COPE urged to re-open probe into SLIC major frauds
Sri Lanka Insurance Corporation (SLIC) employees are urging the Parliamentary Committee on Public Enterprises (COPE) to re-open the probe into corrupt practices and irregularities of the state-owned insurer during 2009-2010 as there was no conclusion still on these matters raised before the committee three years ago, President of the SLIC Employees Union R.S. Nandalal told the Business Times.
He said that the union has made representations to COPE in 2011 on these malpractices, but the inquiry ended abruptly without making any recommendations on serious allegations made by them.
The union is to make a written submission on corrupt practices and irregularities that took place during the period of June 4, 2009 up to now to COPE with the aim of bringing past and present fraudulent practices of the state owned insurer under scrutiny at a time when the economy is struggling to gain steam and cash is hard to come by, Mr. Nandalal disclosed. He noted that the top management of the corporation had swindled a vast sum of money running up to millions of rupees after the organization was handed back to the government on a Supreme Court order in 2009 annulling the multi–billion rupee privatization in 2003.
Outlining major frauds at SLIC during that period, Mr. Nandalal revealed that SLIC’s management had entered into a re-insurance agreement with a bogus company called ‘Trans Asia Management Advisors FZC’ causing a loss of Rs.208 million to the corporation.
This payment has been paid by the corporation as two installments for the re-insuring of Ceylon Petroleum Corporation (CPC) property to re-insurance broker Suresh Balakrishnan of M.F Insurance whose licence was cancelled by the Indian authorities for re-insurance fraud, he alleged.
He was engaged as a re-insurance broker of SLIC using the company name of Trans Asia Management Advisors FZC of United Arab Emirates (UAE), another bogus company. The Sri Lanka Auditor General’s investigation has proved these facts, he said.
The SLIC paid Rs. 92 million as 2009/2010 re-insurance installment of Rs.92 billion and Rs.116 million as the installment of 2010/2011 to this broker and it has been revealed that this money had not been received by relevant re-insurance companies.
The CPC property had been re-insured to the tune of Rs.75.39 billion.
He demanded the government to take immediate action against the perpetrators in accordance with the Parliamentary Act No 01 and 02 of 1982 which has provisions to recover the defrauded money from officials responsible for the fraud.
Highlighting another fraud, he revealed that the SLIC has paid Rs. 6.7 billion on the 31st December 2010 to the Harry Jayawardena-controlled Distilleries Company of Sri Lanka (DCSL) on behalf of its subsidiary Milford Holdings (Pvt.) Ltd, which the latter incurred to acquire SLIC from the government, as the insurer has made good profits through share transactions.
But the DCSL has sent a receipt to SLIC indicating that it has received only Rs. 5.71 billion and nobody knows what has happened to around Rs.1 billion.
He asked as to why the Finance Ministry Secretary Dr. P.B Jayasundera has failed to detect the missing money.
Even Mr. Jayawardena has not brought this matter before the authorities up to now because he had already got the money otherwise he will have to wait for five years under the court order.
The court ordered to reimburse the capital investment of Rs.6.7 billion in Treasury bonds redeemable in five years to the Milford Holdings (Pvt.) Ltd.
The SLIC has violated the Supreme Court order by paying the money directly to Mr. Jayawardena without reimbursing it in Treasury bonds; he said adding that they are consulting their lawyers to take legal action against SLIC and Finance Ministry authorities for contempt of court. Top officials who were responsible for these acts have been given responsible posts in other state institutions without holding any inquiry against them, he added.
He said that the union will also bring to the notice of COPE on several other malpractices of the then top management including the wasting of money of SLI under the guise of publicity campaigns, the setting up of affiliated institutions unnecessarily wasting SLI funds, misusing and wasting SLI funds from 04-06-2009 TO 13-08-2011: misusing of SLI official vehicles and selling vehicles without following proper tender procedures and engaging in corrupt practices committing an offence punishable under the act of parliament no 12 of 1982.
Mr. Nandalal said that their union has decided to re-open the files of major frauds committed by top officials misusing their power as the government is yet to take any action against these corrupt officials.