Controversial Bourse deals: Govt. admits Monetary Board amended EPF investment policy in 2009

The Government has dropped a bombshell admitting that the EPF’s Investment Policy was amended in 2009 enabling the biggest fund to take up equity stakes in commercial banks.

 “The investment policy statement and standards of professional conduct of EPF issued in 2002, which stated that the EPF could not invest in stocks of the banking and financial sectors, is now updated and the EPF has invested in the banking sector since 2009, following the decision taken by the monetary board,” Deputy Finance Minister Geethanjana Gunawardena told Parliament in response to the recent barrage of questions from UNP over EPF investments in banks and controversial companies .

UNP MP Dr. Harsha De Silva responded saying “this is unbelievable” as it was the first time the Government or the Central Bank admitting EPF could not invest in banks and that policy was changed in 2009.

He asked why the deafening silence for three years and why the Central Bank did not issue an immediate media release when they are used to issuing statements against opposition mps every other day.

“More importantly how did the legal issues including ‘conflicts of interest’ on insider information suddenly disappear??,” asked Dr. De Silva who noted that when IMF’s Chief of Mission Brian Aitkin made a statement on 13 June 2011 that “investing EPF funds in banking and stocks could be misconstrued and raises the potential for negative perceptions” Why did the CBSL not divulge they Could do so with no problem!!??.

UNP MP also asked why didn’t the Central Bank inform the changes to the SEC and to the market as part of best practices that all issues that made the Monetary Board to direct that EPF to not to invest funds in banks and financial institutions were no longer valid.

“What is more shocking is that instead of an official EPF statement it was hidden inside a statement of the deputy minister,” Dr. De Silva said.

UNP in Parliament yesterday also asked for the immediate release of the minutes of the Monetary Board along with the justification for the change in policy with respect to EPF investments in banks and non blue chip companies.