18 September, 2020

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Full Text: Misuse Of EPF Funds Case Against Rajapaksa And Cabraal

The case against Mahinda Rajapaksa and Ajith Nivard Cabraal in Connection with the misuse of EPF funds in the purchase of shares to be supported in open courts today.

The complainant states the Employees Provident Fund (EPF) monies that have been invested in the stock market of Sri Lanka with intent to boost up the values of certain shares irrationally and arbitrarily at the expense of the Employees Provident Fund resulting in a total loss of approximately 12 Billion SLR.

Sri Lanka's President Mahinda Rajapaksa (C), Governor of Central Bank Ajith Nivard Cabraal (L), and Economic Development Minister Basil Rajapaksa (R) speak during the presentation of the 2010 Central Bank of Sri Lanka annual report, in Colombo April 11, 2011. Sri Lanka's central bank on Monday forecast economic growth of 9.0 percent for 2012, and said    it expected foreign exchange reserves this year to climb 21 percent to $8 billion. The central bank in its 2010 annual report also forecast post-war credit growth to cool to 18.8 percent by the end of the year versus 25.1 percent at the end of 2010. The speed of credit growth has raised some inflationary concerns. REUTERS/Dinuka Liyanawatte (SRI LANKA - Tags: POLITICS BUSINESS)

These are all the documents that were filed in the Magistrates Court of Colombo;

Full text;

IN THE MAGISTRATE’S COURT OF COLOMBO
In the matter of application in terms of section 136(1) and 139 (1) of the Criminal Procedure Code

Kelum Kumarasinghe
No.38, Bodhirukkarama Road,
Galborella,
Kelaniya

Complainant

-Vs-

1. Ajith Nivard Cabraal
6/31 School Lane,
Nawala,
Rajagiriya
2. Mahinda Rajapakse
Carlton House
Tangalle

Accused

 

On this …… day of August 2015

TO HONOURABLE MAGISTRATE OF COLOMBO:

1. The complaint of the complainant appearing by his Attorney at Law Gayani Dilrukshi states as follows :

2. The Complainant states that he is an Attorney at Law.

(a) The Complainant states the 1st Accused is the former Governor of the Central Bank and has caused a loss of Rs.12 Billion to the EPF Fund by intentionally investing in low shares in the stock market, and by being party to a process referred to as pumping and dumping with full knowledge of the fact and has thereby committed the offence of criminal breach of trust.

(b) The Complainant states the 2nd accused is the former President of the Democratic Socialist Republic and the former Minister of Finance under whose purview the Central Bank fell within, and the offence committed by the 1st Accused was during the tenure of the 2nd accused as the Minister of Finance.

(c) The Complainant further states that the 2nd accused has publicly admitted that he has prevented any action being taken against persons who committed offences under the tenure of the 2nd accused and has thereby committed the offence of aiding and abetting.

(d) The said video clipping of the said Mahinda Rajapaksha who made such an admission in three different occasion is marked as ‘X’ and pleaded herewith as part and parcel of the plaint.

3. The complainant states the Employees Provident Fund (EPF) monies that have been invested in the stock market of Sri Lanka with intent to boost up the values of certain shares irrationally and arbitrarily at the expense of the Employees Provident Fund resulting in a total loss of approximately 12 Billion SLR.

4. The complainant states that:

(a) As per Section 5(e) of the EPF Act, “The Monetary Board may invest such of the moneys of the Fund as are not immediately required for the purposes of this Act in such Securities as the Board may consider fit and may sell such Securities.”

(b) As per Section 7(d) of the ETF Act, “The Board may invest such of the moneys of the Fund that are not immediately required for the purposes of this Act in such shares or Securities as the Board may consider fir and may sell such shares and securities.”

5. Therefore it is abundantly clear that the Parliament has drawn a clear distinction with regard to the two acts and taken away the power from the Employees Provident Fund in making any investments in shares that may be purchased from the stock market.

