COPE First Report - 7th Parliament, 1st Session by Liberal Party Sri Lanka

Parliamentary Series No. 119 Of The Seventh Parliament of The Democratic Socialist Republic of Sri Lanka (First Session)

First Report

From The Committee on Public Enterprises

Presented by Hon.DEW. Gunasekara Chairman of the Committee On 01st of December, 2011

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Composition of the Committee on Public Enterprises First Session of the Seventh Parliament 1. Hon. DEW Gunasekara (Chairman) 2. Hon. (Mrs.) Pavithra Devi Wanniarachchi 3. Hon. A.D.Susil Premajayantha 4. Hon. (Dr.) Rajitha Senaratne 5. Hon. Chandrasiri Gajadeera 6. Hon. A.P.Jagath Pushpakumara 7. Hon. T.B.Ekanayake 8. Hon. Mahinda Amaraweera 9. Hon. S.M.Chandrasena 10. Hon. (Dr.) Mervyn Silva 11. Hon. Lasantha Alagiyawanna 12. Hon. Sarana Gunawardena 13. Hon. Weerakumara Dissanayake 14. Hon. Lakshman Kiriella 15. Hon. Karu Jayasuriya 16. Hon. Ravi Karunanayake 17. Hon. (Al Haj) A.H.M.Azwer 18. Hon. Sajith Premadasa 19. Hon. Sunil Handunnetti 20. Hon. Arjuna Ranatunga 21. Hon. M.T.Hasen Ali 22. Hon. A.Vinayagamoorthy 23. Hon. Dayasiri Jayasekara 24. Hon. (Ven.) Athuraliye Rathana Thero 25. Hon. Seeniththamby Yoheswaran 26. Hon. Namal Rajapaksa 27. Hon. Eran Wickramaratne 28. Hon. (Prof.) Rajiva Wijesinha 29. Hon. E.Saravanapavan 30. Hon. Sujeewa Senasinghe 31. Hon. (Mrs.) Rosy Senanayake

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Content Preface General Observations List of Appendixes â&#x2C6;&#x2014; Appendix-A : Institutions examined Main Committee Sub Committee I Sub Committee II Sub Committee III

1 4 16 17 17 20 21 23

Major Issues of the institutions â&#x2C6;&#x2014; Appendix-B : Issues identified by the Main Committee National Gem & Jewellery Authority

State Mortgage & Investment Bank

University Grants Commission

Ceylon Fisheries Corporation

Sri Lanka Rupavahini Corporation

Samurdhi Authority

University of Sri Jayawardenapura

University of Moratuwa

National Institute of Business Management

Coconut Cultivation Board

Agriculture & Agrarian Insurance Board

Open University of Sri Lanka

Buddhist & Pali University of Sri Lanka

Hector Kobbekaduwa Agrarian Research

& Training Institute Ceylon Shipping Corporation

Cey- Nor Foundation

Lanka Sathosa Ltd.

Sri Lanka Telecom

Sri Lankan Airlines Sir John Kotalawela Defence University

35 36

Sri Lanka Savings Bank

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Mihin Lanka Ltd.

Hingurana Sugar Industries

Sri Lanka Rubber Manufacturing Export Corporation

Rajarata, University of Sri Lanka

Paddy Marketing Board

Independence Television Network & Lakhanda Radio

Janatha Estates Development Board

Kahatagaha Graphite Lanka Ltd.

National Paper Company Ltd.

B.C.C.Lanka Ltd.

Lanka Salu Sala Ltd.

Sri Lanka Broadcasting Corporation

National Science & Technology Commission

Chillaw Plantations Ltd.

Coconut Research Board

Uva Wellassa University

Kalubovitiyana Tea Factory Ltd.

University of Jaffna

National Institute of Library & Information Science

Post Graduate Institute of Agriculture

Kantale Sugar Industries Ltd.

Atomic Energy Authority

South Eastern University of Sri Lanka

Distance Learning Centre Ltd.

Institute of Biochemistry Molecular Biology & Biotechnology

Eastern University of Sri Lanka

Institute of Human Resource Advancement

National Institute of Technical Education

Post Graduate Institute of Science

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

National Centre for Advanced Studies in Humanities and Social Sciences

Sri Lanka Cricket

Buddhasrawaka Bhikshu University

Sri Lanka Foundation

Institute of Fundamental Studies

Bank of Ceylon

National Institute of Education

Peopleâ&#x20AC;&#x2122;s Bank

Sri Lanka Bureau of Foreign Employment

Ceylon Petroleum Corporation

State Timber Corporation

National Water Supply & Drainage Board

Ceylon Electricity Board

National Transport Commission

Water Resources Board

University of Peradeniya

SL Transport Board

Geological Survey & Mines Bureau

SL Ports Authority

Development Lotteries Board

Lanka Mineral Sands Ltd

National Building Research Organization

Airport & Aviation Services Ltd.

Mahaweli Authority

SL State Plantations Corporations

National Lotteries Board

University of Ruhuna

University of Kelaniya

Sri Lanka Institute of Development Administration

Land Reform Commission

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

SL Land Reclamation Development Corporation

Lanka Logistics Ltd

Urban Development Authority

Southern Development Authority

Samurdhi Authority

Wayamba University

Post Graduate Institute of Pali & Buddhist

National Savings Bank

Lankaputhra Development Bank

University of Sabaragamuwa

RDA & Maganeguma Companies

Telecommunication Regulatory Commission

â&#x2C6;&#x2014; Appendix C: Issues identified by the Sub Committee I Institute of Policy Studies

Local Loans & Development Fund

Superior Court Complex Management Board

SL Export Development Board

SL Convention Bureau

Securities & Exchange Commission

Tower Hall Theater Foundation

SL Institute of Local Governance

SL Accounting & Auditing Standards Monitoring Board

100

Udarata Development Authority

100

SL Tourism Promotion Bureau

102

Industrial Development Board

103

Insurance Board of SL

104

Rubber Research Board

105

National Enterprise Development Authority

105

Resettlement Authority

106

Rehabilitation of Persons, Properties & Industries Authority

106

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Condominium Management Authority

107

National Dangerous Drugs Control Board

107

Ranaviru Seva Authority

108

SL Inventorâ&#x20AC;&#x2122;s Commission

108

Janatha fertilizer Enterprise ltd

108

SL Cement Corporation

109

Lakdiva Engineering Co. Pvt ltd

110

Lanka Phosphate ltd

111

Milk Industries of Lanka Ltd (MILCO)

111

HDFC Bank

112

Elkaduwa Plantations Ltd

112

Central Engineering Consultancy Bureau (CECB)

113

Kurunegala Plantations Ltd.

