Mahapola Trust Fund’s subsidiaries marred by financial irregularities
The Mahapola Higher Education Scholarship Trust Fund established four decades ago in 1981 by the then Education Minister Lalith Athulathmudali to assist the needy university students is marred by financial irregularities under its subsidiary National Wealth Corporation Ltd during the last 10-15 years.
The Committee on Public Enterprises (COPE) has come across these financial misappropriations of the Mahapola Scholarship Trust Fund with a net worth of Rs.12 billion incurring a massive loss of Rs.673 million for the state during the past few years.
COPE chairman, Professor Charitha Herath recently directed the Trade Ministry Secretary Bhadrani Jayawardana to notify the Attorney-General and instruct the Criminal Investigations Department (CID) to launch a comprehensive investigation into this matter.
It has been revealed that the fund has incurred this loss of Rs.673 million by conducting an online lottery through a private firm.
Further losses of Rs.102 million was incurred in 2016, Rs.13 million in 2017 and Rs.18 million in 2018, COPE uncovered.
The financial irregularities of NatWealth Securities Ltd, a fully owned subsidiary of National Wealth Corporation Ltd established under the Mahapola Trust Fund, have been exposed during the inquiry of the COPE meeting.
NatWealth Securities Ltd has been barred from carrying out business and activities as a Primary Dealer on a decision taken by Monetary Board of the Central Bank since 30.05.2019.
The reason for this regulatory action was the failure of the company to comply with directions applicable to primary dealers.
It was revealed at a Presidential Commission of Inquiry hearing that these companies suffered severe losses due to the Central Bank bond scam.
The Cabinet of Ministers decided on August 29, 2018 to liquidate the functions of the National Wealth Corporation Ltd and NatWealth Securities Ltd which were established under the Mahapola Higher Education Scholarship Trust Fund.
The two fund management companies set up to handle Mahapola Trust Fund are billed to be liquidated after incurring losses of over Rs. 2.5 billion during the last 15 years, official sources revealed.
Several issues have cropped up in these surrounding companies which were established using the resources of funds with improper administrative structure.
The Trust Fund has made an investment of over Rs.1.26 billion in a fixed deposit of People’s Leasing and Finance Company, a private firm listed in Colombo Stock Exchange violating a Cabinet decision of August 28, 2018, public interest activists and university student unions alleged.
According to an assessment of losses computed by the Higher Education Ministry in the period 2003-2017 the fund had incurred an estimated Rs. 1.687 billion loss of earnings.
All these financial irregularities will be investigated and necessary action will be taken against the perpetrators, COPE sources said.