3 December, 2021

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A Child’s Guide To Forensic Audit Reports: The Reported Losses To Be Taken With A Pinch Of Salt

By W A Wijewardena

Dr. W.A Wijewardena

Asani, the bright Advanced Level student and her grandfather – Sarath Mahatthaya – a well-read retiree, are having intellectual discussions frequently on current issues of public interest. Earlier, they had two such interactive sessions, one on Millennium Challenge Corporation or MCC grant to Sri Lanka and the other implications on the economy of recent tax cuts by the present government (available here and here).

Asani had been confused by the conflicting public opinions expressed by way of slogans on the five reports on forensic audit exercise conducted by two leading international audit firms, namely, BDO India and KPMG India, at the instance of the Monetary Board of the Central Bank of Sri Lanka. She herself did not understand the forensic audit reports, nor could her teacher help her in that regard. Hence, she decided to raise the issues with her Grandpa:

Asani: Grandpa, a lot of people today speak about what is now known as forensic audit reports. What is a forensic audit? How does it differ from a normal audit?

Sarath Mahatthaya: It’s good that you have raised that issue. An audit is a study of what has happened in the past. Normally what we know is a financial audit. For instance, in the case of a company, say a company that produces polythene bags, a normal financial audit will try to establish whether that company has properly recorded its incomes, expenses and profits. A forensic audit – forensic itself means relating to judiciary – about the same company will try to establish whether there had been any irregularities in recording those transactions and if so who were responsible for them. Its findings can be used as evidence in a court of law and therefore, the forensic auditors should do their exercise carefully.

But these two audits alone are not sufficient to make any judgment about the company. Today we conduct economic audits and social audits as well. In an economic audit, we’ll seek to establish whether the resources used by company which we call economic inputs have generated sufficient economic outputs to cover the cost of inputs. A social audit is wider than that. It tries to establish whether society at large has been benefitted on a net basis. For instance, in the case of the polythene bag manufacturing company, it will seek to establish whether the costs it may have imposed on society have been sufficiently compensated by benefits that it has delivered to society. Today, in Sri Lanka, people including Parliamentarians and some scholars are highly worried about forensic audits whereas they should have asked for a social audit to assess whether the Monetary Board of the Central Bank had done its job in compliance with its obligations to society.

A: Then, what led to the conducting of the forensic audit by these two firms? Surely, they can’t do it on their own unless they had been commanded by somebody.

S: You’re correct. It’s the Monetary Board of the Central Bank which gave them this assignment. The Board was compelled to do so because the Presidential Commission on Treasure bond scams during 2015 to 2016 had in their report made a remark – I say a remark and not a recommendation – that even before 2015 there would have been irregularities in the issue of Treasury bonds and therefore, ‘it may be appropriate to conduct a forensic audit’. According to newspaper reports, the previous government immediately seized upon this remark and prevailed upon the Monetary Board to conduct a forensic audit on bond issues pertaining to the period prior to 2015.

This is embarrassing to Monetary Board because now it has to blame previous Boards for failing to act prudently.

A: There’s a general belief in the country that tenders are normally awarded without following proper procedures. Was it the case in selecting BDO India and KPMG India too?

S: No. Due process has been followed in this case and the final selection has been made by a Cabinet Appointed Tender Board, according to reports.

A: Then, what about the reports? Do you think that they’ve been done in a professional manner?

S: The five reports that’ve been presented contain a lot of important information relating to the issue of Treasury bonds, investments by the Employees Provident Fund or EPF and the supervision of primary dealers by the Monetary Board. Yet, there are certain deficiencies which have reduced the quality of the reports. Hence, the answer to your question is yes and no.

A: In that case, there’s nothing wrong in going by the findings in the five reports. Don’t you agree, Grandpa?

S: No. This is highly technical stuff and not many ordinary folk can understand it unless they’re guided by knowledgeable people. This’s true even for the so-called technocrats. You may recall, Asani, that in the case of Buddha’s Dhamma, subsequent Buddhist masters had to write elaborate commentaries known as ‘Atuvaa’ or ‘Teekaa’ explaining what exactly the Buddha meant in his discourses. A similar exercise is needed in this case too. Otherwise, it’s like the Sinhala proverb of placing a ‘sharp razor in the hands of a monkey’.

A: Oh, I see. I’m also such a monkey with a razor blade in the hands. So, I guess, before I cut myself, I need this guidance. Can you further elaborate on this?

S: I’ve several reservations about the reports. It appears that the forensic auditors have failed to do their analysis taking into account the mandate of the Monetary Board and the specific economic conditions the country was facing from 2005 to 2014. The Monetary Board has been given three conflicting mandates by Parliament. Their top priority is to have an inflation-free country with a stable financial system. This’s embodied in its co-objectives known as the economic and price stability and financial system stability.

