Corruption a heavy burden on economy - COPE Chief

Uditha Kumarasinghe and Rajmi Manatunga

KOTTE: While striving to find a solution for the national problem, President Mahinda Rajapaksa is also burdened with averting the disastrous impact of public sector fraud and corruption on the national economy, Parliamentarian Wijedasa Rajapaksa said yesterday.

Presenting the report of the Parliamentary Committee on Public Enterprises (COPE) before the House, Rajapaksa said that fraud, corruption and wastage which is rife in many State-owned institutions in the country has had a heavy toll on the country's economy.

Twenty five public enterprises came under the scrutiny of the Committee headed by Rajapaksa and comprising representatives from all political parties represented in Parliament.

He said the Central Bank is yet to recover Rs 7,000 million from several private companies including the Mercantile Credit Ltd which owes Rs 5,781 million to the Bank.

"The Sri Lanka Telecom Regulatory Commission (SLTRC) has paid Rs 22 million to a Los Angeles company for formulating an institutional plan for the Commission. The agreement is contrary to law and it was discovered that the plan has been drawn up for a foreign institution," he said.

He also revealed that the Commission has granted privileges to its employees in contravention of financial regulations. It has been found that the Commission spent Rs seven million, 9.1 million, 10.5 million on paying salaries to its staff in 2000, 2001 and 2002 respectively.

During its deliberations, the Committee has also found that the Board of Investments (BOI) has functioned so far without an institutional plan.

"Even as it owns a building in Colombo Fort, the BOI is quartered at the World Trade Centre (WTC) for which a monthly rent of Rs nine million is paid. Companies approved by the BOI have imported large amounts of food to the country at a cost of US $ 500 million".

Rajapaksa continued:

"Most wheat consignments imported to Sri Lanka by companies registered under the Board of Investments are not suitable for human consumption. A large number of them are spoiled animal food sent from other countries.

On the other hand, the Airport and Aviation Services Ltd. has invested Rs. seven million on a property in which it has no proprietary rights. There is no auditing in this company. But the Chairman has promised that these matters will be looked into.

In the Water Supply and Drainage Board, a two year IT project commenced in 2000 is yet to be completed, despite spending Rs. 460 billion on it.

Nearly 44 per cent of the water supplied to the country is wasted and non-revenue. Steps should be taken to minimise this wastage which cost, the Government Rs. 1,700 million every year. Seventeen water supply projects are on hold owing to the lack of motors.

There have been large-scale financial malpractices in the Board's Trincomalee and Kiribathgoda branches. The National Lotteries Board (NLB) has no action plan for its activities. It continues to pay a Rs. 7.2 million monthly rent for its office, even as it has purchased a building at a cost of Rs. 421 million.

The State Engineering Corporation is yet to recover Rs. 47.3 million from various entities for the work it has performed.

The unrecovered loans given by the People's Bank run into Rs. 13 billion, obtained mostly by well-known business entities in this country. This is alarming since it discriminates against the 90 per cent of ordinary people who have invested in the bank.

An IT project commenced by the Ports Authority paying Rs. 234 million has been cancelled. In terms of the agreement entered into this effect the authority cannot recover the payment made to the IT company.

The committee also discovered that the Chairman appointed to the Policy Studies Institute is a person ruled mentally unfit by a court. I was the consel appeared for the person in question in that case.

The agreement signed by the Public Enterprise Reform Commission to privatise the Sri Lanka Insurance Corporation is totally illegal.

In conclusion I would like to move a resolution permitting the mass media to cover the proceedings of COPE because public should be made aware of as to how public finance is managed.