The Government Accountability Project (GAP), a non profit public interest group based in Washington D.C. in the US, has published a report on inaction on corruption in Sri Lanka, targeting the Institute of Chartered Accountants of Sri Lanka (ICASL) on its failure to investigate the conduct of accounting firm Ernst & Young in the Sri Lanka Insurance Corporation (SLIC) transaction.
GAP, a 30 year old group that promotes government and corporate accountability and is the top whistle blower protection organization in the US, posted the report on its website which states that the failure of ICASL to investigate Ernst and Young represents a serious breach of professional duty and fiduciary responsibility by the society for auditors and accountants in Sri Lanka.
The report says that in the SLIC judgment, the Supreme Court of Sri Lanka ordered that Ernst & Young be removed immediately as the auditors of SLIC and subsequently ordered the Auditor General to carry out an audit for the entire period during which SLIC was under privatized management.
On March 4, 2010, the report notes that a letter was sent to the ICASL once on protesting the Institute’s lack of action regarding its apparently corrupt members. Among other things, the letter was sent in protest of the induction of PricewaterhouseCoopers (PWC) partner Sujeewa Mudalige as President of ICASL on March 8, 2010 as being outrageous. The report states that Mr. Mudalige played a pivotal role in the fraudulent SLIC privatization. Further, the guest of honour at the induction was Treasury Secretary P.B. Jayasundera whose actions throughout the SLIC privatization process were characterized by the Supreme Court of Sri Lanka as shocking to the conscience.
The GAP report further states that the ICASL, being a quasi-statutory body, has a legal obligation to pursue allegations of misconduct and fraud. As far back as August 2005, the ICASL received a complaint about the misconduct of Ernst & Young and PWC in the SLIC privatization. In July 2007, a ten-member Ethics Committee of the ICASL, decided that prima facie cases of professional misconduct by both Ernst & Young and PWC did exist.
The report also states that when the Ethics Committee reports a prima facie case of misconduct against a member of the Institute, the Council of the ICASL is required to appoint a Disciplinary Committee for the purpose of conducting an inquiry. However,the Committee was not appointed until 2008 and it inquired into the misconduct of PWC but not Ernst & Young. |
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