Then, there’re two other conflicting mandates given to it by Parliament. One is to raise debt for the government at the lowest cost possible. The other is to give the highest return possible to members of the Employees Provident Fund. Therefore, when there’re moves to push the market interest rates by some interested groups, the Monetary Board has to intervene and stabilise the interest rates for the general good of the country.

In the first few years of the period covered by the reports, the country was at a war resulting in draining-out of all resources available to the government. The budget deficit was rising above 8%, foreign funding dwindling and inflation raising its ugly head above 20%. On top of this, the economy was faltering with growth below its potential rate. The Monetary Board had to raise funds for the government by tapping mainly the domestic market. Exploiting this situation, some of the primary dealers had attempted to push the interest rates up and it would have been fatal for economic recovery. So, the Monetary Board had to stabilise interest rates at around 20% and prevent any further interest rate hikes.

So, when the auctions of Treasury bonds began to push the rates up, the Board had to cancel the auctions and resort to an important weapon available to it to stabilise interest rates. That was to issue bonds through a system known as direct placements, a system that had been introduced in 1997 when the Board had introduced the primary dealer system and marketable Treasury bonds.

A: What you mean is that a social audit would have exonerated the Monetary Board for using direct placements more often during that period. 

S: Exactly. The actions of the Monetary Board have to be evaluated not in terms of mere financial numbers but in the context of the gravity of the economic conditions it was facing. That’s because the Board has to deliver a social good to society in terms of its mandate. When it does so, it has to necessarily incur a cost and society should come to recognise that that cost is being incurred for the greater benefit of society.

A: Good! What’re the other reservations that you have about the reports?

S: One is that there’s a fundamental error in the methodology the forensic auditors have used to calculate the losses they say have been incurred by the government when the Board had issued bonds through direct placements. That’s the assumption that the bond market is ruled by a single price throughout and if any bond has been sold below it, it’s a loss to the government.

A: That’s hilarious. Even at our AL class, we’re told that market prices don’t remain the same throughout. But, how do you apply to the bond market?

S: At the bond auctions, even for the same bond, they’re issued to different primary dealers at different prices. What each primary dealer has to pay is the price which he’s quoted at the auction and not the cut-off price of the auction which the last primary dealer has to pay. Suppose both of us bid at the auction. You quote Rs. 120 per Rs. 100 bond and I quote Rs. 100. If my price is the cut-off price, you don’t pay that. You pay the price you’ve quoted and I pay the price I’ve quoted. This’s known as the book-building auction method with multiple prices in each auction for the same bond. Hence, even in a single auction, there’s no single price.

A: But Grandpa, they say that there’s a weighted average price or WAP. What’s that?

S: That’s a price of convenience calculated by the Public Debt Department or PDD of the Central Bank to represent the results of the auction. It’s better than taking the simple average. In the above case, the simple average is just Rs. 110. But, if you bid for bonds to a value of Rs. 1,000 and I bid for a value of Rs. 500, the average price weighted by the amount which each one of us have bid is Rs. 113. This’s not an exact price but a better reflection of the results of the auctions. But it doesn’t show how far the actual prices have departed from this average. If there’s a wide range within which those actual prices have remained, it’s to be understood by reference to a statistical aggregate known as the standard deviation.

A: Then, what’s this secondary market price of bonds they talk about, Grandpa?

S: These bonds that you buy at the primary market can be sold to others before maturity and that market is called the secondary market. The actual price at which these bonds are traded in the secondary market is called the secondary market price. That can be different from the primary market price depending on the demand for and the supply of these bonds in the secondary market. Since there’s no debt exchange in Sri Lanka similar to the stock exchange for company shares, that information is available to PDD only after one day.

In other words, what’s available to PDD today is the actual price that had been there yesterday. But, by that time, today’s prices may have changed. To overcome this bottleneck, PDD collects information every morning pertaining to the maximum price at which a primary dealer is willing to sell and buy a particular bond, reduces it to a single value by using the simple average and releases to the market only for its guidance. That’s because they are not the actual prices but quotes by primary dealers.

It therefore presents some useful information about the level of the prices and the direction in which they may be moving. It is highly dangerous to use these quoted prices to calculate a loss or a profit.

A: How have the forensic auditors calculated the losses they have reported in their reports?

S: The forensic auditors have calculated the losses of issuing Treasury bonds for two different periods. One is for the period from 2005 to end-February 2015. The other is from March 2015 to April 2016. In addition, they have calculated losses to EPF too. To calculate the losses, they’ve created a fictional price called the base price. Any bond sold below that base price has been categorised as a loss to the government. By the same token, any bond sold above the base price should be reckoned as a gain for the government. However, the gain part has not been calculated by auditors since it hadn’t been a part of their mandate.

A: Have you got any reservation about the calculation of that fictional price called the base price?

