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Golden Key Fraud in Sri Lanka

Tuesday, 23 December 2008 - 10:02 AM SL Time
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In the wake of the latest developments regarding the Golden Key Credit Card Company Ltd, the Founder Chairman of Ceylinco Consolidated, Dr. Lalith Kotelawala assured its customers payments and protection for its card holders.

The Chairman stated that on Friday 19th that he sought the advice of legal counsel and consulted the authorities including the CID because the Chief Executive Director of the Golden Key Credit Card Co. Ltd, S. Khavan M. Perera, admitted to mismanagement of the company and voluntarily handed over his passport. Mr. Khavan Perera also tendered his resignation from his directorates of Seylan Bank PLC and The Finance Co. PLC.

Furthermore, Dr. Lalith Kotelawala issued a public statement that during the last few days, he realised that the Golden Key has been involved in a major credit card fraud and that the employees of Golden Key are now beginning to reveal certain facts regarding the involvement of Mr. Khavan Perera.

In a press statement, Dr. Kotelawala stated that he has experienced only two such incidents in the past at very senior levels in the Ceylinco Group of Companies. We survived and both companies are now strong and healthy, one of them even winning a Presidential Export Award this year. Many customers tell me that they placed money in the Ceylinco Group of Companies because of the trust and confidence they have in me, he added.

Former (as of 19th December) Chief Executive Director/ Deputy Chairman, S. Khavan. M. Perera was functioning as the Deputy Chairman/ Chief Executive of 35 subsidiaries and was on the board of directors of approximately 20 other subsidiaries of Ceylinco Consolidated (Pvt) Ltd.

The Financial Times has been informed that Golden Key Credit Card Co. Ltd. was involved in accepting public deposits offering higher interest rates ranging from 24% to 28.5% per annum without being a Licensed Financial Institution approved by the Central Bank of Sri Lanka.

This was confirmed by a senior official of the Central Bank who also said that the bank is closely monitoring current developments.

One such depositor who wanted to remain anonymous stated that he realised certain interest payments by cheques were bouncing from the beginning of December 2008 and company officials convinced them that the payments will be settled by January 15th 2009. Further he stressed that from the second week of December 2008, Golden Key Credit Co. Ltd. had changed the conditions for the deposit withdrawals stating that the customer was to inform 45 days in advance in order to withdraw his money, whereas initially it was just 7 days notice. Another depositor (of over Rs.10 million) also claimed that he found out the resignation of Mr. Khavan Perera had taken place as a consequence of an internal audit conducted under the guidance of the Ceylinco Group Chairman, Dr. Lalith Kotelawala after finding out that depositors of Golden Key were withdrawing money on a large scale.

Last Thursday (Dec. 18th) when the Financial Times contacted Mr. Khavan Perera regarding the issue, he stated that Though there have been lots of rumours that the company is having financial difficulties, there is no such major financial issue. However after it was publicly announced on Monday Dec. 22nd that Mr.Perera admitted to mismanagement on Friday (19th), neither he nor the Finance Director of Golden Key Credit Co. Ltd. were available for comment.

The Financial Times has been informed that currently, control of the Golden Key Credit Co. Ltd. and its subsidiaries, (including Golden Key ENT Hospital (Pvt) Ltd.) have been handed over to the Board of Directors of Ceylinco Insurance PLC. However Chief Executive Director of Ceylinco Life, R. Renganathan said that he is not in a position to comment whilst Chief Executive Director of Ceylinco Insurance PLC Ajith Gunawardena stated on Thursday that he is not aware of such a change since he was out of country.

In a separate advertisement Golden Key customers have been summoned for a meeting at Colombo`s BMICH at 2pm on Tuesday the 23rd December.


