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People's Bank Rs. 4.5 b loan shocker:

Yasodha says arbitrator Wickrema Weerasooriya ruled outstanding loan Rs. 100m, not Rs. 4.5b

by Stanley Samarasinghe and Jayasiri Munasinghe

Yasodha Enterprises owner Yasasiri Kasthuriarachchi addressing the media conference organized by him at Taj Samudra Hotel, Colombo, yesterday, stated that Dr. Wickrema Weerasooriya who was appointed as Arbitrator to settle the dispute between the People's Bank and himself ruled that the outstanding loan amount is Rs. 100 million and not Rs. 4.5 billion.

As against the loan he obtained from the People's Bank, he has repaid to the bank a sum of Rs. 1.7 billion and therefore the arbitrator Dr. Wickrema Weerasooriya concluded that the outstanding loan amount is not Rs. 4.5 billion but Rs. 100 million.

The media conference was organized by him to explain in public his position in response to President Chandrika Bandaranaike Kumaratunga's instructions to the bank to take action for the recovery of the full outstanding loan together with interest accrued thereof.

He further explained that Dr. Wickrama Weerasooriya was accepted as the arbitrator with the agreement of both parties to the dispute and that Dr. Wickrema Weerasooriya is an expert on banking issues with many reasonable settlements to his credit.

In view of his repayments exceeding the amount he borrowed, the bank went a step further to open a savings account of Rs. 2.5 billion in favour of his enterprise, he said.

Answering a question Yasasiri Kasturiarachchi said that as he is a UNP activist, the President directed the bank to initiate legal action against him.

Anyway he admitted that there were certain discrepancies in accounts he furnished and that those errors occurred because the Inland Revenue Department had retained his files at the time of furnishing particulars.

There is a case pending in the Commercial High Court considering his application for the return of his documents retained by the Inland Revenue Department, he said. I have paid interest to the bank at the rate of 36 per cent per annum, he added.

Yasasiri Kasthuriarachchi denied a suggestion by the media that it could be construed that as a UNP supporter he got the party support to appoint a biased arbitrator to bring about a settlement advantageous to him. "That cannot happen", he said in answer.

The President in a press release last Saturday said:

Banking sources 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 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 third party for review or arbitration without the specific consent of the Courts.

You and the board of Directors of 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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