S: Yes, of course. They’ve used a mixture of perceived secondary market prices to calculate the losses. Wherever the average of the secondary market price is available it has been used. But when it’s not available, it is the average of the buying and selling quotes published by PDD on a daily basis that has been used. Since that quoted price is a simple average, they’ve made an adjustment to it by reducing it by 5 cents. Obviously, the objective would have been to correct any error by going by the simple average when there’s a wide range of quoted prices. The selection of 5 cents has been done arbitrarily and not by following any statistical method like taking into account the standard deviation that measures the range of dispersion.

The use of both data sets is defective. The average secondary market price that had been used is not the one governing the market today. It pertains to the previous day and those prices are not applicable to the market today. That is because within 24 hours the market prices may have changed. The other weakness of using that price is that when you average it, you miss a whole range of prices that had prevailed on the previous day. Regarding the second type of prices they’ve used, the quotes are totally inapplicable to gauge the current market prices since they’re all perceptions of primary dealers. On top of this, the choice of 5 cents for the adjustment is arbitrary and any other researcher could have arrived at a different level of losses by assuming a different level of adjustments. For instance, if you reduce the average quoted price by 20 cents, all the losses will disappear and if you use, say 21 cents, it would result in a profit. Those prices they’ve used are useful in knowing the level of prices in the market as a guidance. They can’t be used to calculate the losses or, for that matter, gains involved in a transaction. Hence, these calculations cannot stand in a court of law as evidence.

A: What you say is that those loss calculations are wrong. Then, it must be equally applicable to losses they’ve calculated for post-2015 period as well. Isn’t it the case?

S: Yes, indeed. It applies to the loss calculation of Rs. 9.9 billion pertaining to the latter period too.

A: Media as well as politicians have gone to town on the loss numbers in the pre-2015 period. Any further elaboration on that?

S: From 2005 to end February 2015, there had been 4504 instances of placing direct placements by PDD. Of them, 2783 had been done above the so-called base price and therefore have generated a gain for the government. As I told you earlier, they’ve not calculated this gain since it was not a part of their mandate. Of the balance, 1105 direct placements have been made at prices below the so-called base price.

According to forensic auditors, it has generated a maximum loss of Rs. 10.4 billion. However, of those losses, nearly 96% has been gains by state-sector managed funds. EPF alone has gained about 61%. The rest has been earned by Bank of Ceylon, People’s Bank and the National Savings Bank. The so-called non-state sector primary dealers have got only 4%. Hence, the charge that PDD officers have unduly favoured private primary dealers isn’t confirmed by facts.

If one calculates the gains and net them against losses, there’s clearly a net gain for the government. It’s up to the Monetary Board to do this exercise and disabuse the minds of the public who have been misled by forensic auditors.

Another revelation that one can gauge from the first report is that it is only 24% of the direct placements during 2005-February 2015 that have been issued below this so-called base price. Hence, the balance 76% has been issued outside this price range.

A: It appears that the forensic auditors have taken the Monetary Board, Parliament, media and the public for a ride. 

S: Yes, this has in fact reduced the value of their report significantly. There’re many more howlers they’ve done. Let’s continue this interactive dialogue to find them out.

To be continued….

*The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com

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Latest comments

  • 9
    2

    What a bunch of BS.
    All are crooks from Gots/MR/Cabral/arajun/all worked on insider dealings.

    • 9
      0

      Jehan,
      .
      Crooks can continue their businesses so long they are well talented at keeping LOCAL press close to them: Basil Rajakashes pumps stolen funds pleasing Media men. ‘:

      Give me one single example to see where LOCAL media reacted independently even if MS-RW govt gave them so much of freedom ?
      .
      These frequencies are PUBLIC property, but MEDIA ETHICs have lost their control over them – consequences are even if Derana and Hiru TV channels continue their abusive culture by spreading blatant lies but being biased to their pay masters, they have been doing HIGH criminal acts.

      Hitler days in Germany, stasi groups and some other pro-hiter segments only work on ” Gobbels theory” in order to outreach the masses. ‘
      In the same manner, LOCAL media are caught by RAJAPKSHE MAFIA and continue supporting them. So how can facts become the NEWS headlines of this country ?

      Lies become HEADLINES on and on, not even that BIG lie spread by Prof. Monk from Kelaniya Temple is yet caught by MEDIA experts. The big lie spread by HIM in order bring CRIMNAL Rajakshes back to power, was succeeded. Very sad to see the stupid people beingcaught by the CHEAP tricks being applied by these abusive men with monk constumes or without.

    • 8
      1

      jehan,
      WAW should know that, if everything else in the curry is perfect & missing is only a pinch of salt, it is not a big deal. Harsh de Silva gave a much better analysis covering both regimes:
      youtube.com/watch?v=yqWhmCNhQl

      It appears that the more WAW tries to whitewash thieves, the more he looks bad!

    • 7
      0

      Dr. W A Wijewardana,

      Very childish? Sometimes, children say, Liar, Liar, pants on fire.

      http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=218134

      Childish communications…. Will the mean IQ 79 buy that?.

