COPE - Interim Report for 2012 (7th Parliament, 1st Session)

Parliamentary Series No.179 of The Seventh Parliament of THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

(First Session)

INTERIM REPORT (For the Period From 01.01.2012 to 30.09.2012)

From The Committee on Public Enterprises

Presented by

Hon. DEW. GUNASEKARA, MP Chairman of the Committee on Public Enterprises On th

25 of October, 2012

Ordered by the Parliament of Sri Lanka to be printed on 25th of October,2012

PARLIAMENTARY SERIES NO. 179

The Committee on Public Enterprises The Committee on Public Enterprises is the Legislative body empowered by the Parliament by Standing Order 126, to examine the accounts of the Public Corporations and of any business or other undertaking vested under any written law in the Government , along with the reports of the Auditor General thereon laid before the Parliament.

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Hon.DEW Gunasekara (Chairman) Hon.(Mrs.) Pavithra Devi Wanniarachchi Hon.A.D.Susil Premajayantha Hon.(Dr.) Rajitha Senaratne Hon. Chandrasiri Gajadeera Hon. A.P.Jagath Pushpakumara Hon. T.B.Ekanayake Hon.Mahinda Amaraweera Hon.S.M.Chandrasena Hon. (Dr.) Mervyn Silva Hon. Lasantha Alagiyawanna Hon. Sarana Gunawardena Hon. Weerakumara Dissanayake Hon. Lakshman Kiriella Hon. Karu Jayasuriya Hon. Ravi Karunanayake Hon. (Al Haj) A.H.M.Azwer Hon. Sajith Premadasa Hon. Sunil Handunnetti Hon. Arjuna Ranatunga Hon. M.T.Hasen Ali Hon. A.Vinayagamoorthy Hon. Dayasiri Jayasekara Hon. (Ven.) Athuraliye Rathana Thero Hon. Seeniththamby Yoheswaran Hon. Namal Rajapaksa Hon. Eran Wickramaratne Hon. (Prof.) Rajiva Wijesinha Hon. E.Saravanapavan Hon. Sujeewa Senasinghe Hon. (Mrs.) Rosy Senanayake

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

The Committee Staff The Committee on Public Enterprises is currently served by the following staff . ∗ Nandasiri Peiris, Assistant Director (Administration) ∗ Indrani Senaratne, Principal Officer ∗ Ranjith Fernando, Assistant Principal Officer ∗ Umanga Panditha, Assistant Principal Officer ∗ W.G.S.Shantha,Parliamentary Officer ∗ Prabha Thilakarathne, Parliamentary Officer ∗ M.A.K.D.C.Kumara,Parliamentary Officer Publications The Publications of the Committee are available at the Government Publication Bureau and also on the internet at www.parliament.lk .

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PARLIAMENTARY SERIES NO. 179

Contents

•

Preface

1

•

Introduction

3

♦ Transactions with Poor Accountability

6

♦ Matters Referred to the CID

7

♦ Social Responsibility

7

•

General Observations

8

•

Major Issues of the Institutions * National Library & Documentation Services Board

13

* National Child Protection Authority

14

* Lankaputhra Development Bank

15

* Udarata Development Authority

16

* Sri Lanka Cricket

16

* Sri Lanka Ayurvedic Medical Council

17

* Sri Lanka Insurance Corporation

18

* Sri Lanka Tourism Promotion Bureau

18

* Post Graduate Institute of Management

19

* Sri Lanka Institute of Tourism & Hotel Management

19

* Gampaha Wickramarachchi Ayurvedic Medical University

20

* National Council for Elders

20

* Samurdhi Authority

21

* Sri Lanka German Technical Training Institute

22

* Sri Lanka Export Development Board

22

* Sri Lanka Tea Board

23

* Institute of Post Harvest Technology

24

* Sri Lanka Telecom PLC Ltd.

25

* Ceylon Fisheries Corporation

25

* University Grants Commission

26

* National Disaster Management Centre

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

* Central Bank of Sri Lanka

27

* State Mortgage & Investment Bank

29

* Sri Lanka Rupavahini Corporation

30

* Securities & Exchange Commission of Sri Lanka

31

* Urban Development Authority

31

* Homeopathy Medical Council

32

* People’s Bank

32

* National Transport Commission

34

* Sri Lanka Accounting & Auditing Standard Monitoring Board

35

* Water Resources Board

36

* Sri Jayawardenapura Hospital Board

37

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PARLIAMENTARY SERIES NO. 179

PREFACE The Committee on Public Enterprises (COPE) presents its Interim Report for the year 2012. It proposes to submit its Final Report for the year 2012 by the end of the current year.

It is necessary to recall that its First Report for the 1st Session of the 7th Parliament was presented to the Parliament on 1st, December, 2011. Thereupon, as an immediate follow-up measure, the Chief Accounting Officers were summoned for an in-depth discussion on its findings and recommendations. Their attention was drawn, in particular, to the following requirements, as considered necessary. ∗Corrective actions ∗Recovery actions ∗Disciplinary actions ∗Legal actions ∗Reference to C.I.D. for deeper investigations ∗Reference to Bribery Commission The Committee wishes to report to the Parliament in response to concerns expressed by the Honourable members, that it took upon itself the responsibility of monitoring and reviewing the follow-up measures. This was an unprecedented step in the history of our Legislature. It is the considered view of the Committee that its First Report and follow-up measures have had an impact on the control of Public Finance. Response from the Institutions is appreciably satisfactory, in so far as Annual Reports, Corporate plans, Actions Plans and Financial Statements etc. are concerned.

It needs to be reiterated that though there are automatic controls of Public Finance namely, Appropriation Act, Fiscal Management (Responsibility) Act, Financial Regulations, Treasury Circulars, Public Administration Circulars etc., the Constitutional responsibility primarily rests on the Chief Accounting Officers to exercise effective control over Public Finance.

Classification of Public Enterprises Coming Under the Purview of COPE ∗ ∗ ∗ ∗ ∗ ∗

Regulatory Bodies Promotional Agencies State- owned Enterprises Educational Agencies Development Agencies Research Institutions Total

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29 24 74 56 39 13 235 1

PARLIAMENTARY SERIES NO. 179

Introduction The Interim Report tabled hereby is inclusive of the findings of the examinations conducted by the Main Committee of the Committee on Public Enterprises on 32 State Institutions during the period from 01st of January, 2012 to 30thof September, 2012. The First Report of the Committee, based on 229 State Institutions, was tabled in the House on 01st of December, 2011 which was nearly after one and half years from its first examination. Therefore, before the presentation of its second report, the Committee decided to table an interim report for the purpose of quick attention of the authorities and immediate remedial action .

Three Sub Committees appointed with the objective of increasing the coverage of the number of institutions being monitored, have so far examined 45, 29 and 23 institutions respectively totaling 97 under the chairmanships of the Hon.Susil Premajayantha (Sub Committee-I), the Hon.Karu Jayasuriya (Sub Committee-II) and the Hon.Lasantha Alagiyawanna (Sub Committee-III). Their findings will be reported along with the second Report of the Committee which is to be tabled in the House before the end of the current year.

