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Fate of GKCC depositors in the balance?

" Depositors plead they are little concerned with the sinister games within various sources trying to cash in their misery and say they are aware the value of Kotelawala assets are sufficient to meet what is due to them. They want President Rajapakse and his government and the Courts to give them early relief and justice."
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by Luxman Arvind

(August 22, Colombo, Sri Lanka Guardian) Over 8,000 depositors trusted the honorable Kotelawala name with their live’s savings( over Rs.26 billion) were given a life-line when the government intervened on their behalf and assured early relief. The efforts of the people concerned forming into an effective body brought some results.


Depositors fell into different categories. (1) The very rich – sharks, if you like, who had their black-money stashed here . Amounts in some cases going over several Rs.200 million. They were generally cashing into getting tax-free interest income to finance their high living (2) those from upper middle class families with Rs.25-50 million deposits. Many here had converted the sale of their land and properties. This grouping placed these deposits with GKCC for the purpose of marriage expenses, dowry of their children, financing of overseas schooling and as cushion and protection during these days of political and economic uncertainty. To maintain the quality of their life now threatened by inflation and other negatives in a society under stress – is quite a natural wish (3) those with deposits of Rs.25 million and under who have converted their savings, remittances from children abroad to supplement their income to insure a reasonable way of life against the spiralling cost of living, fuel costs etc., (4) those with investments from Rs.10 million and under (5) those with Rs.3 million and under – most of which pension, EPF funds and others from those retired as protection “against rainy days” as it were. In many cases children abroad, brought up by their parents after much belt-tightening, were building resources to meet the living, medical and other expenses of ageing parents. This also includes visits of these parents to see the children and their grand-children living abroad. Some of these children building up these resources for their parents here out of gratitude were themselves leading a hand-to-mouth existence in their new fond homes of domicile. Most are believed unable to finance the cost of coming with their families here to see the parents - even in intervals of a few years because of the high cost of air travel (5) Those with deposits of Rs.200,000 – Rs.500,000 placed to secure monthly or quarterly interest to meet home running expenditure. The above break-up of fund amounts and the purposes for which they went to GKCC are not absolute but, I believe, can be presumed to represent the general average.

Within the larger investors are some religious figures as well. While the Catholic and Christian priests have said they are the accounted funds of the church, some of the large deposits of Buddhist priests from a religion that abhors the material world and its many temptations has raised many eyes – even those of pious Buddhists. Ministers, MPs and other politicos have all rushed into inflate the ego of the childless Mr. Lalith Kotelawala who had dreamed of converting all of Colombo into a Ceylinco fantasy. He seems to have succeeded in that part of Kollupitiya between the Police Station and St. Thomas’s Prep School – almost now entirely Ceylinco property. While Sakvithi Ranasinghe is of rural plebian and nondescript origins, with little education and a confirmed Casino gambler Lalith Kotelawala came from a different world altogether. Kotelawala was pure and simple subject to a combination of narcissm and megolomania. A senior Central Bank official - on a cursory look at some of the Balance Sheets of the Kotelawala empire - said "the man did not know the basics of accounting" and his hundreds of ventures were a case of biting more than what one can chew. He could not have conspired to rob people of their hard-earned money and savings. The man simply wanted to see the Ceylinco name - here, there and everywhere in his own ego-trip. He still has time and room to win the goodwill of the people and thereby regain the integrity of the family name.

His Deputy Kavan Perera seems to have assured the Depositors the value of the Ceylinco properties can meet the cumulative deposits and even providea reasonable interest. If Mr. Perera can honour his assurance given at the gates of his Dehiwala home early relief can be assured to all depositors soon, he would undo a lot of harm that befell the thousands of depositors, some of whom flocked to his home in desperation.

It appears except for those in category (1) the other depositors did not have in mind action to defraud the state of tax revenue. In many cases, as the main Depositors Association officials inform they were trying to cushion themselves from inflation and being defrauded by the State, whose mismanagement of the economy was, many argue, caused galloping inflation and other deficiencies in the economy. This is one aspect the Courts and the Tax authorities have to take into consideration.



