Bank privileges and depositors’ nightmares

Put thousands in distress through fraud:

Vernon BOTEJUE

It was the most heartening news to the thousands of Golden Key depositors, that President Mahinda Rajapaksa, despite his extremely heavy schedule of Government duties and political functions, yet found time to give ear to the Group of representatives of the depositors who agreed on the initiative of the President at the meeting at Temple Trees recently. The formation of a new Company Registered under the name and style of ‘GKCG Special Purpose Vehicle (Pvt) Ltd’which will run as a viable business venture under the close supervision of a Board of Directors and an Advisory Council. The Board of Directors and the Advisory Council will include members representing the Golden Key depositors too. The depositors will be made shareholders of this new company.

Fraud and deception

The benevolent initiative of President Mahinda Rajapaksa aforementioned, to intervene and rise to the occasion in this instance, in an endeavour to help a section of his subjects in dire financial distress, caused by utter deception that is almost akin to people suffering in distress through natural disaster, is certainly, not only admirable and laudable but manifests that the President is truly the tried and trusted friend of the people and a ‘President with a Heart’.

Distressed financial depositors protesting. File photo

This is in sharp contrast to the fraudster - Golden Key Credit Card Company a satellite of a renowned Bank in Sri Lanka that advertizes itself as ‘a Bank with a Heart’ but finally broke the hearts of over many thousands of its victims through fraud and deception.

Personal letters

It was not only through a massive advertizing campaign both in electronic and print media that the Golden Key Credit Card Company attracted the ‘fly to the spider’s web of deception’ but also through heart warming personal letters under the hand of the Chairman and Directors flaunting high qualifications and honourable titles of Knighthood, Desamanaya etc assuring and guaranteeing depositors the safety of his or her investment. This is with a request to increase the quantum of the deposit with the bait of an increase of interest rates - that was promoted by its chosen officers employed for such purpose who spread the octopus tentacles round individuals and groups of family members who succumbed to the irresistible temptation moved not by greed alone but also certainly by dire need to earn a good income and not miss the opportunity offered.

It is manifestly evident that the biggest financial fraud perpetrated in Sri Lanka by a Limited Liability Company is by ‘The Golden Key Credit Card Company’ that has set in motion a chain reaction of social evils and untold harm and misery to a large section of the people of the country as well as to the ex-employees of the Company itself who were thrown out of employment after the scam and thereafter are unable to get another job on account of their immediate past connection to the defunct discredited credit card company.

Financial loss

It is also known that this is not the only fate the ex-employees face; Some who diligently promoted the business development of the employer Company, after the disclosure of the fraud, had to personally face death threats by depositors armed with guns who demanded from them the refund of their deposits and in order to save their lives had to go into hiding even abandoning their homes.

Another hazard some face is that they are unable to pay the instalments due on loans granted to them by certain Banks that befriended them during their good times under the pretext and guise of helping them by granting them unsecured loans but in truth and in fact it was only to develop the profits of the Creditor Bank that now threaten these defaulters with both criminal and civil action against them.

Many are the stories of depositors who on hearing of their unbearable financial loss of life’s savings died of shock while some committed suicide as they could not meet their daily medical needs for sustenance of life.

Many others who are old and feeble survive under sub standard human conditions in the belief and hope of being reimbursed and certainly look forward to the benefits that may now flow to them through the initiative of President Mahinda Rajapaksa.

Business venture

However there are other depositors who due to old age and health conditions entertain fears that the transfer of all assets of the defunct Golden Key Credit Card Company and or belonging to its Chairman and Directors now facing charges before court, to the newly formed Company would result in delay of settling their dues during their life time till the new company becomes a viable business venture.

In the premises due consideration should and must be given to allay the fears of the old and the infirm who are surviving.

The issue of share certificates to the value of their investment in the envisaged new company may be beneficial to their heirs if any but not for the benefit and survival of those living.

In the circumstances a feasible solution to this problem is to sell the entirety of the share value or part or portion thereof on the request of the share holder in the public share market with the right of pre-emption to the Government and or share holders of the new company and settle the seller of such shares with the proceeds of the sale thereof without any delay.

Advertizing gimmicks

In the light of the serious misconduct and fraud of Banks and Credit Card operators exposed herein it is deemed necessary and expedient in the public interest to alert and caution the people against falling victim to advertizing gimmicks of Banks, Credits Card Companies, Finance Companies and Corporations in Sri Lanka today that do not fall short of saying or doing anything even exploiting the name of religion to make a quick buck as the saying goes or to develop its profits at the expense of the people.

The Daily News paper articles and reports bear testimony to the huge profits made by Banks for a Quarter and thrive with liquidity.

But no benefits are shared or passed on to the people who have contributed their mite to the Bank’s progress. But in advertizing the Bank claims to be partners in progress.

Moreover despite the direction of the Central Bank to lower interest rates the Banks and Credit Card Companies have signally failed to comply.

Commercial banks

On the contrary Commercial Banks taking undue advantage of this direction have seriously reduced the interest rates on savings and fixed deposits of their clients to five percent or seven percent while charging 16 percent to 18.5 percent even on housing loans granted by them. This is utterly unfair when looking back in retrospect when the late SWRD Bandaranaike was the Prime Minister and late Pieter Keuneman was the Housing Minister, housing loans were granted at an interest rate of three percent payable spread out during a period of even for 25 years through the National Housing Department.

There is no reasonable ground to unjustifiably enrich Commercial Banks without any reciprocal benefits to the people of the land.

The Credit Card Companies charge an unconscionable rate of interest of 36 percent that has been reduced to 22 percent only by one Bank according to news reports. But employ the advertizing gimmick of providing an easy path to persons to do the shopping and purchasing without making cash payments as if the Company is granting the card holder a favour while charging the very high rate of interest at 36 percent on the unpaid balance shown in the monthly statement that is grossly unfair. The Credit Card Companies are able to reap such unfair profits as there is no competitiveness among them to offer a better deal to the cardholder. This needs to be remedied.

Mortgage bonds

People must be cautious in selecting the Bank offering Housing loans at attractive rates on mortgage of their land and enter into mortgage bonds with stipulated rates for a term or period of years.

Some of the angry depositors. File photo

It has been the sad experience of those who had entered into such mortgage bonds with a leading Bank offering housing loans for a term or period at an agreed rate of interest but after the lapse of about three or four years thereof arbitrarily enhancing the rate of interest by over five percent on the ground that they were running at a loss and threatened to carry out parate execution on the mortgagor failing to comply with its demand.

However there after wiser counsel prevailed and the matter was settled amicably in this instance.

In this context it is relevant to note that of the profit making corporate bodies or institutions in Sri Lanka, the Commercial Banks are the most privileged for the reason that they are entitled under the law to recover money lent at exorbitant rates of interest by the process of parate execution without recourse to courts of law. Even Court procedures are simplified as the defendant borrower must obtain leave of court to defend the action and even give security for such purpose.

It is common knowledge that whilst enjoying this privilege certain Banks have acted corruptly to obtain ex-parte judgements against defendants by obtaining false fiscal reports.

It is noteworthy that the Bar Association of Sri Lanka strenuously objected to this law that provides for parate execution that was not consistent with the constitution and the common law of the land (Roman Dutch Law) and even unsuccessfully challenged the Bill in Court in 1989.

In the premises it is urged that this unfair law should be abrogated and repealed.

The writer is an Attorney-at-Law