Rs. 974 M in Loans to Daya Gamage-Linked Companies

COLOMBO (News 1st): Companies linked to former Minister Daya Gamage obtained loans amounting to Rs. 974 million from the Sri Lanka Housing Development Finance Corporation (HDFC), a state financial institution established to provide concessionary housing loans to help ordinary Sri Lankans achieve home ownership, a parliamentary inquiry has revealed.

The disclosure was made during a meeting of a subcommittee operating under the Committee on Public Enterprises (COPE), where concerns were raised that the loans had been granted to politically exposed persons, despite the institution's primary mandate being to serve low and middle-income citizens seeking housing finance.

The subcommittee, chaired by MP Asitha Niroshana and appointed to expedite the COPE investigation process, recently examined the operations of the Sri Lanka Housing Development Finance Corporation.

During the proceedings, HDFC Chairman S.P. Keerthirathne questioned how large-scale loans had been issued through an institution intended to assist ordinary citizens.

He noted that the corporation was created to provide housing loans to people in need, but over the years loans had reportedly been granted to politically exposed persons. He questioned how loans amounting to hundreds of millions of rupees had been approved through an institution that was not established to finance such entities and pointed out that many of those loans remain unpaid.

The inquiry then focused on specific companies that had received financing.

Responding to questions from MP Asitha Niroshana, officials identified Bimputh Finance Company as one of the entities that had received a loan facility.

Officials stated that the company had originally obtained a loan of Rs. 250 million, but due to non-payment and the accumulation of interest, the outstanding amount had risen to approximately Rs. 430 million.

When questioned about recovery measures, HDFC Assistant General Manager (Legal) Darshani de Silva told the committee that a court order had been obtained to wind up and liquidate Bimputh Finance Company.

She explained that a liquidator had been appointed and the liquidation process was currently underway.

De Silva further revealed that the Daya Group had provided the institution with a corporate guarantee and that legal action had already been initiated in connection with that guarantee, with the matter now before court.

According to her, during the legal proceedings the relevant parties informed HDFC that a payment was due to them from the Ministry of Finance and that they had no objection to banks recovering their dues from those funds.

She told the committee that discussions had recently been held with the Ministry regarding the matter.

De Silva added that the payment in question relates to the acquisition of Sevanagala Sugar Industries and that any payment due would be subject to a court order. She said discussions are continuing at ministerial level on facilitating the recovery of HDFC's dues if such a payment is eventually made.

The committee also examined whether additional Daya Group-affiliated companies had obtained loans from the institution.

During the discussion, officials identified Olympus Construction as another entity that had received financing.

Officials stated that Olympus Construction had obtained a loan of Rs. 250 million.

The committee then sought details on the total amount currently recoverable from the companies.

Deputy General Manager Kapila Deshapriya informed the subcommittee that the outstanding amount related to Bimputh Finance Company had increased to Rs. 546 million with accumulated interest.

He further stated that the amount due from Olympus Construction had risen to Rs. 328 million, including interest.

Based on those figures, the committee calculated the total recoverable amount at Rs. 974 million.

Commenting on the findings, MP Asitha Niroshana said the outstanding amount linked to the Daya Group now stood at nearly one billion rupees. He further remarked that many financial institutions in Sri Lanka had reportedly suffered significant losses linked to the group and noted that HDFC now appeared to be among those institutions.