EPF undergoes IT transformation to prevent fraudulent deals
The Employees’ Provident Fund’s (EPF) information technology process is to be improved by developing an integrated computer programme network in combination with the Department of Labour and the Central Bank (CB).
The aim is to prevent fraudulent transactions and maintain transparency in all activities of the fund, Labour Ministry sources revealed.
Information relating to the EPF since its establishment could be easily obtained by installing this new computer programme network, a senior official of the ministry who wished to remain anonymous told the Business Times.
An internal audit related to financial control of the Rs. 1.8 trillion-worth fund is being carried out by the CB through a private firm and that costs approximately Rs. 6 million annually.
According to the ministry official, complete responsibility of the EPF is held by the CB and that when investing funds, 93 per cent has been invested in government securities while the remaining 7 per cent has been invested elsewhere.
In 2016, the EPF purchased a lesser volume of bonds from the primary market which has a higher yield while a greater volume of bonds had been purchased from the secondary market which has a lesser yield, denying the members of the Fund a massive financial gain that they would have secured.
Issuing statement on Thursday, the CB stated, since November 2016, all investments are made with the approval of the Investment Committee, while Monetary Board’s prior approvals were obtained for investments outside government securities.
The Risk Management Department has been entrusted with the responsibility of overseeing the investment activities of EPF and formulates risk parameters for investments including revision of the investment and trading guideline.
The recent report of the Committee on Public Accounts (COPA) revealed that an investment of Rs. 500 million had been made in SriLankan Airlines in July 2010, another investment of around Rs.810 million was made in a hotel company on May 31, 2010 and another investment of Rs. 5 billion made in a new hotel complex at the end of 2013 without any gain to the Fund.
These amounts have been written off as impairment losses in the financial statements. Further a sum of Rs. 2.5 billion in 2015 and Rs. 5.2 billion in 2016 was written off in this manner and the same methodology has been continued since 2015, COPA report revealed.
The Chief Accounting Officer (CAO)of the fund has been directed to formulate a comprehensive report on these write-offs clearly categorising them as complete losses and losses incurred as a result of impairment and to submit the report to COPA.
COPA has also directed the EPF CAO to submit a report in relation to the investment of unit trusts by the fund during a period of seven years from January 2010 to December 2016.
The CAO has been directed to find out as to whether a share transaction took place between Sri Lanka Insurance Corporation and the EPF and if so what was the volume of such transaction.