An unprecedented scam
The massive daylight robbery by
a rogue finance company of depositors' money running into more
than Rs.one billion has caused shock and consternation among the
public which in turn could have a ripple effect on all financial
institutions in the country, through bad publicity.
It is also an apt lesson to the public not to be lured by the
glib talk and smooth advertising of racketeers bent on fleecing
them. The latest 'crash' should at least now warn them to think
twice about their choice before stashing away their savings.
The heart rending tales of the depositors of the Sakvithi
Finance Company is a timely warning to gullible sections of the
public not to be deceived by attractive offers. It is stated
that the mastermind of the bogus Finance Company had fled the
country with the massive loot.
The depositors numbering over 1,000 have now lain seige to
the Mirihana Police in a desperate bid for information about the
con-man and his cohorts. Some arrests have been made but as with
all other instances involving large financial scams these are
bound to be small fry.
The story is that the owner of the Fiance Company who had
doubled as an English tutor had fled the country and the
authorities will once again be caught in a dead end as in the
past when Finance Company bosses decamped with the spoils. Some
of the depositors have invested their life savings the most
moving tale being that of a blind man who had invested Rs.3.5
million in the failed venture after seeling of his house and
It is said an advertising blitzkrieg preceded the setting up
the so called Finance Company with prominent personalities too
brought into the picture so as to redouble confidence of the
depositors. The issue had its reverberations even in Parliament
yesterday with NFF leader Wimal Weerawansa questioning the
supervisory role of the Central Bank in this connection.
What was the Central Bank doing when these advertisements
were aired freely, if as the Deputy Fiance Minister Ranjith
Siyambalapitiya said the Central Bank periodically publishes the
lists of Finance Companies allowed to operate by the CB.
We are told that laws are to brought to hound out all bogus
Fiance Companies. And what is the criterion to identify bogus
Finance Companies for any sly operator would take pains to
appear respectable as the latest case demonstrates.
It is not as if this was the first crash of a Fiance Company
in this country. What became of the stringent laws imposed in
the wake of the failed Finance Companies in the past. What
happened to the laws imposing a maximum ceiling for deposits
prescribed for Finance Companies. Had these regulations been
applied to the letter no doubt the present calamity could have
The proliferation of Finance Companies too was a phenomenon
that came about with the advent of the open economy which paved
the way for the setting up of fly by night companies. The mass
circulation of money in the country in the first flush of the
open economy and the burgeoning business environment provided
the ideal backdrop for unscrupulous elements to make a killing.
That they used the innocent gullible public in their scheme
was only incidental. The environment that spawned a free for all
culture also bred avarice, with people not content with what
they had and opting for more and more to keep pace with the fast
pace of life.
This trend continues to this day with even more intensity
with people not thinking twice before gambling with their money.
Incidentally it is no secret that certain Finance Companies
operating today have gambling as their sideline and it is always
a risky business.
That said there are genuine Finance Companies who serve their
clients contentiously and have earned a name for themselves as
viable entities. Besides Fiance Companies too perform a vital
role as the non traditional Banking sector that is one of the
cogs in the wheel that sustains the economy.
What is needed is proper supervision of the operations of
these entities. The Government should now step in to closely
monitor these Finance Companies and not wait until the horse has
bolted to act.
They should not be allowed to fleece the public and get away
with it. Fresh guidelines should also be drafted governing the
incorporation of any Finance Company. This should necessarily be
backed by sufficient assets as collateral and a ceiling on
Also the integrity of persons who set up ventures should be
brought under the microscope. According reports a search is on
for owner of the rouge Finance Company with even Interpol being
alerted. All measures should be taken to apprehend the culprit
and return the monies of the innocent depositors.
True, people invest money for extra returns and the
temptation is to invest in the Finance Companies that offer
attractive interests. The present high cost of living too may
have compelled the public to invest in a sector which offers
bigger dividends. But prudence demands that one does not put
one's eggs in one basket. Most of the depositors taken for a
ride in the latest scam did just that. One must stick to
established banks and finance companies when it comes to hard