Chandra Jayaratne and corrupt auditors

I refer to “Good governance activist” Chandra Jayaratne’s  letter to the President, Institute of Chartered Accountants of Sri Lanka and Chairman, Sri Lanka Accounting and Auditing Standards Monitoring Board published in the Daily FT of 24 October urging them to “introduce necessary regulatory reforms and oversight mechanisms, to assure upholding of professional standards, best practices, ethics”. 

This is strange since as a senior chartered accountant he is aware that CA Sri Lanka established by Parliament by Act No.23 of 1959 has the necessary regulations “to assure upholding of professional standards” and what is glaringly lacking is the WILL to uphold the same. 

He is also aware of the ‘open and shut’ case of professional misconduct by the ‘Partners’ concerned of the Sri Lanka affiliates of PwC and Ernst & Young in the fraudulent privatisation of the Sri Lanka Insurance Corporation confirmed by the Supreme Court, Parliament’s COPE and the Attorney-General and the failure of CA Sri Lanka and SLAASMB to hold those concerned accountable staring him in the face for several years. The SC judgment is also signed by incumbent Chief Justice K. Sripavan.

This is apart from CA Sri Lanka ‘Ethics’ Committee itself almost 10 years ago endorsing the findings of its Investigating ‘Panel’ of a prima-facie case of ‘Professional Misconduct’ by PwC and EY and ALL their Partners at the relevant period. 

Not holding those concerned accountable violates with impunity Section 17 (2) (b) of its Act of incorporation which clearly stipulates that when an ‘Investigating Committee’ appointed by the ‘Council’ “reports to the Council that a prima facie case of professional misconduct has been made out against a member, the Council shall appoint a disciplinary committee for the purpose of inquiring into the conduct of such member” (emphasis mine).  

As for the SLAASMB, at the conclusion of its purported ‘investigation’ of this same fraudulent privatisation, I received the following FARCICAL response as per its e-mail dated 28 November 2005: “Whilst we appreciate the contribution made by the complainants, we are not in a position to keep the complainant informed of the progress of the investigation and the outcome of the investigation, as it would undermine our policy on releasing information to the public.”

These have been brought to Jayaratne’s attention also through my ‘Open’ letters in the media. NOT ONCE HAS HE RESPONDED! He has never referred to this ‘open and shut’ case in his regular missives also to the President and Prime Minister of Sri Lanka on the need for good governance with emphasis on accountability. 

‘Partnership’ law

Under the ‘Partnership’ law in Sri Lanka, ALL ‘Partners’ are ‘Jointly and severally’ liable for any wrongdoing. All Partners are well aware of every audit and assignment. It is unethical for any ‘Partner’ to plead ignorance.  

It is the responsibility of CA Sri Lanka to forthwith disclose the identity of those who were ‘Partners’ of PwC and EY at least for four years prior to 11 April 2003 which is the date on which the scandalous SLIC privatization took place.

It is reprehensible that some ‘Partners’ falling under this period have been appointed ‘Directors’ of ‘quoted’ companies and banks. Some have even been appointed to the ‘Quality Assurance Board’ of CA Sri Lanka!

Conclusion

I ask whether Chandra Jayaratne and other proponents of good governance such as ‘Friday Forum’ of which he is convener are serious in combating corruption and abuse of power when the role of auditors is ignored? After all, chartered accountants and auditors are the first line of defence against corruption in all entities dealing with financial resources.

Although the alleged egregious corruption and abuse of power in SriLankan Airlines has banner headlines, what is glaringly omitted is the identity of the airline’s longstanding auditor – Ernst & Young. 

On the subject of airlines, was it not a Past President of CA Sri Lanka and the OPA – who was mainly responsible for the alleged “within 24 hours” BOI approval of ‘Mihin Lanka’ not withstanding his reported admission to then COPE member Ravi Karunanayake (now Minister of Finance) “under normal circumstances it would take six to eight weeks at least”? (‘The Sunday Leader’ 10 December 2006). 

I trust Chandra Jayaratne will not continue to seemingly prevaricate on auditor corruption.

His response is awaited.

Amrit Muttukumaru