The Committee, through these examinations , has identified several matters which need thorough investigations further. They have been listed under the caption Transactions with Poor Accountability and the directives given to certain Chief Accounting Officers regarding the matters which should be referred to the Criminal Investigation Department are shown under the caption Matters Referred to the Criminal Investigation Department .

The Committee was not confined only to examining the Auditor General’s reports on the public enterprises and also called for explanations from the relevant authorities with regard to certain burning issues and controversial matters frequently discussed in the society and they have been listed under the caption Social Responsibility.

Further, the commonly encountered problems in most of the public enterprises have been categorized under General Observations and the important observations made in relation to each Public Enterprise at the time of examinations, comes under the section Major Issues of Institutions.

The Committee wishes that these findings and observations will be instrumental for the relevant authorities to take remedial action to clear the lapses and irregularities which obstruct the advancement of the public sector.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

As mentioned earlier, this Interim Report will include the findings of the examinations held by the Main Committee of the Committee on Public Enterprises with regard to 32 Institutions mentioned below during the period from January, 2012 to September, 2012.

No.

Institution

Date Examined

1

National Library & Documentation Services Board

21.02.2012 & 22.05.2012

2

National Child Protection Authority

22.02.2012

3

Lanka Puthra Development Bank

23.03.2012

4

Udarata Development Authority

23.03.2012

5

Sri Lanka Cricket

30.03.2012

6

Sri Lanka Ayurvedic Medical Council

04.04.2012

7

Sri Lanka Insurance Corporation

09.05.2012

8

Sri Lanka Tourism Promotion Bureau

10.05.2012

9

Post Graduate Institute of Management

23.05.2012

10

Institute of Tourism & Hotel Management

24.05.2012

11

Gampaha Wickramarachchi Ayurvedic Medical University

25.05.2012

12

National Council for Elders

05.06.2012

13

Samurdhi Authority

06.06.2012

14

Sri Lanka German Technical Training Institute

07.06.2012

15

Sri Lanka Export Development Board

08.06.2012

16

Sri Lanka Tea Board

19.06.2012

17

Institute of Post Harvest Technology

20.06.2012

18

Sri Lanka Telecom PLC Ltd.

21.06.2012

19

Ceylon Fisheries Corporation

22.06.2012

20

University Grants Commission

04.07.2012

21

National Disaster Management Centre

05.07.2012

22

Central Bank of Sri Lanka

06.07.2012

23

State Mortgage & Investment Bank

17.07.2012

24

Sri Lanka Rupavahini Corporation

18.07.2012

25

Securities & Exchange Commision

07.08.2012

26

Urban Development Authority

08.08.2012

27

Homeopathy Medical Council

09.08.2012 4

PARLIAMENTARY SERIES NO. 179

No.

Institution

Date Examined

28

People’s Bank

10.08.2012

29

National Transport Commission

22.08.2012

30

Sri Lanka Accounting & Auditing Standards Monitoring Board

19.09.2012

31

Water Resources Board

20.09.2012

32

Sri Jayawardenapura Hospital Board

21.09.2012

The observations and directives made with regard to each of the above institutions are mentioned under the section captioned as Major Issues of the Institutions.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Transactions With Poor Accountability 1.

The Central Bank of Sri Lanka had invested in Greek Government Bonds which had a face value of EUR 30,000,000 for EUR 22,163,500 (Rs.3,472,576,045) on 05.04.2011 without considering the unfavourable market conditions and in a situation where a high credit risk had been predicted by rating agencies.

The Auditor General had reported that this transaction had resulted in a loss of US $ 15.6 million approximately. The explanation offered by the Central Bank was that in the overall investment in the Euro-zone, there was a profit on the investment. However, the fact remains that the investment on Greek Bond resulted in a loss.

The Committee observed that the Economic Recession had engulfed the continent of Europe and that Greece had been placed in a crisis situation for a longer period of time. The element of high risk was quite discernible. Therefore, this transaction needs further investigation.

2. The Insurance Corporation had entered into a re insurance agreement with a bogus company called” Trans Asia Management Advisors FZC” with regard to Ceylon Petroleum Corporation and a premium of Rs.92,000,000 for the year 2009/2010 and Rs.116,850,000 for the year 2010/2011 had been paid.

3. The actual income raised out of IIFA Film festival had not been identified.

4.

The sale of tickets of the IIFA Cricket match had been given to a private company contrary to the directive of the Minister and the ticket income which was separately collected by the Sri Lanka Cricket had not been handed over to the Tourism Promotion Bureau to the date of the examination.

5.

Although a sum of Rs.9,038,930 had been paid by the Sri Lanka Tea Board to a private institution for the installation of a computer system, the work remained uncompleted even after seven years and according to the agreement, the system should have been installed and handed over within a period of 90 days. Further, some of the components installed several years ago had been outdated by now.

6.

The People’s Bank had invested Rs.1,137 million to purchase 4,236,135 shares of Sri Lankan Air Lines when the Emirates Company sold their shares, but the value of the investment had impaired by 848.8 million as at 31.12.2010.

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PARLIAMENTARY SERIES NO. 179

Matters Referred to the Criminal Investigation Department 1.

The case in which a Samurdhi Bank manager had obtained a loan of Rs.1,025,000 under the name of a beneficiary.

Social Responsibility The Committee was not confined only to the examinations on the Auditor General’s reports. Whenever there is an issue with special public interest, it has called for information from the relevant authorities with regard to such matters. The following instances bear evidence in that effect.

1.

The Auditor General was directed to investigate into the purchase of Substandard fuel by the Petroleum Corporation and to submit a report accordingly. This directive was conveyed to the Secretary to the Ministry of Petroleum.

2.

The National Savings Bank was summoned in an intense situation erupted due to the controversial share purchase from the Finance Company Ltd.

3.

The importance of amending the existing rules and regulations with regard to the children and youths were broadly discussed with the Child Protection Authority as the Act had not been updated for the last 75 years.

4.

The current position of the establishment of private universities, present education system and the degree courses conducted in the Universities and the measures that could be taken to develop the University education were discussed with the officials of the University Grants Commission.

5.

The role of the Central Bank of Sri Lanka regarding the Failed Financial Institutions was discussed.

6.

