Govt. to repay Rs. 4 b to Golden Key depositors

• Finance Ministry receives approval to release funds to Central Bank and dispose of company assets 

Cabinet has agreed to allow the Finance Ministry to release Rs. 4 billion to the Central Bank to complete repayment of Golden Key Credit Card company depositors and dispose of assets that belonged to the finance company and its subsidiaries. 

The proposal, which was presented by Finance Minister Ravi Karunanayake and approved by Cabinet on Tuesday, approved the release of Rs. 4, 055.1 million. Once the Finance Ministry disposes of assets under Golden Key and its subsidiaries the money would then be deposited to the Treasury, according to a handout given at the weekly Cabinet media briefing. 

The repayments are likely to include 456 depositors who had more than Rs. 10 million deposited in Golden Key. 

Ahead of the August 2015 General Election, the Government pledged before the Supreme Court to repay all Golden Key depositors. Under the payment scheme that was devised at the time, the Government paid Rs. 544.3 million in the first tranche and Rs. 3.9 billion under the second round of repayments. Depositors who had more than Rs. 10 million each were to be repaid before end-August 2016 but the deadline lapsed with no response from the Government.    

Last week the Central Bank announced hard-edged plans to repay Rs. 16.5 billion owed to nearly 12,000 depositors of four insolvent financial institutions before liquidating them, including the establishment of a new Enforcement Division to institute legal action against top officials responsible for fraud as well as to increase regulatory oversight by the monetary authority.

Three of the four finance companies are The Standard Credit Finance Ltd., City Finance Corporation Ltd. and Central Investments and Finance Plc. All three companies got into a chronic financial position in 2008 and 2009 due to fraud and mismanagement of funds and therefore did not have assets to pay off deposits.

The fourth, Entrust Securities Plc, a company with a primary dealer license to trade government securities and close links to the family of former President Mahinda Rajapaksa, got into a chronic liquidity and insolvency crisis during the latter part of 2015 as a result of the fraudulent use of funds placed by customers for investment in government securities.

In the case of the three finance companies, repayment will cover Rs. 4,868 million of nearly 11,878 depositors. In the case of Entrust, investments secured with government securities amounting to Rs. 3,100 million belonging to 107 investors will be settled in the coming weeks, the Central Bank said. 

In respect of unsecured investments in Entrust amounting to Rs. 8,508 million belonging to 24 individuals and entities, government securities will be allocated and repaid under the repayment plan to be implemented with the managing support of Seylan Bank Plc, according to the plan. (UJ)