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Sri Lanka looks to pay losses of depositors who lost Rs507mn from Entrust bondscam

ECONOMYNEXT – Sri Lanka has appointed a committee to look into ways to pay losses of 507 million rupees to depositors of a co-operative society bank that lost money from a bondscam by the defunct Entrust group, a minister said.

“Over 60,000 depositors of the Hewagama Korale East Co-operative Society have lost money from this,” Minister Gunewardene said.

“This is not a finance company but a co-operative society. They are holding protests.”

He said Minister of Trade Chamal Rajapaksa had appointed a committee to look into ways for the government to at least pay the principle of the deposits.

The directors of the Hewagama Korale East Multipurpose Co-operative Society Ltd had invested 507 million rupees in what was said to be a primary dealer in government securities approved by the central bank. But it was not a primary dealer.

According to information submitted to parliament East Hewagama Korale Co-operative Society had invested 507.588 million in a company called Entrust Limited through Treasury bills but the money had not been returned.

Parliament was told that Entrust Limited had given fake documents as certificates purporting to represent Treasury Bills issued by the central bank.

By February 28, 2019 the society was owed 661.1 million rupees based on prevailing interest rates.

By February 28, 925.269 million rupees were owed to 115,068 depositors of the Hewagam Korale East Co-operative Society but 74 percent of the assets were lost.

At the time the co-operative society had 166 million rupees in liquid assets.

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The Entrust group also had a licensed primary dealer, Entrust Securities, which was also involved in bond frauds.

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The central bank said in 2016 that 8.5 billion rupees of funds lost in the Entrust Securities bond scam will be repaid. (Colombo/July24/2020)