Corrupt officials, politicians exposed (COPE) but committee lacks power: DEW

  • Amend Standing Orders for mandate to summon former heads of state enterprises
By Chandani Kirinde

Chairman- Committee On Public Enterprises (COPE), Minister D.E.W. Gunasekera says the powers of the Parliamentary oversight committee should be enhanced, to enable it to summon former heads of State-run institutions, as well as bring under its purview private limited companies incorporated under the Companies Act.

Mr. Gunasekera who presented the COPE report to Parliament last Thursday, said that, during its deliberations, the committee identified several instances where enterprises such as maga negume companies and subsidiaries of the Ceylon Electricity Board (CEB) which needed to be summoned, but could not be done, due to the Committee's mandate limiting it to institutions audited by the Auditor General.

Hence, the Committee had recommended amending Standing Orders of Parliament to empower the Committee to summon such companies and allow for scrutiny of their finances. The COPE report also called for greater scrutiny of the eligibility of persons appointed as heads of State corporations, departments, authorities etc., saying that, they should not only be academically but also professionally qualified.

He said that the Parliamentary Committee on High Posts, which examines the eligibility of such candidates too, should look into this matter with all seriousness. In the 176-page report, COPE had examined the accounts of 229 institutions, of which, 40 were listed as loss-making.

"The Committee categorised the institutions into four groups namely, those functioning profitably, those functioning at break-even, i.e. avoiding loss, but failing to make a profit, those institutions whose revenue is dwindling and those institutions running at a loss," Mr. Gunasekera said.

The 40 loss-making institutions included Ceylon Petroleum Corporation (CPC), Samurdhi Authority of Sri Lanka, SriLankan Airlines, Mihin Air, Ceylon Shipping Corporation, the Ports Authority and Transport Board.

The COPE report revealed numerous instances of waste, corruption and mismanagement of State funds running into billions of rupees, in all the examined institutions, with little or no follow-up action to bring to book those responsible for such lapses.

Sri Lanka Cricket (SLC) which comes under the Ministry of Sports, was one of the worst offenders, as revealed by the contents of the report. According to the income statement of SLC, expenditure of the Cricket Board had increased by 524% in 2010, when compared with 2009.

The reason given for this was that more money was spent on matches played by the 'A' team and Under-19 team, the national pool was increased up to 100 players, and they were provided with necessary facilities, while action was also taken to promote women’s cricket.

The total liabilities of SLC stood at Rs 6.1 billion, with total assets being only Rs 3.1 billion, when COPE examined SLC accounts in July and November 2011. SLC officials told COPE that, to pay the liability, they have applied for a loan to the Bank of Ceylon, and the ICC would pay the due amount when audited expenses are forwarded.

COPE had queried the irregular payment of Rs 650,000 to some officers, to which SLC officials who appeared before the committee, replied that this amount was paid for some officers for "doing a good job on the Australian tour", on a proposal of the interim committee. COPE has asked for a list of names of people who were paid.

The committee also observed that the initial estimate for the construction of the Hambantota, Kettarama and Pallekele playgrounds had been Rs 3.3 billion, whereas the total expenditure was Rs 7.18 billion. Cricket Board officials were asked to submit a report with regard to the price escalation and other relevant information.

The committee observed that SLC had paid SLIDA Rs 1.46 million for an assessment of cadre, but the SLIDA report made no provision to introduce an acceptable procedure for promotions, salary structure and age limit for each post, and was not included in it, and the proposal to increase the present cadre from 267 up to 727 in 2012, was suggested without a justification for expansion of the workforce at SLC.
The Committee report also noted that 47 employees had been recruited in 2010, where most of them did not have the basic qualifications and experience relevant to the particular post.

In the Sri Lanka Transport Board, COPE noted that the number of employees are around 34,000, whereas the number of buses in operation are 5,225. SLTB officials told the Committee that action is being taken to increase the number of buses up to 6,000 by end 2011.

In the Samurdhi Authority, a sum of Rs 4,005,000 had been defrauded by 10 members of the staff of the Samurdhi Bank, Nuwara Eliya, by recording as payment made to beneficiari

s. COPE said this type of shortcomings has resulted due to internal audits not being strong enough.
One of the biggest loss-making institutions was Mihin Lanka, which has been running at a significant loss since its inception. The current liability of the company is Rs 2.4 billion, the report said.

The Chief Accounting Officer of Mihin Lanka had told COPE that the company had made a Rs 16 million operational profit in the past six months, which can be viewed as a positive sign of a turnaround.
There were many instances where the finances of the Sri Lanka Ports Authority (SLPA) were not found to be in order or badly mismanaged. In one instance, two cranes purchased at a cost of Rs 444 million in 2008, were found lying idle even by June last year. It was also noted that the SLPA had engaged in several controversial construction work such as the Sooriyawewa Cricket stadium. SLPA officials had told the committee that they had engaged in this work, based on a Cabinet decision, and that SLC had paid Rs 1,200 million to the SLPA for their work.

COPE also reported a massive loss to the country due to the sale of mineral sands at less than the market price, by Lanka Mineral Sands Limited, which comes under the Ministry of State Resources & Enterprise Development.

The Report said that even though COPE had directed not to market mineral sands without calling for Tenders, 15,750 metric tonnes (MT) of Limonite at US$ 100.74 per MT and 445 MT of Rutile at US$ 846.65 per MT had been sold to the previous buyer without calling for a fresh Tender.
By this time, the market price of Limonite and Rutile had gone up to US$ 311 and US$ 1,776 per MT respectively, and losses to the country, due to this, ran into well over Rs 408 million, the report said.
Losses incurred by the National Lotteries Board (NLB) due to the investment in the Online National Lottery Company had been Rs 983 million, and that the entire amount had been written off by a Cabinet decision,' the report said.

COPE has called for the NLB to submit to it the names of the advertising firms and the amount paid to each firm between 2009 and 2011, as irregularities were noted in such payments as well.

With regard to the Urban Development Authority (UDA), COPE noted that the ongoing 65,000 housing unit project in the Colombo city had not been included in the Corporate Plan for 2008-2012 .UDA officials have agreed to submit a revised corporate plan.

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