113

SL Export Credit Insurance Corporation

114

SL Social Security Board

114

Swami Vipulananda Inst. of Aesthetics Studies

115

Consumer Affairs Authority

116

National Apprt.& Indt. Traing Authority(NAITA)

119

State Engineering Corporation of SL (SEC)

120

Board of Investment (BOI)

121

Central environmental Authority

124

â&#x2C6;&#x2014; Appendix D: Issues identified by the Sub Committee II Botanical Garden Trust Fund

125

Sri Lanka Institute of Printing

125

Institute of Post Harvest Technology

126

Land Survey Council

127

National Aquatic Res. Research & Deve. Authority

128

State Printing Corporation

128

Colombo Commercial Fertilizer Company

129

Sugarcane Research Institute

131

Tertiary & Vocational Education Commission

131

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

National Engineering Research & Devep. Centre

132

Sugathadasa National Sports Complex Authority

132

Hadabima Authority of SL

133

SL Institute of Textile & Apparel

134

SL Council for Agriculture Research Policy

134

Official Languages Commission

135

Arther C. Clark Inst. for Modern Technology

136

National Disaster Management Centre

137

National Council for Elders

137

Sri Lanka Press Council

138

National Human Resources Development Council

139

Textile Quota Board

140

SL Freedom for Hunger Campaign Board

141

Mantai Salt ltd

141

Lanka Fabrics ltd

142

National Secretariat for Persons with Disabilities

143

National Inst. of Social Development

144

Industrial Technology Institute

144

SL Inst. of Tourism & Hotel Management

145

SL Tourism Development Authority

145

Paranthan Chemicals ltd

146

SL Accreditation Board for Conformity Assessment

147

SL Cashew Corporation

148

West Coast Pvt. Ltd

149

NHDA/NEMO

149

State Development & Construction Corporation

151

Public Utility Commission

153

NLDB

154

Institute of Technology

155

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â&#x2C6;&#x2014; Appendix E: Issues identified by the Sub Committee III Institute of Indigenous Medicine, Affiliated to the

University of Colombo

Sri Lanaka Ayurvedic Drugs Corporation

156 156

Sri Lanka Institute of Advanced Technological Education

156

National Transport Medical Institute

157

Postgraduate Institute of Archeology

157

Homeopathic Medical Council

157

Postgraduate Institute of Medicine

158

National Science Foundation

158

Provident Fund for Buddhist & Pali University

159

Post Graduate Institute of English

159

University of Colombo School of Computing

159

University of Colombo

159

Universities Pension Fund & Provident Fund

159

National Youth Services Council

160

State Pharmaceuticals Manufacturing Corporation

160

J. R. Jayawardena Centre

160

Mahapola Higher Education Scholarship Trust Fund

161

University of Visual & Performing Arts

161

National Institute of Cooperative Development

161

National Institute of Language Education & Training

161

Gem & Jewellery Research & Training Institute

162

Central Cultural Fund

162

Institute of Construction Training & Development

162

Thurusaviya Fund

162

National Institute of Plantation Management

163

Tea Research Institute of Sri Lanka

163

Skills Development Fund

163

Lady Lochore Loan Fund

163

Information & Communication Tech. Agency of SL

164

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Sri Lanka Handicrafts Board

164

Ceylon Ceramics Corporation

164

National Insurance Trust Fund

165

National Crafts Council

165

Selacine Television Institute

165

Northsea Ltd

166

Rakna Arakshana Lanka Ltd

166

National Design Centre

166

Tea Small Holdings Development Authority

167

National Book Development Board

167

Civil Aviation Authority

168

Tea Shakthi Fund

168

Sustainable Energy Authority

169

Ceylon Fertilizer Company Ltd.

169

Sri Jayawardenapura General Hospital

170

National Film Corporation

170

Ceylon Fishery Harbors Corporation

171

National Institute of Fisheries & Nautical Engineering

171

Sri Lanka Standards Institute

172

Marine Environment Protection Authority

172

National Child Protection Authority

173

National Aquaculture Development Authority

173

Co-operative Wholesale Establishment

174

STC General Trading Co. Ltd

174

State Trading (COOP)Wholesale Establishment Co. Ltd.

