Forensic audits uncover Rs. 19 b loss
- Reports given to Central Bank in October
- Yet to go public due to AG’s advice
- Losses stem from bonds, EPF
By The Sunday Morning News Desk
The Forensic Audit (FA) reports related to the issuance of Treasury Bonds and transactions of the Employees’ Provident Fund (EPF) have uncovered a loss of at least Rs. 19 billion to the Treasury, The Sunday Morning reliably learnt.
These losses are detailed in three out of five reports relating to the issuance of Treasury Bonds between January 2002 to February 2015, primary and secondary market transactions of EPF between January 2002 and February 2015, and EPF transactions in listed and unlisted equities between January 1998 and December 2017. Whereas sources were only able to confirm the discovery of Rs. 19 billion in losses so far, it is possible that these losses are far greater.
However, the reports are yet to be made public following instructions from the Attorney General (AG), even two months after the reports were handed over to the Central Bank.
The reports, which have been compiled by leading international audit firms such as KPMG and BDO, were handed over to the Central Bank in late October. They were commissioned based on the recommendations of the Presidential Commission of Inquiry (PCoI) to investigate the issuance of Treasury Bonds during the period 1 February 2015 to 31 March 2016.
The PCoI was set up by former President Maithripala Sirisena in order to probe the controversial Central Bank Treasury Bond Scam of February 2015 that caused losses amounting to Rs. 11 billion.
The Central Bank then sought the opinion of the AG as to whether the reports should be made public.
The AG opined that the findings in the reports have the potential to be evidence in investigations and legal actions and therefore, access should be limited to those who have statutory authority to access them while emphasising that the recipients maintain confidentiality.
The AG further informed the Central Bank that once the reports and related documents have been fully considered, any extracts which could be disseminated in the public domain without prejudice to investigations or litigation will be notified to the Central Bank.
The reports have since been veiled in a cloak of secrecy for two months and extracts have not been put on the public domain either as specified by the AG.
When contacted by The Sunday Morning, the Senior Advisor on Economic Affairs to Prime Minister Mahinda Rajapaksa, Ajith Nivard Cabraal said the Government had not discussed the issue as yet.
Former Finance Ministry Secretary Dr. R.H.S. Samaratunga, who was a member of the Central Bank Monetary Board till November, refused to comment on the losses which are contained in the report.
“Monetary Board members were given the draft reports before it was finalised. I cannot disclose the contents of the report. The onward actions should be taken according to the AG’s advice and I have not been a member of the Monetary Board since the second week of November,” Dr. Samaratunga said.
Former Chairman of the parliamentary Committee on Public Enterprises (COPE) MP Sunil Handunnetti noted that the reports could only be handled by current Finance Minister Mahinda Rajapaksa since COPE had automatically been dissolved with the prorogation of Parliament early this month.
“Now, there are no committee members and a new committee should be appointed after the new sessions begin and therefore, former members cannot use the reports or take any decision on it,” he stressed.
“The committee was scheduled to meet on the day the Parliament was prorogued to discuss the report. The AG has advised that the contents should be carefully viewed by the members of COPE and the Finance Minister. But it was only an opinion and since it has already become a parliament document, the members could take a decision on the report,” Handunnetti explained.
“But since there is no COPE at present, the sole responsibility is vested with the Finance Ministry,” he added. When asked whether the COPE Chairman had seen the report, Handunnetti noted that he had not opened the report since it was scheduled to be opened at the meeting.
The three reports in question are among a total of five forensic audit reports which were commissioned by the Central Bank, which are listed below:
- Issuance of Treasury Bonds during the period from 1 January 2002 to 28 February 2015 by the Public Debt Department
- Primary and secondary market transactions of the EPF involving Treasury Bonds issued/transacted during the period from 1 January 2002 to 28 February 2015
- Transactions of the EPF from 1 January 1998 to 31 December 2017 in listed and unlisted equities
- Issuance of Treasury Bonds and remittance of funds received to the General Treasury during the period from 1 February 2015 to 31 March 2016 by the Public Debt Department
- Conduct of the supervisory and regulatory role by the Superintendent of Public Debt/Director, Supervision of Non-Bank Financial Institutions pertaining to selected Primary Dealers from 1 January 2009 to 31 December 2017