Lankaputhra Bank’s alleged financial frauds exposed to Bribery Commission
Alleged financial misappropriation running to over a billion rupees at the state-owned Lankaputhra Development Bank (LDB) during the Rajapaksa regime has come to the limelight once again following a complaint submitted to the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) last week.
These financial misdeeds amounting to over Rs. 1.9 billion took place during 2006 to 2014 period and have been exposed in a forensic audit conducted by an independent audit firm Price Water Coopers(PWC) and the report submitted by a three member investigation committee appointed by the Central Bank.
The Jathika Sevaka Sangamaya trade union lodged a complaint with documental evidence at CIABOC on Thursday urging the Commission to instigate legal action against officials and persons for their alleged involvement in criminal misappropriation.
The union, in its complaint, appealed to the commission to investigate and take legal action against officials of the LDB, while finding out as to whether the former Central Bank Governor Ajith Nivard Cabraal and some officials of the bank had been indirectly connected to these financial frauds by not taking action against perpetrators.
A huge amount of loans have been given to selected people with high political connections and friendships with top politicians of the former regime, JSS in its complaint alleged.
It has been revealed that a sum of Rs.700 million had been granted without any collateral to Tri Star Apparel Co. on a directive issued by the Treasury. This money is yet to be recovered.
According to the PWC audit, LDB had the responsibility for monitoring and recovery of loans including the remittance of all loan recoveries to the Treasury.
However there has not been any repayment of either capital or interest to date, the report disclosed.
The Sri Lanka Mushroom Producers Association was given a loan of Rs.15 million pledging a 5-acre land owned by Bingiriya Devagiri temple as collateral.
A sum of Rs. 300 million was loaned to Bettants Co. on a letter of request issued by the Presidential Secretariat.
A person called T.R. Mapatuna received a loan of Rs. 65.2 million while Rs. 5 million was given to Rathnadeepa Export Company without the approval of the LDB Board of Directors, violating bank regulations.
Another loan of Rs.75 million was given to a political ally in Trincomalee to manufacture boats.
“There was no proper procedure followed in the loan and few boats have only been manufactured, those boats have been used for human smuggling,” the complaint said.
The PWC pointed out that it was evident that the bank had not taken positive steps to mitigate extreme risks involved right throughout the release of funds.
Another businessman was given a loan of Rs. 330 million with no proper inquiry.
A loan of Rs. 4.6 million was taken from the Lankaputhra Hambantota branch submitting fake information using signatures of 10 security personnel.
A person has used a 30 year state-owned lease land as a security while around Rs. 200 million has been given to a company according to a direction by the former government’s Finance Ministry Secretary.
These irregularities were found out during the audit investigation of the bank and the money has not been paid back.