Sri Lanka to use central bank profits to bailout Golden Key
ECONOMYNEXT – Sri Lanka is planning to use central bank profits expected to be earned in 2015 to fund an 8.5 billion rupee bailout of Golden Key Credit Card Company, an unregistered Ponzi-scam style firm that collapsed after promising high interest rates.
A total of 8,545 million rupees are needed to bailout investors in the failed company, according to a proposal made to cabinet. Of that 544 million rupees will go to investors who are owed less than 2.0 million, 3.95 billion rupees to investors who are owned up to 10 million rupees.
Investors owed above 10 million rupees will be given the balance 4.05 billion rupees.
Investors will get 41 percent of their money under a court administered plan.
The Central Bank will advance the money for the Treasury provide the tax-payer funded bailout.
So far 1,118 million worth of assets after deducting liabilities, including 532 million dollars of assets belonging to directors have been identified through the court process.
But directors have applied to courts to have their assets released. Without the director’s assets, only 586 million rupees directly under the control of Golden Key will be available to be liquidated, requiring 7,985 million rupees to be provided by the tax payer.
In 2015 the Central Bank is expected to transfer 23 billion rupees in profits to the Treasury and 7,985 million will be offset from projected profit transfers to the Treasury to cover the bailout.
A committee under the central bank is expected to be appointed to recover assets, but unless court gives permission, the agency would not have any authority to recover director’s assets.