6. The complainant states that there is a clear distinction in the definitions of ‘shares’ and ‘securities’ and thus in the powers of the Monetary Board as per Section 5(e) of the EPF Act and the powers afforded to the ETF Board as per Section 7(d) of the ETF Act and accordingly, whilst the Board of the ETF is eligible to invest in shares the Monetary Board has no such power of investing EPF funds in shares.

7. The complainant states that the opinion of former Attorney General Mr. Shibly Aziz, when the Attorney General’s Department was consulted in 1995 was that investment in shares was against the EPF Act, and only investments permitted as prescribed by the EPF Act were investments in Government Securities and that volatile or risky investments was against the EPF Act. The said opinion was in line with a previous opinion that had been given previously by one of the previous Attorney General’s, Mr. Shiva Pasupathy in the late 1970’s.

8. However consequently, when the Department was consulted in 2002 during the tenure of Attorney General Kamalasabeyson in 2002, his opinion was that EPF could invest in shares, although only in listed blue chip companies and not in smaller shares.

9. The complainant states that whilst the EPF has 13 million contributing and non-contributing members, the ETF has 2.3 Million members and the monies of the EPF and ETF belong to its members. The Government agencies managing these funds act as trustees to the funds and play only a fiduciary role and thus are bound to act in the best interest of its beneficiaries.

10. The Complainant states that the Govenor of the Central Bank, Nivard Cabral, being a member of the Monetary Board which is the governing Council of the EPF fund, has breached all fiduciary duties as a member of the Monetary Board and has acted in a dishonest and corrupt manner causing loss in excess of 12,000 Million Rupees to the Fund and its beneficiaries.

11. The complainant states that as per figures tabled by Hon. Sarath Amunugama, in response to a question raised by the Leader of the Opposition, the loss to the EPF as a result of investments made in the Stock Exchange is a sum of Rs. 11.04 Billion as at 20th June 2012. It is further stated by the Hon. Minister that out of 65 companies in which investments were made only 17 of those investments have recorded profits.

12. The complainant states that the loss is principally caused as a result of stock market manipulation caused through a mechanism referred to as ‘pumping and dumping’ whereby a low value ‘junk stocks’ are purchased by a select few widely referred to in the media as the ‘stock market mafia’, with full blessings of 1st accused and other members of the Monetary Board and there after ‘pumped up’ to enormous values, sometimes in the range of thousands of percent higher than the price originally purchased at by the persons belonging to the said ‘stock-market mafia’ and thereafter dumped upon the unsuspecting traders in the stock exchange and principally the Employers Provident Fund consequent to which the particular share in question falls back to its original and actual values.

13. The complainant states that as a result of the loss caused to the Employees Provident Fund the rate of return from investments made by the EPF has fallen to 12% in 2011 from 15% in the previous year and the interest paid to members’ balances has declined to 11.5% in 2011 from 12.5% in 2010.