      MP de Silva quoted a conversation between PTL proprietor Arjun Aloysius and Kasun Palisena, Chief Executive Officer of PTL to prove that they had access to confidential Central Bank information pertaining to issuance of treasury bonds.

      Before 2015 presidential poll, the same lot had brazenly manipulated the CSE, MP de Silva alleged, asserting that having milked the CSE, they moved to the treasury bond market, in a big way.

      Lawmaker de Silva explained the circumstances under which the massive losses were inflicted on those listed on the CSE, with the focus on the EPF (Employees Provident Fund) transactions between 2010 and 2011. The losses suffered by the EPF alone during this period were placed at Rs. 9,469 mn on the basis of forensic audit findings.

    • 10
      0

      Jehan you are right, all BS.
      Earlier I had just a doubt that WAW got a share from the bond theft; I used to respect him as a good professional like Coomaraswamy. Now I am convinced he got a considerable share from it. Or even he was promised to give an Ambassadorial post, or a chairmanship from MR and RW combo. Who knows, still HC position to India is open.
      Dr. Wijewardena, this is despicable.

  • 12
    0

    According to forensic auditors, it has generated a maximum loss of Rs. 10.4 billion. However, of those losses, nearly 96% has been gains by state-sector managed funds.
    ..
    All The Governor-General’s, heads of EPF and ETF, heads of state controlled banks and the Ministers involved are directly responsible.
    ..
    I’m satisfied with the evidence to come to a conclusion that most state run financial institutions are corrupt.
    ..
    Otherwise they should be the first to react to this kind of loss. Their silence shows that the Top is corrupt and clearly they have political and judicial protection.
    ..
    When the hunger makes the poor steal, we are quick to judge them and punish them. When the rich and powerful steal due to their greed, we find avenues to support them.
    ..
    Amazing culture we have. Most walk like crabs and expect the young to have better ethics.
    ..
    Monkey see Monkey do

  • 10
    1

    This writer seems to be making his round abouts deliberately – Dr Harsha De Silva – with his years long professinal expertise made it very clear that the reports have revealed a lot about the losses and that can be creible.

    https://www.youtube.com/watch?v=A70ldPHwZ1g

    To me Dr Wijewardhana is somehow biased to Rajaakshe kalliya, and was one of the regular invitee of SIRASA TV who then went on fabricating all against RW and his Premiership.The other guy was that Susiripala Thennakoon. These men were abused by SIRASA TV to mud slanging campaign against RW on the command of former president STUPID Sirisena. Sirisena did this to protect Rajaapakshe clan, even if the bugger was elected by the UNPrs in 2015.
    :
    He was then under Mahinda Rajapkashe et al. If a senior teacher in a school should have been well aware of the facts regarding any crimes and losses being found in that institution, Dr Wijewardhana should have been aware of the losses and how they made them during those days. And the numbers shown in the current audit reports clearly confirm that the losses made during SAIBABA Mahinda Rajaakshe was multiple times huge than that of known by MS-RW govt. Latter is infact kept aside, cant be even named as losses either. If Ranil to be jailed, Mahinda should be beheaded on the spot for all the losses made in Central Bank.

    • 0
      2

      What professional experience of Harsha de Silva in fund management are you counting on. What has been challenged here are assumptions used in the exercise and none seems to be having objectivity to think clearly without being clouded by politicised preconceptions. Anyone who has professional experience in investment management knows methodologies used to arrive at losses are fictitious. The scope of the audit wrongfully was to calculate only losses and not profits, which may well outweigh the so called losses. And if anyone in the world can do this mammoth job without incurring any loss on a single occasion should take over the job. Try not to mix the whole thing up with the involvement of PTL, the forensics audit is several fold larger than what transpired with PTL. So there’s much more to it than just PTL.

  • 11
    0

    I dont trust you Mr Wijewardhana, but I respect Dr Silva.
    :
    Please let the following be heard by you.
    .
    https://www.youtube.com/watch?v=yqWhwmCNhQI

    • 1
      0

      Dr Desperate Sinhalaya,
      .
      You are spot on Sir !

      If a house is burnt down, if some people were inside, if they survived should know the bit well about the electricity lines and all what in that house. Likewise, this writer who had then been a part of CB adminsitration, should have been well aware of the ground realities of the bank exchanges. He cant say, that he does not know as we are. We are outsiders, but he was then an insider….. and he has also over years exp to understand the accounting numbers and the langauge to ab able to see it right….. but the kind of guys too to take the silent mode as if they knew nothing is BEYOND my understanding.
      As if a surgeon of a pannel in the aftermath of a severe surgery would make every effort to be away from the questioning, this man Mr Wijewardhana has become a joker and regular INVITEE to SIRASA on the payroll. That i scommon to lanken interleectuals the way they handle things.
      Good save srilanka.

