{"id":229656,"date":"2022-10-25T01:54:21","date_gmt":"2022-10-24T20:24:21","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=229656"},"modified":"2022-10-31T17:28:50","modified_gmt":"2022-10-31T11:58:50","slug":"auditors-could-have-prevented-alleged-thico-thilini-scandal","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/auditors-could-have-prevented-alleged-thico-thilini-scandal\/","title":{"rendered":"Auditors Could Have Prevented Alleged \u2018Thico\u2019\/Thilini Scandal"},"content":{"rendered":"<p><span style=\"color: #ff6600;\"><b>By\u00a0<\/b><b><a style=\"color: #ff6600;\" href=\"https:\/\/www.colombotelegraph.com\/?s=Amrit+Muttukumaru\">Amrit Muttukumaru<\/a> &#8211;<\/b><\/span><\/p>\n<div id=\"attachment_142887\" style=\"width: 154px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.colombotelegraph.com\/index.php\/sri-lankan-airlines-weliamuna-report-prosecution-of-negligent-auditors-directors\/amrit-muttukumaru\/\" rel=\"attachment wp-att-142887\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-142887\" class=\"size-thumbnail wp-image-142887\" src=\"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2015\/04\/Amrit-Muttukumaru-144x150.jpg\" alt=\"\" width=\"144\" height=\"150\" \/><\/a><p id=\"caption-attachment-142887\" class=\"wp-caption-text\">Amrit Muttukumaru<\/p><\/div>\n<p>The unfolding multi-billion rupee scandal allegedly involving <a href=\"https:\/\/lk.linkedin.com\/company\/thico-group-of-companies\">\u2018<span style=\"color: #ff6600;\">Thico Group Pvt. Ltd.<\/span>\u2019<\/a> and its founder Thilini Priyamali have the hallmarks of the rot contributing to systemic corruption in this country over the years. It is <b>systemic corruption<\/b> together with the dreadful mismanagement of <b>national unity<\/b> by successive administrations which are largely responsible for the economic woes and political instability in Sri Lanka.<span class=\"Apple-converted-space\">\u00a0 <\/span>This was given a turbo boost after the installation of the <b>Executive Presidency<\/b> in 1978. The mismanagement of national unity will not engage the attention of this article.<\/p>\n<p><span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"https:\/\/lk.linkedin.com\/company\/thico-group-of-companies\">\u2018Thico Group Pvt. Ltd.\u2019<\/a><\/span> is a \u201cduly registered company\u201d dealing in a \u201crange of industries including construction, entertainment, gem and jewellery, real estate and trading\u201d. It is headquartered on the \u201c34th floor, World Trade Centre\u201d in close proximity to the Central Bank of Sri Lanka (CBSL).<\/p>\n<p>Since Thico Group itself claims it is a \u201cduly registered company\u201d, does it not <b>imply<\/b> that apart from other statutory requirements, the company has to engage qualified accountants and have its accounts <b>audited <\/b>by chartered accountants?<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>Since Auditors\/Chartered Accountants are the first and last line of defense against any form of financial corruption does it not mean that they could have <b>nipped <\/b>in the bud<b> <\/b>the alleged corruption in Thico Group? Why are everyone including the businessmen controlled mainstream media and well-heeled NGOs who scream from the rooftops about \u2018good governance\u2019 <b>ignoring<\/b> this <b>truism<\/b>? A simple question which would alert even a <b>simpleton <\/b>is how Thico Group could afford to have an office at the \u201c34th floor, World Trade Centre\u201d?<\/p>\n<p><span style=\"color: #ff6600;\"><b>Bigwig<\/b><b> Collusion<\/b><b>?<\/b><\/span><\/p>\n<p>What also needs to be unraveled is how as alleged by Shamindra Ferdinando in his otherwise (ignoring auditors) incisive article <span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"https:\/\/island.lk\/thico-investments-money-laundering-and-related-matters\/\">\u201cThico \u2019investments\u2019, money laundering and related matters\u201d<\/a><\/span><span class=\"Apple-converted-space\">\u00a0 <\/span>(\u2018The Island\u2019 of 19 October 2022) \u201ca woman, from an ordinary low income family, in Kalutara, with an education only up to eighth grade\u201d could have pulled off a scam such as this? Does he not <b>imply<\/b> the involvement of influential politicians, businessmen, law enforcement officers and regulators?<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>In the same vein Ferdinando refers to \u201cprominent businessman Kamal Hassen\u201d claiming to have been <b>\u201cswindled\u201d<\/b> by Thico Group questioning how \u201cThico Group proprietor obtained approval for her bodyguards to carry automatic weapons, in a high security zone\u201d?