The official, who held a top position at the ADB and was also a senior civil servant in Colombo attached to the Finance Ministry and other government departments prior to going to Manila, has returned to Colombo and says he has explained his position to Finance Minister K.N. Choksy.

"It is a private matter. I have given an explanation to the minister," he said after he was asked about the allegations. He refused to provide further comment on the matter.

The finance minister was not available for comment. Finance Ministry Secretary Charitha Ratwatte said he was unaware of allegations against a Sri Lankan official at the ADB.

The ADB, asked to comment on the issue, said an official had resigned as an alternate director over allegations of sexual harassment but refused to disclose the identity of the official concerned or the country of origin.

The issue has been the talking point amongst the Sri Lankan community in Manila with the two employees concerned said to be Filipino secretaries. It was unclear when the incident occurred but is believed to have taken place in the past few months. The official had been at the ADB for over a year.

Robert Salamon, principal director in the office of external relations of the ADB, told the Sunday Times FT by telephone from Manila on Friday that the ADB was aware of cases filed by two temporary contractual workers alleging improper behaviour on the part of a senior ADB official.

"As this matter is now before the Office of the City prosecutor of the city of Mandaluyong (in Manila where ADB is located) we feel it would be inappropriate to comment at this stage."

But he said the ADB took this matter very seriously. "The ADB has a clear and firm policy on the prevention of sexual harassment and takes seriously all cases involving allegations of this nature," he said, confirming that "the person named in the cases/complaints has resigned from his position as alternate director."

It was also unclear whether the ADB had conducted an internal inquiry into the complaints by the two employees, which is the usual procedure when complaints against employees are made.

Cabraal to assist Pramuka depositors?
Pramuka depositors have called in top management consultant Nivard Cabraal to help mediate with the Central Bank on a possible re-opening of the now closed Pramuka Savings and Development Bank (PSDB).

Earlier in the week, Central Bank officials changed their original stance, demanding a total investment of Rs. 2.2 billion if they are to review their decision and re-open the PSDB, Pramuka Depositors' Association President Ranjith Arambawala said that the Central Bank Director of Bank Supervision had informed him on Thursday that a total sum of Rs. 2.2 billion was needed as a guarantee to cover not only the previously stated individual and institutional depositors' savings, but also other savings schemes which mature in the space of two years.

Arambawala seemed quite puzzled at the sudden change in the Central Bank's position, which compelled him to seek assistance from Cabraal.

Cabraal, speaking to the Sunday Times FT last Thursday, confirmed that he had been approached by the depositors, but said that he was not aware as to the exact role they expected him to play.

Meanwhile the CID has requested Interpol to track down Rohan Perera, former chairman of the bank who has reportedly fled the country.

The Sunday Times FT learns that the Cabraal would be called upon to review the Central Bank investigation report and the Ernst & Young report, to which the depositors have been denied access, in order to assess the actual amount required to re-open the bank. Initially the Central Bank requested a guarantee of Rs. 600 million from Pramuka's board, which was later raised to Rs. 1.3 billion.

Prior to approaching Cabraal, Arambawala had handed over a proposal of possible remedies that would help re-open Pramuka, to the Central Bank and the President's office.

However, Central Bank Deputy Governor P.M. Nagahawatte said that he had not received any such proposal and could not assure depositors that Pramuka could be re-opened. "The problem is, even if the depositors are able to bring in a new investor and re-open the bank, there is no assurance as to whether Pramuka will be able to attract new depositors. That is our main concern," he said.

Cabraal, commenting on the Pramuka crisis, had mixed feelings on the manner in which the Central Bank handled the entire issue. "I believe it is fortunate that they managed to detect Pramuka at a stage when it reported a loss of Rs. 2.2 billion, which could have risen as high as Rs. 10 billion in a few more years."

Cabraal said the disaster began as early as when Pramuka received its banking licence. "Had the Central Bank done a more careful analysis of Pramuka's board of directors, their experience, expertise and track record and monitored their business practices and corporate ethics, Pramuka would not have suffered such a fate."
Cabraal reiterated that history keeps repeating itself, where several directors who have been found guilty of fraud and mismanagement in the past, have continuously managed to shut down bankrupt institutions and obtain new licences to set up new banking and financial institutions.

He said that the banking sector functioned on confidence and the depositing public was unaware of the day-to-day activities of the bank. "The depositors placed their trust in the Central Bank, but it failed to take necessary action as soon as it was aware of the corruption taking place in the bank."

SriLankan expects better year

SriLankan Airlines, on the path to recovery after a disastrous 2001, is planning on consolidation coupled with growth this year with new destinations and the possible lease or acquisition of new aircraft.

Chandana de Silva, Head of Corporate Communications, said plans were underway to contain losses and raise revenues with the airline teaming up with the Sri Lanka Tourist Board in a joint marketing effort to promote the country. "We are hoping to break even by 2004/2005 through the airline sector alone," he said, adding that airline revenues and profits were earlier coupled with ground handling and catering.
The airline is planning to include Cochin in South India on its list of new destinations by March or April this year and also Italy (either Rome or Milan) while prospects of getting another aircraft are on the cards.