  • 10
    0

    I always thought, that Mr Wickramasinghe would not engage himself in any kind of frauds.Entire world respect him as a leader, but Rajapakshe are known to the world as tsunami fund embezzlers and high criminals. Please check your google search by yourself, – and Rajapaskhes are compared with those stupid leaders that have been caught by CHINESE DEBT TRAP. There Rajapakshes cant earn any wrong adulations. That is very unfair.

    https://www.youtube.com/watch?v=yqWhwmCNhQI

    But Mr RW was very naive in that appointment – having appointed AM as the Governer. And I would agree with him during the last govt – they managed it well all the debrie left by highly abusive Rajapakseh rule.

    Truths will come to light sooner than later – I truly believe that RAJAPAKSHES are born uncultured, unethical bastards.

    • 2
      0

      Mr Srimal @I am fully in agreement with you sir.
      .
      I dont think that Mr Wickramasinghe to be blamed even if lanken ABUSIVE media made him a fool for the moment. But when it comes to legality, Mahinda Rajakashe and the hen ch men should be hung by their balls in order to cease the fire.

  • 6
    1

    Dr. Wijewardena: According to your assessment, (spelled in you your “Dialogue” above) the “Forensic Audit” has “MISLEAD” the Public. You were a “Party” to be questioned on the subject matter, because during the period Examined” by the “Auditors” you too were holding office. So best you to do now is to await this report reaches the “Judiciary” and submit your “Defense”. It is not up to you to follow Ajith Cabral and make “Public” explanations. I believe, a “Public Audit” has already been made, in that, the People have concluded, all those “Professionals” and the “Politicians” given a mandate to manage the Governing affairs for the last decades have “RUINED” and “MISLEAD” the PUBLIC. In your conclusion please tel “Asani” that “NAKED TRUTH”. Then at least you have given a correct guidance to that “Student” you have chosen to “MISLEAD” by way of “Question” and “Answer”.

  • 0
    3

    I say the realistic analysis is far different from what is explained. This satisfy ASANIs among the rural community voters. That would satisfy the election. But, what else they can do. At least it stops jailing bhikkus to satisfy NGOs. There is ethical business practices. The other thing is whether the DUE DILIGENCE IN EVERY PRACTICE WAS CARRIED OUT. KPMG AND THE OTHER FIRMS, they never disappoint the clients who give them business. Just like AIRBUS company gave A EURO 17 million commis package to it’s middle man for the buying offer, other firms too give some percentage as commis. Sri Lankan economic figures of GDP, inflation are all cooked. We know FINANCE MINISTRY and CENTRAL BANK were HORA GUHAVAL. They are the most secret places. No one exposes those. I here Treasury was empty for some time. That is why UNP-YAHAPALANA govt GAVE SO MANY PROMISES. But, ask them to show results. Akila Kariawasam says he established 800 closest school is the best school. Ranil said, in another stage, he established 1800 closest school is the best school. ASK THEM A LIST OF THOSE SCHOOLS and then go and check.
    The simple explanation just assess the quality parliamentarians aka LAW MAKERS IN SRI lANKA. welikada prisoners are more respectable.

  • 5
    0

    I wonder, Mr Wijewardena, what you would have to say about Chandraprema’s article in yesterday’s Sunday Island about the forensic audit.

    • 7
      0

      Ms Fonseka,
      .
      This very same Wijewardhana was a regular invitee in the discussion rounds telecasted by Sirasa on this matter.
      :
      And not to forget that this so called gentleman was deputy governer to CB also in that highly suspicious period from 2005-2015, if not for entire 10 year period at least to some years. So he should be considered as a insider to CB.
      .
      He has been making comments very carefully as an outsider would do. Why is that ?
      Dr Silva makes it very clear as an interllectual candidate, but Mr Wijewardhana makes his round abouts as usual. Why ?

  • 1
    1

    In a court of law, they both the Mahinda chintana and UNP-Yahapalana govt can prove they did not break laws. But, they were unethical and if there are laws for abuse of the system or not following due diligence, they are guilty. It looks from 2005 to 2014. They gave very high rates to the PTL like companies which resulted high commis to managers of all those companies and to managers of EPF and ETF. My guess during 2005 – 2014, Ranil also got profits, so he did not want to prosecute none from that group. Ranil was desperate for money as the Sirikotha did not have money to go to elections. So, he became a FOX CHICKEN COUP. Even after exposing it, he did not care. Instead he behaved just like a FOX in the chicken coup did the FRAUD two more times.
    Before 2014, they paid 29% and borrowed only a few billions at a time, mostly from EPF/ETF. Then Ranil came cut the rate in half (about 12-14%) got 15 or 20 billion and did it three times.
    All the prominent politicians received profits. I am also interested to see which of JVP got profits.

