The Failure Of The Central Bank, The Golden Key Curse And The Fall Of A Chief Justice

By Lakshman I.Keerthisinghe -February 15, 2013

Lakshman Keerthisinghe

O cursed lust of gold, to what canst thou compel the heart of man! -  Virgil Aenid(Greed)

The Supreme Court of Sri Lanka in its order of 23.03.2009 granting leave to proceed in SC Applications filed by some depositors of the Golden Key Credit Card Company stated thus: ‘On a perusal of the file… it was revealed that Folio …containing report of the Head of the Special Investigation Unit (S.I.U.) of the Central Bank which had considered the very matter raised by Counsel for the petitioners ..has stated as follows:-‘In view of the above facts the examiners are of the view that the Golden Key Credit Card Company Limited carries on a finance business in contravention of the provisions of the Finance Act No.78 of 1988’.The files that have been produced do not indicate with any clarity the action that has been taken thereafter. , However there is a report to the Monetary Board dated 24.11.2006 which culminates as follows: ‘The Monetary Board is informed of the above and is invited to approve a discontinuance of the examination commenced in respect of the Golden Key Credit Card Company under Section 11 of the Finance Companies Act.’ The Supreme Court further held that  : ‘This Report does not give any reason for disregarding the findings in the Report of the Special Investigation Unit but refers to certain discussions had with the Chairman of the Ceylinco Group. It appears that the subsequent course of action has resulted entirely on the basis of these discussions had with the Head of the very institution which was being investigated.’ The bench headed by the then Chief Justice Sarath N Silva comprised of Hon.Justice Shiranee Tilekawardene and Hon Justice K,Sripavan as the other two judges.

It was reported in the media that the Central Bank is attempting to hide its failure in duty by stating that they had placed advertisements warning people not to deposit money in unregistered finance companies. It is ridiculous to hide behind such an excuse when the Central Bank is charged with a legal duty to supervise non banking institutions and prohibit illegal operations of such companies as reported by the S.I.U. The officers who ordered the discontinuation of the examination of the   Golden Key Credit Card Company should face investigation and punishment for the misery they brought upon thousands of depositors. Thus it is evident that the Monetary Board of the Central Bank chaired by the Governor failed to act by prohibiting the operation of the said fraudulent Company thereby bringing misery to thousands of depositors who deposited their hard earned monies including their EPF and ETF Funds, money obtained by the sale of their only residential houses and properties in view of the high interest rates offered by the said Company headed by the fraudster Lalith Kotelawala, who is retaining the Deshamanya title and presently enjoying a luxurious life style being out on bail whereas the other fraudster Sakvithi having defrauded a very less number of depositors for a much less sum of money is languishing in jail along with his wife whilst his two innocent children are in the care of probation officers. Mrs.Cecilia Kotelawala is in England and the British Government recently issued a statement that as the Sri Lankan Government has not asked for her extradition they are not pursuing the matter although there is a warrant out for her arrest in connection with the Golden Key Fraud. It must be noted that the Central Bank is placed directly under the purview of the Head of State who is also the Minister of Finance. Due to the failure of the Monetary Board to perform its legitimate functions in prohibiting the operations of the said Company thousands of Sri Lankan citizens and their families are suffering in utter misery. While these depositors were from time to time assured of relief by the Head of State that relief appears to be very slow in coming although the matter was highlighted by the Government to oust the Chief Justice Dr.S.A.Bandaranayake. One Cabinet Minister unashamedly referred to the Chief Justice as a thief (hera in Sinhala) during the impeachment debate in the Parliament. This statement may go down in world history as the first occasion at which an incumbent Chief Justice of any country was referred to by a Cabinet Minister in such derogatory terms in the Parliament of any country. But as stated n the Bible Exodus Acts 7:35 Who made thee a ruler and a judge over us?’ would have been a proper question to pose in response to that statement. Then again it is the people of Sri Lanka who send elected representatives to Parliament but the legislators are tasked with the making of laws and not in passing judgement over citizens, which is strictly a judicial power.

