Key to a solution

At last the Golden Key depositors have something to smile about. After months of torment and anguish over their lost investments they now have cause for comfort. According to our main story yesterday a new company is to be set up to manage the Golden Key assets with the depositors themselves being made stakeholders in running the affairs of the new venture.

According to our story the depositors will be allotted shares in the new company equivalent to the investments they lost. All activities of the company will be carried out under the close supervision of a Board of Directors that would include nominees from among the depositors. Initially there were some 9,200 depositors who lost their savings at Golden Key. This has now come down to 7,400 following the implementation of the on going repayment plan where a sum of Rs 750 million have been returned.

The Golden Key depositors agreed to the arrangement at a meeting with President Mahinda Rajapaksa at Temple Trees on Monday. The arrangement now will place the new company under the virtual ownership of the depositors to be run as a successful business venture. There will of course be a Board of Directors of competent personnel and an Advisory Council to oversee the smooth running of the new Company to ensure maximum dividends. It is now upto the depositors themselves to ensure in collaboration of the Board that the new venture is run profitably and if possible reap for themselves rich returns far surpassing the investments they lost to the failed Golden Key company.

Given that the liability towards the depositors is a staggering Rs 26 billion, there is a need for prudent management of the assets of the failed finance company to ensure the maximum dividends to the depositors. Therefore, there is no gainsaying that the proposed Board should include personnel of the highest competence and calibre with a thorough knowledge of the financial market.

The Golden Key depositors are in a way fortunate that the ideal climate exists for successful investments with the dawn of peace as against the bleak prospects that existed when the company crashed in December 2008. Speaking to Daily News Business Golden Key Depositors Association President Dushanthi Hapugoda said they need a dynamic director board to handle this holding company as it consists of many companies. The depositors were also against selling the current assets since in such an event the controlling shares of these assets will not be with them. Taking into account the pros and cons of the issues involved the President agreed to their request.

The President should be commended for coming out with an alternate arrangement of this nature to ensure that the Golden Key depositors are not left in the lurch. Most of the monies invested were the lifesaving of some of the depositors, naturally for higher returns. While some of the astronomical sums invested could have been acquired through questionable means, there is also no doubt that a good many among these depositors have been reduced to penury while many others have been thrown to the streets. The new scheme no doubt represents a light at the end of the tunnel and it is up to those who will handle the affairs of the new company to ensure that arrangement would work to a success.

The alternate arrangement is also a warning to other finance companies that they will not be allowed to get away lightly after cheating the depositors. From this point of view the Government has ensured accountability while also creating stability in the financial market. For, immediately after the collapse of the Golden Key there was a huge run on deposits leading to the near collapse of financial market. Now by creating the viable mechanism to ensure security for deposits there will be less likelihood of such upheavals in the financial sector.

Saying that, the Government should also tighten regulations governing finance companies by even going into the veracity of advertisements and other gimmicks that was the principal reason for such a large number of depositors being lured into the placing their monies in the failed venture. This was also the case with the infamous Sakvithi episode where the gullible and uninitiated were taken for a ride.

There may be legal issues governing free trade and commercial advertising. In such an event the necessary laws should be introduced to protect innocent investors from imposters and con men posing as lily-white philanthropists.