  • 8
    0

    This is a devious and dubious attempt to whitewash the massive fraud that had been perpetrated during Mahinda regime by Cabraal and others. There was an article by that racist idiot Gota bum sucker named Chandraprema in the Sunday Island casting aspersions against the forensic auditors and questioning the revelation about fraud committed by Cabraal. The behaviour of Cabraal acting in panic mode proves of guilt conscience. The amount of money swindled during Mahinda regime far outnumber that during the last government. Cabraal was a dodgy character even before he entered the corridors of power. He ran a Ponzi scheme where he put several people in trouble, before such schemes were banned.

  • 12
    0

    One crook trying to protect another crook?

  • 11
    0

    Coming from a man who sold Sathosa Motors shares owned by EPF at Rs 42 to a private investor now selling at Rs.300.00.

  • 0
    1

    I have a question. Whether EPF gained or lost by these auctions, member get a fixed percentage as interest. Why? And can one say members were affected by those manipulations?

  • 5
    0

    These are too complex for us ordinary folk to understand. To me, as must be for many, what is important is to know whether our money was robbed by anyone. It does not matter to which political party the culprits belong. This interactive article does not seem to give a straight answer. Perhaps there is none. And it may depend on how one sees through smoke and mirrors. Can the grandpa answer few simple questions: (1) Could anyone be taken to court for the 2015 Bond Scam? (2) Is there a possibility of recovering any stolen money? (3) Will the current government pursue these matters through courts?

    Grandpa also mentioned that on investments one could carry out economic and social audits. Should such audits be carried out on all mega investments the government has carried out in recent past, such as the Mattala Airport and Hambantota habour, for example. Shouldn’t any major project where public funds are spent be subject to feasibility on the basis of financial, economic, social, environmental, security and other concerns? Can non-financial benefits/losses be quantified and compared against other competing investments?

    • 4
      0

      Mr Goonathilaka,

      Law and order and MEDIA in SL are made Rajapakshes to enjoy impunity.

      No matter even if they would take part in day light robberly, nothing would have to work, so long SKIN HEADs wearing SANGA costumes are close to MR and his family.
      :
      Paanathi Patha weeramani sikkapadama is valid only to some people, if Rajapakshes kills anyone like animals as was the case with that poor rugby player, if I had been a relative of him, I could know what to do with Rajakshes, nothing would work on them.
      That is very unfair or not ?

      You talk about FEASIBILITY, nothing like that is clear to stupid men, that was the main reason, Wickramasinghes democractic principles were not permitted to ground in the lanken society. Whoever, whatever being said and done, entire world know who these two leaders are and how they do politics in our home country. I respect Mr Wickramasinghe and CBK lot more today, for their real cultured politics, but that dont count in a world being dominated by UNEDCUATED masses.

      Today, they struggle to bring that MCC or other agreements, but for no reasons these pacts were rejected by very same men, while they had been sitting on the side of opposition.

  • 5
    1

    Asani to Grandpa,

    Grandpa is it alright for a businessman to sell at a loss once he has made a profit.
    Grandpa,
    You got me there.
    This could be a new economic theory founded by Dr. Wijewardena.

  • 10
    0

    DrWijewardana name mentioned several times in the forensic report.he authorized some bond transactions prior to 2015.now he tried to abosolve himself from blame him as well as nivad Cabral the former governor of central bank.he tried to mislead the public.

  • 1
    10

    Excellent analysis.All our MPs and Ministers should read this and if necessary call Mr.Wijewardena before the Parliament to enlighten them on the five reports.

  • 7
    0

    during the period 2005 to 2015, the might less sultan rajapuk’s and his gang of merry men/women and the doubtful? took the poor down the pallan sad sorry Lanka for many a ride.?
    =
    then in 2015, the corruption cleansing mob got into power by defeating the corrupt sultan along with his harem and they all had to retreat into the wilderness.
    =
    lot’s of actions were promised against the rajapuk’s and his corrupt to the core gang, the masses were awaiting on tenterhooks but the two rulers connived with the rogues and sadly for the world they were given the VIP treatment along with mansions, security contingents and you name it a mere demand was given right away to the sultan and his boru horu gang of merry ?.
    =
    In 2019, November 16 polls for the plum position his much tainted with many a crime kallathoni American citizen of a? resoundingly flew into powder mainly thanks to the racist sitting on their midget of a brainless brain.
    =
    now after this clean resounding win there been nothing positive happening in this hora boru sad nation.
    =
    all the corruption inquiries have been put on, the cabby Cabral has been made an advisor to his pothai Gura, the cost of living is rising bt the thaparae, pensions to the elderly has been frozen no wage rises and you name it the military is running the much tainted comical country.
    =
    the whole once upon a time developed successful nation who were exporting rice the staple diet of the whole wide world now has become the world’s biggest begging bowl importer and is the joke of the 21st century.
    =
    this central bank will be a thing of the past as the cabby Cabral is the main hora.?
    the others are small-timers?
    =
    cheers, R. J., the one & only.

  • 10
    0

    Dr.W A Wijewardena,

    Re:Child’s Guide to Forensic Audit.

