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A litany of mistakes made public

14 Mar 2022

  • COPE’s first report for the year reveals extent of poor asset management by public institutions
BY Sumudu Chamara Revealing a plethora of little-known facts about the operations of public institutions and the management of their funds, the first report of the Committee on Public Enterprises (COPE) for the ninth Parliament was presented to Parliament last week by COPE Chairman Prof. Charitha Herath.  The report contained inquiries into 12 public enterprises which took place during the first session of the ninth Parliament, i.e. 6 January 2021 to 7 April 2021, and among them are the Independent Television Network (ITN); on the storage and distribution of petroleum; the Coconut Development Authority (CDA); the study on the present status of the field of foreign employment; on the role of the National Child Protection Authority (NCPA) regarding child abuses; Sri Lanka Insurance Corporation Ltd.; on the performance of the project to relocate people living in high landslide risk areas in the Kandy District; the environmental audit on the import, use, and post-use management of plastic; Lanka Mineral Sands Ltd.; the Peradeniya University’s Postgraduate Institute of Science; Sri Lanka Cricket (SLC); and the National Livestock Development Board. ITN’s declining revenues The Committee had observed that the annual reports of ITN for 2017, 2018, and 2019 had not been tabled in Parliament, and that there is a gradual loss incurring trend after 2015, and recommended that action be taken to table in Parliament the annual reports for the previous years before 30 June in the coming year. The Mass Media Ministry Secretary is responsible for implementing this recommendation. Adding that although the combined plan for 2017 and 2018 has been prepared, the combined plan presented for 2017 to 2019 had not been updated, the Committee noted that the ITN Chairman should take action to update the combined plan pertaining to the 2017 to 2019 period. No progress has been reported in this regard. The Committee had also observed that the General Manager (GM) and Deputy GM (DGM – Administration) had shirked their responsibility by not obtaining the approval for a recruitment scheme although the approval for the cadre of the ITN was granted by the letter of the Director General of Management Services dated 8 May 2018 bearing number DMS/1590/VOLII, and had acted without an approved recruitment scheme on the pretext that ITN is an income-generating entity. In this regard, the Committee recommended to get the recruitment scheme approved, and to submit a report on its progress to the Committee through the said Secretary within one month. The Committee had been informed of the progress of the implementation of these recommendations. Not obtaining proper services for contra deals was another matter the Committee looked into. Adding that a sum of Rs. 14,641,728 pertaining to contra deals carried out by the company in 2003, 2005, 2006, and 2007 has been accounted on 31 December 2019 as compensatory adjustments without obtaining the services due, the Committee had recommended that a report adjusted with the amount pertaining to contra deals and services receivable be submitted to the audit through the said Secretary within one month, which has been presented. With regard to the failure to take back office equipment from officers after they left the service, the Committee had pointed out that the Apple mobile telephone and the television used by one of the advisors had not been retaken as he left the company and the reason for such failure is the weakness on the part of the officers in charge of the Administration Division, for 2016, and recommended that a report be submitted to the Committee within one week detailing all state properties not returned when an officer left the service, and that the responsibilities of the DGM be subjected to re-scrutiny. The required report has been presented, as per the COPE report. The Committee had also observed that duties had not been assigned formally to all officers including those in the top management, and in this regard, recommended that the administrative structure of the organisation be re-formulated with the concurrence of the Management Services Department and the said Secretary, and that action be taken to serve the lists of duties to all officers in writing. Furthermore, the Committee had expressed concerns over the loss of Rs. 582 million suffered in 2019 by the company, which had received an after-tax profit of Rs. 433 million in 2015, resulting in a four-year (2016–2019) loss of Rs. 2,500 million. It recommended that a report be submitted within a month regarding the financial situation of the company during the period from 2013 to 2019. The said Secretary has presented the report. Issues with the storage and distribution of petroleum  As part of this inquiry, the Committee had investigated the Power and Energy Ministry, Ceylon Petroleum Corporation (CPC), and Ceylon Petroleum Storage Terminals Ltd. (CPSTL). The Committee had paid attention to the intervention of the Ministry to supervise the functioning of CPC, CPSTL, and Lanka Indian Oil Corporation (LIOC), and it has been revealed that, CPSTL is responsible for the distribution of 92% of petroleum in the country; the remaining 8% is distributed by the LIOC; the LIOC has an ownership of one-third of CPSTL; the Ministry intervenes in the regulation and supervision of the two institutions; and that the Treasury intervenes to decide the fuel prices. During the inquiries, the Ministry Secretary had stated that three members from the LIOC, a representative from the Treasury, and five members recommended by the Minister in charge of the subject participated in the Director Board of CPSTL but that there is no representative from the Ministry. In this regard, the Committee had recommended that the supervision of the relevant institutions be conducted attentively in a formal manner. The Committee had also paid attention to the need to make arrangements to increase the