The Kidney disease in the North Central province has become a burning issue at the moment and the causes for the problem had not been identified even after years. There is no proper coordination among the relevant authorities and the Committee directed the Water Resources Board to take action to form a Steering Committee with the participation of the relevant authorities and organizations such as the Ministry of Health, The World Health Organization etc. and also to send a monthly report to the Committee on the progress of the studies being carried out on the issue.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

General Observations 1.Scheme of Recruitment It is the considered view of the Committee that the scheme of recruitment of certain institutions, especially of those small scale establishments, must be revised to cope with the requirements of the institutions. When a vacancy in a high ranking post becomes open, these institutions find it difficult to recruit suitable personnel due to the advanced qualifications expected by the scheme of recruitment and also the poor salary scales to be paid which are not compatible with the qualifications required. Generally, the personnel with higher qualifications are reluctant to join certain small scale institutions. For instance, the post of Director General in the Library & Documentation Services board had been vacant for years without being able to find a qualified person and therefore, number of short comings remained unsettled for years.

Recommendation The Treasury is advised to revise the scheme of recruitment of the above sort of institutions enabling the personnel who have gained experience in the relevant fields with adequate qualifications also be applied when vacancies occur.

2. Unacceptable delays caused in legal matters The Committee does not deny the utmost care which should be taken when dealing with legal matters. However, It identified number of instances where certain activities of several institutions had not been achieved for not being able to get the legal matters cleared in time. This situation can be frequently seen with regard to the Bills and amendments to Acts as they had been pending before the Legal Draftsman or the Attorney General for a considerable time period.

Recommendation The role which should be played by the auxiliary Departments such as the Department of Legal Draftsman and the Attorney General’s Department need to be made more efficient and the institutions are also required to furnish necessary information to these Departments in order to expedite the process.

3. Circulars overruling the Act The Committee observed several instances where the Treasury had issued circulars which contradicts with the provisions in the Act or the other Government regulations which leaves a dilemma before the Institutions as to what must actually be complied with. The same situation was observed with regard to certain circulars issued by the University Grants Commission which surfaces the provisions stipulated in the University Act. 8

PARLIAMENTARY SERIES NO. 179

Recommendation The Committee recommends to amend the Act, if necessary, to get rid of the provisions which do not go in line with the present day requirements or to carefully go through the Act otherwise, before the issue of the Circulars.

4.Duality The Committee stressed the importance of amalgamating institutions of which the functions are with overlapping nature, by its earlier report as well. Out of the Institutions examined so far, it is recommended to consider the amalgamation of the following institutions.

1. Sri Lanka Convention Bureau 2. Sri Lanka Tourism Development Authority 3. Sri Lanka Tourism Promotion Bureau

Although, in the previous report, it was suggested to amalgamate the Coconut Cultivation Board, Coconut Research Institute and the Coconut Development Authority, the Chairman of the Coconut Cultivation Board had stressed the difficulty in doing so, claiming that these three institutions are entities with three different objectives.

5. Dearth of Professionals in Public Enterprises One of the frequently encountered problem with regard to most of the public enterprises is the dearth or difficulty to retain the professionals such as Accountants, Engineers, Finance Managers, Technical Officers etc. due to the higher salary scales exist in the private sector with regard to above posts.

Further, the affinity to join with organizations such as Ceylon Electricity Board etc. due to the attractive allowances has also affected the other public enterprises to retain the professionals within their establishments. Therefore, the Treasury is recommend to rethink of these salary scales and increase it to an acceptable level. It is also recommended to maintain similar salary scales among the public enterprises to minimize the concentration of said professionals around certain set of institutions of the type mentioned above. This trend is a matter of serious concern which needs the intervention by the Cabinet. The growing declining of the number of professionals in the Public Sector Enterprises is a matter of serious concern. This trend will seriously affect the efficiency, effectiveness and productivity of the enterprises. The Government needs to take policy changes to arrest this trend.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

6. Qualitative Development of the University Education The Committee is of the view that the university education in Sri Lanka requires some drastic changes for its qualitative development. The curricula have not been changed for years with the changes, taken place in the relevant fields over the past few decades. Most of the graduates who pass out from the universities do not possess a satisfactory competency in the English language and the common grievance with regard to most of the degree courses is that they are not job oriented. The sharp decline in the number of students who offer Economics as a discipline is a matter of concern.

The Committee also observed some serious lapses with regard to the administration of certain universities. It came into light that the commitment of certain lecturers with regard to betterment of the academic performance is not upto the required level. The university authorities were directed to formulate a regulatory mechanism to ensure the attendance of the lecturers as it was reported that the absenteeism is on the increase.

The smooth functioning of the Universities can be ensured only through a collective effort on the part of the university authorities rather than through the bureaucratic procedures of the University Grants Commission.

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Major Issues of the Institutions

PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry National Library & Documentation Services Board February 21st, 2012 & May 22nd, 2012 (Ministry of Education )

Major Issues & Problems Identified/ Discussed

Comments & Decisions of the COPE

1. The posts of Director Gen- 1. It was directed to take action to fill these two eral and the Accountant had key positions before the been vacant for a considermonth of May. able period of time.

2. The Annual Reports for the 2. It was directed to table all years 2000, 2006, 2008, the outstanding reports 2009, 2010 & 2011 had not upto 2010 before the been tabled in Parliament. month of May and the 2011 report before June.

3. The post of Accountant had 3. It was directed to answer been vacant and as a result, all the outstanding queries replying to Audit queries within two months time. had got delayed.

4.

A sum of Rs. 247,500 had 4. The CAO was directed to been over paid to an ex– communicate with the Director General due to the Secretary to the Ministry irregular placement on the of Higher Education to salary step , violating the recover the amount from Management Services Cirthe salary of the lecturer culars and the concerned and report back to the person is, also working as a Committee. lecturer at the University of Kelaniya, had refused to pay the over paid amount.

5. As per the accounts , unset- 5. The CAO was directed to submit a report on this tled balances amounting to matter within two months R s . 2 , 3 5 8 , 1 2 1 , time.

Rs.4,163,833 , R s . 4 , 5 7 4 , 8 0 8 &Rs.4,336,045 were observed for the respective years from 2006 to 2009.

6. Although it is mandatory 6. The Printers & Publishers for the registered publishOrdinance must be ers to reserve 5 copies of amended to close the loop every publication in the holes existing in the preDept. of National Archives, sent law. where one copy is supposed to be sent to the National Library & Documentation Services Board which does not take place as expected.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry National Child Protection Authority February 22nd, 2012 (Ministry of Child Development & Women’s Affairs)

Major Issues & Problems Identified 1.

Comments & Decisions of the COPE

The foreign funds received 1. Legal action could be for the projects on preventaken against the then tion of child abuse had been Board of Directors for the used for other purposes such expenditure incurred in as repairing vehicles, purcontrary to the Financial chasing a photocopy maRegulations. chine, paying the VAT for the purchased land etc.

2. It had not been able to pro- 2. The CAO was directed to vide Foster Parent Facility get advice from the Attorfor 107 children, victimized ney General on these chilby the Tsunami Destruction dren and to get a special due to the unavailability of directive from the Courts the death certificates of their in this regard. parents.

3. The Committee was not 3. The CAO was directed to satisfied with the explanasubmit a comprehensive tion given with regard to report on these children the 2661 children victimized including an age analysis, by the Tsunami. the duration within which the Authority is required to look after them and the problems facing with the task.

