He asked that a detailed statement of all EPF and ETF share purchases from 01 January 2010 to 30 April 2012 (inclusive) be tabled in the House.
The statement should be certified by the Secretary to the Ministry of Finance who is the Chief Accounting Officer of the Ministry under which the EPF and ETF operate, Mr. Wickremesinghe said in a statement under Standing Order 23(2).
The opposition leader’s statement reads,
The monies of the Employees Provident Fund (EPF) and Employees Trust Fund (ETF), belongs to the members. The EPF has over 13 million contributing and non contributing members while ETF has 2.3 million accounts. Government agencies have custody of these Funds and therefore play only a fiduciary role, managing the Funds in the best interest of the members including investment in Treasury Bills and shares.
Recently the media carried news items alleging fraud and market manipulations in share transactions. This includes a push and dump strategy in which speculators pushed up the value of shares and then dumped them on these two Funds resulting in a loss for the Funds and a gain for a ring of speculators. These reports state that the loss in respect of five companies is alleged to be in the range of over Rs. 4 billion. This has caused consternation among the members, trade unions as well as employers who contributed on behalf of their employees. It has also impacted on the financial market. There are media reports that this issue will also be taken up by the International Labour Organization in Geneva.
The Standard and Poor’s Banking Industry Country Risk Assessment (BICRA) has stated “Our economic risk score of ‘8’ for Sri Lanka reflects a “very high risk” assessment of economic resilience and credit risk in the economy, and a “high risk” assessment of economic imbalances, as our criteria define those terms.” The report has also stated: “We see a potential conflict of interest in the Central Bank’s role. In addition to policy formulation and supervision of banks, the monetary board of the Central Bank also oversees Employees’ Provident Fund investments. The Fund is a large investor in Sri Lanka banking stocks”.
We in Parliament have a duty of oversight over these funds and safeguarding the rights of members. We have also to inquire into the findings of the Standard and Poor’s Report in regard to the EPF. Under Article 148 of the Constitution the Cabinet of Ministers and individual Ministers are responsible to this House both in regard to the government as a whole as well as subjects and functions coming under the individual ministries. Section 9 of the ETF Act “the Board may utilize any monies of the Fund for investment in shares for the employees with the approval of the Cabinet of Ministers.”
However, full details of the investments made by these Funds are not available to Parliament or its members. In view of the media reports by the financial agencies and the reaction of financial and trade union sectors it is imperative that the Parliament takes action to fulfil its obligations. Otherwise we may be found fault for not exercising proper oversight in regard to these Funds. Inactivity on the part of this House will not be excused specially after the NSB scandal.
Therefore this House requires details of all the transactions of the two Funds to make a considered decision regarding the truth or otherwise of these allegations and further action if any to secure the Funds.
The government has an obligation to this House to make available all the information required by the House to make its own determination on this matter. Not only the Ministers even the officials have a duty to keep the House informed of all the information required and give truthful answers. Article 4 (a) of the Constitution have vested this House with the powers to ensure compliance.
These two Funds and the Central Bank come under the Ministry of Finance. In these circumstances I request this government to inform the House of the present position of the investments made by the Funds by tabling a detailed statement of all EPF and ETF share purchases from 01 January 2010 to 30 April 2012 (inclusive) certified by the Secretary to the Ministry of Finance who is the Chief Accounting Officer of the Ministry under which the EPF and ETF operate.