storage capacity, and the institution’s plans in that regard. During the inquiry into this, it had been revealed that CPSTL controls all the petroleum storage complexes except the petroleum storage complexes in Sapugaskanda and Trincomalee; that the diesel storage capacity has been increased so that the capacity is sufficient for 48 days; that the petrol storage capacity is sufficient for 30 days; that the tanks with a capacity of 15,000 metric tonnes (MT) have been constructed; that three tanks with the capacity of 10,000 MT have been repaired; that a capacity of 3,000 cubic metres was generated as nine new oil tanks were constructed in Kolonnawa; that a new tank complex has been built in the Muthurajawela area; and that the opinion of the internal engineers is to have a storage capacity for 45 to 60 days for the petroleum requirement of this country. Stating that different countries maintain storage facilities depending on their fuel requirements and that a scientific study of the country’s fuel requirements and the time taken to import fuel is needed, the Committee had emphasised that the tendency to commit fraud and corruption is high when the institution lacks such a plan. When looking at the arrangements that have been made to obtain environmental impact assessment (EIA) reports on the environmental impact that can be caused by newly constructed oil tanks in Muthurajawela and Kolonnawa, the Committee had found out that although arrangements had been made for waste management and sludge control in those areas, and places with a higher environmental impact have been identified, no arrangements had been made to obtain EIA reports. The Committee had recommended that EIA reports for those new constructions be obtained and presented to the Committee, and as such, the necessary reports have been submitted.  The Committee had also inquired about the demurrages that have to be paid to the Harbour and the ships for the delays that can occur during transportation owing to the blocking of pipes, and the said Secretary had informed that $ 1.5 million has to be paid for 2018 and $ 1 million has to be paid for 2019. However, action had been taken to reduce it to $ 310,104 in 2020. In this regard, the Committee had recommended that action be taken to pay demurrages that should be paid for fuel ships. The Committee had recommended that consensus be reached through discussions to collect the money due to the institution from state institutions such as SriLankan Airlines, the Ceylon Electricity Board, the Railways Department, and the Army.  The progress in this regard has been reported to the Committee. Activities of the CDA The Committee had paid attention to the losses incurred from the Coco Garden project (the Pasikudah model coconut garden), and had issued recommendations to submit a detailed report within a month explaining how the institution plans to turn the Coco Garden project into a profit-making project. As per the interim report submitted by the institution, the opening of the project was on 1 June 2013; it was opened for tourists on 7 April 2014; the total amount spent for the project was Rs. 22.2 million; Rs. 12.9 million has been spent as the operational cost for the period between 2015 to 2019; Rs. 3.17 million out of the total project cost has been spent to cultivate perennial crops and for land development; the number of animals in the animal husbandry section is 145; and there is a setback as the expected profit came down due to the Easter Sunday attacks in 2019 and the Covid-19 pandemic in 2020. The Committee report noted that a sum of Rs. 14,247,853 has been spent in 2017 for an addition to the main building of the Coconut Development Board without prior approval and it has remained a non-economic expenditure until now, and it was therefore recommended to take immediate action in this regard after discussing the matter with the Auditor General. The report mentioned that the Committee had been informed that the said recommendations have been accepted and are being implemented. The Committee had also paid attention to a payment of Rs. 17,186,549 from November 2011 to January 2015 for 27 officers including the Chairman and the executive officers without approval from the Treasury, and not taking action to recover that amount from the relevant officers up to date. It was recommended that an investigation be conducted and a report be submitted to the Committee. A clarification report has been submitted regarding the matter; however, it states, according to the COPE report, that action has not been taken to recover the money that has been paid. Pointing out that the CDA has borne Rs. 130,775,085 from 2017 to 2019 for foreign exhibitions, the Committee had pointed out the importance of following a specific method to monitor the progress of foreign exhibitions that cost such a large amount of financial capital.  The Committee had also observed that certain employees who go abroad on scholarships do not return, and had recommended taking action to recover the money from the guarantors for those who do not return after going abroad on a scholarship. It was recommended that a report be presented on the progress of the above within a month to the Committee. However, so far, no report has been submitted, according to the COPE report. The present status of the foreign employment sector Taking into account requests to bring back migrant workers, especially in the Covid-19 context, the Committee had recommended that the Sri Lanka Bureau of Foreign Employment (SLBFE) make arrangements to obtain the Executive sanction to bring the affected migrant workers back to Sri Lanka through the submission of a cabinet memorandum, and that the progress be reported to the Committee. A report has been submitted on 21 April 2021. Among other matters that were discussed were ensuring proper training facilities for migrant workers and sending professionals for foreign employment, regarding which the necessary steps are being taken. Furthermore, the Committee had paid attention to amendments to the SLBFE Act, and had recommended the appointment of the