174

Employees Trust Fund Board

175

State Pharmaceuticals Corporation

175

Palmyra Development Board

175

National Library & Documentation Services Board

176

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

PREFACE The Committee on Public Enterprises (COPE) for the First Session of the Seventh Parliament presents its report to Parliament in terms of the Standing Order 126. The Committee having had its first meeting on the 8th June, 2010, decided to appoint three Sub-Committees on the basis of the sectors of Finance, Agriculture & Media and

Education & Health, in order to expedite the process of examining Public

Enterprises. It was agreed that the Main Committee would examine large scale Public Enterprises, whereas those small scaled Enterprises would come under the purview of sub-committees and their findings would be reported to the Main Committee. The Committee commenced examining the institutions on 4th August, 2010, and held its final sittings on November 18th, 2011 for the 2010/2011 period. Since the formation, the Committee examined 229 public enterprises as stipulated in the table below. Committee

Chairman

No of Examinations

Main Committee

Hon.DEW Gunasekara

Sub Committee I

Hon. A.D.Susil Premajayantha

Sub Committee II

Hon.Karu Jayasuriya

Sub Committee III

Hon.Lasantha Alagiyawanne

The Committee wishes to report to the Hon. Speaker and Parliament that it successfully completed its assignment of work for the ensuing period within a period of 16 months, an unprecedented record in the history of the Legislature. It is the considered view of the Committee that the Report to be presented to Parliament should receive urgent attention by all Chief Accounting Officers. Its contents should be carefully noted by the Chief Accounting Officers who are required to ensure that necessary action is pursued by the institutions under them. Senior public officers are more vulnerable in the area of procument of supplies, tender procedures and resulting in tender relevant awards and the execution of works thereof. It will not be out of place to quote from the forward as embodied in the Code of the Financial Regulations under the hand of the then Secretary to the Treasury, Mr.H.Jinadasa Samarkkody, in January, 1966 when he wrote; 1

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

â&#x20AC;&#x153; The Minister of Finance has, therefore, ordered that in respect of matters above mentioned, the Heads of State institutions may, in appropriate circumstances, deviate from the procedures laid down if he is satisfied that such action is necessary in the public interest.â&#x20AC;? Let us harken to our conscience whether we sincerely and in good faith do so in such manner as not to compromise public interest for personal benefits. It is also the view of the Committee that the Administration / Management should give

careful

consideration

the

general

observations,

comments

and

recommendations made by the COPE. The specific recommendations in respect of each one of those institutions should be discussed by the Board of Directors. Audit is an integral part of the concept of transparency and accountability be it to the share-holders, management, administrations or the legislature. Audit acts as an aid to management and administration which are complimentary and not adversial. This crucial aspect needs wider appreciation by all the stake holders. This is a perceptible global trend to increase the mandate of the government audit with a view to making the parliamentary control over the state finance more effective. We are moving more and more from the usual regularity and transactions audit- to the economy, efficiency, and effectiveness audit in view of the expanding plans and programmes in the context of our socio- economic objectives. It needs to be understood that what people expect from us is value for money which means nothing but economy, efficiency, and effectiveness. Therefore, it has become necessary to enhance the professional capacity of Audit so as to assure the people of the social relevance and worthwhileness of Audit. The Committee offers its thanks and appreciation to the Auditor General and his staff and also the officials of the General Treasury (Department of National Budget and Department of Public Enterprises) for their unstinted co-operation during the course of our examinations. We believe that the Committee has been able to strengthen the cause of public accountability to which Audit is committed and dedicated. 2

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Last but not least, the Committee expresses its deep appreciation of the hard work done by the staff of COPE and of their relentless efforts to complete the assignment before the deadline. It is hoped that this report will generate interest and vigilance amongst the general public to create awareness and alert amongst the public officers and stimulate the Audit on the concept of transparency and accountability.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

General Observations & Recommendations The following observations, which were generalized by considering the findings of the examinations conducted by the main committee and the three sub committees, were seemed to be common for the most of the Public Enterprises scrutinized and many of the institutions had failed to correct them even though some of the observations were stipulated in the previous COPE report as well.

These observations are based on the position prevailed at the time of examination.

(1) Corporate Plans & Action Plans It was apparent that many of the institutions had not given due attention on the Corporate Plan and the Action Plan. The Institutions such as, Lanka Sathosa, Ceylon Shipping

Corporation,

Buddhist

Pali

University,

University

Sri

Jayawardenapura, National Aquatic Resources Research & Development Agency, State Printing Corporation, Tea Research Institute and the National Dangerous Drugs Control Board had not updated their Corporate Plans in accordance with the Public Enterprises Circular as at the date of examination. A considerable number of institutions had failed to achieve the targets in the Corporate Plan and some institutions had prepared Corporate Plans merely for the submission. Recommendation It is essential for a public enterprise to prepare and update its Corporate Plan annually and to strictly adhere to the Treasury Circulars when the plan is prepared. The line Ministry may help the institutions to prepare the Corporate Plan and the Action Plan and should monitor whether the targets stipulated in the Corporate Plan are achieved. A committee may be appointed to review the performance of the Corporate plan at least quarterly.

(2) Procurement Plan It is the view of the Committee that not preparing the procurement plan in advance has led to many issues such as purchasing unnecessary goods and goods in inferior quality, making payments before the receipt of the goods etc. Therefore, it is recommended to prepare the procurement plan soon after the allocations are made by the budget. 4

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(3) Audit & Management Committees It was observed that the Audit & Management Committee of many institutions had not been functioning as expected and more over, several Enterprises did not have a Committee appointed. The above Committee of the National Institute of Business Management had met only once for the year 2010, and that of the Hector Kobbekaduwa Agrarian Research & Training Institute, University of Sri Jayawardenapura, Sri Lanka Press Council, Homeopathic Medical Council and the Lanka Phosphate Co. Ltd had met only twice for the year 2010 as at the date of examination.

Recommendation The Committee should meet at least once in every three months. Further, the report of the Audit & Management Committee must be tabled at the board meeting for the attention of the chairman and the board of directors. The treasury representative of the board, who is supposed to be the chairman of the Committee, needs to perform his duty very efficiently with a view to upgrading the state of the institution. It is the view of the Committee that the quality of the members of the Audit and Management Committee needs enhancement. The Auditor Generalâ&#x20AC;&#x2122;s Department and the Treasury should collectively give consideration to this need.

(4) Tabling of Annual Reports Almost all the institutions summoned had not tabled the Annual Reports in time. The Agricultural & Agrarian Insurance Board, Sri Lanka Institute of Printing and the SL Institute of Local Governance had presented no annual report to the Parliament after 2005 as at the date of examination. For most of the other institutions, there were two to three outstanding reports to be tabled before the parliament. Several Organizations of which the government has only a proportion of total shares, such as Sri Lankan Air lines, Mihin Lanka had not tabled the annual reports before the Parliament at all.

