Foreign forensic audit on Treasury bond scams hits snag
Sri Lanka’s six forensic audits into alleged Treasury bond scams and managing a Rs. 2.2 trillion Employees’ Provident Fund (EPF) hit a snag owing to high fees claimed for the workload made by one of the two foreign audit firms selected for the task, official sources revealed.
BDO India and KPMG are conducting the forensic audits and five of those audits began in April this year.
Most of those audits are to be completed in two to three months and the longest audit will take at least six months for its completion.
One of the forensic audits has still not commenced as the Indian audit firm BDO was claiming a high fee of Rs. 900 million to conduct it.
Out of this amount a sum of Rs. 1.5 million is needed only for the purpose of auditing phone calls, a senior official who wished to remain anonymous told the Business Times.
He said that most of these telephone calls were in Sinhala and the content of it will have to be translated to English enabling the foreign audit firm to continue the auditing process.
The Cabinet Tender Committee appointed to select prospective bidders has awarded contracts to BDO India and KPMG at an agreed payment of Rs.250 million and it was approved by the Cabinet on March 6 this year, he added.
However all six audits are expected to be completed before the end of this year and necessary action would be taken by the Central Bank considering the outcome of the forensic audits.
These forensic audits were recommended by a Presidential Commission of Inquiry into the alleged bond scam in 2015 and 2016, and will also cover earlier periods since 1998, when bonds were issued outside auctions.
Holding a forensic audit examination on the EPF involvement in Treasury Bonds and Treasury Bills transactions from 2008-2014 was also recommended by the Commission.
The high fee demand made by BDO India and the additional cost for translating thousands of telephone calls made pertaining to bond transactions have been referred to a cabinet consultative committee, he disclosed.
An amendment to the Civil Procedure Code is being contemplated to expedite legal action to recover the massive loss of Rs. 1.6 billion to the government, Presidential Secretariat sources said.
The Attorney General will look into the possibility of passing a separate Act in Parliament to recover the loss to the government and the EPF avoiding delays in court procedure. New laws will be introduced to empower the Central Bank to prevent reoccurrence of similar incidents in the future.
The Speaker of Parliament has been directed to take action against the members of the Committee on Public Enterprises (COPE) who had communicated with Perpetual Treasures Ltd’s owner Arjun Aloysius while the COPE probe was in progress, these sources said.