"We are constrained by the number of aircraft and looking at this issue closely. At the airline's next board meeting in second week January a board paper would be presented on this matter," De Silva said.

Television programme for the benefit of migrant workers

A group of entrepreneurs is considering plans to launch a new TV programme targetted at migrant workers, their problems and issues relating to an industry that is Sri Lanka's largest foreign exchange earner.

"We are very closely examining such a programme to be held on a weekly basis which would be a boon to migrant workers," noted Suraj Dandeniya, Managing Director at Acura, a foreign employment agency.

Dandeniya, also president of the Association of Licensed Foreign Employment Agencies of Sri Lanka (ALFEA), said sponsors were being sought for the weekly programme which would cover various aspects of the foreign labour market.

Experts covering various fields including employment, education, health, banking and migrant workers themselves would be featured on the show.

The programme is also aimed at solving problems and responding to all the FAQs (frequently asked questions) on foreign labour markets.

Close to one million Sri Lankans, mostly women, work in the Gulf and other countries but many face problems like cheating by employment agencies, bogus job contracts, delayed wages, physical abuse and sexual harassment.

Dandeniya said the project was being considered by a group of individuals and not
ALFEA.

Bandula cautions public against greed
Deputy Minister of Finance Bandula Gunawardena has raised concerns about the growing vulnerability of the public to high return investments and seductive advertising by several new financial companies.

The minister was referring to the recent Pramuka fiasco, in which the bank had lured depositors by offering high interest rates and had deceived the public by falsifying its annual reports in which net profits were shown to cover up its massive losses.

He also cautioned the public to beware of investing in new financial instruments such as trees.

"The government cannot stop such investment institutions from being set up and operating because this is a free market," he said in an interview. "All we can do is hope the regulator takes timely action to prevent such disasters as Pramuka."

The minister also said, "What happened to the depositors of Pramuka and what will happen to the investors in trees is that they will have to suffer a tragic loss due to their greed. The government cannot stop the public from being greedy."

The minister was also concerned about the declining standards of financial reports prepared by companies, and encouraged the public not to judge a company from the profits mentioned in its annual reports.

"At the moment the Central Bank and the CID is investigating in to the accounts of 26 financial institutions, which cannot be divulged at this stage," the minister said.

When asked whether the government was concerned about the negative impact on the entire banking sector from Pramuka's closure, the minister said that there was nothing to fear. "In America, a bank collapses everyday. If people understand the subject of macro-economics in depth, they will learn to make the correct investments."

Speaking on the government's steps to curb corruption and inefficiency in the public sector, the minister said that the Devendra Commission appointed by President Kumaratunga had proposed to lay off one-third of those employed in the public sector with immediate effect.

"At the moment there is an excess of public sector employees, and most of them receive salaries without doing any work."

He said that Prime Minister Ranil Wickremesinghe had opted to adopt a more subtle method of reform, by introducing a Voluntary Retirement Scheme in several government departments and halting the recruitment of public servants in 2002.

Minister Gunawardena said that the government's total revenue was only Rs. 300 billion, of which the total salary bill expenditure was Rs. 100 billion and the pension bill a total of Rs. 32 billion.

He said that the remaining public sector employees could definitely expect a pay hike towards the end of the year, if the economy continues to blossom.

The minister also highlighted that the government was expecting less revenue through privatisation this year.

The government was expecting only Rs. 9.5 billion when compared with the previous regime's budgetary expectation in 2001 of Rs. 25 billion, he said.

The Treasury could not afford to bail out loss making public sector establishments, but he said that the government would not privatise efficient institutions such as the National Savings Bank and the State Mortgage and Investment Bank.

The minister also said that there would be an increase in foreign investment this year, through the traditional donor agencies such as the World Bank, IMF, ADB and more recently the European Investment Bank, following the government's fiscal discipline and successful peace initiatives.

He said that infrastructure development would be given priority this year, with projects such as the Colombo super highway, Katunayake airport expansion, Hambantota port development and several power generation projects expected to get off the ground.

When asked how the government proposed to increase productivity in the country, the minister said that due to strong public perceptions, the government was unable at this juncture, to cut down on the amount of holidays, due to the harsh criticism and protest it may receive from the public.

He said that such reform would take time and an overall change in the mentality of Sri Lankan's would be necessary if the country was to match the productivity levels of China, Malaysia and Indonesia.

The minister also said that the private sector had been given plenty of encouragement to spearhead the country's economic growth, and quashed private sector concerns that the government had denied the engine of growth, its fuel.Minister Gunawardena said that the government had provided institutions with tax reductions, several new investment opportunities, special legal provisions, reduced interest rates, reduced inflation, and halted government borrowing to help increase private sector resources.

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