Recommendation The legal provisions with regard to the tabling of annual reports lies in the section 14 of the Finance act No. 38 of 1971. Accordingly, it is imperative that any organization 5

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

with government owned shares must prepare and table the annual reports in Parliament as a means of showing public accountability. They must be tabled by 31st of May or if it is not submitted before the stipulated date, the chairman and the board of directors should be held responsible and the secretary of the ministry, as the chief accounting officer, should take the final responsibility with regard to the timely presentation of annual reports. We recommend that the chairmen who do not submit annual reports in time should not be re-appointed as heads of institutions. (5) Unsatisfactory Recovery of Debts and Receivables Recovery of debts and receivables had been a serious issue for many of the institutions. These receivables can be categorized as follows; (1) Amounts to be recovered from the retired officers, (2) Amounts to be recovered from the officers, who had been transferred, (3) Amounts to be recovered due to breach of agreements, (4) Amounts due from other government Institutions for services provided. (5) Amounts to be recovered from external parties for services provided.

5.1 Amounts to be recovered from the Retired Officers It was crystal clear that action could have been taken to collect the particular dues at the time of retirement through the pension or from any fund payable to the employee by the Government. Since the officers who were involved with the clearance process had not performed their duties properly and consequently, the Government had lost a good sum of money.

5.2 Amounts to be recovered from the officers who had been Transferred The Committee observed several instances where the recovery of dues had been neglected with regard to the officers those who had been transferred to other Government institutions. Since these officers are still in the Government Service, recovering possibility of the debts still exists. The documents relating to these debts should have been sent to the present working places for further action. It is the responsibility of the present management of such institutions to expedite the recovery process.

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5.3 Amounts due to Breach of Agreements Many Institutions relating to the higher education had confronted with this problem as the officers, those who went abroad on study leave had not reported back to work even after completing studies. The following table shows the debts recoverable, to the nearest million, in several institutions due to breach of agreements, as at the date of examination. Institute

Amount/Million

University of Sri Jayawardenapura

University of Moratuwa

National Institute of Business Management

0.3

Open University

Hector Kobbekaduwa Agrarian Research & Training Institute

University of Peradeniya

105

5.4 Amounts due from other Government Institutions There were loans to be recovered from other Government Institutes which are outstanding for several years. Mihin Lanka owed Rs. 10,000,000 to SL Rupavahini Corporation which had not been paid to date. The amounts payable to Sri Lanka Ports Authority by the Ceylon Shipping Corporation is Rs. 50 million and had been displaying in final accounts for years without being settled. The Mihin Lanka had not paid interest for a loan of Rs. 500 million obtained from Air Port and Aviation Services (Pvt.) Ltd. The debts owed by the Sri Lanka Rubber Manufacturing & Export Corporation to the Peopleâ&#x20AC;&#x2122;s Bank and the General Treasury are Rs. 115 million and Rs. 1385 million respectively.

5.5 Amounts to be Recovered from External Parties For not taking action in the proper time and weaknesses caused in follow up actions, many external debtors had defaulted payments. It was observed that, in the State Mortgage and Investment Bank, number of loans had been defaulted after paying only one or two installments. Sri Lanka Rupavahini Corporation had not taken action to recover Rs. 42,649,586 receivable from various political parties for the use of air time. 7

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Recommendation Strong attention should be focused on the clearance process before the retirements or transfers of officers. There must be a proper co-ordination with the Department of Labour and Department of Pensions to take necessary action to deduct these dues from the pension or any other fund to which the relevant employee is entitled. If there is no way of deducting the dues from the particular officer, action should be taken to recover it from guarantors. The Universities Act should be amended and conditions should be tightened to prevent the breach of agreements by the officers going abroad on study leave. Legal action should be taken against the external defaulters and if there is no way of recovering the debts, their names should be blacklisted. The Treasury may formulate a strategy for a loan scheme applicable to the entire public service so that the burden on the particular institute in which the employee is working, is released.

(6) Legal Issues The Committee identified several cases where the public money had been wasted due to legal issues. Spending money on constructions without getting the ownership of lands verified, pending cases in courts which stands for several years making payments to lawyers are the two dominant facts encountered. Open University of Sri Lanka had spent Rs.18, 716,902 for the construction work of three regional centers on lands whose ownership had been challenged. Due to a dispute arisen in the Buddhist & Pali University in relation to an employee problem, Rs. 2 million had been spent so far as payments for Lawyers but the case is still pending before the court.

Recommendation It is recommended to get the dispute resolved through the Labour Tribunals and the Attorney General should be consulted in the nick of time.

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(7) Financial Stability of Institutions The Committee would categorize all the institutions summoned under the following categories. 1. Institutions with a stable financial position. 2. Institutions running at a break even. 3. Institutions with decreasing revenue. 4. Institutions running at a loss.

In this report, more emphasis would be placed on the latter two as they are the entities which seek immediate attention of the authorities. 7.1 Institutions with decreasing revenue National Gem & Jewellery Authority, State Mortgage & Investment Bank, Sri Lanka Rupavahini Corporation, Sri Lanka Telecom were several institutes which had recorded a significant decrease in profits over the years. The most alarming fact is that the decrease of revenue of institutes like State Mortgage & Investment Bank, Sri Lanka Rupavahini Corporation and Sri Lanka Telecom is around 90% by the year 2009.

7.2 Institutions running at a loss/deficit Out of the institutions examined by the Committee, the following institutions were found • • • • • • • • •

loss

making/deficit

Tea Small Holdings Development Authority Tea Shakthi Fund National Youth Services Council Thurusaviya Fund National Child Protection Authority Janatha Estate Development Board Ceylon Ceramic Corporation Sri Lanka Inventors Commission Sri Lanka State Plantation Corporation

entities • • • • • • • • • • •

for

the

financial

year

2010.

