CIFL case: Court further extends interim order till 24 February
Monday, 3 February 2014 01:43
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Depositors of Central Investment & Finance Ltd. (CIFL) brought to the cognisance of the Court of Appeal that though the Directors of CIFL have sought permission from the Court to carry out certain functions of the CIFL, these activities are, in fact, not prevented.
When their Writ petition was taken up last week before the Bench comprising Justices Anil Goonerathne and Malinie Gunaratne, they moved the Court to record the functions indicating the paragraph 22 of the objections of the existing Directors in order to grant permission for (a) collecting monies due to the CIFL, (b) exercising the mortgages under the properties given as securities to CIFL and liquidate the same and (c) to recover the funds which had been siphoned out of CIFL to the subsidiary Companies of ASPIC Corporation by perpetuating a fraud on CIFL.
The Court further extended till 24 February the Interim Order issued on 27 September against Central Investment & Finance Ltd., staying the operation of the Monetary Board’s direction to convert its 60% deposit liabilities into Non-Voting Shares. The matter is fixed to be taken up on 21 February.
Depositors filed their Writ petition complaining of alleged unlawful and activities in breach of Finance Business Act by CIFL.
Deputy Solicitor General Janak de Silva undertook to obtain information from the Central Bank in relation to the minute paper of the Monetary Board decision in respect of the implementation of the appropriate regulatory measures to encourage cash-strapped institutions to revive and be restructured.
The Depositors cited the Monetary Board, Central Bank Governor Ajith Nivard Cabraal, Finance Ministry Secretary Dr. P.B. Jayasundera, the Central Bank, Director of the Department of Supervision of Non-Bank Financial Institutions, Chairman of CIFL Roscue A. Maloney, and its Directors.
Faisz Musthapha PC with Mangala Niyarapola instructed by Derrick Samarasekara Associates appeared for the Petitioners.
The Petitioners are seeking a Writ order from the Court compelling and/or directing the Monetary Board, the Central Bank Governor, the Finance Ministry Secretary, the Central Bank and the Director of Supervision of Non-Bank Financial Institutions to take steps to have the CIFL to pay the depositors the deposited monies in CIFL, the capital and interest.
They state CIFL represented that it was established in 1966 and registered with and/or licensed by the Monetary Board and that it was revealed from the Notes of the Auditors of the Annual Report of the CIFL the presence of certain irregular dealings of CIFL.
They complain that commencing from February 2013 CIFL has started refusing to release the deposits and the relevant interest payments of those deposits which had matured.
They allege they had been deliberately and fraudulently deceived and cheated by CIFL, which was facing severe liquidity issues.
They bemoan the true picture of unlawful activities, which were in clear breach of the Finance Business Act, began to emerge as the depositors intervened by demanding their investments and lament that they found CIFL severely experiencing liquidity problems due to unwise and reckless investments in properties and mismanagements and irregularities.
They state that they believe that CIFL Chairman Roscoe Maloney, Directors J.G.S. Maloney and D.A. Hettiarachchi have already left Sri Lanka despite repeated promises by the Director of the Department of Supervision of Non-Bank Financial Institutions to impound their passports preventing the Directors leaving the country.
They state CIFL, which made a profit of Rs 7.9 million as at 31 March 2012, was making a shocking loss of Rs. 330 million as at 31 March 2013 which was reflected online in the company network system and visible to the Account Manager working under the Central Bank who was directly responsible for monitoring the activities of CIFL.
They charge the Central Bank failed to take prompt action to rectify the situation immediately, as a result of which the CIFL too collapsed within less than two years.
They maintain it is the duty and responsibility of the Central Bank to penalise CIFL and its Board of Directors for resorting to unlawful and illegal practices by eroding billions of investors’ money, instead of allowing them to continue to operate as Registered Finance Company.
They allege the Monetary Board has failed to examine the maintenance of CIFL’s capital, liquid assets, and classification of investment schemes, provisions for bad loans, etc.
