By Rusiripala Tennakoon –

It has become a common feature for much of the substance elicited during deliberations at the Parliamentary COPE committees to disappear into oblivion, in sublimation. While they appear to be highly explosive at the first hearing, they become part of the history soon to be buried for good. The power of the COPE to deal with serious lapses, fraudulent operations and non-compliances brought up at this forum has become a questionable issue and many refer to the COPE as a body without teeth to bite.

Basic concept underlying the Committee on Public Enterprises (COPE) established in 1979 by the Parliament is to make it serve as an authoritative body to ensure the Compliance of Financial Discipline in Government owned bodies functioning as Public Corporations and Semi Government Organizations.

The duty of the Committee is to report to Parliament on accounts examined, Financial operations, and performance of the management officials. It is constitutionally mandatory for the Accounts of such organizations to be Audited by the Auditor-General which should become the basis for further investigations by the Committee. It has the Power to summon any official or other people relevant to the matters investigated, as considered necessary by the COPE, to obtain evidence and produce documents etc.

The Reporting to Parliament by the committee should contain recommendations on their findings and directives via Parliament to the Corporations and Statutory bodies for compliance in action programs to rectify the lapses.

The social concern about this aspect is based on the lack of public information about the follow up action because once a report is tabled in Parliament such reports should be referred to the Minister in charge of the subject of Finance and the Ministries overlooking the institutions. They are expected to submit their observations and steps taken with regard to what has been pinpointed, to the HOUSE, within a period of eight weeks.

In such a context what is actually transpiring is intriguing. As a case in point the COPE report on the Peoples Bank dated 4^th May 2022 in the Parliament is cited as an example.    

We refer to the Extracts of minutes of the 13^th meeting of the Committee on Public Enterprises held on Wensday,4^th May,2022 in the Parliament of Sri Lanka, attended by 16 Hon MPs, 3 from the Auditor Generals Dept. Under the Chairmanship of Hon. Charitha Herath with the following representation by the peoples Bank.

Chairman Sujeewa Rajapakse and 6 Directors of the Board, CEO and 7 DGMs, Additional Chief Law Officer, and 4 other officials participate on behalf of the Bank, in the Prescence of 3 Senior Officials of the Ministry of Finance with the Secretary Ministry of Finance in attendance.

It is reported that Under the deliberations of this meeting, the COPE discussed the progress of several matters which were the subject of discussion at the previous COPE meeting held after summoning the Peoples Bank on 5^th September 2019.

We set out below in the order the matters were discussed and reported in the minutes of the COPE meeting under the same reference number.

Item No.04 (a) Service Extension of the former General manager Mr. Wasantha Kumara

In the reported reply furnished by the CEO/GM about the current situation he has stated that “the said officer had terminated his service after six months service and the problem solved accordingly”

However the previous COPE report specifically directed that the amount that the bank had to pay as salaries and other benefits granted to Wasantha Kumara during the period of this unauthorized extension to be recovered from the officials who were responsible.

Wee wish to know whether the Bank took any steps and whether this amount was charged from the officials responsible. If not how the Bank accounted for this irregular payments.

It is on record in the 2019 COPE report that Wasantha Kumara had taken away two vehicles and the COPE ordered to recall one. No mention was made about this at the last COPE meeting and we wish to know whether the Bank took any action in this regard and what the outcome is.

The Treasury and the Public Enterprises Department was directed by the committee to issue a common guide line regarding the vehicle issues of this nature in the State Banks.

WE wish to know whether the bank has received any such guide Lines in accordance.

(b) It was revealed and the Auditors reported that a sum of Rs 84 million has been paid o/a of an issue not having proper evidence to Ms. JIT the contractors and the Bank should rectify this.

The GM after 3 years has stated according to the COPE report that a forensic audit is being conducted by the National Audit Office in that regard.

Due to the long time lapse on this issue we wish to know the current position of this unauthorized payment and who will be held responsible for any losses incurred as public funds.

Item No. 05. MTD Walkers PLC

It has been reported that the COPE has  noted the fact that a Director of the Bank was functioning as a Director of the defaulting borrow were company  and the loan has been granted without any collateral. The total amount of the Loan Package was Rs 4.2 Billion. The COPE specifically questioned whether it was possible to obtain such big amounts as loans.

The GM’s reply was, “certain amount had been recovered , legal action initiated and investigations are being conducted by the CID against the members of the Board of Directors of the said company. GM also stated that action has been taken to conduct an investigation against the said Director by the CID.

WE wish to know the current position and whether this position is true.

