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COPE: Attempts to gradually deregulate state-owned Litro Gas failed
View(s):The report submitted by the Committee on Public Enterprises (COPE) on the statutory audit conducted by the Auditor General on Litro Gas Lanka Limited (LGLL) and Litro Gas Terminal Lanka (Private) Limited (LGTLL) can be considered as an example of how an attempt to gradually deregulate the control of a state owned enterprise failed, the committee said recently. COPE Chairman Charitha Herath tabled the report in Parliament on Thursday.
COPE Chairman Prof. Charitha Herath
The committee presented its examination and investigation of Litro Gas Lanka and Litro Gas Terminal Lanka as a special COPE report, as it showed how an attempt to wrest control of a state owned enterprise failed.
The report details how problems first arose when Litro Gas refused to be audited by the National Audit Office or the Auditor General and refused to appear before COPE as a public enterprise.
The issue regarding the proprietorship of a public enterprise was resolved to some extent with the intervention of the Auditor General and the Attorney General’s Department, COPE said in their report.
COPE subjects to scrutiny all the government owned corporations, trading enterprises and other businesses that have been assigned to the government under any written law and any companies registered under the Companies Act No. 7 of 2007, with 50% or more of shareholding resting with the government, a government-owned company or a local authority as their accounts as per Article 154(1) of the Constitution.
LGLL and LGTLL were established under the Sri Lanka Insurance Corporation Ltd. (SLIC) and function as its subsidiaries.
SLIC and its subsidiaries had been subjected to audit by the Auditor General with the 19th Amendment to the Constitution. In 2020, while the auditing was being done however, LGLL and LGTLL said they were no longer under the scope of the Auditor General with the passage of the 20th Amendment to the Constitution. The companies had said they would appoint an independent auditor under the Companies Act.
They had said they were no longer under the Auditor General even though the percentages of shares in these two companies held by the government were 99.94% and 100% respectively.
Nevertheless, board share remained at 4:1 ratio and though the boards of directors for these companies were appointed by SLIC, whether the Finance Ministry Secretary was the Chief Accounting Officer of the companies was questionable with this issue.
In July last year, COPE informed both companies to appear before it on the grounds that 99% of shares of both companies belong to SLIC. It also recommended to submit a proposal to appoint the Auditor General as the official auditor of the two companies. It also cancelled the proxy appointed by SLIC on April 23, 2020, in relation to the appointment of the auditor of the two companies.
In September last year, the Auditor General informed COPE that there was an invitation from the new management of Litro Gas to begin an audit of both LGLL/LGTLL but there would be a delay in beginning the audit until a court determination was given on the case related to the matter, which was still pending.
In October last year, the then chairman of Litro Gas had written to the Auditor General that they had withdrawn the writ petition filed with the Court of Appeal on the matter, paving the way for the Auditor General to again initiate the process of auditing the two state owned companies.
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