14. The complainant states that a select few instances of such market manipulations are listed below:

  • The EPF incurred a loss of Rs. 700 Million on an investment of Rs. 3000 Million in Ceylon Grain Elevators PLC. At the time of investment the value of the share was Rs.250, and bought a further number of shares in its downward trend at a cost of Rs.185/share as a mitigatory measure. However the value of the share had fallen to Rs.55/share. However the total loss incurred as a result of investment in the said share exceeds a sum of Rs.1.02 Billion as stated by Dr.Harsha De Silva.
  • In April 2012 the EPF invested Rs.280.5 Million in Piramal Glass (Ceylon) Ltd. at Rs.6.20 per share increasing total shareholding of the company to 10%. However the price of the share fell to Rs.5.20 per share within a week of making the investment causing a loss of Rs. 50 Million to the EPF.
  • Despite a debt of Rs.6.2 billion the EPF purchased 23.7 Million shares of Galadari Hotels (Lanka) PLC., at a cost of Rs.32.50 per share from Nawaloka Hospitals and related parties increasing its stake by 13 percent. According to Nawaloka Hospitals Deputy Chairman and Chief Executive Officer Jayantha Dharmadasa it has been “a great relief” for them to get rid of the “burden” – Galadari Hotels (Lanka) PLC. The current trading price of Galadari Hotels (Lanka) PLC is approximately Rs.13/share causing a loss in excess of Rs.500 Million.
  • Shares of Laugh Gas PLC was trading at approximately Rs.38 per share over a period of 2 months prior to the purchase of Rs.1.8 Billion worth of shares by the EPF, on 10th October 2012 at approximately 11.00 am at a price ranging between Rs.48-51/share. On the same day at 2.30 pm the market price of the share fell back nearing original levels to Rs.40/share causing a loss of Rs.300 Million within hours of purchase. It ironical that Laugh Gas share is not even on the main Board where as it was on the second board namely the Dirisaviya Board and has no apparent asset base for such a inflated value of the share.
  • The EPF thereafter increased its shareholding in Laugh Gas PLC to 57.89 Million ordinary shares holding a stake of 17.28% of the company followed by 18 Million or 35% non-voting shares. The current trading prices of Laugh Gas PLC Voting is Rs.22-23/share whilst the Non-Voting price is Rs.14-15/share causing a loss of a sum in excess of Rs.1300 Million.
  • A loss of Rs.1000 Million as a resulting of an investment made in Lanka Orix and Leasing Company.
  • Other major losses incurred include Browns (Rs 934 million), Central Finance (Rs 933 million), Vallibel One (Rs 740 million) and DFCC (Rs 655 million).
  • The EPF recorded a loss in value of shares held in Dialog (Rs 572 million), Richard Peiris (123 million shares) (Rs 455 million), HNB (Rs 420 million).

15. The complainant hereby states that the shares that have been purchased from Companies were spear headed by political cronies who are near and dear to the governor and the other members of the Monetary Board such as Wegapitiya of Laugh Gas; Valibal – Dhammika Perera; Orix Lanka Ltd- Ajith Devasurendra; Nawaloka Hospitals – Jayantha Dharmadasa & Upali Dharmadasa (already charged in court for insider dealer transactions).

16. The complainant further states that Ajith Nivard Cabral – Govenor Central Bank, has acted in a corrupt manner with intent knowingly that such monies invested in shares of which values were drastically crashing and thereafter did nothing when it was very well known and seen that such share values were plummeting, causing colossal losses to the Government and has thereby committed the offence of criminal breach of trust, by breaching the trust placed in the 1st accused as the holder of the office of Governor Central Bank.

17. The complainant states that the loss caused by these suspects to the tune of approximately Rs. 11.5 Billion (Rs.11,500 Million) Causing a loss to the wage earning employees of Sri Lanka is a heinous offence.

18. The Complainant further states that the 2nd accused being the Minister in charge of the subject of Finance and the 1st accused was directly reporting to the 2nd accused. This incident causing loss to the EPF was very much publicized and was reported in the public domain. How ever the 2nd accused aided and abetted the 1st accused by knowingly ignoring his illegal conduct and encouraged the 1st accused to commit the offence of Criminal Breach of Trust of the funds of the EPF that was entrusted with the 1st accused as the head of the Monetary Board.

19. The complainant urges that a Sinhala translation of this plaint will be filed in your honour’s court in due course.

20. The 2nd Accused was also holding the office of the President of the Republic of Sri Lanka. He has relinquished office on the 8th January 2015. The 2nd Accused Mahinda Rajapaksha does not enjoy any immunity. He can be sued in any court of Law.

21. The complainant wherefore seeks summons/notices to be issued in the first instance on the 1st and 2nd for the offence committed under and in terms of section 388 of the penal code accused and to take steps to punish them under section 389 of the penal code.