4. The existing rules and regu- 4. The CAO stated that aclations regarding children tion was being taken. and youths had not been amended for about 75 years since the enactment.

5. It was brought to the notice 5. It was directed to superof the Committee that there vise these centres with the are about 400 private child assistance of the officials care centres in the country of the provincial councils with around 17,000 chiland to maintain a database dren. on this information. The CAO/AO was further directed to submit a detailed report on Child Care Centres in the Country.

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PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

Lankaputhra Develop- 1. The following status were 1. observed with regard to the ment Bank loans granted to the garment factories.

February 23rd, 2012 (Ministry of Finance & Planning)

a) Nipuna Garments –Rs. 7,000,000/-

a) Now being recovered in installments.

b) Tri Star Apparel Exports Ltd. Rs.700,000,000/-

b) Only Rs. 20 million had been recovered by now and discussions are going on to recover the rest.

c) Keen Wear International Rs. 9,354,035/-.

c) Company is not functioning at the moment and legal action had been initiated.

d)Osaka GarmentsRs.8,834,091/-

d) Company is not functioning at the moment and legal action had been initiated.

2. Annual reports from the 2. The CAO was directed to year 2009 had not been expedite the process of tabled yet. preparing and tabling the Annual reports.

3. The Committee discussed 3. The staff needs an intenabout the absence of a sive training on Banking. trained staff in the Bank.

4. There had been instances 4. The CAO/AO informed where the loans had been that they follow the granted without obtaining a guidelines now before valuation report on the granting loans . property being mortgaged which is contrary to the Central Bank guidelines.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry Udarata Development Authority March 23rd , 2012 (Ministry of Economic Developemnt)

Major Issues & Problems Identified

Comments & Decisions of the COPE

1. As directed at the previous 1. Action had been initiated COPE meeting, the investionly in 09.03.2012 and no gation on the overpayment internal inquiry had been of Rs. 2.5 million for the carried out before handconstruction of Ambuing over the case to the luwawa Ganetenna Road CID and Bribery & Corhad not been conducted due ruption commission. to the misplacement of relevant files.

2. Annual reports for the year 2. The CAO stated that the 2007 to 2009 had not been said reports had been subtabled in the Parliament. mitted to the Cabinet for approval.

3. The Committee observed 3. The poor supervision and that the Goods Marketing the weak administration & Information centre built of the Authority had led in Badulla spending to these type of irregulariRs.1,173,272 and the water ties. tanks built in Rattota, D a n k a n d a - D a mb a g o l l a Water Scheme, spending Rs.499,389 are not properly constructed and the project on the Children’s Park in Pilimathalawa had been abandoned.

4. The amalgamation of the 4. The CAO was directed to Udarata Development Autake early action in this thority with four other instimatter. tutions of the Ministry of Economic Development established with the aim of poverty elevation and the formation of the Divineguma Department was discussed.

Sri Lanka Cricket March 30th , 2012 (Ministry of Sports ) Contd...

1. When the agreement be- 1. The President of Sri tween SL Cricket and the Lanka Cricket was diCarlton Sports Network rected to take legal advice was signed, the Secretary on this matter. of the Sri Lanka Cricket

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PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

being the CEO of Carlton Sports Network is a matter which leads to clear conflict of interest as he is aware of all inside information during this tender procedure.

2. The Committee discussed 2. According to the AO, the Indian Cricket Board had about the Sri Lanka Prenot released their players mier League Cricket Tourdue to the pressure of nament to which the Indian their sponsors.

Cricket Board had not released their players.

3. It was discussed in detailed 3. The AO stated that it was regarding the clause that the franchise which had had been included in the been given for further 25 agreement signed between years and the ownership the SL Cricket and the of the team is vested with Summerset Entertainment the SL Cricket.

Vnetures giving the rights to the Sponsor to sell the team for 25 years.

Sri Lanka Ayurvedic Medical Council April 04th ,2012 (Ministry of Indigenous Medicine)

1. According to the existing 1. The Committee wanted Law, the council can take the CAO/AO to keep all action only against the regthe massage clinics under istered Ayurvedic massage the supervision of the clinics.

Ministry and also to see whether they could train the staff attached to these centres.

2. The mushrooming of Ay- 2. The present Act should be urvedhic massage centres amended promptly to and fake practitioners could eradicate the illegal pracnot be cut down due to the tice in the guise of Ayweaknesses in the relevant urvedhaya. law.

3. The preparation of the 3. The CAO/AO was directed to appoint a Commanuals for the Registered mittee including the speAyurvedic practitioners had cialized personnel and not been prepared upto professionals to prepare 2012. the manual.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry Sri Lanka Insurance Corporation Ltd. April 04th ,2012 (Ministry of Finance & Planning. )

Major Issues & Problems Identified

Comments & Decisions of the COPE

1. There is no laid down proce- 1. The Committee wanted dure to circulate the rethe CAO/AO to tighten insurance receivables and the procedure. payables recorded in the books of the Corporation, to the respective parties and reconcile in the event of any differences.

2. The Company had entered 2. The transaction had taken place in a situation into a re insurance agreement where the name of the with a bogus company suspicious company had called� Trans Asia Managebeen made public in the ment Advisors FZC� with web site in 2007 which regard to Ceylon Petroleum shows the poor manageCorporation and a premium ment performance of of Rs.92,000,000 for the year the Corporation.

2 0 0 9 / 2 0 1 0 a n d Rs.116,850,000 for the year 2010/2011 had been paid.

Sri Lanka Tourism Promotion Bureau May 10th ,2012 Ministry of Economic Development

1. The proposal on the amalga- 1. The Committee wanted mation of the Bureau with the the CAO/AO to pay Sri Lanka Convention Bureau more attention on this and the Sri Lanka Tourism matter.

Development Authority had been submitted to the Legal Draftsman for approval .

2. Actual income of the IIFA 2. The CAO was directed to film festival had not been appoint a Committee to identified. investigate into the entire income and expenditure of the IIFA film festival and to submit a report to the Committee within two months.

Contd...

3. The sale of tickets of the 3. According to the CAO/ AO, on a request made IIFA Cricket match had by the organizers, a decibeen given to a private comsion had been taken by pany in contrary to the directhe Chairman of the Organizing Committee that tive of the Minister and 18

PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified the ticket income which was separately collected by the Sri Lanka Cricket had not been handed over to the Tourism Promotion Bureau to the date of the examination.

Comments & Decisions of the COPE the Tourist Board should not be involved with the Cricket match and as such the Bureau had no responsibility on the expenses or income.

Post Graduate Institute 1. A significant number of 1. The Committee directed to furnish the Audit report irregularities had taken of Management regarding this matter for place at the international further action. branch in Dubai which is May 23rd, 2012 closed by now .

