First Capital detects Rs. 160 m fraud

Friday, 9 December 2011 01:18 -     - {{hitsCtrl.values.hits}}

First Capital Holdings Plc has detected a fraud of Rs. 160 million at its subsidiary First Capital Ltd., committed by a senior employee of the company.

While announcing that there would be no loss to the clients of the group, a company spokesman released the following statement:

“I can confirm that fraudulent activity has taken place which has caused damage to the company. Initial indications of a fraud arose late last week. The company is in the process of ascertaining the period of the fraud and the investigation is ongoing. We cannot disclose details of the person responsible for the fraud at this time, since legal proceedings have been initiated. A court order has been issued for his arrest. We believe he has left the country.

“The impact to the company’s shareholders will be Rs. 160 million as indicated by our preliminary inquiries.  There will be no material impact on any other companies of the First Capital Group. There will be no losses to clients of the group.

“We are undertaking a complete review of our systems and all aspects are being looked at to prevent a recurrence of a fraud. There is a prima facie case against the accused on cheating and fraud and criminal breach of trust. A substantial part of the loss is accumulated interest. The company reported profits after tax of Rs. 983 million in the Financial Year ended 31 March 2011.The loss amounts to less than 2% of the company’s total assets of 9.6 billion.”

Dunamis Capital Plc, which has a substantial shareholding of its holding company PVIC Management Company Ltd., which holds 63.07% of the shares of First Capital Holdings PLC, announced to the stock exchange that the impact on its profit and loss account was Rs. 105 million according to preliminary investigations.  

The company also announced the appointment of Minette D.A. Perera to the Board of Directors with immediate effect. Perera is the Finance Director of the MJF Group. She has been on the board of Ceylon Tea Services Plc since September 200 and Kahawatte Plantations since January 2001.

Perera is a fellow member of CA Sri Lanka and the Chartered Institute of Management Accountants, UK and has over 30 years experience working in leading local and international companies as an Executive Director.

First Capital Limited is a financial services group comprising of four subsidiaries and an associate company: First Capital Treasuries Limited (Licensed Primary Dealer in Government Securities), First Capital Markets Limited (Licensed Margin Provider), First Capital Asset Management Limited (Licensed Investment Manager) and First Capital Money Brokers Limited (Inter-Bank Money Broker). The company has branch offices in Kandy and Matara.

First Capital Holding’s shares fell Rs. 1.50 to Rs. 15.50 when 645,200 shares traded, while Dunamis Capital saw its share price fall Rs. 2.70 to Rs. 15 with 919,700 shares trading.    

First Capital comes under the direct purview of the Central Bank of Sri Lanka and Securities and Exchange Commission of Sri Lanka.