Earnest attempts are being made at denying justice to the depositors of the F&G Group of companies (F&G Real Estate Co. Ltd. and F&G Property Developers Pvt. Ltd.) subsequent to 13 long years following the debacle of Ceylinco.
Nearly 4,700 depositors who had invested their hard-earned cash with the F&G Group of companies (F&G Real Estate and F& G Property Developers) risked losing over Rs. 7 Billion due to the collapse of Ceylinco which occurred in 2008.
Investors in the hope of achieving justice in 2009 filed a fundamental rights petition (FR 317/2009) in the Supreme Court seeking the assistance of Sri Lanka’s judicial system in a bid to reclaim their deposits.
After examining the FR petition the Supreme Court ordered the appointment of an Interim Board of Directors to manage the assets owned and operated by F&G Real Estate Co. Ltd. and F&G Property Developers Pvt. Ltd
The Interim Board of F&G consisted of Roshan Fernando, former Supreme Court Judge Nimal Dissanayeke, former SL Army Officer Ranjan De Silva, and former Treasury Secretary Dixon Neelaweera and Lionel Katuwawala.
Consequently, Chief Justice Shirani Tillakawardhana instructed the Interim Board of F&G to call for an Expression of Interest (EOI) for a potential investor to take over the F&G Group of companies, revamp the operation and pay back the depositor’s liability.
Although several EOIs were submitted, none of them were able to submit an efficacious investment plan to jump-start F&G.
As a result, under the guidance of the Supreme Court & Central Bank, the F&G Board hired KPMG to carry out an evaluation and submit their recommendation to pick an appropriate investor to take over the group.
KPMG upon carrying out a stringent technical & financial evaluation of the listed investors who submitted their proposals deemed that ZRA Holdings Pvt. Ltd, was up for the task since the proposal submitted by it proved to be the most productive and beneficial to depositors.
According to the proposal, ZRA Holdings Pvt. Ltd. whose directors have a wealth of experience in investing in high-value urban real estate ventures will take over the reins of F&G, establishing both companies under them while making an initial investment worth Rs. 500 million.
As per the settlement plan, a payback ratio of 51 percent of depositor funds was outlined to be paid in cash to depositors of F&G Property Developers while the outstanding 49 percent was to be met through the granting of non-voting shares.
Whereas F&G Real Estate was concerned, repayment was to come through 61 percent in cash through depositor funds while the outstanding 39 percent was to be settled through the granting of non-voting shares.
Accordingly, the Supreme Court which sanctioned the settlement plan on 24 March 2021 directed the signing of the investment agreement with the Interim Board of F&G & ZRA Holdings Pvt. Ltd. and both parties signed the agreement on 30th April 2021.
As per the agreement ZRA Holdings Pvt. Ltd was warranted to issue maiden shares on behalf of F&G Real Estate Co. Ltd. and F&G Property Developers Pvt. Ltd. to be commensurate with its initial investment value of Rs. 500 Mn in 60 days, following which ZRA Holdings Pvt. Ltd would take over as the major shareholder of the F&G Group of companies.
Subsequently, two members of the F&G’s Interim Board already appointed by the Supreme Court together with Directors representing ZRA Holdings Pvt. Ltd was required to overlook operations and upon settling of all the depositors, these directors representing the F&G’s Interim Board were required to step down, handing over operations to the new management through a systematic transition. As per the agreement Central Bank will monitor the whole process in this period.
As the second phase of implementing the investment Agreement ZRA Holdings Pvt. Ltd was required to issue shares and a meeting in this regard was convened between the shareholders of F & G property Developers Pvt. Ltd. & members of the Interim Board.
This meeting convened on 30 July 2021 with Directors of ZRA Holdings Pvt. Ltd drawing a bank draft worth Rs. 500 million in accordance with the terms & conditions of the agreement.
However, the following shareholders, Directors and their sanctioned representatives refused to grant approval at this juncture and proposed to set another date for a meeting while providing them with more time to consider.
These individuals comprised of Lalith Kothalawela, K.A.S.Jayasinghe, Mervyn Jayasinghe &Malani Sabharutnam.
This course of action has deliberately & maliciously precluded the investor from issuing shares in accordance with the agreement entered into. Surprisingly their logic was that they weren’t made aware of the investment process despite being parties and stakeholders of the Supreme Court petition filed in 2009.
Ironically these stakeholders had concurred with the final Supreme court verdict issued on 24 March 2021, which included the Central Bank, the Attorney General’s Department, Depositor Unions, Shareholders Unions of both companies, their directors, and attorneys.
Moreover, if the relevant stakeholders & directors were keen on filling their objections, they were at liberty to do so ahead of the verdict being issued.
Deliberately interfering and causing delays to the investment agreement which has been sanctioned through a Supreme Court verdict may well amount to contempt of court.
However new date to continue the adjourned EGM has been secluded to 2nd November 2021, after many delays due to the pandemic situation in the country and all the details and documents requested by the shareholders have been furnished by the current board. While some of the shareholders have already expressed their willingness to toe the line with the supreme court decision, the intentions of the others are yet unknown.
Most of the 4,700 depositors affected by the F&G financial crisis are still struggling to make ends meet and some of them are no more, recent Covid 19 crisis has worsened their plight. Even after the elapse of 13 long years the process to ensure justice to the depositor remains mired and depositors are waiting in anticipation of a speedy solution.