View from Colombo: Pramuka depositors continue to suffer

A year after the collapse of the Pramuka Savings and Development Bank (PSDB) which left in the lurch around 15,000 depositors and employees, there is no solution in sight.

Depositors who formed an association to fight for their rights complain that they are extremely displeased with the manner in which the country's Central Bank authorities have been responding to their pleas as they are not even implementing the Supreme Court order to seek means to reopen the bank.

They ask how have top officials responsible for this disaster left the country without any difficulty, stating that the so called "timely" intervention of the central bank has left the depositors high and dry though it tries to hide its negligence behind various excuses, some of them nothing but a mere joke.

According to depositors, all the institutions involved keep passing the buck, leaving the victims of mismanagement, corruption and fraud, stranded and helpless.

No compensation

To date they have not received any compensation for their collective loss which is estimated to be around Rs3.2 billion. According to reports, three people have committed suicide unable to bear the loss of their entire savings, while one died of a heart attack and 14 others suffered a stroke on hearing the news of the closure of the bank.

The Depositors Association submitted a restructuring concept to the central bank on September 17, but has not yet received a response. They accuse the central bank of not providing prospective investors with adequate information about the bank to formulate a proper proposal. The bank is now operative only to recover loans and reported a recovery of Rs107 million in July.

Meanwhile, the bank's chief executive, Rohan Perera, who fled the country in December, has come out of hiding, though he has not disclosed his exact whereabouts in Europe. He claims that every cent of the depositors' money is safe. He told a London-based journalist of a Colombo-based English language daily that "Pramuka bank did not fall, but was killed by the island's central bank".

Accusations

Perera also charged that he was blackmailed by a minister who demanded Rs50 million, with Rs10 million paid up front, to reopen the bank.

But a top official who joined the bank in 1999 stated that during their regular meetings with Perera and others, they always painted a rosy picture though they did know that all was not well with the financial system, but they could not reveal this to the public as they were bound by company ethics.

A central bank source, meanwhile, has stated that "they are studying proposals to restructure the bank and very little has come in through the loan recovery process as 80 per cent of the loans were non-performing. The source added that the central bank acts in the interests of depositors who campaign against the monetary board and the media doesn't take the trouble to investigate their bona fides.

"The depositors ask for money to be infused into the bank but the central bank is not empowered to do so and also give out information about Pramuka. The delay in settling the issue was due to court action and central bank will be with the bank throughout."

While this drama continues, the depositors continue to suffer.

The writer is a Sri Lanka-based journalist.