Hundreds of millions of rupees belonging to the Employees Provident Fund (EPF), the largest Social Security Scheme in Sri Lanka has been invested in eight unlisted companies including the SriLankan Airlines (SLA), it was revealed before the Presidential Commission of Inquiry (PCOI) on SriLankan Airlines, SriLankan Catering and the Mihin Lanka Pvt. Ltd yesterday.
According to the testimony of EPF Superintendent of CBSL, Nalini Malkanthi Bandara which continued for the second day, it was also revealed that the EPF has not received returns by investing in four of these eight companies including the SLA.
The EPF has invested Rs.5 Billion in Canvil Holdings, Rs.2.9 Billion in West Coast Company, Rs.1 Billion SriLankan Catering, Rs.500 Million in SriLankan Airlines, Rs.495 Million in Cargills Bank, Rs.450 Million in Weligama Hotel Properties Company, Rs. 350 Million in Jetwing Symphony Company, and also in Fitch Ratings Company.
According to the EPF Act No. 15 of 1958, the Monetary Board of the Central Bank of Sri Lanka (CBSL) is the sole authority of investing EPF fund. Therefore, it should make a determination before making any investment using EPF funds. The most highlighting thing that was revealed through Bandara’s testimony pertaining to the investment made with the SLA is that the CBSL has no any plan or prior study for this investment in its possession. The investment was made in July 2010, during the tenure of former CBSL Governor Ajith Nivard Cabraal and Treasury Secretary P.B.Jayasundara, who was a permanent member to the Monetary Board.
The Investment Committee of the EPF had sent its recommendations without carrying out any study pertaining to this investment and the Monetary Board had ratified it without any plan or related document, it was revealed.
The other thing highlighted yesterday was that according to the Investment and Trading Guideline of the EPF published on March 21, 2007, there are no provisions to purchase shares of unlisted companies.
When asked by Additional Solicitor General Neil Unamboowe, who led evidence, as to whether the EPF was benefitted from the investment, the witness said that there have been no returns from this investment so far. However, the investment has been recorded in the accounts book as a notional value of Rs. 100.
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