Parties tussle over Chief Justice in Golden Key case

Tuesday, 29 July 2014 00:14 - - {{hitsCtrl.values.hits}}

Mohan Peiris withdraws citing scurrilous letter defaming him in hearing the case

There was a tussle over the Chief Justice hearing the Golden Key Credit Card Company Ltd. case, with one party opposing and the other requesting the move, and eventually Mohan Peiris announcing his withdrawal from the bench. This was following Chief Justice Mohan Peiris yesterday citing an alleged scurrilous letter defaming him and stating that he was withdrawing from the hearing of the petitions on Golden Key. The Chief Justice put his position before the Counsels appearing for the parties to elicit their opinion. Ali Sabry PC and Faizer Musthapha PC appearing for the intervenient Petitioners, the employees of the Ceylinco Insurance, informed Court that the instructions from their clients are that the Chief Justice should not hear this matter. Other Counsels K. Kanag Iswaran PC, Faisz Musthapha PC, Nigel Hatch PC, Prof. H.M. Afulla, Junior Counsel for Romesh de Silva and Avindra Rodrigo as well as Deputy Solicitor General Viraj Dayaratne informed Court that they have no objection and the Chief Justice can continue to hear the matter. Counsel for the Ceylinco Insurance Emp-loyees Share Owning Trust Ltd. known as CIESOT had on 10 March submitted that CIESOT was incorporated in 2000 essentially as a trustee company and for this reason alone does not fall within the ambit of the investigation. He had also submitted that the trustee company was created to hold in trust a parcel of shares for the benefit of the employees of the Ceylinco Insurance. Avindra Rodrigo instructed by Mohan Balendra representing the depositors had submitted that this mechanism of trust was a legal sham, and contended that it was not a share ownership scheme for the benefit of the employees. The Court had made order that the Securities and Exchange Commission in cooperation with the Financial Investigation Unit of the Central Bank investigates this transaction to determine it true nature, transgressions of any of the legal provisions and submit a report to Court. Deputy Solicitor General Viraj Dayaratne submitted a report on the investigation conducted on the order of the Court. He said the Ceylinco Insurance Employees Share Owning Trust Ltd. known as CIESOT was created in 2000 with J.L.B. Kotalawala and nine others as Directors for the benefit of the employees of the Ceylinco Insurance. He added that in 24 December 2012 there was a fresh Director Board replacing the first one but they did not give specific reason. He pointed out that fresh Board of Directors for the CIESOT was in place long after the collapse of the Golden Key Credit Card Company. He also told the Court that the investigation revealed that there was no provision to allocate the shares of CIESOT to the employees of the Ceylinco Insurance but the employees are entitled to. Directors in the fresh Board are Kotalawala, Alwis and E.P.L. Ranasinghe who are Directors of Ceylinco Insurance where Kotalawala possesses 50% of shares while other Directors possess balance 50% shares, he said. He maintained that the CIESOT is thus under the control of Kotalawala and the employees hold no shares in their names but the shares are in the name of the company. The Supreme Court on 9 May made order granting permission to the Board of Directors appointed by Court to give effect to the seizure and sale of assets of the Golden Key Credit Card Company Ltd. with the subsidiary assets of former Directors. V.K. Choksy had then brought to the notice of the Court the said assets are valued to the tune of between Rs. 7 to 8 billion and that after the sale of assets and shareholdings, there will be a sum of Rs. 7.1 billion for the settlement of 40% repayment to the depositors. Ali Sabry PC and Faizer Musthapha PC had objected to shares of the Ceylinco Insurance Employees Share Owning Trust Ltd. known as CIESOT being sold by GKCCCL. They contended that the beneficiaries of the CIESOT are employees of the Ceylinco Insurance, not others. Intervenient Petitioners the employees of the Ceylinco Insurance in their intervenient petition state that the shares of Ceylinco Insurance which have been vested in the Golden Key Credit Card Company Ltd. which comprises the asset base of the company known as CIESOT have been acquired by the said CIESOT by utilising funding provided by the Ceylinco Insurance and the employees union of Ceylinco Insurance, as opposed to the nominal equity capital of Rs. 200 of the said company, a part of which can be attributed to J.L.B. Kotalawela. They contend that a partial contribution to an equity of Rs. 200 would not in any event have entitled Kotalawala to an asset base valued at Rs. 6.126 billion. They maintain it is inequitable to effect any seizure of the said shares of Ceylinco Insurance which have formed a trust property, of which the beneficial interest is vested with the intervenient petitioners, on the basis of attributing a partial contribution to the nominal equity capital by Kotalawala, against whom certain depositors of Golden Key Credit Card Company have preferred claims.