Hope for Golden Key?

Monday, 8 April 2013 00:00 - - {{hitsCtrl.values.hits}}

Golden Key depositors finally have a reason to smile about after nearly five years of battling legal bottlenecks to have access to the assets of directors to recoup some of the estimated Rs. 26 billion lost from the most famous financial collapse in living memory. However, they still have to face many challenges while the regulatory framework of the country also has to gear itself to prevent a reversal of this ray of hope.

According to reports, all movable and immovable assets of Lalith Kotelawala, his wife Sicille and the seven other directors of the collapsed Golden Key (GK), will come under the microscope following a judicial directive to appoint a top-level Task Force headed by a DIG to conduct a full-scale probe.

The assets to be identified by this high-powered team will also include those the nine GK directors have alienated, sold, transferred or gifted on or after 30 June 2008 — approximately six months prior to the collapse of this Ceylinco subsidiary.

This follows last week’s Supreme Court directive to revive GK under a new board of directors with a mandate to operate its business, safeguard and recover all of its assets.

The Task Force, headed by the high-ranking police officer as its Chairman/Convener, will include two senior Central Bank officers with knowledge of financial intelligence and financial practices (to be nominated by the Central Bank Governor), an intelligence officer of the Armed Forces (to be nominated by the Defence Secretary), a Senior State Counsel (to be nominated by the Attorney General) and a Senior Officer from the Urban Development Authority (to be nominated by the Defence Secretary).

On identifying the assets, the Task Force, will take immediate steps to secure them physically and thereafter forward a list to the Supreme Court (SC) on a quarterly basis for an order for their appropriation towards GK. On receiving an order from the Supreme Court, such assets will be transferred to the GK for appropriate action.

According to the Central Bank’s Action Plan, parallel to the revival and management of the GK, a separate effort will be launched to expeditiously realise the personal assets, including shares belonging to the key directors of GK, as they have violated the bail conditions as per Supreme Court and High Court orders relevant to them, whereby they agreed to contribute their personal assets towards the settlement of the security deposit balances.

Under the Action Plan, depositors will see a larger amount of their money being returned to them as shares, which after the lapse of three months can be traded at the stock exchange. Given the proposal depositors will see as much 41% of their money being returned with positive prospects for total repayment if the company is revived profitably.

Despite the positive prognosis there is still a long road ahead for both the executors of the Action Plan as well as the depositors. This means that stronger attention by the Central Bank is essential as well as having better monitoring mechanisms to ensure that the same plight does not befall other financial organisations. Perhaps the greatest responsibility of all lies with the public to ensure that their hard earned money is safeguarded.