{"id":142888,"date":"2015-04-16T13:38:36","date_gmt":"2015-04-16T08:08:36","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=142888"},"modified":"2015-05-24T14:57:40","modified_gmt":"2015-05-24T09:27:40","slug":"sri-lankan-airlines-weliamuna-report-prosecution-of-negligent-auditors-directors","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/sri-lankan-airlines-weliamuna-report-prosecution-of-negligent-auditors-directors\/","title":{"rendered":"Sri Lankan Airlines & Weliamuna Report: Prosecution Of Negligent Auditors & Directors?"},"content":{"rendered":"

By\u00a0<\/strong>Amrit Muttukumaru<\/span> –<\/strong><\/p>\n

\"Amrit<\/a>

Amrit Muttukumaru<\/p><\/div>\n

Large-Scale corruption will continue to thrive so long as professionals \u2013 particularly auditors and lawyers (i) are not held accountable (ii) \u2018named & shamed\u2019 (iii) punished – for dereliction of duty and wrongdoing. Can any large-scale corruption occur without the complicity of professionals? Are not accountants and auditors the first line of defense against corruption in all entities dealing with financial resources?<\/p>\n

This is precisely what is avoided even by purported good governance activists and the media in Sri Lanka. Although they talk the hind legs<\/strong> off a donkey on the evils of corruption, they fail to bite the bullet in regard to \u2018naming & shaming\u2019 professionals and bigwigs in the corporate sector.<\/p>\n

Based on the Prime Minister\u2019s statement, the J.C. Weliamuna Report<\/span><\/a> into alleged corruption and abuse of power in Sri Lankan Airlines<\/span><\/a> confirms this malady.<\/p>\n

The Report which confirms in shocking detail what the discerning public has long suspected appears to have missed the wood for the trees by neglecting to give due attention to the fact that the alleged corruption and abuse of power by Chairman, Nishantha Wickramasinghe<\/span><\/a>, Kapila Chandrasena<\/span><\/a> (CEO) and others took place under the watch<\/strong> of the airline\u2019s long standing auditors \u2013 Ernst & Young<\/strong> and its Board of Directors which included Messrs. Susantha Ratnayake, Nihal Jayamanne PC, Sunil G Wijesinha, Sanath Ukwatte and Manilal Fernando – many of them also in its Audit Committee \u2013 some even as Chairmen!<\/p>\n

\"SriLankan<\/a><\/p>\n

*Picture courtesy\u00a0SriLankan Airlines Facebook page<\/em><\/p>\n

Directors<\/strong><\/p>\n

As per Annual Reports, former Directors include:<\/p>\n

Mr. Susantha Ratnayake \u2013 Chairman, Audit Committee for some years. He is a former Chairman, Ceylon Chamber of Commerce and incumbent Chairman, John Keells Holdings PLC – arguably the country\u2019s leading private sector entity. He is also Chairman, Ceylon Tobacco Company PLC.<\/p>\n

Mr. Nihal Jayamanne PC \u2013 Chairman, Audit Committee and its member for some years. He is a leading lawyer who is Chairman of the Law Commission of Sri Lanka and the Company Law Advisory Commission. He is also Chairman, Seylan Bank PLC.<\/p>\n

Mr. Sunil G Wijesinha \u2013 Chairman, Audit Committee. He was a Director when Dr P B Jayasundera was Chairman and continued for a period when Mr. Nishantha Wickremasinghe succeeded him. He is a Chartered Engineer and until recently was Chairman, NDB Bank. Previously he was Chairman, Employers\u2019 Federation of Ceylon and Deputy Chairman, Sampath Bank PLC.<\/p>\n

Mr. Sanath Ukwatte \u2013 Member, Audit Committee is a leading hotelier. He is Chairman, Mount Lavinia Hotel Group<\/p>\n

Mr. Manilal Fernando \u2013 a Director for some years is a lawyer. He is a Director of Aitken Spence & Co. PLC and Ceylon Guardian Investment Trust PLC (A member of the Carson Cumberbatch Group). These are leading corporate entities in Sri Lanka,<\/p>\n

What does this convey about the professionals concerned and the private sector projected as the country\u2019s \u2018engine of growth\u2019?<\/p>\n

The Weliamuna Report while rightly recommending \u201ccriminal investigations<\/span><\/a>\u201d <\/em><\/strong>into instances of alleged corruption which includes the entire re-fleeting process with brand-new aircraft costing $2.3 billion and \u201cnoting instances\u201d<\/em> where former Chairman Wickramasinghe and some others in top management should be \u201cprosecuted\u201d<\/em><\/strong> is apparently silent on proposed punitive action against the airline\u2019s auditors and Board of Directors for any negligence <\/strong>of fiduciary responsibility inimical to the public interest<\/strong>.<\/p>\n