Chairman of the Bureau as the ex officio Chairman of the Board of Directors; amending the Act in a manner so that the sections relating to very important matters such as the Chairman of the Board of Directors, the Board of Directors, and representatives of the line Ministry are very clearly interpreted; and reporting the progress of the amendment of the Act to the Committee within a month. The Ministry Secretary had stated that proposed matters have been incorporated into the SLBFE Act as new amendments by the committee appointed by the Ministry and that it had been referred to the Cabinet of Ministers for approval. Meanwhile, the Committee had noted a very low number of employees going abroad through Sri Lanka Foreign Employment Agency (Pvt.) Ltd., and had required a report about the number of persons sent abroad by the institution during the past five years. According to the report that had been submitted from 2016 to 2020, the number of such persons has drastically declined from 820 to 113. With regard to blacklisting foreign employment agencies and employers that harass workers in violation of the relevant agreements, the Committee Chairman had noted that the complaints that cannot be addressed within the general complaint resolution mechanism of the institution and those that require further investigations are referred to the Special Investigation Unit and that those complaints are investigated by police officers attached to the SLBFE as investigation officers from the Police Department. It further noted, however, that this Unit has been removed with effect from 10 June 2021. The role of the NCPA in relation to child abuse  During inquiries into the NCPA, the Committee had pointed out that the annual reports for 2016, 2017, 2018, and 2019 had not been presented to Parliament, and recommended that the said reports be presented within two months. The progress on this has since been reported. Noting that the NCPA took no follow-up action regarding the child abuse cases filed at High Courts, the Committee had recommended taking action for the speedy conclusion of cases that have been pending for a long time without any judgment and properly utilising public funds to conclude the proceedings of cases related to children, among other actions. Progress on the implementation of these recommendations has already been reported. Moreover, the Committee had paid attention to the complaints received by the NCPA and the measures taken in relation to them, and had observed that out of 89,405 complaints received by the NCPA from 2011 to 2020, only 50% of the complaints had been resolved and inquired about regarding the management of children’s homes. Among the recommendations were taking action to ensure the proper management and monitoring of children’s homes by the NCPA and making a special arrangement to deal with complaints. Progress regarding the implementation of these recommendations has been reported to the Committee. The Committee had further discussed the failure to establish a national database on child issues even though over 20 years have lapsed since the establishment of the authority. In this regard, it had recommended maintaining an updated national database on child issues, and co-ordinating with all relevant institutions that deal with child issues to take action in relation to the recommendations; progress regarding this has been since reported to the Committee. SLC Discussing the legal provisions under which the SLC has been incorporated, the Committee had noted,among other things, that all sports associations, including the SLC, are functioning under the Department of Sports Development, the latter of which is functioning under the Sports Ministry. Therefore, the SLC operates under the provisions of the Act applicable to that Department, and the manner in which these institutions are audited is clearly set out in that Act. The SLC is ultimately accountable to the Parliament, and the Ministry Secretary, as the Chief Accounting Officer, is responsible for submitting to the Parliament the annual reports relating to the activities of SLC. The Committee had also inquired into the transfer of Rs. 29 million to another bank account instead of transferring it to the bank account of the SLC in connection with the television coverage of the Sri Lankan team’s tour in South Africa in 2018, and had observed that, during the Committee meeting that was held on 20 February 2020, it has directed to conduct an inquiry through the Criminal Investigation Department (CID) into the aforesaid incident and to submit a report on the same. It had recommended submitting a report regarding the progress of the court case filed regarding the matter within one month of the investigations carried out by the CID and the Ministry, taking steps to finalise the legal action taken regarding this matter before the next meeting of the Committee, and submitting a detailed report obtained from the Chairman of the SLC to the Committee by the said Secretary within three months. In response, the SLC has submitted a progress report, and the said Secretary has informed the Committee that, with the intervention of the Ministry, a procurement process has been commenced to select a suitable institution to conduct an audit of the computer software system of the SLC, among other steps. Among other matters the Committee paid attention to were issues related to the recruitment of the Head Coach of SLC, the payment of an advance for the construction and improvement of local playgrounds and international stadiums, and contract agreements related to uncompleted work. Even though many recommendations made and concerns raised by the Committee have received responses from the respective public institutions, a number of institutions had not responded to some points raised by the Committee as per the report. While the Committee is known as an entity that reveals how public institutions are managed and how they handle funds, that endeavour will not be successful if full co-operation from public institutions is not extended.

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