Urban Development Authority Mihin Air ltd Ceylon Petroleum Corporation Atomic Energy Authority Sri Lanka Mahaweli Authority National Dangerous Drugs Control Board Sugathadasa National Sports Complex Authority Sri Lanka Press Council National Gem & Jewellery Authority Marine Environment Protection Authority Sri Lankan Air Lines 9

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

• • • • • • • • •

Co-operative Wholesale Establishment Paddy Marketing Board State Trading (wholesale) Company Ltd Social Security Board Sri Lanka Ports Authority National Disaster Management Centre Road Development Authority Sri Lanka Transport Board National Aquaculture Development Authority

• • • • • • • •

Ceylon Fishery Harbors Corporation National Enterprise Development Authority Industrial Development Board Samurdhi Authority of Sri Lanka Sri Lanka Cashew Corporation National Water Supply & Drainage Board Ceylon Fisheries Corporation National Housing & Development Authority

(Source-Auditor General’s Department)

Recommendation Excessive staff, increasing expenditure, poor management, dearth of capital etc. had been the prominent factors for this situation and introducing retirement programmes to reduce the excessive staff and a radical restructuring is recommended.

(8) Unfilled Vacancies Some of the institutions had not taken action to fill the approved carder of the institute whereas in some institutes, an excessive staff was observed under some designations. The following table illustrates the position of carder of some selected institutes at the time of examinations.

Institute

Approved Cadre

No of Vacancies

Sir John Kotalawala Defence University

236

National Gem & Jewellery Authority

272

Hector Kobbekaduwa Agrarian Research & Training Institute Coconut Cultivation Board

210

802

195

27,684

3162

Samurdhi Authority(2009)

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Sri Lanka Rupavahini Corporation had 439 vacancies under 191 designations and excess of 183 officers under 72 designations. Recommendation It is recommended to the Treasury to revise the carder of these institutions. (9) Replies to Audit Queries Majority of the institutes examined had neglected providing replies to audit queries and it was the opinion of the Committee that many issues could have been tackled upon a dialogue with the Auditor-General without bringing them before the Committee. Recommendation Internal Auditor of the Ministry should focus attention on this issue, and examine whether replies are sent properly and on time. The CAO must be held responsible for the replying to audit queries on a timely basis. The Auditor General should bring any lapse in not replying to audit queries in time, to the attention of the Chairman of the board and the Secretary to the Ministry. The Auditor General should also be notified on the action taken on the issues.

10. Amendment to the Standing Order 126 The Committee identified several instances where some enterprises such as West Coast (Pvt) Ltd., Maganeguma Companies, and subsidiaries of CEB were of the opinion that they do not come under the purview of the COPE as they are private limited Companies incorporated under the Companies Act and also due to the fact that they are not audited by the Auditor General and further, some institutions had sought the opinion of the Attorney General as well. The standing order 126 (2) states â&#x20AC;&#x153; It shall be the duty of the Committee to examine the accounts of the public corporations and of any business or other undertaking vested under any written law in the government laid before parliament , along with the reports of the Auditor General thereon.â&#x20AC;? Being based on that, the Attorney General, when his opinion had been sought by the LECO Company ltd. has stated in his letter dated 07.05.2009, that the duties of the COPE are confined to examine the accounts of the public corporations and any 11

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

business or other undertaking vested under any written law in the Government. He has further stated that

“ a public corporation in terms of Article 170 of the

constitution is defined to mean “ Any Corporation, board or other body which was or is established by or under any written law other than the companies ordinance, with funds or capital , wholly or partly provided by the government by way of grant loan or otherwise.” As such, the Committee recommends amending the standing orders empowering the Parliament to summon above sort of companies irrespective of the fact that whether it is audited or not audited by the Auditor General and instituted under companies law or otherwise. If a particular institute has its own subsidiaries or associates, their financial particulars must be disclosed in the parent Annual Report. 11. Mid Year Performance Report It is recommended to the treasury to prepare a mid year performance report with respect to each public enterprise and copies be sent to the chairman of the enterprise and also to the secretary to the relevant ministry. 12. Revising Outdated Procedures It is the view of the Committee that the efficiency of Public Enterprises had seriously been affected by outdated procedures, methods adopted continuously from several decades ago. For instance, much time is wasted in obtaining permission for carder and the institute had to run for several years with vacancies Further, it is recommended that the institutions should be permitted to hire employees on fixed contracts with no provision for extensions or permanency unless appropriate qualification for permanency is obtained. The institutions with adequate capacity and mandates of an extensive nature should be permitted to employ personnel in terms of needs, provided that these do not become an additional burden on public funds. Investments made with dedicated funding of many institutions, in particular in the Universities, are often questioned in audit queries due to the deviation from the formal procedure of obtaining Treasury approval for such institutions. Therefore, it is recommended that these procedures be revised and that the institutions with adequate capacity and mandate of an extensive nature be empowered to take their own decisions with internal procedures to ensure transparency and accountability.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

13. Duplications The Committee found several institutions that are redundant and much overlapped with regard to functions. It is recommended that the Government review the need for so many statutory institutions and combine those that work in similar areas while laying down distinct responsibilities and targets and close down those which are a drain on public funds. 14. Poor Supervision of the General Treasury The Department of Public Enterprises and the National Budget are the controlling arms of the public enterprises and various circulars and instructions are issued by these two departments for the sake of good governance and proper functioning of the institutes. An officer from the General Treasury is specially appointed to the board of directors of every public enterprise. But, the Committee observes that, although the instructions are issued by the Treasury, there is no proper supervision exercised by the Treasury, to see that these instructions and guidelines are adhered to by the public enterprises. Furthermore, it is recommended to pay special attention by the Treasury to see whether the Treasury representatives of the director boards are efficiently perform their duties in the boards. 15. Accountability The Committee has observed in the case of several institutions that the responsibility for various lapses is being passed on to the previous Management or Board of Directors. The Committee considers that it is necessary to seek amendments to the Standing Orders of the Parliament making it mandatory for the members of the previous Management to present themselves before the Committee, when they are summoned. 16. Unqualified Personnel In the case of certain institutions, the Committee observed that the Chairman and / or the Board of Directors are not qualified academically and professionally and many of them do not have enough experience in the particular field. The Ministries are requested to give their earnest considerations to this matter with all seriousness. The attention of the Committee on High Posts is drawn to this matter, when reappointments of officers are referred to the Committee. 13