Be that as it may there is also another aspect that has to be considered. It was also reported sometime ago  in the media that in an order of the bench headed by the Chief Justice Dr.S.A.Bandaranayake, the Supreme Court in a case filed for the vindication of the fundamental rights of the depositors of the Golden Key Credit Card (GKCC) Company who were about to receive repayment on the proceeds of the sale of the Golden Key Eye Hospital suffered a terrible set back when the matter was reverted to the Commercial High Court (CHC) thereby thousands of depositors and their families who were anxiously hoping for repayment, at least partly, in time for the Sinhala and Hindu New Year lost that opportunity. Counsel representing a depositors’ association submitted to court that the case can be referred to the CHC after the three assets are disposed of and a part settlement made to depositors. Cases in the CHC drag on for a long time. Justice delayed is justice denied. For the past one and half years, not a cent had been repaid to GK depositors. In any event as the Supreme Court is the final appellate Court the matter would eventually end up in the Supreme Court after protracted litigation by which time the elderly depositors who had invested their EPF and ETF funds in Golden Key in the hope of leading a comfortable life in the evening of their lives would have gone to their graves after spending their last days in misery. The echoes of their mental agony would reverberate on the living, who were either architects or contributed to the non refund of their hard earned money thereby resulting in their misery falling upon such persons and their families without a doubt. In the absence of judicial intervention, divine intervention would undoubtedly ensure punishment to such wrongdoers. “We are shattered”, said Ms. Dushanthi Hapugoda, President of the All GKCC Depositors’ Association. “We thought we will receive at least another LKR 100,000 repayment to meet the pressing needs of our children during the forthcoming New Year”, “What a battle it was for three long years – we didn’t even have time for our personal commitments. We had to struggle and struggle in search of justice”, she said. It was reported that a buyer for the ENT hospital was present in court with his lawyer and was prepared to place a non refundable deposit of USD 1 million within four days and pay the balance before April 30 that year with the permission of the Court as the Court had earlier ordered that the assets be advertised for sale, in the local media..Prof. Lakshman R. Watawala, Chairman of the Committee of Chartered Accountants said that LKR 1.4 billion can be raised if the three key assets are disposed of. This will enable a repayment of at least LKR 200,000 each to depositors. Ms. Hapugoda said that more than LKR 200 million has been spent on the Committee to carry on its work. The three members are paid LKR 200,000 each per month. “There are buyers for some of the GK assets. What we plead for is to sell these assets and make at least a part payment to desperate depositors, some of whom have already committed suicide in despair”, she said. In an earlier media report it was stated that the Celestial Residencies, another Ceylinco property was to be acquired by the State without any repayments being made to the depositors whose money had been invested in the property. When the Supreme Court had earlier ordered the advertising of these assets for sale thereby spending the money of the poor depositors to meet the advertising costs the above order came as a surprise to the hapless depositors. The Chief Justice was charged with accepting a Rs.1.6 million rebate from one of the companies belonging to the Ceylinco Group in purchasing a property for her sister. This could easily be construed as conduct unbecoming of a judge in dealing with a property that came within the purview of a case on which such judge was required to adjudicate.

As Kautilya said in his Arthashastra speaking of the King or the ruler:‘a king with a depleted treasury eats into the very vitality of the citizens and the country.’ At the same time ‘a king, who impoverishes his own people or angers them by unjust exactions will also lose their loyalty.’ Kautilya further stated ‘impoverishment, greed and dissatisfaction are engendered among the subjects, when the king:(i) fails to give what ought to be given and exacts what he cannot rightly take;(ii) does not punish those who ought to be punished but punishes those who do not deserve to be;(iii) indulges in wasteful expenditures, destroys profitable undertakings and (iv) fails to protect the people from thieves and robs them himself.

Even at this late stage if His Excellency the President as the Minister of Finance admits the failure of the Central Bank and intervenes to grant solace to the depositors it would be a blessing as this would avoid the curse of the Golden Key falling upon others as it did on the fallen Chief Justice of Sri Lanka.