It is also understood some in category one (1) with political and muscle power have managed to acquire some of the Kotelawala-owned land and properties via strong-arm tactics – in some cases far in excess of their deposit values. The case of a former well-known Mudalali - and now multi-billionaire with a wide commercial empire - is simply greed and intent to defraud State revenue . And so a former Test Cricketer whose name was mentioned. Both matters were reported in the media.

The GKCC Depositors Association lead by Anusha Emmert have been working hard to seek relief and justice for all of them. Tragically, at least two depositors commited suicide during December 2008 period when GKCC closed their offices. The press reported 18 have so far died consequent to falling ill in shock of having lost their only source of revenue. Many well-known and respectable upper and middle class families have been rendered virtually penniless. These depositors have held several demonstrations in various parts of Colombo to draw government’s attention to their sad plight. It was pathetic to very see old couples from upper middle class families in the hot sun and in tears pleading they have lost all their sources of income and are now virtually in the street. Encouragingly for these unfortunate people both the government and the judicial process have come to their rescue. The Governor of the Central Bank has moved fast to appoint a Panel of Chartered Accountants to assess the value of properties and work out a methodology by which funds can be given back to the depositors. It is understood all those who had deposits of Rs.200,000 and under have been paid off. Meanwhile, depositors fear the government might take a long time to settle their dues in the light of a formulae put forward by an Indian financial institution in a separate case where settlement has been proposed in instalments going upto 10 years. As to GKCC Depositors, a large number of them are old and unlikely to survive the next 2-3 years.

When a disreputed and notorious politico – with established close connections to the government -announced a few months ago he was going to the aid of the depositors, there was understandable alarm amongst the depositors. The man was rumoured to have approached Lalith Kotelawala in January 2009 and offered to settle the matter “privately” with the support of “the very top” It was at this time the media was fed information that the actual value of all Kotelawala properties – subject to encumberences, was in the region of Rs.12 billion – much less than the unpaid funds of the depositors. But Kotelawala has his connections as well and did not need the mediation of a man with hardly any credibility. There was also a fear other sources claiming close proximity to the high and mighty were moving into buy Kotelawala high-value properties at give away prices. One instance was the high-value Ceylinco ENT Hospital at Rajagiriya – valued by a private impeccable source in excess of Rs.2 billion. There was almost a sale of this Hospital at a very low Rs.550million to a local party with political influences. Shocingly, even this money was to come from a State Bank – and not from the funds of the individual negotiating. In an economy where the rupee is depreciating day by day the value of the Kotelawala properties certainly are appreciating. Reliable sources in the finance market inform the combined values as at date of Celestial Towers (where a world-class American bank and upper end hotel chain were finalizing plans to come in) Trillium Residencies, Pioneer Towers (Fort) the ENT Hospital at Rajagiriya - are around Rs.50 billion - sufficient to pay depositors their funds in full plus a reasonable interest for the period from December 2008. The government and Courts appear to be, rightly, in sympathy with these suffering depositors. It is understood of the nearly 8,000 whose papers were in order have been paid a sum of Rs.100,000 already. This is hardly anything most depositors say since many of them have borrowed from friends and neighbours since 2009 simply to exist. The Supreme Court early this month – on a Report-statistics provided by the Panel of Chartered Accountants – ordered the 2nd payment of Rs.200,000 to all depositors. Enquiries made from with several depositors reveal this has not been received yet.

Depositors plead they are little concerned with the sinister games within various sources trying to cash in their misery and say they are aware the value of Kotelawala assets are sufficient to meet what is due to them. They want President Rajapakse and his government and the Courts to give them early relief and justice. They also do not wish to be penalised for taking the side of General Sarath Fonseka in the Presidential Elections since their decision was purely to save their members. The Geneal had promised to settle the matter "immediately" after he assumes office.

Admittedly, this is only about GKCC Depositors – the story of some of whom I know personally. There are many other depositors who have lost their had-earned savings with other financial institutions - which also needs to be highlighted and those concerned provided with early relief. One wonders why the guilt-edged State institutions - like the National Savings Bank and the two State Banks have not structured their interest rates to attract the large funds to gain the nearly Rs.150 billion in the hands of

Fly-by-night financial institutions. Singapore successfully came out with a programme during the mid-1960s and utilized the funds for many development projects while the depositors interests were protected.

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