COPE questions more sour deals of State sector

By Aswhin Hemmathagama Our Lobby Correspondent

An interim report with the findings of the examinations conducted by Main Committee of the Committee on Public Enterprises (COPE) on 32 State institutions during the period 1 January to 30 September 2012 was tabled yesterday in Parliament, revealing more transactions with poor accountability.

Among institutions which were exposed were the Central Bank of Sri Lanka (CBSL), Insurance Corporation, IIFA Film Festival, IIFA Cricket Match, Sri Lanka Tea Board, and People’s Bank.

Minister of Human Resources and COPE Chairman D.E.W. Gunasekara addressing the House said: “If you can remember, the last report from the COPE was presented to this House in December 2011. That report was about the investigations conducted over 229 State institutions, for the first time in the history. We will be investigating 235 institutions this year. For the purpose of handling, these institutions were segregated into several sectors that came under three different sub-committees, out of which we have already completed examinations on 129 institutions. Today’s report contains the findings of 32 institutions that came under the main committee.”

According to this interim report, COPE has identified several ,matters including transactions with poor accountability, matters referred to the Criminal Investigations Department, and social responsibility, that need thorough investigations further.

Transactions with poor accountability

The Central Bank of Sri Lanka (CBSL) had invested in Greek Government Bonds, which had a face value of EUR 30,000,000 for EUR 22,163,500 (Rs. 3,427,576,045 on 5 April 2012 without considering the unfavourable market conditions and in a situation where high credit risk had been predicted by rating agencies.

The Auditor General had reported that this transaction had resulted in a loss of approximately US$ 15.6 million. The explanation offered by the Central Bank was that in the overall investment in the Euro zone, there was a profit on the investment. However, the fact remains that the investment in Greek Bonds resulted in a loss.

The Committee observed that the economic recession had engulfed the continent of Europe and that Greece had been placed in a crisis situation for a longer period of time. The element of high risk was quite discernible. Therefore, this transaction needs further investigation.

The Insurance Corporation had entered into re-insurance agreement with a bogus company called Trans Asia Management Advisors FZC with regards to Ceylon Petroleum Corporation and premium of Rs. 92,000,000 for the year 2009/2010 and Rs. 116,850,000 for the year 2010/2011 had been paid.

The actual income raised out of IIFA Film Festival had not been identified. The sale of tickets for the IIFA Cricket Match had been given to a private company contrary to the directives of the Minister and the ticket income which was separately collected by the Sri Lanka Cricket had not been handed over to the Tourism Promotions Bureau to date of the examination.

Although a sum of Rs. 9,038,930 had been paid by the Sri Lanka Tea Board to a private institution for the installation of a computer system, the work remained uncompleted even after seven years and according to the agreement, the system should have been installed and handed over within a period of 90 days. Further, some of the components installed several years ago are outdated now.

People’s Bank had invested Rs. 1,137 million to purchase 4,236,135 shares of SriLankan Airlines when Emirates sold its shares, but the value of the investment had impaired by 840.8 million as at 31 December 2011.