<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>He also reports Kamal Hassen\u2019s allegation that he had \u201crejected the disgraceful proposal made by a lawyer, on behalf of the accused\u201d to \u201cdrop the case\u201d at the Fort Magistrate\u2019s Court in exchange for \u201cRs 10 mn as the initial payment\u201d.<\/p>\n<p>What takes the cake is Ferdinando\u2019s reference to a vocal former Provincial Governor who with his \u201cassociates\u201d is said to have parked \u201cover Rs 226 mn\u201d in Thico Group allegedly having \u201cquestioned\u201d at a TV interview \u201cthe right of the public to ask how they got so much money\u201d!<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>Is it any surprise the CID has \u201cinformed Colombo Fort Magistrate&#8217;s Court that several politicians and popular personalities who invested their money at Thilini Priyamali&#8217;s Company are reluctant to make complaints with police for various reasons.\u201d?<span class=\"Apple-converted-space\">\u00a0<\/span>(\u2018Daily Mirror\u2019 20 October 2022)<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p><span style=\"color: #ff6600;\"><b>Money Laundering<\/b><\/span><\/p>\n<p>Kudos to Shamindra Ferdinando for posing the question \u201cwhether Priyamali, and those who invested money through what was advertised as a well-diversified duly registered Thico Group of Companies, were involved in money laundering.\u201d?<\/p>\n<p>On the subject of money laundering, did not the Sirisena \u2013 Wickremesinghe Yahapalana government in which <b>SJB leaders<\/b> figured prominently and <b>JVP supported<\/b>, in effect <b>facilitate <\/b>money laundering when it repealed the Exchange Control Act No. 24 of 1953 and brought into law the new Foreign Exchange Act No. 12 of 2017?\u00a0\u00a0The new law\u00a0certified on 28 July 2017 became effective\u00a0from 20 November 2017.\u00a0SJB\u2019s Eran Wickramaratne who is now very concerned about money laundering was\u00a0State Minister of Finance\u00a0from\u00a0May 2017. These are the people including the JVP who are now promising a \u2018system change\u2019!<\/p>\n<p>A\u00a0<b>precursor<\/b>\u00a0to the dangerous Yahapalana inspired Foreign Exchange Act was the \u2018invitation\u2019 issued by then Finance Minister Ravi Karunanayake through India\u2019s \u00a0\u2018The Hindu\u2019 of 5 October 2015\u00a0to\u00a0\u201cSri Lankans and Indians who had to take back their deposits from banks in Switzerland to place their funds in Sri Lanka\u201d. \u00a0He had further assured that <span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"https:\/\/www.thehindu.com\/business\/place-your-money-in-sri-lanka\/article7724025.ece\">\u201cNo questions would be asked\u201d<\/a><\/span>!<\/p>\n<p>As if these were not bad enough, then CBSL Governor Dr. Indrajit Coomaraswamy (who Colombo elites consider could do no wrong) under whose tenure this dangerous Act became effective, had the <b>audacity<\/b> to cite this Act to justify CBSL inaction<span class=\"Apple-converted-space\">\u00a0 <\/span>to determine\u00a0<b>legitimacy<\/b>\u00a0of offshore accounts\u00a0in tax havens held by Sri Lankans named in the <b>\u2018Panama Papers\u2019<\/b>:<\/p>\n<p>\u201cThe time period prescribed by the Foreign Exchange Act No. 12 of 2017 to conclude investigations under ECA expired on 19.05.2018 as stipulated in the Foreign Exchange Act No 12 of 2017. These investigations also lapsed on that date.\u201d<\/p>\n<p><span style=\"color: #ff6600;\"><b>Corrupt CA Sri Lanka<\/b><\/span><\/p>\n<p>I make bold to affirm that the apex body (CA Sri Lanka)\u00a0 regulating the audit\/chartered accountancy profession in Sri Lanka makes no small contribution to the systemic corruption in this country if it\u2019s\u00a0<b>disgraceful <\/b>handling of its investigation\u00a0of my &#8216;complaint&#8217; made as far back as 8 August\u00a02005, of the \u00a0&#8216;Professional Misconduct&#8217;\u00a0by the local affiliates of\u00a0Price Waterhouse Coopers (PwC) and Ernst &amp; Young (EY) in relation to the scandalous privatisation\u00a0of the Sri Lanka Insurance Corporation (SLIC) is anything to go by.<\/p>\n<p>To date it has not concluded its investigation, has reneged on its undertakings given to me and kept me the complainant in the dark. The undertaking includes \u201cto complete the investigation early and transparently.\u201d (Ref.\u00a0ICASL (CA Sri Lanka)\u00a0e-mail of 13 March 2006).