    Very childish, indeed.

    If you use Wimal Buruwansa math, that says 2/2 = 0, to the forensic audit losses, there will be no losses, as everything gravitates to zero, and there will be no losses. So, Cabral, Mahendran, Mahinda Rajapsksa, Ranil W et al did nothing wrong.

    May be you will be able to get a good fraction of the populace , mean IQ 79, to buy into it,

    Using Wimal Buruwansa math, 2/2=0, as there are no losses, all the culprits can be exonerated.

    In the meantime, the imbeciles , mean IQ 79, will continue to prostrate to monks, who hijacked Buddhism, and installed themselves as the 3rd Gem of the Triple Gem, until the Chinese come along and correct the monk hegemony, like In Tibet.

    Prostration to monks is childish. The monks were recruited as children, very childish.

  • 3
    1

    First place a ‘sharp razor in the hands of a monkey, then it is easy to take the Monetary Board, Parliament, media and the public for a ride.

    Look at the photos Falling to mood reflects the who is happiest , then blame then graivity for mood change not the action.

  • 5
    1

    Grandpa WAW and Faraz Shauketaly are on a mission to whitewash the pre 2015 era and cast unfair aspersions on the auditors. I wonder why.. It is the media and these self-proclaimed “experts” who are responsible for twisting facts to suit their very own twisted agendas – always. The “pinch of salt” philosophy will of course never apply when it is their money. Also see: https://www.newsfirst.lk/2020/02/02/methodology-for-calculations-flawed/

    • 8
      0

      Craig

      Please check the credentials of That Fraz Shauketaly – the dimwit only criticised Wickramasinghe not Rajaapshe for some hidden reasons. I thought the bugger would have been fair – going by the attacked Sirasa suffered during the brutal regime of MR.

      He does not know the basics of basics about the ground realities of Mahinda Jarapakshe politics. If Jrapakashe would ahve been caught by CORONA … for sure srilanka will rise up to be an another SOUTH korea.

  • 3
    1

    As the caption suggests the observations look childish and an attempt to defend a seemingly difficult case. Dr.Wijewardena have failed to suggest that losses made in Allosius’s case too could have been set off against the previous profits made by the Central Bank.All the observations made so far look partisan as in the case of Trump Impeachment trial.So let us hand the case to an independent judge Buddhism being a SINHALA BUDDHIST COUNTRY where in if anyone has made undue profits robbing the poor people their bad deeds will follow them and punish them in this birth next and many more births to come like the way a cart follows the Bullocks.

  • 7
    0

    Why in the world do two auditing companies with a global reputation take the monetary board of the central bank for a ride?? I think it is high time this Dr SHUT UP! and let the report speak for itself. The information it has put out would never have been obtained if not for them. It has established with clear proof the crooks involved. It has managed to triangulate based on the extracted forensic digital records and interviews the identities of the culprits. There were two governors who refused absolutely any cooperation with the investigation for example. One ran away and hid. The other used his influence to stick his middle finger at the investigators. But both are caught red handed and need to be brought to justice. But as we know no justice will ever be done. We will defer to the guilty who make absurd claims about the auditors such as the one Dr here. In one of the reports it is noted that the SEC refused to provide the identities of those who were involved in the pump and dump scam and that it only did so at the last minute after holding up the release of the reports WHY? This Dr tries to trivialize the losses made on the stock market by conflating profits made by the EPF and ETF. A loss is a loss regardless of what profits they may have made elsewhere. Besides, where does he get his numbers from and why deos anyone need him to re-interprit a comprehnsive report while attempting to poke holes in it?

  • 2
    7

    Obviously Sarath Mahathaya must be a UNP Or Yahapalana Supporter or both . Because our Pohottu Supporters would know a Bond even it bites them in the back.

    Anyway how can a poor AL Student understand Audits of the Issuance of Sovereign Bonds , when Dr Rani himself knew nothing about them.

    And had to send his Bright Boys like Ajith Pereara and Suji Senasinghe , the Ministers of the Yahapalana Government to get Tuition on Bond Trading .

    And the Tutor himself was non other than Mr Aloysious the Principal Bond Trader of the Yahapalana Government.

    These Forensic Audits apparently have given a clean Bill of Health Dr Wije’s ex Mates in the CB Monetary Borad .
    And also seems to have cleared Dr Rani’s ex Best Finance Minister, who even visited the Monetary Board with the ex CB Boss who is now hiding in Singapore.

    Anyway I watched the Media briefing of Dr Rani’s other Bright Boy Dr Harsha yesterday.
    Dr Harsha even has a real PhD in Economics and should know at least the basics of Bond Trading.
    -.
    He told the Press that it is clear as the day that Dr Rani and his Cabinet is responsible for a LKR 9000 Million Loss to the Government regardless what ever these F*****Report say.

    And I believe him, because he was waving all 5 Reports in front of the Media Scrum..

