{"id":98379,"date":"2020-01-29T00:05:42","date_gmt":"2020-01-29T06:05:42","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=98379"},"modified":"2020-01-28T16:57:24","modified_gmt":"2020-01-28T23:57:24","slug":"forensic-audit-report-on-central-bank-bond-scam-and-the-superannuation-management-in-sri-lanka","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2020\/01\/29\/forensic-audit-report-on-central-bank-bond-scam-and-the-superannuation-management-in-sri-lanka\/","title":{"rendered":"FORENSIC AUDIT REPORT ON CENTRAL BANK BOND SCAM AND THE SUPERANNUATION MANAGEMENT IN SRI LANKA"},"content":{"rendered":"

BY EDWARD THEOPHILUS<\/strong><\/em><\/span><\/h2>\n\n\n

I\nattempted to find a copy of the forensic audit report on the central bank bond\nscam, but I could not find it, most probably, the speaker of parliament may want\nto maintain confidentiality on the contents of the report. If it is opened to\nthe public different views would have aroused on the contents as there are\nexperts in Sri Lanka who have more knowledge of bond dealings and its dishonest\naspects in the process. We can see that there were considerable points, which\nrelated to the deal.  It was eventuated\nwith the knowledge of authorities who had obligation to exercise due care and\nattention as bank executives when dealing with various transactions and the consent\nof authorities who made the covering approval or originally authorized the deal\nhad a fidelity to exercise authority on good faith and discretion in term of\napplicable administrative law of Sri Lanka. The deal was deemed to be cheating\nand eventuated without good faith that they were doing the right thing. On this\nbasis, the bond scam was a crime against the government or people of Sri Lanka.  Many mistakes happening in day to day banking\nactivities, but they don\u2019t amount to treat as crimes. <\/p>\n\n\n\n

The\nfollowing points are serious in the case and the public need knowing whether\nthe auditor considered the points. Mr. Ajith Nivard Cabral also made public\nstatements on this matter. <\/p>\n\n\n\n

  • The borrowing to the\ngovernment at a higher rate of interest than the decided rate or prevailing\nrate of the market by the government was cheating and as a result of this\naction, additional cost incurred to the government and the responsible officers\nwho authorized the deal with knowing the consequences would be guilty on this\ntransaction. <\/li>
  • The borrowing more than\nthe amount required at a higher rate was also cheating and the bank officers\nwere responding to question about this and without considering the problem,\nauthorized to borrow a large sum of money was dishonesty and what did the\ngovernment authorities do with such additional money.  This action also amounts to a crime. <\/li>
  • There was no consultation\nof the ministers in charge, who were supposed to use borrowed funds and the\nleader of the cabinet, the president of Sri Lanka on the rate of interest and\nthe volume of borrowing.  The leader of\nthe cabinet should have questioned this abnormal transaction at the cabinet\nmeeting and would have taken remedial actions to indemnify the potential loss\nto the government at first instance and to prevent a future repeat. The records\nindicate that borrowing happened twice. It was amount to misleading and\nmisappropriation.<\/li>
  • The government auditor\nwas responsible to advise the government about the transactions and advise the\ngovernment to take legal actions against the culprits.  Did the auditor General at that time or after\nthat play the role?  If the auditor\ngeneral did not play the role it could be treated as his negligence, which\ncould be treated as abetting to commit crimes and the auditor general also\nwould be an accuse of the case.<\/li>
  • The issuer of Bonds\n(Central Bank) and an investor of the bonds (EPF managed by the Central Bank)\nis procedurally wrong according to banking procedures and reflect a conflict of\ninterest.<\/li>
  • The government procedures\nrules that the government cannot borrow funds without the approval of the\nsecretary to the treasury and did the central bank as a government-owned\norganization obtain the approval of the treasury to borrow funds and to issue\nbonds to the public for the borrowing purpose. \nWhat was the treasury opinion on this matter?<\/li><\/ul>\n\n\n\n

    I\ndon\u2019t know whether forensic auditors considered above points when they\npreparing the audit report. Lateral thinking on the forensic audit report is\nessential and hiding the report from the public is not appropriate. <\/p>\n\n\n\n

    The\ncentral bank bond scam indicate that the superannuation management in Sri Lanka\nis in a crisis and my article since the year 2000 indicated that the central\nbank is a regulatory authority of the financial system of Sri Lanka and the\nmanagement of superannuation, collecting premiums, insurance, and investments\nof fund markets playing role, which is subject to regulations of the authority,\nthe central bank.  Sri Lanka regulator\nhas become a market player and it is a disgraceful act in Sri Lanka’s financial\nsystem.  Since the year 2000, I have been\npointed out this issue and the government or the policy-makers have failed to\ncorrect the problem giving the confidence in the financial system of Sri Lanka.<\/p>\n\n\n\n

    The\ngovernment needs to separate superannuation management from the central bank\nand establish a separate organization to do it consolidating all super funds to\na single organization.  The proposed\norganization would be a large corporation, which lifts Sri Lanka’s economy and\nprovide more than 10000 jobs for educated youths. Such a new organization could\ngive a long-term solution to the unemployment problem of university graduates\nand boost to the construction industry. <\/p>\n\n\n\n

    The\npresident, Mr. Gotabaya Rajapaksa should investigate my suggestion and take\naction to solve the economic issues of the country.  <\/p>\n\n\n\n

    The\nproposed new organization to manage super funds in Sri Lanka can open two\naccounts in Bank of Ceylon and Peoples\u2019 Bank for operation purpose and such\naction will be a good solution to liquidity problem (Money base problems) in\ntwo major government banks and the banks would not need to borrow from outside\nfor liquidity problem.<\/p>\n\n\n\n

    The\ncentral bank of Sri Lanka can freely play its role especially regulation and\nsupervision of banks, non-bank finance companies and other market players such\nas insurance, merchant banking, stock market dealing and many other market\ndealings.  The central bank also can\nsupervise the proposed super management organization.  Then the monetary policy will successfully\nimplement in the country and the original purposes of the central could be\nachieved.  <\/p>\n","protected":false},"excerpt":{"rendered":"

    BY EDWARD THEOPHILUS I attempted to find a copy of the forensic audit report on the central bank bond scam, but I could not find it, most probably, the speaker of parliament may want to maintain confidentiality on the contents of the report. If it is opened to the public different views would have aroused […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[],"class_list":["post-98379","post","type-post","status-publish","format-standard","hentry","category-edward-theophilus"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/98379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=98379"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/98379\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=98379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=98379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=98379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}