<\/p>\n<p>Purported \u2018Good Governance\u2019 activists which include businessmen owned newspaper\/TV<span class=\"Apple-converted-space\">\u00a0 <\/span>mainstream media and NGOs such as Transparency International Sri Lanka, Verit\u00e9 Research, Advocata\u00a0Institute and others who talk\u00a0the\u00a0hind legs off\u00a0a\u00a0donkey on the evils of corruption and get paid for doing so, have steered clear of demanding accountability from Chartered Accountants faulted for egregious \u2018professional misconduct \u2018by the Supreme Court, Parliament\u2019s \u00a0COPE, the Attorney-General and CA Sri Lanka \u2018Ethics Committee\u2019 itself vis-\u00e0-vis<\/p>\n<p>the scandalous SLIC privatization. They fail to bite the bullet by \u2018naming &amp; shaming\u2019 errant professionals and bigwigs in the corporate sector complicit in the corruption of politicians.<\/p>\n<p>The <b>\u2018Supreme Court\u2019<\/b> (SC\u00a0FR 158\/2007) in its\u00a0landmark Judgment delivered on 4 June 2009, held the SLIC privatisation to be <b>\u201cillegal and invalid ab initio\u201d<\/b> and ordered the removal <b>\u201cforthwith\u201d<\/b> of the auditors, Ernst &amp; Young. (emphasis mine)<\/p>\n<p>The <b>COPE<\/b> Report to Parliament dated 12 January 2007 as recorded in the \u2018Hansard\u2019 inter alia states as follows:<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>\u201cErnst &amp; Young auditors and PwC Consultants were directly involved in the said <b>fraudulent <\/b>conduct<b>.<\/b>\u201d<span class=\"Apple-converted-space\">\u00a0<\/span>(emphasis mine)<\/p>\n<p><b>Inaction<\/b> by CA Sri Lanka on the &#8216;Professional Misconduct&#8217;\u00a0by PwC and EY in relation to the scandalous SLIC privatisation is probably the most <b>glaring<\/b> example of CA Sri Lanka corruption.<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p><span style=\"color: #ff6600;\"><b>Impunity &amp; CA Sri Lanka<\/b><\/span><\/p>\n<p>Impunity appears to be the standard feature in the manner CA Sri Lanka conducts its affairs. This includes:<\/p>\n<p>1) The Senior Partner of EY at the time of the SLIC divestiture (Asite Talwatte) being appointed to the key decision making CA Sri Lanka\u00a0\u2018Council\u2019\u00a0SUBSEQUENT<b>\u00a0<\/b>to my \u2018complaint\u2019.<\/p>\n<p>2) The Senior Partner of PwC at the time of the SLIC divestiture (Deva Rodrigo) being appointed by CA Sri Lanka SUBSEQUENT to my \u2018complaint\u2019 to its \u2018Quality Assurance Board\u2019\u00a0purportedly designed \u201cto maintain and enhance the credibility and high standards of our profession.\u201d (Ref. CA Sri Lanka Circular to members \u2013 6 September 2010)<\/p>\n<p>3) Sujeewa Mudalige\u00a0SUBSEQUENT\u00a0to my \u2018complaint\u2019 being <b>allowed<\/b> to be\u00a0the President of CA Sri Lanka notwithstanding apart\u00a0from being a Partner of PwC,\u00a0he was a part of the Sri Lanka Team that comprised the PwC Indonesia Team that played a pivotal role in the fraudulent SLIC privatisation.<\/p>\n<p>Incredibly, the \u201c<b>Chief Guest<\/b>\u201d at his induction was <b>Dr. P.B. Jayasundara<\/b>\u00a0after\u00a0he was <b>faulted <\/b>by Parliament\u2019s COPE and the \u2018Supreme Court\u2019 in relation to the scandalous SLIC privatization.<\/p>\n<p>4) Another member of CA Sri Lanka \u2018Quality Assurance Board\u2019 Ajith Ratnayake was Director- General, Sri Lanka Accounting &amp; Auditing Standards Monitoring Board (SLAASMB) at the time it sent me its <b>FARCICAL <\/b>response at the conclusion of its purported \u2018investigation\u2019 of this same privatization \u2013 ref. e-mail dated 28 November 2005:<\/p>\n<p>\u201cWhilst we appreciate the contribution made by the complainants, we are not in a position to keep the complainant informed of the progress of the investigation and the outcome of the investigation, as it would undermine our policy on releasing information to the public.\u201d!<\/p>\n<p>Any guess as to who was <span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"http:\/\/srilankaeconomicforum.org\/weerakoon-wijewardena.html\">Chairman of SLAASMB<\/a><\/span> at this time? It was none other than <b>W.A. Wijewardena<\/b>, former CBSL Deputy Governor who every week <b>waxes eloquent<\/b> on the need for \u2018Good Governance\u2019!