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

17. PAYE Tax Payments There were a number of institutions where the PAYE tax is paid by those institutions on behalf of the employees, apparently on an understanding between the Treasury and the relevant Trade unions. Conceptually, the PAYE tax should be borne by the employee by virtue of the fact that he is a tax payer. This runs counter to the concept of Income tax from the point of view of distribution of income. This will in effect result in reduction of tax payable by the institutions since the profits are reduced by such payments. It is obviously unfair by PAYE taxpayers of other institutions. Longer this problem remains unsolved , more complications will arise in the future. 18. Private Auditors In the case of institutions whose accounts are audited by private auditors, the Chief Accounting Officer should ensure that copies of these Audit Reports are forwarded to the Auditor General at the earliest.

19. Under utilization of funds. Through the examinations of various public enterprises, it came into light that the provisions granted by the Treasury amidst many difficulties are not properly utilized by considerable number of institutions.

20. Abandonment of partly completed Projects & projects ended up with failure Another deplorable source that leads to wastage of public funds is the abandonment of partly completed projects on the way, after spending a large sum of money. For the Kohila Vagura Project of the Southern Development Authority, Rs.5,627,923 had been spent which has been suspended by now. In the examination of the Samurdhi Authority, the Committee identified number of projects of such nature. Some projects initiated by the Land reclamation and development Corporation had been ended up with a loss and some projects had been suspended by now.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Recommendation Many of such projects had been abandoned due to lack of Capital, legal issues, frauds committed by the officers involved with projects and also due to changes made in the initial design including modifications. It is recommended that a proper feasibility study must be carried out to foresee every aspect which affects the successful completion of the projects.

21. Amendments to the Acts The goals and the objectives of an institute should be changed with on going changes in the socio economic environment and the Committee observed that the activities of the institutions cannot be extended or carried out properly due to the restrictions lying in the relevant Acts under which they are incorporated. For instance, according to the act of Sri Lanka Land reclamation and Development Corporation, the provision available to stop illegal fillings of lands are limited. Therefore, it is recommended to amend the relevant Acts enabling the Public enterprises to function in a broader scope. 22. Granting Loans by Profit Making Institutions It has been observed that certain profit making enterprises are in the habit of granting loans to other institutions. The COPE was in view that this practice should not be encouraged.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Appendixes Appendix A: List of Public Enterprises examined by each Committee Appendix B: Major issues identified in the examinations with the directions of the Main Committee Appendix C: Major Issues & problems discussed & the directives of the Sub Committee I Appendix D: Major Issues & problems discussed & the directives of the Sub Committee II Appendix E: Major Issues & problems discussed & the directives of the Sub Committee III

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Appendix A

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Institutions Examined by the Main Committee

Date of Examination

National Gem & Jewellery Authority

4.08.2010

State Mortgage & Investment Bank

5.08.2010

University Grants Commission

17.08.2010

Ceylon Fisheries Corporation

18.08.2010

Sri Lanka Rupavahini Corporation

19.08.2010

Samurdhi Authority

20.08.2010

University of Sri Jayawardenapura

07.09.2010

University of Moratuwa

09.09.2010

National Institute of Business Management

23.09.2010

Coconut Cultivation Board

24.09.2010

Agriculture & Agrarian Insurance Board

06.10.2010

Open University of Sri Lanka

07.10.2010

Buddhist & Pali University of Sri Lanka

08.10.2010

Hector Kobbekaduwa Agrarian Research & Training

19.10.2010

Institute 15

Ceylon Shipping Corporation Ltd.

20.10.2010

Cey- Nor Foundation Ltd.

21.10.2010

Lanka Sathosa Ltd.

09.11.2010

Sri Lanka Telecom

30.11.2010

Sri Lankan Airlines

01.12.2010

Sir John Kotalawela Defence University

02.12.2010

Sri Lanka Savings Bank Ltd.

03.12.2010

Mihin Lanka Ltd.

07.12.2010

Hingurana Sugar Industries Ltd.

08.12.2010

Sri Lanka Rubber Manufacturing Export Corporation

09.12.2010

Rajarata, University of Sri Lanka

04.01.2011

Paddy Marketing Board

05.01.2011

Independence Television Network & Lakhanda Radia

20.01.2011

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Institutions Examined by the Main Committee

Date of Examination

Janatha Estates Development Board

08.02.2011

Kahatagaha Graphite Lanka Ltd.

10.02.2011

National Paper Corporation Ltd.

23.02.2011

B.C.C.Lanka Ltd.

24.02.2011

Lanka Salu Sala Ltd.

08.03.2011

Sri Lanka Broadcasting Corporation

09.03.2011

National Science & Technology Ltd.

08.03.2011

Chillaw Plantations Ltd.

23.03.2011

Coconut Research Board

05.04.2011

Uva Wellassa University

06.04.2011

Kalubovitiyana Tea Factory Ltd.

07.04.2011

University of Jaffna

03.05.2011

National Institute of Library & Information Science.

05.05.2011

Post Graduate Institute of Agriculture

06.05.2011

Kantale Sugar Industries Ltd.

