September 11, Colombo (LNW): Nearly 14 years after the collapse of the F&G Group of companies (F&G Real Estate and F&G Property Developers) and the related downfall of Golden Key Credit Card Company, new revelations have emerged, causing further distress to the depositors and investors.
The Ceylinco conglomerate, led by Lalith Kotelawala, saw its empire crumble, leaving around 7,000 depositors, many of whom still face financial hardship. Some have even passed away during their long struggle to recover their investments.
The liquidation of F&G in 2009 left depositors grappling to reclaim over Rs. 6 billion owed to them, despite the company’s assets being valued at approximately Rs. 7 billion by 2013.
This financial debacle led depositors to file a fundamental rights petition (FR 317/2009) in the Supreme Court, seeking judicial intervention to reclaim their funds. While the court issued orders in favor of depositors, recent developments suggest that F&G’s new management has failed to comply with these directives, deepening the frustration of those affected.
A key issue involves F&G’s current management and its dealings with ZRA Holdings, the company that took over F&G under Supreme Court supervision. Instead of prioritizing the repayment of depositors,
ZRA Holdings allegedly used F&G funds to invest Rs. 200 million into an 11% stake in a hotel property in Wadduwa, initially named Ocean Queen Hotel and later rebranded as Aryana Queen.
This hotel, co-owned by a Turkish investor and a local partner, had been struggling financially and could not repay its loans from the Bank of Ceylon (BOC). As a result, BOC prepared to auction the hotel to recover its dues.
ZRA Holdings reportedly intervened by making a partial loan repayment to BOC, utilizing funds from F&G depositors. Furthermore, sources claim that ZRA Holdings overvalued the hotel at nearly Rs. 1.2 billion and overpaid for the 11% share purchase, further misusing depositor funds.
This financial maneuvering, combined with other unsubstantiated withdrawals from the NDB Bank for unspecified business purposes, has outraged depositors.
The depositors are particularly incensed because ZRA Holdings had previously provided an affidavit to the Supreme Court in March 2021, assuring that any funds invested in F&G would remain unencumbered and be used solely for reviving the company.
This recent use of depositor funds for unrelated investments contradicts that commitment and raises questions about the integrity of F&G’s current management.
The Depositors Association, representing the interests of those affected, has continuously raised concerns with F&G’s management about these questionable financial decisions. However, the management has refused to meet with depositors’ representatives or disclose details of the transactions.
The silence of two directors, previously tasked with protecting depositors’ interests, has further fueled speculation that they might be benefiting from these underhanded deals.
Depositors, many of whom lost their life savings, initially had a glimmer of hope when the Supreme Court ordered the repayment of 51% of their deposits, though without interest.
Now, with evidence of mismanagement, they are preparing to seek further intervention from the Supreme Court, accusing ZRA Holdings of siphoning off depositor funds in direct violation of court orders.
As these allegations continue to unfold, questions remain about whether those responsible will be held accountable for the financial losses imposed on thousands of innocent depositors.
