An unprecedented scam

The massive daylight robbery by a rogue finance company of depositors' money running into more than Rs.one billion has caused shock and consternation among the public which in turn could have a ripple effect on all financial institutions in the country, through bad publicity.

It is also an apt lesson to the public not to be lured by the glib talk and smooth advertising of racketeers bent on fleecing them. The latest 'crash' should at least now warn them to think twice about their choice before stashing away their savings.

The heart rending tales of the depositors of the Sakvithi Finance Company is a timely warning to gullible sections of the public not to be deceived by attractive offers. It is stated that the mastermind of the bogus Finance Company had fled the country with the massive loot.

The depositors numbering over 1,000 have now lain seige to the Mirihana Police in a desperate bid for information about the con-man and his cohorts. Some arrests have been made but as with all other instances involving large financial scams these are bound to be small fry.

The story is that the owner of the Fiance Company who had doubled as an English tutor had fled the country and the authorities will once again be caught in a dead end as in the past when Finance Company bosses decamped with the spoils. Some of the depositors have invested their life savings the most moving tale being that of a blind man who had invested Rs.3.5 million in the failed venture after seeling of his house and property.

It is said an advertising blitzkrieg preceded the setting up the so called Finance Company with prominent personalities too brought into the picture so as to redouble confidence of the depositors. The issue had its reverberations even in Parliament yesterday with NFF leader Wimal Weerawansa questioning the supervisory role of the Central Bank in this connection.

What was the Central Bank doing when these advertisements were aired freely, if as the Deputy Fiance Minister Ranjith Siyambalapitiya said the Central Bank periodically publishes the lists of Finance Companies allowed to operate by the CB.

We are told that laws are to brought to hound out all bogus Fiance Companies. And what is the criterion to identify bogus Finance Companies for any sly operator would take pains to appear respectable as the latest case demonstrates.

It is not as if this was the first crash of a Fiance Company in this country. What became of the stringent laws imposed in the wake of the failed Finance Companies in the past. What happened to the laws imposing a maximum ceiling for deposits prescribed for Finance Companies. Had these regulations been applied to the letter no doubt the present calamity could have been averted.

The proliferation of Finance Companies too was a phenomenon that came about with the advent of the open economy which paved the way for the setting up of fly by night companies. The mass circulation of money in the country in the first flush of the open economy and the burgeoning business environment provided the ideal backdrop for unscrupulous elements to make a killing.

That they used the innocent gullible public in their scheme was only incidental. The environment that spawned a free for all culture also bred avarice, with people not content with what they had and opting for more and more to keep pace with the fast pace of life.

This trend continues to this day with even more intensity with people not thinking twice before gambling with their money. Incidentally it is no secret that certain Finance Companies operating today have gambling as their sideline and it is always a risky business.

That said there are genuine Finance Companies who serve their clients contentiously and have earned a name for themselves as viable entities. Besides Fiance Companies too perform a vital role as the non traditional Banking sector that is one of the cogs in the wheel that sustains the economy.

What is needed is proper supervision of the operations of these entities. The Government should now step in to closely monitor these Finance Companies and not wait until the horse has bolted to act.

They should not be allowed to fleece the public and get away with it. Fresh guidelines should also be drafted governing the incorporation of any Finance Company. This should necessarily be backed by sufficient assets as collateral and a ceiling on deposits.

Also the integrity of persons who set up ventures should be brought under the microscope. According reports a search is on for owner of the rouge Finance Company with even Interpol being alerted. All measures should be taken to apprehend the culprit and return the monies of the innocent depositors.

True, people invest money for extra returns and the temptation is to invest in the Finance Companies that offer attractive interests. The present high cost of living too may have compelled the public to invest in a sector which offers bigger dividends. But prudence demands that one does not put one's eggs in one basket. Most of the depositors taken for a ride in the latest scam did just that. One must stick to established banks and finance companies when it comes to hard earned money.