EPF buys shares of loss making TFC at inflated price: AG
* Price inflated by 66%, the same as the NSB-TFC deal February 14, 2013, 8:44 pm
* PAC will summon EPF again, Auditor General asked to
prepare comprehensive report on all equity transactions
The Central Bank has used EPF funds to purchase The Finance Company PLC (TFC) shares at Rs. 40 each, inflated by 66.66 percent, when the market value was just Rs. 24 per share in 2011, according to a report submitted by the Auditor General (AG) to the Public Accounts Committee (PAC), R. Yogarajan UNP MP, a member of the PAC, said yesterday (14).
The now infamous NSB-TFC deal also saw shares being bought at a price inflated by 66 percent.
"An important issue reported by the AG was the purchase of 5,091,200 shares of a finance company between 23rd Feb 2011 and 1st Nov 2011 for Rs. 40.36 when the market value was Rs. 24, knowing well that the operational loss of the finance company was Rs. 4,285,937,284. The AG when questioned confirmed that the said finance company was The Finance Company PLC."
"This transaction is similar to the transaction entered into by the NSB which was considered corrupt and cancelled by the President himself. Not only was the transaction cancelled, but the Chairman and the board of Directors of NSB were asked to resign. Further, the Chairman was reported to the Bribery Commission and legal action has been instituted. As a result of the transaction coming to light the government abandoned the Chairman of the NSB who happened to be the spouse of the Chief Justice. When the CJ who was thus hurt, reacted against the government the government decided to impeach the CJ. This is history now," Yogarajan said.
"However, this transaction of the Central Bank seems to be the precursor to the NSB transaction. When the CBSL transaction went through without a hitch the operators at the CBSL have become bolder to raise the buying price to Rs. 50 and increase the number of shares to 7.8 million. This confirms the suspicions that arose about the origin of the NSB transaction. If the NSB transaction was corrupt, and the Chairman of NSB whose board approved the transaction has been charged in court, will a similar course of action be taken now on the CBSL transaction which has come to light. If the Monetary Board approved the transaction, will the Chairman of the Monetary board, the Governor of the Central Bank resign or be removed? Will legal action be instituted? The person who ordered the probe in the case of the NSB deal was the Secretary to the Ministry of Finance. He is a member of the Monetary Board and a party to the decision since he cannot order a probe against himself, will he resign for a fair probe to be conducted?
"This CBSL transaction involving the poor workers’ retirement fund shows that the NSB deal was not an isolated incident but an institutionalised operation right from the top, the CBSL, which is to supervise all the banks and other financial institutions. This confirms that the mafia referred to by Thilak Karunaratne, former Chairman of the Securities and Exchange Commission (SEC), does exist and draws its power from the top," the UNP MP said.
When Yogarajan raised this issue at the PAC, the Governor had merely explained that it was a strategic investment. However further questioning was not possible since the Chairman hurriedly adjourned the meeting of the PAC, Yogarajan said.
"The two government entities responsible for the EPF funds namely the Ministry of Labour and the Central bank were summoned before the PAC earlier this month. The committee was chaired by Sarath Amunugama Senior Minister and Deputy Minister of Finance. At one stage the propriety of Sarath Amunugama presiding over the committee when an institution under his ministry was been scrutinised was raised but he over ruled the objection," the MP said.
"The AG’s report also highlighted the Rs. 500 million EPF investment in SriLankan Airlines, and this was taken up at the PAC. The Governor of the Central Bank replied that it was a long term investment in SriLankan Airlines and that with the boom in the tourist industry it would become a profitable investment. PAC members questioned whether the EPF funds which were held in trust by the Central Bank (CBSL) could be invested on political directions of the government."
Three UNP members of the committee (R.Yogarajan, Ajith P Perera, and Harsha De Silva) have obtained a further date for continuing the consideration of the EPF by the PAC. From the AG, they have also requested a copy of the Investment plan for 2012 and the presentation made by Ms. Kalyani Goonetilake, Superintendent of EPF. They have also requested further details regarding the RPF transactions at the stock exchange, namely:
* Explicitly, the name of the Company in which shares were bought.
* The dates on which they were bought, the price and the quantities
* The seller of the shares in each transaction
* The broker in each transaction
= The monetary board approval, if available
* The published accounts of the company in which shares were bought at the time of the transaction, and any accounts available, before and after the transaction
* If any of the said shares have been sold subsequently, and if so the buyer and price.
What’s Sri Lanka’s best overseas Test win?
Last Updated Sep 18 2014 | 10:22 pm