Source(s)
• Associated Press

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Spetsnaz1
Joined: Jun 2006
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LK Information  23 Dec 2008 04:41:08 GMT  Report for Abuse  
Actually any depositors need not worry about Golden Key....Mr.Kotalawala has more than 300 companies in SL.. and Golden Key is one.. this company has been running for more than a decade.. just this one guy messed up the Golden Key.. there is a conference today at the BMICH for all the Golden Key depositors..he is going to reestablish the company.. and neither any depositor would loose any money.. since Mr.Kotalawala is not a cheater.. and nor will the Golden Key company will close down...
kiora
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LK Information  23 Dec 2008 05:35:33 GMT  Report for Abuse  
Oh gosh what a relief and words of wisdom for depositors. A personal guarantee from a third party about the integrity of the company.Only in Sri Lanka this kind of expert knowledge that can be relied on.
p007
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LK Information  23 Dec 2008 06:17:01 GMT  Report for Abuse  
In Sri Lanka, it is always the top people who resort to massive Frauds with the Public Sector setting the example.

As for the Ceylinco, in the two previous instances alluded to by Dr. L.K., it was again the top people who were involved. What a shame.
Spetsnaz1
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LK Information  23 Dec 2008 06:35:07 GMT  Report for Abuse  
Kiora,
Oh gosh what a relief and words of wisdom for depositors. A personal guarantee from a third party about the integrity of the company.Only in Sri Lanka this kind of expert knowledge that can be relied on.

actually if you know Mr.Kotalawalas business ethics you will not say that.. I m quite sure people wont get affected by this.. he is not a sakvithi.. and this situation cant be compared to Sakvithis case..
lankaputha
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LK Information  23 Dec 2008 08:22:18 GMT  Report for Abuse  
Any ways, in the recent pass we've seen these kind of massive frauds. Wonder whether Sri Lanka is in Europe or, our maids and ex-lankans send billions of dollars uncounted..
pacha
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LK Information  23 Dec 2008 10:20:19 GMT  Report for Abuse  
People are in large scale withdrawing deposits from Seylan bank now. and i have personal experience these celinco people dont give the insurance claims on time. i am still waiting for a claim to be received from August 2008
pacha
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LK Information  23 Dec 2008 10:36:12 GMT  Report for Abuse  
Founder/Chairman of the Ceylinco Goup Lalith Kotelawala while at a function at BMICH today got mobbed by Golden Key Credit Card customers who demanded their money. According to reports he had sought refuge in the nearby Bandaranaike Museum.
-Daily mirror
upananda7
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LK Information  23 Dec 2008 22:41:39 GMT  Report for Abuse  
Dr. Lalith Kotelawala's supporters or officials who are responsible for good governance of the financial institutions, trying to do the postmortem to the Golden Key Credit Card Company crisis while nobody raised the question of why this kind of problems only at Ceylinco Group of companies.

We should check whether they have followed the guidance of Central Bank of Sri Lanka in respect of rules and regulation related to financial institutions and guidelines for internal as well as external auditors.

Since the external auditors are also paid by the Ceylinco Group, authorities should check and ascertain that there were no malpractices since it is depositors' money.

I strongly recommend that authorities should take stern action to audit all the companies under the Ceylinco Group since authorities and the general public should know that there are no illegal intra company transactions.

Upananda Karunaratne (USA
kiwikanga
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LK Information  23 Dec 2008 23:44:53 GMT  Report for Abuse  
We should check whether they have followed the guidance of Central Bank of Sri Lanka in respect of rules and regulation related to financial institutions and guidelines for internal as well as external auditors


As far as I am aware the Golden Key Credit Card Company had not been registered as a Financial Institute as per the definition of the regulations with the CB.

Even Seylan Bank depositors seem to have got jittery and are supposed to be withdrawing deposits.

A similar fiasco was seen just before HPT too crumbled. HPT too was a very reliable and honorable finance company with the Sigiriya rock as their symbol of strength and was in existence for than 3 decades, but it crumbled in the face of massive withdrawals. Hope the same does not happen to Seylan and the Ceylinco Group.

Edited By - kiwikanga - 23 Dec 2008 23:52:09 GMT
veritas
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LK Information  24 Dec 2008 15:36:06 GMT  Report for Abuse  
The 28 billion rupees question is, is Kotalawala telling the truth?
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