Item No. 06. Non-performing Loans (NPL)

The COPE querying on the state of the total amount fallen into the category of NPL, which was about Rs. 54 billion, inquired from the bank, how much has been recovered from this amount.

Bank was directed to report back to the Committee within 3 months how this amount would be recovered and what course of action is proposed by the bank to do this.

The COPE directed the Bank to produce copies of written correspondence and documents exchanged between the Bank and the CBSL with regard to the loan facility granted to CPC within a months Time.We wish to know whether the bank has complied with this.

Item No. 07 Loans and advances to State Owned Enterprises

The COPE questioned on the Loans given to several institutions such as CEB,CPC, RDA, Sri Lankan Airlines, Colombo Commercial Fertilizer ltd & the Ceylon Fertilizer Company Ltd. And the money released for Chinese Fertilizer and Nano Urea.

The COPE further inquired whether the proper procedure followed in importing  fertilizer to the country and directed to submit a report on this matter to the Committee within a Month.

We wish to know whether this direction was complied with.

The COPE also paid its attention on top 10 non-performing loan balances given to Companies such as Yasodha Group, CML MTD group, Mihin Lanka (pvt) Ltd and W.M. Mendis and Company Ltd.

As these matters were raised in public bringing disrepute to the Bank, we wish to know whether they are properly attended to and remedial action taken by the bank.

The Chinese fertilizer ship which was returned as Chinese faeces, became a big scandal in the country mainly because the country has to pay through the PB to the suppliers despite the returning of the shipment.

As the relevant LC was opened by the bank it is alleged that the Bank is at fault for not advising the client(importer ) about the correct precautions to be taken.

Staff members in the know of more details about many of these impugned transactions are willing to go to the CID or assist the COPE.

The COPE has paid special attention to loans outstanding from W.M. Mendis & Company. CML MTD Group and Daya Apparel Group and directed the bank to submit a report to the Committee within a month on the procedure followed relating to granting of loans to the said companies. COPE also referred to a loan given of RS equivalent of 2.5 Billion and totally unpaid, to a Maldivian company, Huvarvee International (Pvt) Ltd. This loan as we are informed has been granted in US dollars (10 Million). The facts reported to COPE in this regard appear to be complicated and the bank is unable to take legal action due to faulty or poor documentation issues.

Those intending to represent matters to higher authorities on this aspect wish to know the current position and whether the bank has appraised the COPE subsequently as required.

The COPE directed the bank to send a report within one month regarding the 54 Billion NPL balances. COPE also wanted the Bank to report on all transactions related to 21 companies figuring in the NPL list for the last 5 years including the proposals of the projects, names of the officials who approved these loans and whether they were properly evaluated .

Item No. 09 Bank’s net foreign assets

The COPE queried whether proper procedures had been followed in connection with the instructions given by the Central Bank and directed the bank to report to the committee in that regard.

Item No. 10 Loan restructuring process

The COPE questioned the continuous support given to certain companies while they were in the top 10 liast of NPL (for the last 5 years) such as CML MTD Group, Mihin Lanka (Pvt )Ltd., W.M. Mendis and Co Ltd., Huravee International Pvt Ltd., Daya Apparel  Group and Nawaloka Group  etc.

We wish to know whether the bank has taken any action in this regard.

No. 12 Data Ware House project

AS bank employees we are aware that this project from day 1 was a complete failure and a white elephant the bank was trying hard to sustain, finally after a wastage of about Rs 400 Million, another proposal of Rs 470 million was narrowly saved due to reports submitted by employees about the non-feasibility at this project.

The COPE wanted the bank to conduct a special internal investigation and to report the matter to the CID.

Ther is no information that this was done. We wish to be apprised of the current situation as we can assist in the CID investigations.

Item No. 13. Systemic and personal lending issues

Under this subject heading the COPE has detected several systemic defects owing to weaknesses of the management including the role of Directors. The COPE is of the view that the Board of Directors should not try to protect any other institution but need to secure and protect the bank itself only and also stressed that it is basically a systemic issue.

This tantamount to a reprimand made on the Board of Directors.

We wish to know whether the bank since then has taken any remedial measures.

Referring to the waste of funds associated with the Advertising expenditure we note that the financial accounting system followed by the bank does not help one to find out how much the bank spends on Advertising. Bank has stated that the annual budget is around Rs. 800 million. Strongly addressing issues such as selection criteria and the excessive expenditure on this the COPE wanted the bank to furnish a report within two weeks stating those.

This case study shows how serious lapses duly exposed by the COPE go underground.

This is suggestive of a need for the COPE to initiate Actions to deal with those who commit lapses as well as those who fail to carry out corrective directives.