25.05.2011

Atomic Energy Authority

26.05.2011

South Eastern University of Sri Lanka

07.07.2011

Distance Learning Centre Ltd.

08.06.2011

Institute of Biochemistry Molecular Biology and

10.06.2010

Biotechnology 47

Eastern University of Sri Lanka

21.06.2011

Institute of Human Resource Advancement

22.06.2011

National Institute of Technical Education

23.06.2011

Post Graduate Institute of Science

24.06.2011

National Centre for Advanced Studies in Humanities and

05.07.2011

Social Sciences 52

Sri Lanka Cricket

06 07.2011

Sri Lanka Foundation

07.07.2011

Buddhasrawaka Bhikshu University

08 07.2011

Institute of Fundamental Studies

19.07.2011

Bank of Ceylon

09.08.2011

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Institutions Examined by the Main Committee

Date of Examination

National Institute of Education

10.08.2011

Peopleâ&#x20AC;&#x2122;s Bank

11.08.2011

Sri Lanka Bureau of Foreign Employment

25.08.2011

Ceylon Petroleum Corporation

23.08.2011

State Timber Corporation

24.08.2011

National Water Supply & Drainage Board

26.08.2011

Ceylon Electricity Board

National Transport Commission

07.09.2011 17.10.2011 09.09.2011

Water Resources Board

20.09.2011

University of Peradeniya

21.09.2011

SL l Transport Board

22.09.2011

Geological Survey & Mines Bureau

23.09.2011

SL Ports Authority

06.10.2011

Development Lotteries Board

12.10.2011

Lanka Mineral Sands Ltd

12.10.2011

National Building Research Organization

13.10.2011

Air port & Aviation Services Ltd

14.10.2011

Mahaweli Authority

18.10.2011

SL State Plantations Corporations

19.10.2011

National Lotteries Board

19.10.2011

University of Ruhuna

20.10.2011

University of Kelaniya

20.10.2011

Sri Lanka Institute of Development Administration

21.10.2011

Land Reform Commission

21.10.2011

SL Land Reclamation Development Corporation

24.10.2011

Lanka Logistics Ltd

24.10.2011

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Institutions Examined by the Main Committee

Date of Examination

Urban Development Authority

24.10.2011

Southern Development Authority

25.10.2011

Samurdhi Authority

25.10.2011

Wayamba University

28.10.2011

Post Graduate Institute of Pali & Buddhist

28.10.2011

National Savings Bank

31.10.2011

Lankaputhra Development Bank

31.10.2011

University of Sabaragamuwa

31.10.2011

RDA & Maganeguma Companies

14.11.2011

Telecommunication Regulatory Commission

15.11.2011

Institutions Examined by the Sub Committee I

Institute of Policy Studies

13.09.2010

Local Loans & Development Fund

14.09.2010

Superior Court Complex Management Board

16.09.2010

SL Export Development Board

16.09.2010

SL Convention Bureau

16.09.2010

Securities & Exchange Commission

17.09.2010

Tower Hall Theater Foundation

17.09.2010

SL Institute of Local Governance

17.09.2010

Accounting & Auditing Standards Monitoring Board

21.09.2010

Udarata Development Authority

08.12.2010

SL Tourism Promotion Bureau

08.12.2010

Insurance Board of SL

09.12.2010

Industrial Development Board

09.12.2010

National Enterprise Development Authority

28.06.2011

Rubber Research Board

28.06.2011

Resettlement Authority

28.06.2011

Rehabilitation of Persons, Properties & Industries Authority Condominium Management Authority

National Dangerous Drugs Control Board

15.08.2011

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Institutions Examined by the Sub Committee I (Contd…) Ranaviru Seva Authority

15.08.2011

SL Inventor’s Commission

15.08.2011

Janatha fertilizer Enterprise ltd

16.08.2011

Lakdiva Engineering Co. Pvt ltd

16.08.2011

Lanka Phosphate ltd

16.08.2011

SL Cement Corporation

16.08.2011

Elkaduwa Plantations Ltd

19.09.2011

Kurunegala Plantations Ltd

19.09.2011

HDFC Bank

19.09.2011

Central Engineering Consultancy Bureau (CECB)

19.09.2011

Milk Industries of Lanka ltd (MILCO)

19.09.2011

SL Export Credit Insurance Corporation

14.11.2011

SL Social Security Board

14.11.2011

Swami Vipulananda Inst. of Aesthetics Studies

14.11.2011

Consumer Affairs Authority

14.11.2011

National Apprt.& Indt. Traing.Authority(NAITA)

15.11.2011

State Engineering Corporation of SL (SEC)

15.11.2011

Board of Investment (BOI)

15.11.2011

Central environmental Authority

15.11.2011

Consumer Affairs Authority

15.11.2011

Institutions Examined by the Sub Committee II

Botanical Garden Trust Fund

17.08.2010

Sri Lanka Institute of Printing

18.08.2010

Institute of Post Harvest Technology

19.08.2010

National Aquatic Res. Research & Deve. Authority

20.08.2010

Land Survey Council

19.08.2010

Colombo Commercial Fertilizer Company

23.09.2010

State Printing Corporation

23.09.2010

Tertiary & Vocational Education Commission

06.10.2010

Sugarcane Research Institute

06.10.2010

National Engineering Research & Development Centre

13.10.2010

Date of Examination

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Institutions Examined by the Sub Committee II contdâ&#x20AC;Ś Sugathadasa National Sports Complex Authority