    • 4
      1

      sumane the menike?
      do any of your SLPP clowns – [ jokers ] know what a bond transaction means.?
      I do not think so as most of them including your good self is non-english speaking swabasha amude clad buggers know what is meant by a bond issue.?
      =
      why on earth are you jokers hogging onto this classy illustrious webpage and do you and the others of your caliber/ilk desire to drive it down the pallan into the cesspit in the bog.?

  • 0
    1

    Thanks are due to the author of this article, trying to explain / educate the general public through a “dialog between a grandpa and granddaughter”. Clearly the auditors themselves were interested in completing the assignment in double quick time to get the fat bucks. They all know that we are a bunch of buffoons who have a record of appointing people who do not have the citizenship of our country as Governors of the Central Bank. Clearly the audit report too have some shortcomings and in real terms have they completed the assignment? If the answer is no the question arises as to who certified the payments to the so called auditors. We all know that from time to time the so called auditors cum consultants too were pulled up by various governments in the world for wrong doing. In that context how reliable is the findings of one rogue against another?

  • 1
    0

    We wonder why WAW kept quiet for so long. His is an vain attempt to give a hand to the Cabraal clan. My I remind WAW that he was DG when Cabraal was G. A very senior retired officer was heard saying Cabraal was not fit to be a peon in the CB. When US$ 7.5 million was spent in CB funds in Mahinda’s attempt to get hosting of the Commonwealth Games 2018, WAW kept quite knowing very well that there was no such provision to spend CB funds for such futile matters. He should have told Cabraal that was illegal. It had no Monetary Board approval. Even Mahinda had not anything in writing. It was Lalith Weeratunga who gave orders. Such monies cannot be spent even with Cabinet approval according to MLA. It was the same in the case of Greek Bond. It was a fake no such transaction took place MARA took 8 million US dollars by that fake investment. And for the first time in the history of the CB we saw the P&L in the red. WAW YOU ARE RESPONSILE.

  • 1
    2

    Was there a Bond Scam during yahapalanaya? YES!
    Should the culprits be prosecuted? YES!
    Was there irregularities re. capital market transactions (Bond/Stocks) during the previous regime? YES!
    Should the culprits be prosecuted? YES!

    Is the forensic audit worth the money spent? NO!

    Why?
    Being a participant in capital market transactions for over 35 plus years, my personal view is the report is very amateurish! put together by a set of accountants who have no clue of the dynamics (and technicalities) driving capital market transactions! There is no consistency in the approach toward the audit. And the audit has been performed on the childish basis of 1+1=2, with no assumptions related to demand/supply, market sentiment, availability/lack of cash in the market, market expectations, all of which are important drivers of yield/price in the capital market! cont……

  • 0
    0

    cont….

    On the Yahapalana Bond Scam, I was expecting to see some insight on the the biggest affirmative political action that was taken to enable the execution of the Scam! Which in my view was the instructions given to Chairmans/CEOs of the state banks not to participate in the two auctions related to the scam! The state banks are institutions loaded with excess cash and they have the ability to bid and walk away any amount offered by the government. The prevention of state banks participating enabled the “podiyan” bond trader Perpetual to walk away with the largest slice of cake offered at a yield of more than 25% over and above the market yield, and make a killing!, by a subsequent arranged sale to EPF down the road when rates stabilised!

    The PCoI on the Bond Scam did touch on this aspect and questioned the perpetrator, but did not pass any proclamations in the report, being satisfied with the perpetrator’s answer being “To prevent state banks from bidding at higher rates and moving interest rates upwards” cont…….

  • 0
    1

    cont…..

    In my personal view the PCoI did not possess the technical competence to assess the impact of this fraudulent instructions, and were satisfied with the perpetrator’s justification!

    The perpetrator, the then Finance Minister is no economic wizard who understands macro-economic fundamentals driving interest rates! As was demonstrated, the CBSL acted completely opposite to the Minister’s contention and offered the bonds at a yield (interest rate) over 25% in excess of the then prevailing market rate! The question I was awaiting answers to were: Did the Minister, subsequent to his instructions to state banks, convey to the CBSL his communication with state banks? and inform the CBSL the reason he was keeping the state banks out was to avoid a spike in interest rates?

    This happened not once but twice! Coincidence?
    Who benefitted from this affirmative political action? the ‘podiyen’ bond trader!
    Who was the politician who had the most telephone conversations
    with the “podiyen” bond trader? Your guess is as good as mine!

    In my professional opinion, if the state banks had participated in the two tainted auctions, there would have been no room for the scam as they would have bid at a yield rate very much lower than that was offered by the rogue bond trader acting in concert with a rogue minister!

  • 0
    0

    cont….

    And my fear is this stupid report has provided all the rogues an exit mechanism to get way scot free. All one has to do is establish fallacy on one of the conclusions and all other conclusions even if right would go out of the window!

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