Confusing signals at Lankaputhra Bank
Confusion reigns at institutions like the Lankaputhra Development Bank (LDB) where an appointment made by the Treasury has been rejected by the Central Bank and questions regarding its validity are being posed to the Public Enterprises Ministry who is in charge of loss-making state institutions. With subjects and ministries being changed there is more confusion with the LDB Chairman Lasantha Goonewardena claiming that he is appointed by the Treasury, though he comes under another ministry, and it is only they who could take action against him regarding his appointment.
However, when a letter from the regulator arrived at the LDB calling for the resignation of its chairman the Chairman refused to accept this and stated that he had appealed to the Central Bank. All this information is fed to the Public Enterprises Development Ministry which is in charge of the LDB since the August General Election. However, it was interesting to find out that once the ministry is in receipt of these letters regarding the Bank Supervision Department’s refusal to accept such appointment and that this said letter was recalled by the Central Bank as per the Company Secretary, the ministry had forwarded these to the Treasury.
In another side of the fiasco, the Central Bank functions under the Economic Affairs and National Policies Ministry. Meanwhile at the COPE meeting into the affairs of the bank, it was noted that the manner in which recovery of loans and granting of loans was carried out previously had not changed and in this respect the bank was asked to adhere to the Central Bank directions on the interest on loans. In addition it was pointed out that the loans could not be disbursed at lower interest rates based on the wants of the Chairman which was unacceptable. In this regard, the Treasury representatives were asked to act with more responsibility.
The state owned LDB has two Treasury officials on its board. Further 64 new recruitments made between January 1, 2015 and March 3, 2016 were not carried out following the correct procedure, it was noted. The COPE committee had also discussed matters pertaining to the opening of two LDB bank branches in Akuressa on December 19 and Thambuttegama in January without the Central Bank’s approval. It was noted that prior to obtaining the required approvals from the regulator the bank had opened these two branches which the Chairman claimed were not branches but information kiosks with no bank operations carried out.
Another matter that came up was the irregularities that were found at the Wennapuwa branch of the LDB where Rs.51.1 million had been deposited by 11 customers who opened fixed deposits on December 29, 30 and 31 of 2015. On the same dates these depositors had obtained loans amounting to Rs.45.5 million and later on January 11 and 13 of 2016 these deposits were later taken out. COPE has asked the LDB Chairman, the Public Enterprises Development Ministry Secretary, the General Manager /CEO and the Auditor General’s Department to forward reports on these said issues.