A sigh of relief

The long agony of the Golden Key Credit depositors appears to have eased. The Colombo District Court was told that depositors with less than one million rupees would be paid 75 percent of their monies within three months and those with deposits of Rs. 2 million and less within six months. The rest, meaning those with deposits worth Rs. 2 million and more will have 75 percent of their dues settled within one year according to our page one report yesterday. The full contours of the repayment plan will be known on October 13 when Counsel for the Defendant makes his representation to Court.

The Central Bank should be commended for working round the clock to bring solace to the depositors, victims of the biggest financial scam of the country. Of course the CB was at the receiving end of blame for laxity in monitoring the affairs of the failed concern. But the way it acted at the insistance of the President to rope in the culprits before they had time to flee the country to enjoy the fruits of the amassed loot, the legal process set in motion to make them accountable and bring justice to the depositors and the steps taken to raise the cash to pay back the depositors should equally be lauded.

This is in contrast to the earlier instances where the embezzlers either fled the country or the failed Finance Companies were let off lightly or in some instances even given Government handouts as a bail out.

Of course many finance companies collapsed in the past but this is the first occasion that the crash led to such upheavals affecting the local financial markets, with a massive run on deposits even in the established banks. So it was not just the depositors who felt the pangs but the entire banking sector and the local money markets.

In that sense the collapse of the Ceylinco behemoth can be compared to the famous financial crashes in the West which sent their money markets into a tail spin. To the Credit of the authorities concerned prompt action was taken to minimise the negative fall out with the necessary structures put in place to staunch the bleeding.

The scam also galvanized the Central Bank, the monitoring authority of the Finance Companies to plug all the loopholes to prevent a recurrence in the future. So it appears that the country's financial sector survived the biggest financial upheaval in the country.

But what of the depositors? Indeed they are fortunate that Ceylinco Group had sufficient assets to be liquidated to pay at least part of the deposits. The saga may also teach a lesson to people driven by greed to be more circumspect when investing their money in future. Of course the standing of the Ceylinco Group and the stature of its owner (though now sullied) may have instilled confidence in the depositors to take the plunge. If there is one thing that the Golden Key drama brought home to the public it is the deceptive nature of the mega advertisements and the high faulting propaganda dished out to lure depositors. Now the public are bound to think twice before investing their money in so-called solid ventures.

While all the depositors should be fully compensated the Government should also devise a mechanism to tracking down black money which is what most of the deposits amount to given their sizes and identities of their owners which are today public knowledge. There are also questions as to how certain individuals came by such enormous amounts of money given their station in life and occupations and calling.

Today, it is no secret that there is a thriving black economy in the country which runs almost parallel to the State economy which causes distortions in the regular financial picture while at the same undermining the regular economy. There is large scale money laundering graft, mega smuggling, arms deals of which proceeds end up in 'shelters' such as the collapsed financial venture.

This while the genuine tax payer is being hounded and sometimes treated as a criminal for delays in filing his returns. It is hoped that whatever restructuring of the finance companies that is currently underway it is essential that all deposits and depositors be brought under the microscope to ensure the State receives all revenue due to it.

Fighting alcohol

According to State Revenue Minister Ranjith Siyambalapitiya alcohol consumption had dropped by 9.5 percent compared to 2007. He said increased taxes on alcohol and other disincentives resulted in this trend. Of course this was a boost to the Mathata titha program of the President who has already declared war on alcohol and drugs. Significantly the Minister said, according to the mandate of the President to discourage alcohol consumption, the hitherto tradition of giving liquor permits to party supporters were done away with. Since 2005 only a few permits were granted to tourist hotels that too on court orders. This is in contrast to the year 2003 when 150 wine store permits were issued to party supporters.

No doubt the Government's anti-alcohol campaign is having the desired effect going by the statistics but it should also take cognizance of the fact that there is a large bootlegging industry in the country that threatens to negate the positive outcome of the Mathata titha campaign.

The record fines from raids on illegal distilleries in recent times show the extent to which this underground industry has grown. The Government should therefore make a concreted effort to tackle this problem in the same way its energies are expended on the Mathata titha program. The nexus between the politicians, police and the illicit liquor manufacturers should be severed if the Government is even to get to first base in fighting the evil.