Commission to grill Minister Moragoda

The Special Presidential Commission of Inquiry appointed last month to investigate into matters relating to failed finance companies, will summon for questioning Tourism Minister Milinda Moragoda, among others, Commission sources said.

The Commission begins sittings in camera at the BMICH tomorrow. The probe is a direct result of revelations made by the Parliamentary Committee on Public Enterprises (COPE), whose findings were tabled in Parliament in June 2005 revealing alleged financial manipulation and violation of accounting principles by Mercantile Credit Ltd (MCL) and the failure of the Central Bank to control such misdeeds.

Mr. Moragoda is a director of MCL which owes billions of rupees to the Central Bank. Its other directors are Nihal Jayawardena (his uncle) and Mrs. Neeliya Perera (his mother). In a damning indictment of the Central Bank management at the time, COPE said the Central Bank had gone to the extent of issuing a licence to operate a commercial bank to the very directorate of MCL that violated the criteria set out for issue of a banking licence.

It also found that the Central Bank had failed to adopt suitable measures and actions to deal with individuals who had been responsible for such failures and take proper legal action connected therewith. The COPE report said the total amount recovered from MCL to date was only Rs. 121.4 million against the advances made amounting to Rs 1.7 billion. Further only Rs 13 million has been recovered from the monies that have been extended to the subsidiaries of MCL in violation of Central Bank guidelines on lending by finance companies.

“Out of the total of Rs 7263.3 million due to the Central Bank by 13 defaulting finance companies, more than 60 per cent was due from MCL, declared COPE’s then Chairman Rohitha Bogollagama in presenting the report to Parliament on June 22, 2005.

Mr. Bogollagama said COPE carried out a detailed review on Mercantile Credit since the amount advanced to this company alone amounted to 63 per cent of the total advances made by the Central Bank and the amount outstanding amounted to Rs. 4.7 billion as at December 31, 2004.

The members of the Special Presidential Commission that will probe the 13 defaulted finance companies are retired Supreme Court Justice Priyantha Perera (Chairman), Faisz Mustapha PC, Eastman Narangoda (former General Manager, National Savings Bank) and A. S. Ratnayake (Director General, Accounting and Auditing Standards of the Institute of Chartered Accountants). Mrs. Nandani Dissanayake, Central Bank Secretary will serve as the Commission Secretary.Sources said the Commission will begin the probe by looking into any deficiencies on the part of responsible officials of the Central Bank and the first to give evidence will be relevant officials of the Bank.