COPE questions state bank over Rs. 54 bn default

Inquiry into what took place during yahapalana rule:

How come GM takes home Rs 16.6 mn Benz for Rs 113,698
Rs 402 mn squandered on useless project

By Shamindra Ferdinando

Amidst the worst-ever fiscal crisis that has prompted several lawmakers, including former Prime Minister Ranil Wickremesinghe to warn of severe threat to the banking system, the parliamentary watchdog committee-COPE has demanded an explanation from the state-owned People’s Bank regarding the public sector defaulting a staggering Rs 54 bn.

Having drawn the attention of the top management of the People’s Bank to serious lapses therein, Committee on Public Enterprises (COPE) Chairman Prof. Charitha Herath,

MP, on Wednesday (04) asked Chairman of the bank Sujeewa Rajapaksa to furnish within one month a list of defaulters, assessments made prior to the releasing of loans and those involved in the process. General Manager, People’s Bank Ranjith Kodituwakku was also present.

Prof. Herath said that the next COPE report would contain relevant information obtained from the People’s Bank. Instructions were issued in the presence of Auditor General W. P. C. Wickremaratne.

The COPE summoned the People’s Bank management to inquire about the Auditor General’s reports that dealt with 2018 and 2019. The late Mangala Samaraweera served as the Finance Minister during yahapalana administration (2015-2019).

Minister Dr. Nalaka Godahewa, State Minister Indika Anuruddha and members of Parliament Mahinda Amaraweera, Jagath Pushpakumara, Rohitha Abeygunawardena, Patali Champika Ranawaka, Dr. Harsha de Silva, Rear Admiral (retired) Sarath Weerasekera, Eran Wickremaratne, Jayantha Samaraweera, S.M. Marrikar, S. Rasamanikkam, Madura Withanage and Premanath C. Dolawatta participated in the hearing.

In the run-up to Wednesday’s meeting, Prof. Herath told The Island that a total system change was required to ensure financial stability and transparency in both the public and private sectors.

The SLPP National List MP emphasized the need to examine the shocking revelations made at the watchdog committees, namely the COPE, COPA (Committee on Public Accounts) and COPF (Committee on Public Finance) against the backdrop of developing monetary crisis. Obviously, there had not been supervision at any level, therefore urgent remedial measures were required, Prof. Herath said, pointing out the current fiscal crisis should prompt the Parliament and the incumbent government to address serious issues at hand.

COPE members asked the People’s Bank management how some private companies had been given loans running to billions of Rupees without adequate security, whereas small and medium scale businesses struggled to obtain loans. Demanding the streamlining of the process, the lawmakers asked the People’s Bank management to reveal how such large loans were authorized.

The COPE also questioned the rationale in the People’s Bank transferring the ownership of Mercedes Benz that had been acquired on April 27, 2015 at a cost of Rs 16.6 mn to the retiring General Manager for Rs 113,698. The incumbent General Manager Ranjith Kodituwakku has said that the bank normally allowed a retiring General Manager to take the vehicle used by him for a period of over one year. The Parliament in a statement issued in Sinhala quoted Kodituwakku as having told the COPE that the value of the vehicle had depreciated from Rs 16.6 mn to Rs. 113,698 and decision was based on market price.

But the lawmakers demanded to know how a vehicle bought for Rs 16.6 mn was sold for Rs 113,698. Subsequently, the General Manager said that the Bank had changed its policy regarding transferring of ownership of vehicles to retiring General Managers and Deputy General Managers. Under the new system, a GM and DGM would be entitled for the privilege only of he or she served the bank for 25 years.

Declaring public money could not be squandered that way, Prof. Herath requested Treasury Secretary Mahinda Siriwardena to intervene and formulate a system to prevent such occurrences. Prof. Herath said that the state banking sector that was under the Treasury Secretary. Therefore, the Treasury Secretary should act against decisions such as transferring of vehicles only on the approval of respective Boards of state banks.

The COPE also raised the bank spending Rs 402 mn on what it called data warehouse project initiated in 2015 that had not been successful. It transpired that the person who had been appointed as the head of the Information Technology Section of the People’s Bank by the then Chairman of the People’s Bank was a former employee of the company that managed the useless project. Prof. Herath has asked Treasury Secretary Mahinda Siriwardena to conduct an inquiry at ministry level. Herath also asked AG Wickremaratne to conduct a special audit by the National Audit Office.

When the COPE questioned the incumbent bank management about the transferring of a loan amounting to Rs 4.2 bn granted to a company owned by the then director of the bank, the officials said the CID was inquiring into it. The said amount had been estimated as at Dec. 31, 2019.

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