Prof.Gunapala Nanayak(Ministry of Higher kara, the Programme DirecEducation) tor, had been interdicted following the report of the Auditors and his Provident Fund had been withheld until the inquiries come to an end.

2. The Transport allowances 2. The AO was directed to take the covering apamounting to Rs.371,475 proval of the Ministry. had been paid in contrary to the PED Circulars.

Sri Lanka Institute of 1. Although a cost of Rs.51 1. The Committee which criticized the exorbitant million had been incurred Tourism & Hotel Mancost of Rs.3.9 million for the refurbishment of the agement incurred on one room, 13 rooms at Hotel decided to have a surprise Samudra, construction May 24th, 2012 visit to the place on the work, fittings and furniture same day itself and was had been in poor quality. It (Ministry of Economic satisfied with the set up. was also observed that a Development) proper procument procedure had not been adopted.

Contd...

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

2. A consultant had been ap- 2. The CAO was directed to pointed contrary to the Govinquire into the matter and ernment rules and regulasubmit a report. tions and at the examination, the CAO and the Board of Directors confirmed that their approval had not been given on the appointment.

3. The Bank balances ranging 3. It was directed to deposit from Rs.59 million to 128 the money in Seven Day million had been lying idle Call deposits until the in a current account through approval is gained to open up a Savings Account. out the year under review This was a serious lapse without any return to the from the point of financial institution. discipline.

Gampaha Wickrama- 1. Rs. 1,800,000 had been in- 1. The CAO was directed to vested in Fixed Deposits in obtain the approval of the rachchi Ayurvedic contrary to the Treasury Treasury.

Medical University Circulars.

May 25th, 2012 (Ministry of Higher Education)

2. The Current position of the 2. It was stated that the sylInstitution was enquired. labuses had been revised and lectures were conducted in English medium. Further, special courses on Yoga, IT and English had also been introduced to cater the present requirements.

National Council for Elders

1. As stipulated in the Act, a 1. The CAO/AO was diWelfare Fund for the elders rected to initiate the fund, had not been established. with the financial assistance obtained from the Treasury and other donors and if possible, using the fixed deposit of Rs. 4 million prevailing in the bank for its credits.

June 05th, 2012 (Ministry of Social Services)

Contd...

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PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

2. Objectives & functions 2. It was directed to take specified for the protection action to achieve the obof the rights of the Elders as jectives laid down in the per the Act, had not been Act. properly identified in the Corporate Plan.

Samurdhi Authority June 06th, 2012 Ministry of Economic Development

1. A Samurdhi Bank manager 1. The Committee directed had obtained a loan of to hand over the case to Rs.1,025,000 under the the CID for further invesname of a beneficiary. tigation.

2. A sum of Rs.138.1 million, 2. The CAO/AO was directed to get the assistance the amount due for the winof the District Secretariats ners of the Housing Develto find the winners or eliopment Lottery remains gible persons entitled to unawarded even as at April, the prices.

2012, for not being able to find the winners owing to the fact that some of the winners were not alive or gone abroad.

3. As per the Scheme of Re- 3. The CAO was advised to cruitment, considerable take action to merge those number of vacancies were posts in the new carder of observed. the proposed Dept. of Divineguma and that the filling of the vacancies is not necessary now.

4. For the investment of 4. The CAO, having stated that Rs. 11 million had Rs.86,579,226 made in four been received for the first institutions during the period 2000-2004 , no return time, stated that it had been decided to sell their had been received to the shares at a higher price. date of examination.

5.

Contd...

Without carrying out a fea- 5. According to the CAO/ sibility study, Rs.28 million AO, legal advice had been and Rs.2.5 million had been sought from the Attorney paid to a private institution General to recover the from the Samurdhi Fund for loss. the construction of a garment factory and other expenses.

21

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

6. An amount of Rs.1,250.5 6. The CAO/AO stated it million obtained from the had thus happened due to Samurdhi Fund on settlethe delays in receiving ment basis, remained unsetTreasury provisions and tled. the Committee directed to discuss the matter with the Treasury.

Sri Lanka German Technical Training Institute (SLGTTI) 07th June, 2012 Ministry of Youth Affairs & Skills Development

1. The drafted bill with regard 1. The draft had been subto the Constitution of the mitted to the Legal DraftSLGTTI had not yet been man and the Committee presented to the Parliament directed to draw his early attention on this.

2. The regulations which guide 2. The CAO was directed to the administrative and fiissue administrative and nancial functions are not financial guidelines to the clear due to the absence of SLGTTI until the bill is an Act. passed by the Parliament.

Sri Lanka Export De- 1. The Export Development 1. The CAO was directed to Fund is not in operation at look into the possibilities velopment Board the moment. of restoring the Fund.

(EDB) June 08th, 2012 Ministry of Industry & Commerce

Contd‌.

2. The Committee was in- 2. The Committee directed formed that the officers of the CAO/AO to make the Auditor General’s Dearrangements to facilitate partment, in some instances, the Auditor General to had been refused to provide carry out his audit indewith the necessary informapendently, without any tion without the approval of obstruction. the Chairman of the EDB. 3. Four motor vehicles had 3. The Committee expressed been procured on hire basis its dissatisfaction on the for a period of 05 years on a matter and the Treasury monthly rental of Representative informed Rs.114,218 per head when that the approval had not the approval had been been given as the Treasgranted to purchase vehicles ury was not satisfied with on lease basis. the transaction.

22

PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

4. According to the AO, the 4. The Committee viewed total export values for the that this rate was not years of 2010 and 2011 are enough and directed to US $ 9.6 billion and US $ take steps to increase the 10.9 billion respectively and export value in the counthe export growth rate in try in future.

2010/2011 had been 18%.

5. The Committee is of the 5. The role of the EDB should be strengthened opinion that the Export Deand the Ministry should velopment Board is not innovative. exercise supervision over its work. A higher priority should be given to the export sector by the Ministry.

1. Although the documents 1. The CAO was directed to related to the expenditure of submit a detailed report to Rs.4,672,875 incurred as the the Committee indicating June 19th, 2012 Tsunami Aid had been as to how the money had handed over to the Bribery been spent and also draw Ministry of Plantation or Corruption Commission, the attention of the BribIndustries the Board had been called ery Commission on the for hearing only once since delay .

2010.

Sri Lanka Tea Board

2. Although a sum of 2. The CAO was directed to Rs.9,038,930 had been paid investigate into the matter to a private institution for and see whether there was the installation of a comany suspicious involveputer system, the work rement behind the transacmained uncompleted and tion and to report to the some of the equipment inCommittee on the findstalled several years ago had ings. been outdated by now.

3. The appointment of two 3. It was directed to take representatives from the early action to regularize Trade Unions and a reprethe matter. sentative from the Ministry of Trade to the Board of Directors had not been made as per the Act. Contd...

23

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

4. The London branch had 4. Nevertheless, according been closed down due to to the CAO/AO, the marpoor sales of the Sri Lankan ket for Sri Lankan tea in tea in the presence of AfriMiddle East and Eastern can and Indian tea at lower countries has been satisprices. factory.

