COPE’s fresh report exposes more corruption, misspending in public sector

Saturday, 15 November 2014 00:26 -     - {{hitsCtrl.values.hits}}

The Committee on Public Enterprises (COPE) presented its second interim report for 2014 in Parliament yesterday, revealing the findings and recommendations of the 46 public enterprises examined from 7 May to 26 September 2014. According to Human Resources Minister and COPE Chairman D.E.W. Gunasekara, the observations and the findings of the committee are based on the Auditor General’s reports for 2011 and 2012 and the performance of the institutions reflect only the situation prevailing at the date of the examination. The COPE report listed a series of major transactions with inadequate accountability. It noted that the entire procurement process in relation to the granting of local television broadcast rights by Sri Lanka Cricket in 2010 was not transparent. “In spite of the initial estimate of Rs. 2.5 million, the tender related to the refurbishment of 13 hotel rooms at the Samudra Hotel had been awarded by the Sri Lanka Institute of Tourism and Hotel Management for Rs. 3.9 million per room. However, the selected contractor had failed to perform the refurbishment up to accepted standards and the final payment had been made ignoring the audit observations,” the report listed. “Even though a stock distributor in Anuradhapura had been responsible for the misplacement of 5000 MT of fertiliser valued at Rs. 388 million (without subsidy) given by the Colombo Fertilizer Company Ltd. to be distributed among farmers under the fertiliser subsidy scheme, the investigations into the fraud, which took place in 2008, had not been completed even by 2014. It was further observed that no agreement had been entered into when handing over the fertiliser stock to the particular centre which had been registered only as an NGO.” The report also stated that the monopoly of selling soft drinks at Galle Face Green had been acquired by a trade union of the Sri Lanka Ports Authority who registered as a private company before later being sold to an external company for Rs. 5.5 million without the approval of the Ports Authority. The report further held that the National Paper Company Ltd. had received only Rs. 16 million for a stock of scrap iron worth around Rs. 40 million sold in 2012 and a significant number of dishonoured cheques had also been obtained in regard to this transaction. “Although the construction work of the Oluvil Port had been completed by spending Rs. 6,780 million from the DANIDA Agency of Denmark and Rs. 444 million of the Sri Lanka Ports Authority, its operations had not commenced even at the date of the examination, which was held on 4 June 2014. Furthermore, it has been revealed that the port can accommodate only small vessels due to its low depth of around nine meters. “Rs. 391 million, spent on the improvement of the efficiency of the Colombo Port, had become useless as the project, funded by the Asian Development Bank, had been abandoned since Government policies had later changed. “Rs. 54,889,800 had been paid as fines by the State Printing Corporation in 2010 and 2011 for not handing over printed books at specified dates and not printing textbooks in accordance with the relevant specifications. Rs. 1,494,543 had been made as the initial payment for the construction of an administration building for the University of Sabaragamuwa. Due to a legal issue, no construction had commenced at the date of the examination on 5 June 2014, even though Cabinet approval had been received in 2007. “The contract for the construction of the arch-bridge of the Pussallawa-Ulapane road had been awarded by the Road Development Authority in 1999 at an estimated cost of Rs. 42 million. Since the construction work had stopped by 2003 after the expenditure of Rs. 34 million, the contract had been re-awarded to the State Development and Construction Corporation to complete the remaining work for Rs. 75 million on the condition that it should be completed before 18 June 2009. However, the construction work had not been completed even by 31 December 2013,” the report stated.    

 Harsha slams EPF Annual Report 2012 in Parliament

  UNP MP Dr. Harsha de Silva on Thursday claimed that the Employees Provident Fund (EPF) Annual Report for 2012 was nothing more than an extension of the ‘Mahinda Chinthana’ political propaganda. De Silva charged that the “tone” of the report set the stage for forthcoming elections and accused the Central Bank Governor of being “unprofessional”. “Rather than talking about 2012, the Governor is accusing lawmakers of attacking the EPF. He is referring to the series of revelations I made in Parliament to bring their malpractices and massive fraud into the limelight,” Dr. De Silva said, following the tabling of the EPF 2012 Annual Report in Parliament yesterday. Dr. De Silva went on to say: “The Governor is making a political statement, which is an attempt to cover up the massive frauds of pump and dump which took place in 2010. The audit examinations of the 2010 accounts are yet to be completed in Parliament. Extensions are given one after the other to avoid being exposed. This is a clear violation of Article 148 of the Constitution.” However, commending the bold steps taken by the Auditor General, Dr. De Silva said: “The observations given by the Auditor General clearly reveal certain questionable activities which took place and a lack of documentation.” In the Annual Report the Auditor General has made two observations. The first of these observations refers to section 34 of the Sri Lanka Accounting Standard 16, where fixed assets should be revealed at least once every three or five years. Nevertheless, the fixed assets of the EPF, costing Rs. 76.6 million, which had been fully depreciated, had not been re-valued. According to the second observation, despite mentioning that an impairment test in terms of Section 58 of the Sri Lanka Accounting Standard 39 had been done to ascertain whether investments made in companies in which financial assets had been classified and brought to account as investments were subjected to impairment during year the under review, adequate evidence in that had not been furnished to audit. Nevertheless, an impairment test had been done at the end of 2013. The yardstick applied in that connection had been a 20% decrease in the share market price. According to the test done based on this policy, the share market value of the investments made in the shares of two companies (a sample taken by the Auditor General) as at 31 December 2012 amounted to Rs. 189.9 million and Rs. 6.79 million respectively and as compared with the cost of those amounting to Rs. 1 billion and Rs. 43 million the impairment in the value amounted to Rs. 815 million and Rs. 37 million or 18.9% and 15.5% respectively, the Auditor General stated in his report. However, the 2013 Annual Report claims that the EPF is the largest superannuation fund in the country with a net worth of over Rs. 1.1 trillion as at 31 December 2012, accounting for 12.7% of total assets in the overall financial sector in the country. Governor of the Central Bank of Sri Lanka and the Chairman of the Monetary Board Ajith Nivard Cabraal, addressing shareholders, reported 2.3 million members and 14.6 million accounts in the year under review. “During the five-year period from 2009 to 2013, the EPF earned a massive profit of Rs. 558 b, which easily superseded the earnings of any other entity with a comparable asset base. In absolute terms, the EPF made a profit of Rs. 101.7 b in 2009. Rs. 111.5 b in 2010, Rs. 107.5 b in 2011, Rs. 111.8 b in 2012, and Rs. 125.6 b in the year ended 2013, and such profits were duly credited to all member accounts at the end of each respective year,” Cabraal said.