SLIC/PERC probe report due in January

The final report from the subcommittee of the Committee on Public Enterprises (COPE) on the Sri Lanka Insurance Corporation (SLIC) privatisation investigation which was to be issued this week on December 5 will now be released sometime in mid-January, sources close to the committee, said.

They said the members of the subcommittee were unhappy with the quality of the report which was to the submitted to Parliament and as a result, have decided to issue a more professionalized statement.

Ernst & Young, the auditing firm which was directed by the subcommittee to provide the working capital of SLIC has once again failed to do so, giving dubious and unconvincing excuses, the sources said. They have been granted additional time. Sources say that the purpose of the subcommittee which has undeterred powers is not to malign and smear individuals but to go after the loss of revenue by intentional fraudulent activities. It is imperative that the issue be looked at from a balanced point of view, they said. The conduct of the accounting firms, Ernst & Young and PricewaterhouseCoopers (PwC), consultants to the government during the SLIC privatization and other individuals questioned during this inquiry was unexpected of professional organizations, the sources said. Members of the subcommittee have been frustrated at the lack of cooperation as well as the lack of candour and forthrightness. Errors have been uncovered on both sides of the parties involved including the buyer and the seller.

Ernst & Young is required, as per International Auditing Standards (IAS), to disclose 'current assets' and 'non-current assets' and 'current liabilities' and non-current liabilities' pertaining to the accounts of SLIC. IAS 1 which is the 'Presentation of Financial Statements' states "IAS 1 specifies the minimum line item disclosures on the face of, or in the notes to, the balance sheet, the income statement, and the statement in changed in equity. Current and non-current assets and current and non-current liabilities are presented as separate classifications on the face of the balance sheet." “Ernst & Young, as an international auditing firm, must have been aware of these standards. If they were, then they intentionally withheld pertinent information on SLIC accounts,” one source said.

The sources also told the Sunday Times FT that the auditors who were called before the subcommittee for questioning were stunned that the subcommittee showed such tremendous knowledge and grasp of the complex issues surrounding this case and knew how to get to the point of the matter. Most who appear in Parliament for such questioning do not take it very seriously, assuming that the issues will not be delved into such detail. This was not true of the COPE subcommittee, the sources said. (NG)