5. The Committee enquired 5. The CAO/AO was diabout the views of the Tea rected to submit the independent views of the Board on importing tea for Committee already apblending purposes. pointed to look into this matter along with the recommendations to the Government within two months time.

6. The Committee enquired 6. It was decided to brief the about the current status of Hon. Minister on this Tea-Replanting which sigmatter in order to draw nificantly below the national more attention of the relerequirement per annum. vant authorities.

7. For the importation of the 7. According to the AO, the Dept. of Customs had vehicle worth of initially agreed to exempt Rs.1,917,000 which was the vehicle from the duused at the Tea Promotions ties though that stand had Unit in Japan, Rs.6,676,393 had been spent as custom been changed later. However, the Tea Board had and other import duties and not claimed the initial later, it had been sold for Rs.2,400,000 in 2011. consent of the Dept. of Customs in writing and the Committee expressed its dissatisfaction on the whole process.

Institute of Post Harvest Technology June 20th, 2012 (Ministry of Agriculture)

1. Since the inception , the 1. The CAO/AO was diinstitute had been able to rected to adopt a methodobtain only one Patent Cerology which hampers the tificate. other Patent hunters to obtain the findings of the researches carried out by the Institute.

2. A number of shortcomings 2. It was directed to take was observed in the acaction to rectify the accounting procedure. counting errors.

24

PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry Sri Lanka Telecom PLC Ltd. June 21st, 2012 Ministry of Telecommunication & Information Technology

Major Issues & Problems Identified

Comments & Decisions of the COPE

1. The license of the company 1. The CAO was directed to had expired and the applitake prompt action to obcation for renewal had been tain at least a temporary pending for approval before extension until the formal the Telecommunication approval is given.

Regulatory Commission.

2. The company , based on the 2. The Committee emphasized need of adhereing to Companies Act, had been in the directives of the Comthe understanding that there mittee in future. was no legal requirement for them to submit the Annual report to the Auditor General in spite of the previous COPE directive given to do so.

3. The remittance of dividends 3. The AO stated that they remitted a fair amount of to the Government had decreased over the past several dividends to the Government, having retained a years though the profit of certain amount for the the company had increased. capital expenditure.

Ceylon Fisheries Cor- 1. As directed in the previous 1. The CAO/AO was diCOPE meeting, action had rected to take prompt acporation not been taken to cease the tion to acquire ownership joint venture entered into of the land.

June 22nd, 2012 with a private company in 2003, where a land of the (Ministry of Fisheries institute had been used as & Aquatic Resources the share of the joint venDevelopment) ture.

2. The Economic Service 2. The CAO stated that the Charges amounting to Institution had been unRs.21,184,217 for the period able to pay as it was runfrom October, 2007 to ning at a loss.

March, 2011 had not been paid.

Contd...

3. Contrary to the relevant 3. The AO was directed to Circulars, three vehicles had obtain the approval of the been provided with fuel Ministry. valued at Rs.1,059,256 exceeding the specified limit.

25

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

4. Neither the action had been 4. The CAO/AO was ditaken nor a record of losses rected to recover the value had been maintained as per of losses from the relevant the financial regulations officers if they are responwith regard to 15 vehicles sible for the damages. which underwent damages during the years 2010 and 2012.

5. Contrary to the PED Circu- 5. The CAO/AO was directed to regularize the lars, eleven employees had been attached to the Minismatter within the legal try. Further, salaries and frame of the institution. overtime amounting to Rs.2,359,405 had been paid during the year 2011.

University Grants Commission July 04th, 2012 Ministry of Higher Education

1. Seventy Scholarship funds 1. The CAO was directed to do the needful early. valued at Rs.7,993,323 had been dormant over a number of years.

2. The Committee discussed 2. The CAO was directed to about the students leaving submit the statistics of the the country for higher edustudents thus leaving the cation after Advanced country and also the Level. amount of money drained out of the country for this reason.

3. Based on the Circular 3. The CAO was directed to No.876 of 06.06.2006, cersubmit the explanation in tain recruitments had been writing along with a copy made in the year 2010 and of the Cabinet decision 2011contrary to the Scheme taken in this effect. of Recruitments .

4. Out of the sum of Rs.139 4. It was informed that a decision had been taken to million received in the year transfer the balance 2002 from the SIDAamount to the UGC Staff SAREC Foreign Aid Project, Rs.2,193,843 had been Development Fund. idling since 2007.

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PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry National Disaster Management Centre July 05th, 2012 (Ministry of Disaster Management )

Major Issues & Problems Identified

Comments & Decisions of the COPE

1. The Audit & Management 1. According to the CAO/ Committee meetings had not AO, the Audit & Manbeen held after the year 2006 agement Committee of the Ministry covers the matters relating to the centre.

2. The National Disaster Man- 2. The CAO/AO agreed to agement Plan for 9 districts complete the task within had not yet been prepared. the three months to come.

3. The Committee directed to 3. The CAO/AO stated that the funds received by conduct more awareness prothem for awareness programmes, safety programmes grammes had been limon disasters for school chilited. dren.

Central Bank of Sri Lanka (CBSL) July 06th, 2012 (Ministry of Finance & Planning)

1. Rs.480 million had been paid 1. According to the Goveron behalf of the Ceylon Penor, the CPC had reimtroleum Corporation for the bursed the bills. foreign lawyers who appeared in the Hedging Transaction Case.

2. The Current position of the 2. It was informed that the legal process initiated against assessment carried out by the Directors of the Failed a team of lawyers had Financial Institutions was been submitted to the enquired.

Attorney General and the response of the Attorney General is yet to be received.

Contd...

3. The progress on the 77 corre- 3. It was directed to submit spondence files related to the a report on the number of Pyramid System was encases investigated with quired and the Governor dates of commencement stated that 02 determinations 27

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified had been made which had been given to the Attorney General whereas 09 other cases had been pending before the courts.

Comments & Decisions of the COPE and the dates of conclusion along with the dates on which those indictments had been handed over to the Attorney General.

4. Without following Treas- 4. The AO stated that the Treasury circulars issued ury Circulars, surplus in this effect, was not apfunds amounting to plicable to CBSL. Rs.51,798,660 had been invested in Treasury Bills by two of the Departments of the CBSL, through primary dealers in the private sector.

5. The PAYE tax liability of the staff is borne by the Bank.

5. The Committee stressed that the CBSL had violated the Inland Revenue Act No.24 of 1997 and concluded that the Government should reconsider this matter.

6. The CBSL had invested in 6. According to the GoverGreek Govt. Bonds which nor, the loss incurred due had a face value of EUR to this investment is US$ 30,000,000 on 05.04.2011 one million and further without considering the stated that it had been unfavourable economic clearly compensated by situation prevailed in the other profits generated by region. the overall investment in the EURO zone.