Wherefore the complainant prays that Your Honour’s Court be pleased to;

a) To issue notice/summons on the 1st and the 2nd accused in the first instance
b) To make an order to impound the passports of the 1st and the 2nd accused, preventing him from leaving the country.
c) To charge the 1st and 2nd accused for the offence of criminal breach of trust punishable under and in terms of section 389 of the penal code.
d) Proceed the trial as provided for under the provisions of the criminal procedure code.
Complainant Attorney -at -Law

EPF Charge Sheet – click here

EPF Case List of Witnesses – click here

EPF Affidavit – click here

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Latest comments

  • 22
    2

    Mahinda Rajapaksa, Mara, has many titles

    1. Tsunami Hora

    Tsunami funds: Champika says MR may lose civic rights if guilty

    http://www.dailymirror.lk/83065/champika-says-mr-may-lose-civic-rights-if-guilty

    2. EPF Hora

    Misuse Of EPF Funds Case Against Rajapaksa And Cabraal

    3. MaRa MiNi Maruwa
    etc.

    MaRa MaRa Chatu MaRa

    MaRa MaRa Amana MaRa

    MaRa Tsunami Hora

    MaRa MaRa EPF Hora…

    MaRa MaRa MiNi MaRuwa

    • 13
      0

      Amarasiri

      You missed out “MaRa MaRa [Edited out]” !

      • 3
        0

        mike,

        Sorry. Here it is!

        The MaRa MaRa Song.

        MaRa MaRa Chatu MaRa

        MaRa MaRa Amana MaRa

        MaRa MaRa HoRa MaRa

        MaRa MaRa Pacha MaRa

        MaRa MaRa Dhushana MaRa

        MaRa MaRa Mini MaRu MaRa…

    • 26
      1

      Wow… he is really talented… I thought only chameleons could change color but seems like the Mara Tsunami Minimaruwa takes the cake… Now lets make them all eat the cake. Hats off to President Sirisena, the only man who had the guts to give us our Country back… Lets make sure it stays this way, fellow citizens…

    • 2
      15

      Amarasiri

      Enough is enough. You are going too much.

      My Mahinda is not a hora or a carapotta. He is God given angel. He is an exhilarating taste like you get when you eat hot bathappu karolla.

      I hope you will stop your anti- Mahinda tirade.

      Do what you want with Ranil but not with my Mahinda.

      He is my God and beyond.

      • 9
        1

        Nirmala

        “My Mahinda is not a hora or a carapotta. He is God given angel. He is an exhilarating taste like you get when you eat bathappu karolla.”

        You keep worshipping this mad former dictator Medamulana Meeharaka for reasons best known to you! Why? Are you still enjoying this bugger’s Wattilapam (your own word)?

      • 5
        0

        A good example of blind faith. Are you living in a make believe land or is your head buried in the sand?

      • 0
        0

        NIRMALA n

        “My Mahinda is not a hora or a carapotta. He is God given angel. He is an exhilarating taste like you get when you eat hot bathappu karolla.”

        I bet that your MaRa MaRa Chatu MaRa is a Paradeshi, Para from South India or elsewhere. Get his DNA tested. It will prove that he is a Para-, and may or may not be a “karapotta”, cockroach Para in the Land of Native Veddah Aethho. Isn’t his middle name Percy?

        We need to learn to call a Spade, a Spade.

  • 5
    31

    Superannuation Funds or EPF as it is called in Srilanka always invest members’ contributions to grow their value overtime, and to at least keep up with inflation or beat it if possible.

    You can’t just keep the money under the mattress.

    These investments are spread across Shares, Property, Bonds and Fixed Deposits to get diversification, as different asset classes peak and drop at different times.

    Diversification is the fundamental need to even out these up and downs.

    Issuing Bonds to mates at 3 % more than the going rate is what the authorities must be worried about ,and not genuine share investments in solid businesses.

    Right now the LKR Bond holders who got in at the market rate of 9 % are bailing out hoping to get that extra 3 to 4 % by buying back..

    And Perpetual ArJun and family shareholders are laughing all the way to the Bank.

    Because of this rush, the rates will drop even below the market rate which was at the time when the Governor’s SIL got that extra 3 % as pure commission.

    That is what the thinking people should consider before casting their vote on the 17.

