ICASL Ethics Committee probes Talwatte, PwC

The Ethics Committee of the Institute of Chartered Accountants of Sri Lanka (ICASL) is expected to wrap up its probe into the role of high profile accountant Asita Talwatte and PricewaterhouseCooper (PwC) in the Sri Lanka Insurance Corporation (SLIC) divestiture and issue its report in a month’s time, officials said.

According to Lakshman Perera, Secretary of the ICASL, the investigation was triggered by a member of the public, Amrit Muttukumaru, sending a scathing letter dated 8 August 2005 addressed to Ajith Ratnayake, Director General of the Sri Lanka Accounting & Auditing Standards Monitoring Board and Indrajith Fernando, President of the ICASL.

In the letter, Muttukumaru said there is a serious "open and shut" documented case of outrageous professional misconduct and unethical practice by PricewaterhouseCooper (PWC) Sri Lanka's Senior Partner, Deva Rodrigo and Partner, Aneela de Soysa, as well as Ernst & Young, Sri Lanka. "The conduct of particularly Deva Rodrigo with reference to his blatant conflict of interest and the impunity surrounding it is to say the least shocking. Apart from being the Senior Partner of PWC in Sri Lanka, he is also a member of the Monetary Board of Sri Lanka and Chairman of the country's largest and most influential business chamber, the Ceylon Chamber of Commerce," Muttukumaru wrote.

Rodrigo was a member of the Steering Committee, given the responsibility of appointing the financial and legal advisor to the Sri Lankan government on the privatisation of SLIC. The Committee went on to appoint the lucrative project to PWC which had a fee of just under US$ 2 million. Rodrigo has said he declared his interest to the Steering Committee and was not directly involved in the appointment of PWC but Muttukumaru's letter stresses that he should have tendered his resignation immediately.

He says that Ms. Aneela de Soysa, who spearheaded the questionable SLIC privatisation at the Public Enterprises Reform Commission (PERC) was appointed as Partner with PWC in Sri Lanka, the “timing of this is further damning." De Soysa was serving as Secretary of the Steering Committee while still being employed at PERC.

Asked to comment, De Soysa said she had a 'chat' with the ethics subcommittee some months back but there hasn't been any recent contact.

"I would think that those institutions (ICASL and SLAAMB) being professional bodies would not like this matter being discussed in the newspapers. I can deny any charges of negligence on my part. Newspaper reports are generally misleading. It's a very complex privatization."

ICASL’s Perera, asked why the probe was taking over a year, said the process is fairly long. "We had to write to the people concerned to get the documentation to start the investigation. Some of the documents had to be obtained from abroad." In addition, the ICASL had to interview witnesses and record their statements. "Now the process is more or less in the final stages because this investigation is to find out whether there is a prima facie case," he said

He said if the subcommittee determines that there is a prima facie case, the findings will be reported to the council who will then be responsible for appointing a disciplinary committee to further delve into the inquiry. "However, this is still in the investigation phase," Perera reiterated, adding that the investigation report is not out yet. Asitha Talwatte, Senior Partner at Ernst & Young, accountants for SLIC and one of the individuals under investigation, is also a member of the council and a former ICASL President.

As reported by the Sunday Times last week, the COPE subcommittee which was constituted to investigate the divestiture of SLIC says it was unsatisfied with the responses given by representatives from Ernst & Young, PWC and PERC during questioning. Treasury Secretary PB Jayasundera even failed to show up at the meeting. Ravi Karunanayake, member of the subcommittee told The Sunday Times FT that the next meeting, planned with the Auditor General has been rescheduled from 27 October to 6 November as the parties involved requested more time.