7. The Reserves for the years 7. The Governor stated that 2010 and 2011 had been the Gold Trading is han5.91% and 6.31% respecdled in a careful manner tively, including the Gold and that they have 10 tons Trading and Gold Trading of gold as at the date of related activities. examination which had been only 5 tons in 2006.

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PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

1. NPL ratio related to EPF 1. The Bank should make loans was observed to be aware the EPF borrowers increasing each year graduin writing on the surally . charge being deducted July 17th, 2012 from the EPF contribution by the Central bank Ministry of Finance & against late settlements.

Planning State Mortgage & Investment Bank

2. The loan amounting to Rs.4.8 2. A proper coordination million , categorized as loss had not been in existence had not been recovered from with the Central Bank to the Central Bank due to erroidentify these sort of neously entered information shortcomings at the very such as name, deposit No. moment they are encounetc. tered.

3. The loan amounting to Rs.9 3. The property kept as the collateral had been taken million which had been deover by the Bank and its faulted after paying only one installment still remains outcurrent valuation is Rs.14 million whereas standing with an aggregated the valuation at the time amount of Rs.17.1 million as of granting the loan had at 25.07.2012. also been Rs.13 million which was appeared to be an overvalued figure.

4. As at the end of the year 4. It was directed to furnish 2011, the unappropriate loan a list of un-appropriate balance of Rs.236,278,296 is loan accounts with an shown and by the end of age analysis.

May, 2012, it has reduced to Rs.165.37 million. The CAO/ AO stated that it was difficult to reconcile this balance as it is a rolling account.

5. A sum of Rs.525,125 had 5. The CAO/AO was dibeen reimbursed during the rected to pay serious year 2012 for Credit card attention on this matter. bills of the Chairman without obtaining proper approval from the Treasury and without supportive documents such as bills etc.

29

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

Sri Lanka Rupavahini 1. It was observed that out of 1. The CAO/AO was directed to submit a deRs.42,640,586, the receivCorporation able amount from various tailed report on this political parties for using air debtor balance along with July 18th, 2012 time, only Rs.148,370 had the guidelines prepared in been recovered. respect of recoveries to Ministry of Mass Methe Committee. dia & Information 2. The Credit facilities amount- 2. The CAO/AO was diing to Rs.62 million had rected to submit a debeen given to the private tailed report on the closed sector but a problem had down companies. been encountered with the recovery of those dues as some of the Companies had been closed down.

3. Even though the credit pe- 3. The CAO/AO stated that a new mechanism had riod had been determined as been adopted to recover one month, out of the client the debts. debtor balance amounting to Rs.596,893,398/-, 73%, 32% and 19% had been outstanding for more than one month, three months and three years respectively.

4. An amount of Rs.21,717,482 4. As the amount due from out of the total sundry debtthe Dept. of Inland reveors amounting to nue had been outstanding Rs.55,480,000, had been from 1999, the CAO/AO identified as doubtful debts was directed to write off and it includes the amount with the reRs.17,858,971 due from the quired approval. The Dept. of Inland Revenue.

CAO/AO also stated that The rest of the amount inaction is being taken to cludes the amounts due from recover the due amounts foreign TV institutions and from the insurance comInsurance Companies for panies and the TV comreimbursement of medical panies have been black bills . listed as they did not settle the balance.

5. The Corporation is continu- 5. The CAO/AO was diously incurring losses on rected to take action in Contra Agreements. this regard.

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PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry Securities & Exchange Commission (SEC) August 07th, 2012 Ministry of Finance & Planning

Major Issues & Problems Identified

Comments & Decisions of the COPE

1. The Committee enquired 1. The CAO/AO was diabout the current position of rected to submit informathe Surveillance System and tion on these referrals action taken on the referrals and an Interim Report on investigated so far. the reported cases.

2. The CAO/AO pointed out 2. The CAO/AO was directed to revise the existnumber of shortcomings ing system to give more inherited in the Act which authority to deal with the avert the process of clampmarket offenders by ining down the market offendcluding all necessary ers. proposals until the Bill is passed in Parliament.

3. The Former Director General 3. Rs.3,024,168 had been of the Commission had enpaid during his study tered into an agreement to period but only serve for an obligatory peRs.61,500 had been reriod of four years and had covered and released obtained full pay leave for from the obligatory pereading for Master’s degree riod on 06.07.2012. in USA. 4. The Chairman of the SEC 4. The Committee directed to discuss the matter with was of the view that the Act the Ministry and make was not effective enough to necessary amendments to achieve objectives of the institution. the Act.

Ministry of Defence & Urban Development

1. It was observed that the Han- 1. It was also observed that wella Town Development the UDA had done only Project and Balangoda Town the designing and estimaDevelopment Project had tion of Town Plans and most of the projects are been stopped halfway. carried out by the Provincial Councils.

Contd...

2. The arrears of income of the 2. As the CAO stated that a Rest House Division had suggestion has come out amounted to Rs.271,432,104 to transfer the Rest as at 31.12.2011 and the Houses to the relevant Government Audit has stated institutions, the Committhat the Authority has no tee wanted him to see powers to establish such a what action could be unit as far as its scope is taken in this regard. concerned.

Urban Development Authority August 08th, 2012

31

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

3. Recoverable amounts due 3. A report with regard to from various institutions these outstanding were observed. amounts was called in. ∗ ∗ ∗ ∗ ∗ ∗

Rs.51,843,285 from the National Housing Development Authority.

Rs.11,042,550 from the external projects.

Inactive loan balance Rs.1,695,000.

Housing rent income outstanding Rs.21,215,238.

Utilization fee related to Dambulla New Town Plan - Rs. 69,137,692.

The terminated rent as at 31.12.2011– Rs.105,945,737.

1. The Committee discussed 1. According to the CAO/ about the current affairs of AO, there was a number the institution including the of court cases filed Court cases. against the Council and August 09th, 2012 they are still pending before the Court. It was Ministry of Indigenous further stated that a numMedicine ber of unqualified medical practitioners had been registered during the time of the previous Management.

Homeopathy Medical Council

2. At present, there are 191 2. The Committee directed registered practitioners in the to send a report on the Council and the Amended current position of the Act had been referred to the Institution with all essenCabinet. tial information People’s Bank August 10th, 2012 Ministry of Finance & Planning Contd...

1. The current position of the 1. The Committee was of outstanding amount of the view that the monthly Rs.120.7 million due from installment was not suffithe Ceylinco Group of Comcient enough as it takes panies, was enquired and nearly 50 years to reobserved that, cover the total.

32

PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified according to the rescheduling agreement entered into later, the total due amount had been reduced to Rs.117.1 million which is to be settled in Rs.200,000 monthly installments.

Comments & Decisions of the COPE The CAO was directed to look into the possibilities of increasing the installment and also to send a report to the Committee on this Ceylinco Loan Transaction including the names of the persons who had been involved with it.