    Not these political stunts.

    • 11
      1

      KASmaalam K.A Sumanasekera

      You are typing loads of bull.

      Do you know anything about Sovereign Wealth Fund (SWF)? Lets hear it from a man who is supposed to be fluent in finance so he believes.

      When is the right time for you to apologized to the people who were born in barber caste? Be a man.

    • 8
      1

      KASmaalam K.A Sumanasekera

      As the minister responsible for budget preparation what sort budgetting technique did he use? Out of the following methods please chose the one that is most appropriate:

      activity-based budget
      add-on budget
      bracket budget
      continuous (rolling) budget
      incremental budget
      strategic budget
      stretch budget
      supplemental budget, and
      target budge

      Did he prefer add-on budget to other as he could conveniently add 10%, 15% 20%, to over and above the real costs?

      Your apology to the people born in barber caste is over due.

      • 9
        1

        Wrong. He used none of those. But gave the zero-based budget a new meaning by wiping out the entire state coffers to the zero level.

      • 7
        1

        NV none of the above probably;
        back-of-the-envelope
        or
        back of the fag pack

  • 24
    1

    These two crooks (Mahinda and Nivraal) not only swindle the money from the poor masses whose sweat and blood turned to be EPF and ETF but also gamble with Greek Bonds and utilise to pay salaries from other departments especially the dear, loving brother’s ‘Divi Neguma’.
    I have very grave doubts whether any EPF/ETF funds are actually available for new claims?? People were forced to accept the a Fixed deposit slips from Bank of Ceylon with above average interest rate at least to one year FREEZE the money without consent.
    In worse case scenario, they started to cut trees to pay very vulnerable cases (I raised this issue in CT several times).

    Trust me, these two family names (Rajapakse and Cabraal) will be unpopular names in Sri Lanka very soon like Hitler and Mussolini in Europe.

  • 9
    3

    If namal has a [Edited out]

    • 1
      6

      I see he has already stolen yours!

      • 8
        1

        taraki

        What about yours? Looks like you willingly surrendered it to him.

    • 0
      1

      [Edited out]

    • 1
      0

      Man, why is that you go to that biza levels ?

      I hate the man, but I woudl not add the kind of comments.

  • 3
    3

    Is it not similar to the NSB fraud??
    Why is it that the NSB fraud is not investigated? Is it because RW has an agreement with Shirani B not to proceed??

  • 7
    0

    Good to catch these Ali Horas. But what about that Kariyasam or somebody the ex CJs husband who also played a big role in swindling the peoples EPF funds? Must catch this bugger also. Otherwise battle half-done. Now his son is also contesting elections to bring about good governance, he says. Hic. Hic….Crooks breeding a new generation of Facebook crooks.

  • 8
    0

    WOW !

    Ajith Cabraal & Mahinda Rajapake – to line your pockets with Cents you compromised the Sri Lankan’s economy with Dollars. ( or Euros)

    As President Lee Kwan Yew said – a Pilot cannot run an airline
    Nor can a Cheat run an economy

    With due apologies to Tom Dooley
    http://www.oldielyrics.com/lyrics/the_kingston_trio/tom_dooley.html

    Hang down your head, Rajapakse
    Hang down your head and cry
    Hang down your head, Rajapakse
    Poor people, you’re ALL bound to die

    Your son lusted for used chattel,
    So, YOU ALL took his life;
    Your SON got him killed him on Park Road;
    You all contributed to this plight!

    Hang down your head, Rajapakse
    Hang down your head and cry
    Hang down your head, Rajapakse
    Poor family , you’re bound to die

    This time after the elections
    Reckon where you will be?

