EPF must follow globally-accepted accounting practices
Monday, 12 May 2014 00:00
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I read with concern the many letters, statements and comments made both by politicians and union leaders regarding the loss amounting to Rs. 12 billion in 2011.
Now this is not small money. Even a well-performing company would take years to accumulate assets to such a degree. The fund is able to muster money, because it is collected according to the act and using the long arm of the law. Given half the chance most people would prefer to look after their own money given the accusations being traded against the managers of the fund.
The Sunday Times had an editorial dedicated to the EPF a week back. Their argument raises very important concerns. Their concerns maybe because the newspaper staff have their life savings with the fund, so obviously they are worried about the safety of the fund.
The Central Bank has been defending the fund saying it has performed amazingly well. Some of the highlights in Nihal Rodrigo’s statement are noteworthy and many of the comments by union leaders, business editors and MP Dr Harsha de Silva also have validity.
The loss of Rs. 12 billion was highlighted by none other than the country’s Auditor General. Is the Central Bank saying his findings are not worthy of a debate? Certainly we need to take his comments seriously.
I am sure Rodrigo must be a highly-trained investment advisor with a good financial qualification, may be a CFA. I don’t know. But he certainly needs to be on top of the game to manage a one trillion pension fund!
My other point is, the fund needs to follow globally-accepted accounting practices. How can they argue the fund takes a long-term view and therefore, unless realised, the investment must be guided by the purchase price? Ridiculous! The members should be told the actual position, but give them the confidence and the basis for the contentious investments in either quoted or unquoted stocks.
The Auditor General had raised serious concerns about investments in near bankrupt companies; some of them after three years are still struggling to put their nose above water. How do you treat such stock market investments? MP Dr. Harsha keeps screaming, most times with no basis, but on this issue his views and the trade union views must be taken into consideration.
The proposal to have proper representation in the management of the fund would help allay all fears and help win back the confidence of the public. To be fair by Rodrigo, I note he has taken over after all this controversy in 2012/13. The Head of the fund in 2011 was one R. Dheerasinghe, still in the Central Bank. That person should be the one responding to these allegations and not poor Rodrigo.
Devinda Dissa