\u2018Mihin Lanka\u2019<\/strong><\/p>\n

Since we are on the subject of airlines, was it not a Past President of the ICASL and the OPA \u2013 Mr. Lakshman Watawala who was mainly responsible for the alleged “within 24 hours”<\/em><\/strong> BOI approval of ‘Mihin Lanka<\/span><\/a>‘ not withstanding his reported admission to then COPE member Ravi Karunanayake (now Minister of Finance)\u00a0“under\u00a0normal circumstances it would take six to eight weeks at least”<\/em>! (‘The Sunday Leader’ 10 December 2006).<\/p>\n

The question is \u2013 will the government hold Mr. Watawala who has responsibility for many accounting bodies accountable?<\/p>\n

Ernst & Young<\/strong><\/p>\n

The case of the airline\u2019s longstanding auditors<\/strong> – Ernst & Young is intriguing.<\/p>\n

Does not the question also arise why auditors are allowed to hold office in the same entity for extended periods?<\/p>\n

Ernst & Young (together with PwC) was faulted\u00a0for ‘Professional Misconduct’ by (i) the Supreme Court (ii) the Attorney-General (iii) Parliament’s COPE vis-\u00e0-vis the fraudulent privatization of the Sri Lanka Insurance Corporation. The ‘Supreme Court’ (SC FR Application No: 158\/2007) in its\u00a0landmark Judgment delivered on 4 June 2009, held the SLIC privatisation to be “illegal and invalid ab initio” <\/em>and had ordered the removal <\/strong>“forthwith”<\/em> of the auditors, Ernst & Young.<\/p>\n

Although ICASL\u2019s ‘Ethics’ Committee more than eight years ago endorsed<\/strong> the findings of its Investigating ‘Panel’ that a prima-facie case of ‘Professional Misconduct’ had been established against\u00a0Ernst & Young and PwC and\u00a0all<\/strong> their Partners, the ICASL has still not concluded its purported investigation of\u00a0my ‘complaint’ of \u2018professional misconduct\u2019 made as far back as 8 August\u00a02005. This appears to be of no interest to anyone<\/strong>!<\/p>\n

It must be noted that (i) Dr. P.B. Jayasundera \u2013 former Treasury Secretary and former Chairman of the airline was Senior Policy Advisor to Ernst & Young (ii) The auditors of the private media controlled Press Complaints Commission of Sri Lanka as per its website is Ernst & Young.<\/p>\n

Any guesses who the auditors are of Transparency International Sri Lanka of which Mr. J.C. Weliamuna is Chairman? As per its website it is Ernst & Young!<\/strong><\/p>\n

To cap it all, the incumbent President of ICASL\u00a0– Mr. Arjuna Herath is a Partner of Ernst & Young.<\/p>\n

Since it seems inappropriate to have the ICASL under the Ministry of Trade and Commerce, it is suggested that it be brought under the ambit of either the Ministry of Finance or Ministry of Policy Planning and Economic Affairs.<\/p>\n

Conclusion<\/strong><\/p>\n

On the subject of \u2018complicity\u2019 Wikipedia<\/span><\/a> makes the following observation:<\/p>\n

\u201cAn individual is<\/em>\u00a0complicit<\/em><\/strong>\u00a0in a<\/em>\u00a0crime<\/em>\u00a0if he is aware of its occurrence and has the ability to report the crime, but fails to do so. As such, the individual effectively allows criminals to carry out a crime despite potentially being able to stop it from happening, either directly or by contacting the authorities. The offender is a de facto<\/em>\u00a0accessory<\/em>\u00a0to the crime, rather than an innocent bystander.\u201d<\/em><\/p>\n

In this instance we are referring to auditors and Board Directors with fiduciary responsibility<\/strong>!<\/p>\n

Those reluctant to hold professionals accountable and \u2018name & shame\u2019 wrongdoers have clearly lost the moral authority to speak of good governance and any pretense to combat corruption.<\/p>\n","protected":false},"excerpt":{"rendered":"

[…]<\/p>\n","protected":false},"author":22,"featured_media":142887,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,46,8,6968],"tags":[],"class_list":["post-142888","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-colombotelegraph","category-constitutional-reforms","category-editorial","category-popular-columns"],"yoast_head":"\nSri Lankan Airlines & Weliamuna Report: Prosecution Of Negligent Auditors & Directors? - Colombo Telegraph<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.colombotelegraph.com\/index.php\/sri-lankan-airlines-weliamuna-report-prosecution-of-negligent-auditors-directors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sri Lankan Airlines & Weliamuna Report: Prosecution Of Negligent Auditors & Directors? 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