments.

Speaking to Daily FT, one of the depositors’s (who did not wish to be identified) of the F&G Real Estate Co. Ltd said that the company has failed to pay the interest payments since December 2008. “They did not pay interest for deposits even at maturity. On 17th February all the depositors (approximately 200) were invited to the head office to pay back the interest payment but when the officials of the company did not do so, we encircled them and blocked their way. Later on Deputy Chairman of the F&G Group came and told us that they have three plans to overcome the issue in the company. He convinced us that one of them is to bring the F&G Real Estate Co. Ltd. and Property Developers Ltd. under F&G Co. Ltd. and regularize it under the Central Bank supervision. “The other option is to settle the depositors investments via a foreign fund worth Rs. 65 billion from a European country which is still in the negotiating process with Ceylinco Group according our sources. “ Mr. Chalaka Sanjeewa Perera of F&G told us that they are receiving some foreign funds from Vatican since last December. When we questioned whether European countries were interested in investing in companies with difficulties, the officials of the F&G were of the view that European Countries are interested in developing countries such as India, Pakistan and Sri Lanka.” Our source said that “The third option of the repayment plan is to dispose of all the assets of company “. When Daily FT questioned whether the Sri Lankan ex-cricketers and cricketers have signed up for mortgage bonds against the mega assets of the company as a security for their large scale investments in F&G Group, the Deputy Chairman, F&G Group of Ceylinco Consolidated, Mr. Mervyn Jayasinghe said that “Though we have some of such cricketers signed up for mortgage bonds, the company has the authority to sell those assets and repay them their interest.”

Speaking to Daily FT, Mr. Mervyn Jayasinghe concluded that with repayment scheme will be published in the newspapers and all these activities will be conducted in a transparent manner and that with the blessing of state financial institutions and Central Bank, the company will take immediate actions to regularize its non registered two subsidiaries. In the wake of the general scenario among Ceylinco subsidiaries and depositors' dilemmas, the question still remains how far this 'viral behaviour pattern' amongst depositors affects the Ceylinco Group’s assets and subsidiaries and whether they are going to get their return back soon.

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