2. The total outstanding of the 2. The CAO/AO was directed to send a report on Non Performing Loans this outstanding including given to 109 customers has the methodology applied a m o u n t e d t o to recover the NPL balRs.5,877,812,467 as at ances.

30.06.2011 which includes an interest of Rs.1,651,950,096.

3. A Non Performing balance 3. It was stated that the loan evaluating procedure had of Rs.1,178,224,427, out of been strengthen to avoid the total amount given to 29 such situations and further customers as overdraft, has been remaining unrecovered stated that action has been even as at 30.06.2012. taken to recover the balances.

4. An outstanding Non Per- 4. The CAO/AO was diforming Loan balance of rected to submit a detailed Rs.31,383 million of 52 recovery list. customers remains outstanding even as at 30.06.2012.

5. A case was observed where 5. The CAO/AO was dithe legal action for defaultrected to furnish details ing of a loan had been initiregarding this loan. ated only in 2010 even though the defaulting company had been wound up in 2009. This loan has been categorized as a Non Performing Loan in 2006.

Contd...

33

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

6. The Bank had invested 6. The CAO/AO was optiRs.155.5 million in the mistic that the company shares of the People’s Merwould show a better prochant Bank Ltd. and this gress in the future as it company had incurred a had already recorded a cumulative loss of profit of Rs.25 million by Rs.141.16 million at the end March 2012. of 2010.

7. The Bank had invested 7. The Committee was conRs.1,137 million for the cerned about the purchase purchase of 4,236,135 of of shares in a loss making shares of Sri Lankan Air enterprise and pointed out Lines when the Emirates that the Bank should act Company sold the shares. in a responsible manner in However, the value of the the future. investment had been impaired by Rs.848.8 million as at 31.12.2010.

National Transport 1. The Committee observed 1. It was directed to submit a report as to how these that three Route Permits had Commission three permits had been been issued contrary to the issued. specified regulation.

August 22nd, 2012 Ministry of Private Transport

2. A sum of Rs.5,640,977 had 2. The CAO/AO stated that been paid for 12 busses in an inquiry had been initi2010 under Gami Sariya ated and two persons had project, without any inspecalready been interdicted. tion.

3. Although Rs.36,594,963 had 3. The CAO/AO stated that been spent from March the project had been ter2009 to December 2011 for minated by April, 2012. the City Liner Coach Services, the expected objectives had not been achieved sufficiently.

Contd...

4. The Committee discussed 4. The Committee was of the about the preparation of the opinion that the controlNational Policy for the ling power should be reTransport System. tained with the Commission.

34

PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

5. The Auditor General 5. The CAO/AO stated that pointed out that 12 Route they were compelled to Permits had been issued attend to the requests without carrying out proper made by higher authoriinspection. ties within the tender procedures.

Sri Lanka Accounting 1. The objective of the institu- 1. It was directed to take tion was to review the Fiaction to review all Finan& Auditing Standard nancial Statements of other cial Statements from the Monitoring Board public enterprises to make year 2013 and if necessure that they are prepared sary, to obtain extra proviSeptember 19th, 2012 in accordance with the resion from the Treasury. quired standards. However, Ministry of Finance & they had not been able to Planning achieve at least 20% of the target.

2. The social awareness of this 2. It was directed to carry important public enterprise out some awareness prois not satisfactory. grammes on the activities of the institution.

3. Not only had the post of the 3. The Auditor General pointed out that all entitleDirector General and the ments due for the permapost of Senior Technical nent service must be setManager, which were in the tled and finalized along permanent carder, been conwith the termination of verted into contract basis service from the permairregularly, but also the granent service. The CAO/ tuity provision had been AO was directed to get a made covering the entire clarification in this regard period spent both in the perfrom the Attorney General manent and the contract and the Ministry of Laservice. bour Relations.

Contd‌

4. The salaries of three officers 4. It was stated that the including the above two had Board had to renew the irregularly been increased agreements entered into contrary to the conditions in with the three professionthe letters of appointment als to retain them within and without the due apthe institution as the salaproval. ries paid in the other institutions had been more attractive when compared with that of the Board.

35

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

5. The role of the Board was 5. The Treasury should lend found to be ineffective. its support to the Board in order to strengthen it.

Water Resources Board September 20th, 2012 Ministry of Irrigation & Water Resources Management

1. The Committee extensively 1. The Committee expressed its strong dissatisfaction discussed the Kidney disease issue frequently enin this regard and directed countered in the North Cento take action to handle tral Province and observed the matter by establishing the followings. a Task Force with the representation of all relevant authorities. Further it was directed to report to the Committee monthly on the progress of the studies carried out in this effect. *

The extensive analysis in this regard had been started only recently, even though the disease existed in the region for nearly a decade bringing death to more than 20,000 people.

*

The studies on fertilizer must be increased as it had been suspected to be one of the major causes.

*

There is no proper coordination among the responsible authorities such as the Ministry of Health and as a result, it had not been able to reach to a unanimous conclusion on the analysis conducted at different places.

2. The post of Internal Auditor 2. The appointment is not ethical and directed to had become vacant and an regularize it immediately. officer in the Finance division had been appointed to the post on acting basis.

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PARLIAMENTARY SERIES NO. 179

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified

Comments & Decisions of the COPE

Sri Jayawardenapura 1. The Committee discussed 1. The Committee made the the current status of the following recommendaHospital Board Hospital and observed the tions and directed to forfollowing matters which mulate and submit a new September 21st,2012 hinders the progress of the business plan within three Hospital. months.

Ministry of Health *

Problems related to recruitment of Carder

* In the recruitment of carder , it is recommended to make necessary arrangements to recruit staff on secondment basis in addition to the new recruitments made by advertisements.

*

Dilapidated condition of the * A large scale renovation buildings programme is recommended.

*

Constraints on the administration to compete with the private hospitals.

*

Reluctance of specialized * The removal of the 10% royalty is recommended doctors to work in the hospital due to 10% royalty to enable the patients to charged on the private pracobtain the service of the tice . specialists.

*

Dearth of single rooms and * The hospital should carter the poor bed occupancy rate to the lower middle class though there are 1001 beds and the Ministry should identified. lend its support to strengthen the hospital.

These constraints should be removed and it was directed to formulate and get the Treasury approval for a set of regulations suitable for the smooth functioning of the hospital .

Contd‌.

37

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT

Date/ Name of the Institution & Ministry

Major Issues & Problems Identified *

Comments & Decisions of the COPE

Labour problems, Trade * There must be a good unions and the discipline of dialogue with the work the staff. force and they must be acknowledged on the new business plan and they should be allowed to make suggestions.

Further, the role of the Chairman with regard to the maintenance of a sound discipline in the hospital is emphasized.

*

Lack of a proper business model.

* A comprehensive business plan placing more attention on the marketing aspect must be prepared.

38

PARLIAMENTARY SERIES NO. 179

Note

39