People’s Bank pensioners allege fraudulent happenings at the bank
View(s):A pensioners’ association representing retired staff of the People’s Bank (PB) has raised several strictures on the bank’s accounts urged the Auditor General to carefully scrutinize the bank’s accounts. “The financial position of the bank has to be published in a realistic way and should not be permitted to be window-dressed to display a distorted picture of reality. Such an exercise merely hides the fact of the inefficiency of the management. In the context of the present public focus on state owned enterprises, in regard to their effectiveness and importance to the economy and various allegations of frauds and irregularities that have been leveled, we wish to emphasize that it is imperative to draw special attention to the above matters pertaining to the bank.
It is important in such a background to examine whether the conduct of the authorities responsible for the management and administration of the bank have acted in conformity to the “fit and proper” conduct stipulations and guidelines required under good governance and set procedures,” a letter jointly signed by T. Rusiripala (President) and Victor Jayawardena (acting Secretary) of the Peoples Bank Pensioners’ Association (PBPA) to the Auditor General, states.
Here are excerpts of the letter:
Matters pertaining to the Pensions Trust Fund: In terms of Section 4.07 of the Trust Deed, all annually audited Statements of Accounts of the Fund has to be submitted to the Board of Directors and to the AGM of the members of the Trust Fund. Also the audit of the Fund has to be conducted in a manner that is to be decided at the previous AGM of the members of the Fund. Yet, the bank has breached this regulation and had not acted in terms of Section 4.07. The last AGM had been held in 2013 and thereafter for two years no meeting has been convened. Accordingly what is produced in the bank’s Annual Report pertaining to the Pension Trust Fund, is a statement not approved by the members at the AGM of the membership of the Fund.
Questions arising in relation to Actuarial Reports: In the Annual Statements of Accounts published by the bank for the year 2014, it is stated that, for the purpose of the annual allocation of Funds, for the Pensions Trust Fund, the Rate of Interest rate (yield on deposits) has been taken as 9.5 per cent. Yet, the actual rate adopted has been 11 per cent which is one of the optional rates indicated in the Actuarial Report. Due to this manipulation, it has become possible to indicate the current balance of the Trust Fund as Rs. 43.82 billion. However, if the actual deposit rate of 9.5 per cent had been used for this computation, the current balance of the Trust Fund would have been Rs. 49 billion. Accordingly, the allocation for the year 2014 made by the bank for the Pensions Trust Fund has a deficiency of Rs. 5.6 billion.
Irregularities observed in issuing debentures to Pension Trust Fund: The bank obtained Rs.15 billion from the Fund by issuing debentures on three separate occasions. On the last two occasions, debentures valued at Rs. 5 billion each have been issued. It has to be examined whether the Debenture issue has been made conforming to the stipulated regulations in the People’s Bank Act. Conformity to the provisions in the Act become important and relevant in the event of a doubt regarding the debenture liability.
Peoples Bank Widows and Orphans Pension Fund: As at 2007 January the balance of the fund had been Rs. 5.669 billion according to the Actuarial Report issued in respect of the Fund.
Since the investment income and the continued contributions into the Fund, exceed the financial benefits disbursed to the beneficiary members, the current balance would be estimated at around Rs. 15 billion. Yet, the Fund continues to be held as an internal account in the Bank’s Books and its financial position remains undisclosed in the Annual Reports of the bank. The members of the Widows and Orphans Fund have also not been furnished with information relating to the Fund. Other matters not revealed in the Annual Report: The establishment and management expenses of the bank is a huge expense head and we believe that an intensive scrutiny of these expenses by way of an Audit is necessary.
A sum of approximately Rs. 1 billion is incurred on advertisements and marketing and numerous charges are being leveled publicly against irregular deployment of these funds for other extraneous activities. Hence, the need for an intensive audit arises. Senior management officials of the bank have been employed on a contract basis with massive salaries, super benefits and perks attached to their office, and the need has arisen to re-examine such engagements, for the following reasons:
Persons who were recruited on a temporary basis on contract have been permitted to continue over a long period in responsible senior positions. The CEO and the most senior level officers of the bank consist of these contracted individuals. Privileges, perks and emoluments of these executives are being decided upon by themselves and there is information that transport and other facilities are being extensively misused. The responsibility for the formulation of policy relating to best management practices and procedures in the long term interest and well-being of the bank has been vested on the temporary contracted employees and there is no higher body/authority comprising of a higher level permanent employees to evaluate and pass such important policy matters.
For a period of over 12 years now, there is no future succession plan or scheme for the permanent senior officers to be molded for higher responsibilities and for replacing these contract employees. We strongly believe that a proper audit investigation should be conducted into the matters of the purchase of machines and apparatus for the computer division and People’s Card Centre as a huge cost, has been incurred. Projects involving the modernization of computer systems, transactions and agreements pertaining to Sri Lanka Telecom need to be examined to determine whether any irregularity has taken place.”