F&G buys into defunct hotel using depositors’ fundsF&G buys into defunct hotel using depositors’ funds

Despite having to pay the depositors as per Supreme Court orders, the new investors and management of F&G Real Estate Company and F&G Property Developers have allegedly drawn out depositors’ money and invested a huge sum of Rs. 200 million to buy 11% of the issued shares in a hotel property in Wadduwa named Ocean Queen Hotel, now renamed as Aryana Queen. 



This hotel had been developed by a Turkish investor along with a local. The hotel had borrowed heavily from the Bank of Ceylon and could not repay the loans. Subsequently, the loan became non-performing, and BOC obtained a clearance, to auction the property by a public auction. 

It is alleged that, ZRA Holdings the investor in F&G intervened and paid a small payment against the loans to the BOC using F&G monies. This move by the new management together with monies withdrawn from the NDB Bank for unsubstantiated business purposes has drawn the depositors by surprise and disappointment.

Source said this hotel property was a continuous loss-making white elephant with a market value of nearly Rs. 450 million, with no takers. With BOC going in full swing to auction the property ZRA Holdings, moved in on the request of the Turkish investor and having over valued the property and nearly Rs. 1200 million, allegedly made F&G buy 11% of its shares at an exorbitant price of Rs. 200 million, transferring monies through the NDB bank. All this, when monies were owing to the depositors and remaining unpaid, sources alleged.

This move by ZRA Holdings to use the “Investors’ funds as well as depositors’ funds” from F&G is in total contravention to the affidavit given by the new investors (ZRA Holdings) in March 2021, to the Supreme Court confirming that the monies invested in the F&G Companies will be unencumbered by ZRA Holdings Ltd., and used solely for purposes of investing in the F&G companies. 

The Depositors Association have been raising this issue with the current management of F&G, but the management is adamant not to meet with the depositors’ representatives nor disclose the details of the unsubstantiated payments, proof of which are with the Depositors Association.

The two directors appointed from the previous Board of Directors(one has since passed away), who are entrusted to look after depositors’ interests are allegedly silent on this issue, raising doubts whether they too are beneficiaries of this illegal underhand deal using the “ZRA investors’ and depositors’ monies”.

Questions are being raised as to whether any commissions were made on the purchase of hotel shares and who the beneficiaries are, especially when depositors’ monies were used.

The depositors, numbering around 3500, and most of them having lost their life-time savings finally had a ray of hope in the Supreme Court, which ordered that 51% of the deposits be paid back, but without any interest. 

The new investor ZRA Holdings having taken over the defunct F&G Companies under Supreme Court Orders and strict compliance requirements, have now resorted to withdrawing monies from the F&G Companies in contravention to the undertaking given to the Supreme Court, the depositors alleged. 

They said that the multiple Associations of the Depositors are now to seek Supreme Court intervention, with evidence and proof of depositors’ money allegedly syphoned off by the new caretaker investor ZRA Holdings.