    Hadn’t a-been for Maithri
    You’ll all be in PURGATORY

    Hang down your head, Rajapakse
    Hang down your head and cry
    Hang down your head, Rajapakse
    Poor boy, you’re ALL bound to die
    Hang down your head, RAjapakse
    Hang down your head and cry
    Hang down your head, RAjapakse
    Poor boy, you’re bound to die

    This time after the elections
    Reckon where you will be
    Down in some lonesome valley, in kurunegala
    Hangin’ from a white Bow tree

    Hang down your head, Rajapakse
    Hang down your head and cry
    Hang down your head, Rajapakse
    Poor boy, you’re bound to die
    Hang down your head, Rajapakse
    Hang down your head and cry
    Hang down your head, Rajapakse

    Poor boy, you’re bound to die
    Poor boy, you’re bound to die
    Poor boy you’re bound to die
    Poor boy, you’re bound to die…

    • 0
      1

      Don’t murder that lovely song.

  • 2
    4

    Not sure of these things. USA also did the same thing for 401K’s, Social Security, and Medicaid shares, and also very irrationally and arbitrarily. Many people’s life savings were wiped out in 2009.

    However, USA can control things better with good military establishment, by “tweaking” things better in other lands that “do-not-comply” with US monetary balancing act.

    Now for Sri Lanka on the other hand, going “big-shot” so fast with all these stock-market things (pegged to Chinese loans) is bound to be very, very detrimental.

    Guess Ranil will peg all stocks and shares on the US military establishment. Let’s hope that China and Iran and Russia will “comply.”

    All is farce and fallacy.

  • 8
    0

    It was with tremendous efforts by the Labour Officers that the EPF funds swelled. They walked from shop to shop, boutique to boutique, to blue chip companies and got them to pay EPF, prosecutions were filed by these officers and it is saddened to see these funds squandered. Very few know and acknowledge the work of the labour officials in collecting the money.

    Central Bank maintained the accounts and now they have just misused the funds.

    • 0
      0

      In addition, labour officers are paid a pittance, while central bank employees get a bonus, EPF, pensions, medical benefits for maintaining the accounts and most of it comes from the surcharge. Now they have cheated also.

  • 1
    6

    Dear Native,

    Even Madras Middle class would know more about Super, Provident Funds, Investment Returns , Economic Cycles and asset Classes, than you lot.

    Mahendran has an easy job..

    • 2
      1

      KASmaalam K.A Sumanasekera

      “Even Madras Middle class would know more about Super, Provident Funds, Investment Returns , Economic Cycles and asset Classes, than you lot.”

      Have they over taken the brilliant Tamil/Sinhala people of this island? You are fibbing, can they do it from a toilet nadu? You are making it aren’t you?

      Probably you just want to be fit in with your Tamil Nadu cousin.

      Is Sundar Pichai your long lost cousin?

      Indra nooyi Pepsico chief must be related to your mum.

    • 0
      0

      Hey Kandiah Arasaratnam Sumanasekeram, [Edited out]

  • 1
    0

    This is all a guessing game. However, all of us have have common sense.

    If we really need to know the truth let us all pressurize the government to expedite the legal proceedings.

    Not all in the various sectors of the public service are angels. There are many love MaRa- for what reason we do not know or can we guess!! Therefore there are other methods by which we can expedite proceedings.

    Pem

  • 1
    2

    They have given here part of the story. During the same period EPF invested in large number of profitable shares such as Textured Jersey PLC. These profitable share investments have been carefully omitted. There will probably be a huge net gain when total investment in shares are taken.

  • 1
    3

    In share investment large strategic investments have to be distinguished from retail share trading. Fortis India (not fools) bought Lanka Hospitals stake at Rs.60/- per share. After that it came down to around Rs.30/-.

    Chinese stock market recently crashed. Many Chinese state institutions have invested in shares. Will the heads of those institution be hanged?

    We have to see the overall net profit/loss made from investment in all shares during the relevant period without carefully leaving out very profitable share investments.

    I am not a support of any of the CB Governors but any allegations have to be fair and unbiased

  • 4
    0

    This Cabbarala fellow is so slick and cunning that even Mahajaraa AliBaba did not trust him though he only made use of him . At one stage he is supposed to have said “OOo Nariyek”, when somebody asked him about his great economic advisor.

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