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EPF lost Rs. 11billion by 2013 on poor investments
View(s):The annual report of the Employees Provident Fund (EPF) for 2011 presented to Parliament this week revealed that poor investment choices of the fund’s monies have resulted in the Fund losing more than Rs.11 billion by the end of last year.
The EPF had made investments of nearly Rs. 74 billion on a long term and short term basis in 74 companies listed in the share market. Out of this, the value of investments made in 58 companies amounting to over Rs. 54 billion had diminished by over Rs.11 billion, the Auditor General s report included in the Annual Report said. The EPF had also invested Rs.500, 000,000 in around 1. 8 million units of an airline company in July 2010 but this had not yielded any income to the Fund since the date of investment.
In reply to this matter, the Central Bank of Sri Lanka informed that it is confident of future prospects of profits from the company with gradually decreasing losses.
The other bad investments included Rs. 2.9 billion invested in 29,750,000 units of an electricity generating company from April 2007 to November 2008 not yielding any income to the Fund in 2008, 2009 and 2010 while Rs. 540,909,091 had been received twice in 2011 as dividend income.
In addition to these, billions of rupees have been invested in a finance company, a communication company and in the hotel and tourism sector, but in all the returns on the investments have been dismal.
The report said that the net result of the operations of the Fund for 2011 under review had been an after tax surplus of Rs.107, 202,066,499 as compared with the net surplus of Rs.111, 445,011,747 for the preceding year, The net surplus for the year under review as compared with the preceding year indicated a decrease of Rs.4, 242,945,248. The decrease of income from investments by a sum of Rs.5, 049,303,683 had been the main reason for the decrease in the financial results.
The report also revealed that the Central Bank of Sri Lanka had outsourced the internal audit relating to the funds control to a private audit firm and the audit fee paid in 2011 amounted to Rs.7, 314,048.
The internal audit of the activities of the EPF should be carried out by the Department of Labour but due to the inadequacy of staff, it has been possible to cover only a part of the Fund by that audit. The Audit report also said that an agreement had been entered into with a private company in November 2010 for the Re-registration of Members of the Employees’ Provident Fund. In 2010 and the following year, a sum of more than seven million rupees has been spent on the project.
However the work on it had not been completed even by the end of 2012 and the equipment valued at Rs.7, 457,195 purchased for the project had been idling in the Department.