Central Bank’s failure on Golden Key comes to light

In what appeared to be a startling revelation, the Central Bank had discontinued the activities of its Special Investigation Unit way back in 2006 after it examined the accounts of the Golden Key Company (GKC) and identified a major crisis in it -- three years before the company went bankrupt.

This had come to light during the proceedings of the Parliamentary Select Committee (PSC) that probed the impeachment charges against former Chief Justice Shirani Bandaranayake.  In her submission to the PSC, Justice Shiranee Tilakawardane said that if appropriate action had been taken at that time, the present plight of the depositors could have been averted.  Investigations had been carried out by the Monetary Board during the time of then Governor Sunil Mendis.  The discontinuance of the investigations had taken place only after he retired.

In response to a question by Leader of the House Nimal Siripala de Silva during the PSC session, Justice Tilakawardane had said, “The Special Investigation Unit of the Central Bank had gone into the accounts of Golden Key because there were many petitions that had been sent. When they had been sent, analyzing those, they found that there was a very big problem with the Golden Key Company-the GKC. Then, what happened was, there was a meeting. Mr. Mendis   was the then Governor of the Central Bank. Shortly after he left, there was a meeting that had been held on 24/11/2006. I must say it was almost a fate because there were so many files and I just pulled one and I found inside it, this record. It said that all the proceedings were culminated. The minute said, “the Monetary Board is informed of the above and is invited to approve a discontinuance of the examination commenced in respect of the Golden Key Credit Card Company under Section 11. That was in 2006, long before many more, thousands other people invested in that, things would have come to a halt. If that had happened at that time, things would have come to a halt and there would not have been this huge loss that took place.”

After listening to her remarks, the Leader of the House also remarked that the Central Bank had failed in its duty.

In her oral submissions before the Committee, she further said that it might have happened after a meeting between Lalith Kotelawala, the Chairman of Ceylinco Conglomerate, and the Central Bank.

She said, “That decision was taken by the Central Bank and the Monetary Board. Though ‘X’ or ‘Y’ takes it, it goes as the decision of the Monetary Board. Being lawyers, you understand that; it is called chain command responsibility. So, they discontinued it. After 2006, there were large numbers of investors. When that came up again, we had to take steps to immediately alleviate what was going on.”

These submissions of Justice Tilakawardane are available on pages 1513 and 1514 of Volume II of the PSC Report tabled in Parliament.   She gave evidence before the Committee regarding the charge of professional misconduct against the impeached Chief Justice, in hearing the case involving the Ceylinco group.  

UNP MP Lakshman Kiriella, who commented on the matter, said that he would raise the issue in Parliament very soon.

“Regarding the Golden Key case, the former Chief Justice is blamed. But the fault lies elsewhere. It is now clear who is responsible for the plight of those who deposited money after 2006. We will expose this,” he said. (Kelum Bandara)