<\/p>\n<p><span style=\"color: #ff6600;\"><b>Other Cases<\/b><\/span><\/p>\n<p>(1) It was a Past President of CA Sri Lanka and the OPA (Lakshman Watawala) who was mainly responsible for the alleged \u201c<b>within 24 hours<\/b>\u201d BOI approval of \u2018Mihin Lanka\u2019 not withstanding his reported admission to then COPE member Ravi Karunanayake \u201cunder\u00a0normal circumstances it would take six to eight weeks at least\u201c! (\u2018The Sunday Leader\u2019 10 December 2006)<\/p>\n<p>(2) At the time of the alleged wrongful purchase of TFC (The Finance Company PLC) shares by the NSB (National Savings Bank), the Chairman of TFC was Preethi Jayawardena and the CEO of NSB was Hennayake Bandara. Both of them are senior chartered accountants who were also former members of the CA Sri Lanka governing \u2018Council\u2019.<\/p>\n<p>(3) The alleged <span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"https:\/\/www.ft.lk\/article\/34189\/SLC-Treasurer-admits-seeking-Govt--loans\">financial profligacy<\/a><\/span> at \u2018Sri Lanka Cricket\u2019 in the run-up to the 2011 Cricket World Cup which Sri Lanka co-hosted took place when the Treasurer of \u2018Sri Lanka Cricket\u2019 was senior chartered accountant (Sujeewa Rajapakse) who subsequently became President of CA Sri Lanka.<\/p>\n<p>He is currently <b>Chairman of People\u2019s Bank<\/b>. Does no one see the <b>massive<\/b> \u2018conflict of interest\u2019 in he being the Managing Partner of audit firm BDO Partners?<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>(4) Could not chartered accountants\/auditors have blown the whistle long before alleged frauds were \u2018discovered\u2019 in the failed finance companies?<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>(5) Could the egregious Treasury Bond scams have taken place without the complicity of professionals which include chartered accountants in the hierarchy of the Central Bank and Bank of Ceylon?<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>(6) What action if any has CA Sri Lanka taken on the alleged egregious professional misconduct of former CBSL Governor <b>Ajith Nivard Cabraal<\/b>\u00a0who is a Past President of CA Sri Lanka?<\/p>\n<p>(7) Why did not then PM Ranil Wickremesinghe identify Ernst &amp; Young as the long standing auditors of SriLankan Airlines (up to at least 2014-15) when he stated at a news conference:\u00a0\u201cMost of Mihin Lanka\u2019s losses had been hidden in the Sri Lankan Airlines balance sheet thereby inflating its debt burden to USD 3.2 billion\u201d (ref: \u2018The Island\u2019 27 April 2016)<\/p>\n<p><span style=\"color: #ff6600;\"><b>Conclusion<\/b><\/span><\/p>\n<p>Is there any <b>collusion<\/b> between the larger audit firms in this country (mainly PwC\/EY\/KPMG) which enable influential auditors from these firms soon after retirement to be \u2018invited\u2019 to sit on the director boards of leading PLC companies while \u2018technically\u2019 avoiding companies being audited by them? Should there not be a mandatory period (say 5 years) during which retired auditors\u00a0<b>cannot hold<\/b> any office of fiduciary responsibility in \u2018quoted\u2019 companies?<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>Unless Auditors\/Chartered Accountants who are the first and last line of defense against any form of financial corruption are held <b>accountable <\/b>for any negligence, the country<span class=\"Apple-converted-space\">\u00a0<\/span><b> \u2018will not have a prayer\u2019<\/b> to avoid financial corruption.<span class=\"Apple-converted-space\">\u00a0 <\/span>If the proponents of \u2018good governance\u2019 are <b>unwilling <\/b>to do this, they must forever <b>\u2018hold their peace\u2019<\/b>!<\/p>\n<p>I urge<b> <\/b>CA Sri Lanka and any of those named to <b>CREDIBLY REFUTE<\/b> any of the above.<\/p>\n<p>Is it not in the <b>public interest<\/b> for the businessmen controlled mainstream media to <b>name<\/b> (i) the <b>auditors<\/b> of <span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"https:\/\/lk.linkedin.com\/company\/thico-group-of-companies\">\u2018Thico Group Pvt. Ltd.\u2019<\/a><\/span>? (ii) the \u2018investors\u2019 in this company?<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>It is highly <b>unlikely<\/b> this article will see the light of day in any of the mainstream media &#8211; including Shamindra Ferdinando\u2019s \u2018The Island\u2019!<\/p>\n<p>\u2018System Change\u2019 my foot!<\/p>\n","protected":false},"excerpt":{"rendered":"<p> [&hellip;]<\/p>\n","protected":false},"author":163,"featured_media":229544,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,46,8],"tags":[],"class_list":["post-229656","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-colombotelegraph","category-constitutional-reforms","category-editorial"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Auditors Could Have Prevented Alleged \u2018Thico\u2019\/Thilini Scandal - 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