Thursday, 28 November 2013 00:00
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Letter
Much has been said in the print media about the plight of the many depositors of CIFL. Be assured that this will not be the last finance company to deprive its depositors of their hard earned savings. The depositors of CIFL themselves or the depositors association on behalf of the depositors should initiate legal action against:
1. The auditors for failing to report the correct status of the company.
2. CA Sri Lanka for issuing a practicing certificate to the auditors and should also be sued for damages. CA Sri Lanka is a cash rich institution.
3. The Central Bank officials who failed to take preventive action on time.
4. The Company Directors.
In addition, they should write to the professional accountancy bodies to cancel the membership of accountants employed in the company.
Furthermore, Central Bank must, in the future, enact legislation for every registered finance company to:
1. Distribute a copy of the annual report to every depositor of the finance company and invite them for the Annual General Meeting. The depositors should have the same rights as the shareholders of the company except the right to receive dividends.
2. Ensure that the auditors of the company explain to the depositors the nature of the qualification of the audit report, if any.
3. Employ a professionally qualified accountant.
4. Display the ratings given by a credit rating agency in every document canvassing for deposits from the public. Whenever there is a change in the ratings, this should be brought to the attention of existing depositors. The Central Bank must, for the benefit of the investing public, publish monthly the credit ratings of every registered finance company.
5. Provide for imprisonment of every director and the head of finance for failing to release the financial statements of the company on time.
6. Prohibit every director of a collapsed finance company to be a director in any company for a period of 10 years.
These measures will to a great extent ensure that businessmen, who are not confident of honouring payments due to depositors, will not accept deposits from the public in the future. With the introduction of these measures, stories of depositors committing suicide will be a thing of the past. If at all, it will be a case either of an auditor or a director committing suicide.
Lucky Jayamanne
Ja Ela
