Takeover of collapsed Finance & Guarantee companies

Your article captioned “New owners takeover collapsed Finance & Guarantee companies” (https://www.ft.lk/front-page/New-owners-takeover-collapsed-Finance-Guarantee-companies/44-756327) is an eye opener to persons like me who placed our hard earned lifelong savings with the F & G Companies looking forward to a peaceful and respectful life after retirement.

Many were lured by the high interest rates that were offered by the companies and the fact that the Kotalawelas were in control. Unfortunately all our dreams were shattered and most of us were left penniless after retirement. We tried all legal means to recover our monies and made representations to the Central Bank as well as to those in power but to no avail. Depositor Associations were formed to enlarge our voice to claim our dues, but to no avail.

The Central Bank (CBSL) appointed boards and trustees to overlook the companies and also came up with settlement methods. Although very small amounts were paid out, many depositors ended up dying, broken down, ill, depressed, and even mentally disturbed to have lost their livelihood.

Finally after 15 years we were happy that the day had dawned where we would receive our moneys back. But NO – the CBSL had prepared a plan to settle depositors only with 51% and 61% of their deposits and with no interest at all.

According to CBSL the settlement plan was prepared nearly seven years back much before our economy went sliding down the precipice, with the Dollar skyrocketing to Rs. 350. The CBSL then awarded the two failed but asset rich companies to ZRA Holdings Ltd., led by small time land broker and dealer Sarath Subasinghe for a mere Rs. 500 million.

After the economic collapse in the country and the currency values falling the value of land and property skyrocketed. This increased the asset values held by the two companies substantially, leaving a Deposits to Assets ratio of about 1:2.

The asset values were more than double, which could be used to settle all the depositors 100% along with interest as well. The creditors too could be settled 100%. But the CBSL had not bothered to look at the side of the depositors but merely handed over the companies to ZRA Holdings, who according to your article, invested in the company shares at 10 cents to a share, while the share value should have been at least the par value of Rs. 10.

We depositors appealed to the Supreme Court, while the former Board of Chairman Roshan Fernando, Chartered Accountant Katuwawela, Brig.Ranjan Silva, former DST Treasury Dixon Nilaweera and a prominent judge, too had made a professional valuation of all the assets and submitted to the Courts informing that the entire deposit amount could be paid back. Cunningly, the new investor informed the Court the difference between the deposit amount and the settlement plan will be bridged by offering non-voting shares to the depositors, and the court accepted and order was given accordingly.

While ZRA is sitting pretty with assets over Rs. 8,500 million and a deposit liability of nearly Rs. 3,500 million, it is now cunningly and hurriedly taking steps to issue shares to the depositors at Rs. 10 which is 100 times more than the 10 cents per share they had grabbed.

With all respects to the Court Order, it may be the Courts were not told by ZRA that they were going to deprive the depositors by issuing shares at Rs. 10 rather than the 10 cents price they paid and obtained 5 billion shares for mere Rs. 500 million.

It is time that the Depositor Associations take this matter up with the Courts and re open the case (if possible) and ensure that we poor depositors who have lost everything – capital, interest, health, livelihood and some life itself – be duly compensated with full capital repayment and a reasonable interest, OR we be issued non-voting shares at the same 10 cents price per share that ZRA took for itself. After all, the new investor is sitting on our hard earned money which has doubled and trebled in asset value. It is daylight robbery.

R. Peiris

Kalutara