Moragoda co. off the hook for now

The Presidential Commission of Inquiry investigating failed finance companies began work earlier this week but what was surprising – even before it fully started – was that it would not be immediately probing failed companies such as Mercantile Credit Ltd.

Commission Secretary Ms. J.A.N. Dissanayake told The Sunday Times that the commission would, in the first instance, concentrate only on two of the five terms of reference listed in the mandate.

The two terms of reference are to examine the individual conduct for the deficiencies associated in connection with the items highlighted in the COPE report dated June 22, 2005, by relevant officials of the Central Bank who have been in charge of the regulation and supervision of the banking and non-banking financial sectors during the period 1991 to 2005; and to make recommendations on appropriate steps to be taken against any official/s responsible for such deficiencies.

The Commission comprises Justice Priyantha Perera (Chairman), Faisz Mustapha, Eastman Narangoda and Ajith Ratnayake. Mrs Dissanayake denied a report in The Sunday Times which said Minister Milinda Moragoda was to be called before the commission in connection with the Mercantile Credit issue. “The Commission has not taken a decision so far to call upon Minister Moragoda to testify before the Commission,” she said in a letter.
However, she said over the telephone “I don't know if it will be decided in the future.”

The appointment of the commission was as a direct result of a COPE report which said failed finance companies including the Moragoda family-owned Mercantile Credit Ltd, had defaulted payment of millions of rupees. The COPE report said Mercantile Credit was the biggest offender.

A commission press release said the commission has decided to conduct proceedings in the normal course, to maintain transparency unless in exceptional circumstances but bankers said leaving out finance companies in the initial probe raises many issues relating to transparency.

“Will Moragoda get a new lease of life?” one banker asked. Mr. Moragoda is in charge of the Tourism Ministry with Mr. Faizer Mustapha as his deputy. This week Ms. L K Gunatillake, present Director, Department of Supervision of Non-Bank Financial Institutions of the Central Bank was the first to testify before the Commission. She was questioned on the regulatory role of the Central Bank vis-a-vis the finance companies.