Saturday, 31 January 2004  
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People's Bank Rs. 4b loan shock

Banking sources yesterday made the shocking disclosure that the People's Bank was in the process of settling a massive Rs. 4.8 billion debt owed it by Yasodha Group, for as little as Rs. 10 million.

They said that the original sum owed the People's Bank was Rs. 4 billion and another Rs. 800 million accrued as interest on the loan.

Following, this President Chandrika Bandaranaike Kumaratunga has severely warned People's Bank Chairman Lal Nanayakkara on any unjustifiable settlement with the Yasodha Group in respect of recovery of facilities granted to them, the Presidential Secretariat said.

In a letter dated January 29, 2004, the President says, any step taken by the Bank which lacks transparency will be subject to a special inquiry and dealt with severely.

The President has informed the Chairman People's Bank that it is in his best interest to adhere strictly to legal process through the Court of Law, the Presidential Secretariat said.

The full text of the letter:

"I am aware that your Bank has resorted to legal action, for the recovery of large amounts outstanding in respect of advances and facilities granted to Yasodha Group and that already judgements have been awarded in favour of People's Bank in a number of cases.

Therefore, it stands to reason to expect the Bank to continue with the rest of the cases, so that there is a reasonable chance of recovering outstandings.

I am now informed that, recently, the Bank has agreed to a proposal by Mr. R. Paskaralingam, Advisor to the Prime Minister, to refer the dispute between the Bank and Yasodha regarding the amounts outstanding, to a third party - Dr. Wickrema Weerasooriya.

The logic of this decision is incomprehensible. It is obvious that matters which are sub-judice should not be referred to a third party for review or arbitration without the specific consent of the Courts.

You and the board of Directors of the People's Bank will have to account for this decision, which clearly lacks transparency and constitutes a departure from accepted practices of 'Good Governance'.

It is extremely unfair for a State Bank to extend privileges to an individual, however politically powerful he may be, which are denied to others, less influential.

I consider such patronage to be a travesty of justice. I categorically state that the privileges not extended to others should never be extended to Yasodha Group and any violation of this practice will be investigated into.

I also learn that your Board is considering reaching a settlement on the basis of the recommendations by this third party investigator.

As the Head of State, I severely warn you to desist from any unjustifiable settlement and any steps taken by the Bank, which lacks transparency, will be subject to a special inquiry and dealt with severely.

It is in your best interest to strictly adhere to legal process through the Court of Law."

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