Ceylinco assets worth Rs. 4 bn.

transferred to SPV to repay GK depositors-On a Supreme Court directi e

BY SURESH PERERA-December 7, 2013, 6:20 pm In an unprecedented boost to the prolonged struggle to repay suffering Golden ey !G " depositors# the Supre$e %ourt last &ee' directed the transfer of t&o $a(or %eylinco %onsolidated assets )alued at around Rs* + billion to the dedicated Special Purpose ,ehicle !SP,"* -his &as the first ti$e since the collapse of G # a %eylinco subsidiary in .//0# that t&o significant assets of substantial $onetary )alue are to be disposed of to raise funds to grant relief to thousands of struggling depositors* In ter$s of the court order# 1/2 of the direct shareholding of 3* 4alith B* otela&ala in %IES5- !P)t" 4i$ited# the $a(or shareholder of %eylinco Insurance P4%# &orth around Rs* 6 billion &ill be transferred to the SP, to settle G in)estors* %IES5-7s total shareholding in %eylinco Insurance e8ceeds +*1 $illion# 1/2 of &hich is held by otela&ala* -hese are high-)alue shares &ith last &ee'7s stoc'$ar'et trading price in the range of Rs* 9#.06 per share# officials said* -he G -as' :orce reported that it &as unable to establish the nature of the business of %IES5- and also could not obtain the financial state$ent of the co$pany* ;hen in<uired# otela&ala denied any 'no&ledge of the nature of the business and P=G# the co$pany7s e8ternal auditors# declined to pro)ide the re<uired financials sans the consent of %IES5-*Ho&e)er# &hile scrutini>ing the $a(or shareholders# it &as re)ealed that %IES5o&ns +#1?9#0@9 shares of %eylinco Insurance P4%# according to its Annual Report .//0 -9.# the -as' :orce said* -he Supre$e %ourt also directed that SA4 In)est$ent %o$pany 4td*# and its subsidiaries be transferred to the SP, and 4alith and Sicille otela&ala and other $e$bers of the e8isting board of directors be declared null and )oid* Be& directors should be appointed by G in their place* According to the audited financial state$ent of SA4 In)est$ent as at =arch 69# ./96# the net &orth of the co$pany is Rs* +C?*. $illion# of &hich Rs* 91/ $illion represents its property# plant and e<uip$ent# &hile Rs* 99+*C $illion represents shares and in)est$ents in subsidiary and associate co$panies*

-he -as' :orce reported that letters &ere sent on August ?# ./96 to fi)e ban's to sei>e fi8ed deposits and debentures under the na$e of this co$pany* SA4# denoting Sicille and 4alith &as 9//2 o&ned by the otela&alas* ;ith substantial assets# the e8istence of this co$pany &as declared earlier by 4alith otela&ala# but not the )alue of its assets &orth $ore than one billion rupees# G director# Dushanthi Hapugoda e8plained* She said that SA4 had a sta'e in A'asa ade# Seylan Ban' and the 1/-perch Eliban' Road residence of otela&ala* E;e are positi)e of reali>ing around Rs* + billion through the sale of these t&o $a(or assetsE# she noted* E-his is a big relief to depositors &ho had gone through agony for the past fi)e yearsE* An audit re)ealed that during 3anuary-=arch# .//@# %eylinco 4i$ited had sold 6*9.? $illion %eylinco Insurance P4% shares held by the$ and recorded a profit of Rs* +0.*+ $illion* otele&ala had siphoned these profits to his benefit through loans gi)en to %eylinco International Realty 4td*# !Rs* 9?0*1C $n"# %eylinco %onsolidated 4td*# !Rs* 9/? $n" and %eylinco In)est$ent and Realty 4td*# !Rs* 9?9*. $n"# she asserted* -here &as no agree$ent on this Rs* +1C*.0 $n loan# no proper procedure to reco)ery and non reco)ery of loan during the year or subse<uently* It &as i$portant to ascertain &hat happened to the funds transferred to these three co$panies# the audit obser)ed* Si$ilar to this fraudulent transaction# the shares of SA4 In)est$ent &ere earlier held by =r* and =rs* otela&ala on a 1/-1/ basis* In AprilF=ay .//@# shares &ere transferred to one =rs* ;i(eratne and her t&o daughters* Returns &ere bac' dated and sub$itted to the Registrar of co$panies and the penalty &as paid to (ustify the transaction# the audit report stated* -his share issue &as done to a)oid any ac<uisition by courts to Golden ey depositors# the report noted# &hile na$ing the co$pany secretary &ho did this transaction together &ith another person# an e$ployee of -he :inance 4td*# but &ho &or'ed in the %hair$an ! otela&ala7s" office* -he Supre$e %ourt also directed the transfer of Rs* 96/ $n held in a for$er G director7s Australian ban' account to the SP,* -he go-ahead &as also gi)en for the transfer of %eylinco In)est$ent and Realty shares# &hile sanctioning the sale of the pri$e De :onse'a Road property o&ned by =rs* Sicille otela&ala* ;ith $any potential buyers# this property is e8pected to be disposed of for Rs* 9./ $n by end Dece$ber# Hapugoda e8plained* After the li<uidation of these assets# all depositors &ill be repaid on a pro-rata basis to ensure that all in)estors# irrespecti)e of their big or s$all holdings# recei)e an e<uitable percentage# she said* E;e are condfident of e8ceeding the e8pectations of depositorsE*