14.10.2010

SL Council for Agriculture Research Policy

03.11.2010

Hadabima Authority of SL

03.11.2010

SL Institute of Textile & Apparel

03.11.2010

Official Languages Commission

08.11.2010

Arther C. Clark Center for Modern Technology

08.11.2010

National disaster Management Centre

08.11.2010

National Council for Elders

10.1102010

Sri Lanka Press Council

10.11.2010

National Human Resources Development Council

03.12.2010

Textile Quota Board

23.05.2011

Mantai Salt ltd

23.05.2011

SL Freedom for Hunger Campaign Board

23.05.2011

Lanka Fabrics ltd

24.05.2011

National Secretariat for Persons with Disabilities

24.05.2011

National Inst. of Social Development

24.05.2011

Industrial Technology Institute

30.05.2011

SL Tourism Development Authority

31.05.2011

SL Inst. of Tourism Management

31.05.2011

Lanka Fabrics Ltd

13.09.2011

Paranthan Chemicals ltd

13.09.2011

SL Accreditation Board for Conformity Assessment

13.09.2011

SL Cashew Corporation

16.09.2011

West Coast Pvt. Ltd

16.09.2011

34 35 36 37

NHDA/NEMO State Development & Construction Corporation

Public Utility Commission NLDB

Institute of Technology

14.10.2011 14.10.2011 17.10.2011 17.10.2011

17.10.2011

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Institutions Examined by the Sub Committee III

Date of Examination

22.07.2010

Institute of Indigenous Medicine, Affiliated to the University of Colombo Sri Lanaka Ayurvedic Drugs Corporation

Sri Lanka Advanced Technical Education

10.08.2010

National Transport Medical Institute

11.08.2010

Postgraduate Institute of Archeology

11.08.2010

Homeopathic Medical Council

15.09.2010

Postgraduate Institute of Medicine

21.09.2010

National Science Foundation

21.09.2010

Provident Fund for Buddhist & Pali University of SL

21.09.2010

Post Graduate Institute of English

28.09.2010

University of Colombo School of Computing

28.09.2010

22.07.2010

University of Colombo

28.09.2010

Universities Pension Fund & Provident Fund

28.09.2010

National Youth Services Council

01.10.2010

State Pharmaceuticals Manufacturing Corporation

01.10.2010

J. R. Jayawardena Centre

12.10.2010

Mahapola Higher Education Scholarship Trust Fund

12.10.2010

University of Visual Performing Arts

12.10.2010

Tea Research Institute

08.04.2011

Turusaviya Fund

08.04.2011

21 22 23 24 25 26

National Institute of Plantation Management Institute of Construction Training & Development National Institute of Cooperative Development National Institute of Language Education & Training Gem & Jewellery Research & Training Institute

08.04.2011 08.04.2011 08.04.2011 08.04.2011 08.04.2011 08.04.2011

Central Cultural Fund Information & Communication Tech. Agency of SL

SL Handicrafts Board

29.04.2011

Ceylon Ceramics Corporation

29.04.2011

Skills Development Fund

29.04.2011

Lady lochore Loan Fund

29.04.2011

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Institutions Examined by the Sub Committee III Contdâ&#x20AC;Ś National Insurance Trust Fund

29.04.2011

National Crafts Council

17.06.2011

North Sea Ltd

17.06.2011

National Design Centre

17.06.2011

Selacine Rupavahini Institute

17.06.2011

Rakna Arakshana Lanka Ltd

17.06.2011

Book Development Council

26.08.2011

Tea Small Holdings Development Authority

26.08.2011

Tea Shakthi Fund

26.08.2011

Civil Aviation Authority

26.08.2011

Sustainable Energy Authority

09.09.2011

Ceylon Fertilizer Company ltd.

09.09.2011

State Pharmaceuticals Manufacturing Corporation

14.09.2011

Sri Jayawardenapura General Hospital

14.09.2011

SL Standard Institute

15.09.2011

Marine Environment Protection Authority

15.09.2011

National Film Corporation

15.09.2011

National Child Protection Authority

15.09.2011

National Institute of Fisheries & Nautical Engineering (NIFNE) Ceylon Fishery Harbors Corporation

National Aquaculture Development Authority(NAQDA)

15.09.2011

53 54 55 56 57 58 59

Co-operative Wholesale Establishment (CWE) STC General Trading Co. ltd State Trading (COOP)Wholesale Establishment Co. Ltd. Employees Trust Fund Board State Pharmaceuticals Corporation Palmyra Development Board National Library & Documentation Services Board

15.09.2011

13.10.2011 13.10.2011 18.10.2011 18.10.2011 18.10.2011 20.10.2011 20.10.2011

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Appendix B

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Aug. 04, 2010

National Gem & Jewellery Authority Ministry of Environment

Problems Comments & Decisions of the COPE

1. Due to the violation of the 1. The matter should be taken agreement entered into between up at the Management the Ministry on behalf of the Committee Meeting and a Authority and the American report should be submitted Gem Traders Association, a sum to the Committee on the of Rs. 7 million had been action taken. wasted. 2. Revenue of the Authority had 2. The factors which had led to been decreasing annually, this situation should be whereas the expenditure identified, and the increases rapidly. corporate Plan should be prepared accordingly to overcome the issue. 3. A person who was recommended 3. A detailed report should be to be dismissed had been submitted within one promoted disregarding the month. recommendations. 4. An incentive allowance had been 4. The action doesnâ&#x20AC;&#x2122;t comply paid in a situation where the with the Treasury Authority incurred a significant Circulars. loss.

Aug. 05, 2010 State Mortgage & Investment Bank Ministry of Finance & Planning

1. A Large amount of loans 1. The CAO/AO was directed remained unsettled and a to submit a report within significant number of loans had two months categorizing been defaulted after the payment all the loans indicating of one or two installments. follow up action taken. 2. The profit, which had been Rs. 312 million in the year 2005, had dropped to Rs. 21 million by 2008. 3. Rs. 586,000 had been spent for 3. Money had been spent in the maintenance of Koggala contrary to the objectives Beach Park and a home of the Bank. gardening development.

4. 25 audit queries had not been 4. The CAO/AO was directed replied. to send replies within two months.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Aug. 17, 2010 University Grants Commission

Problems Comments & Decisions of the COPE

1. Rs. 106 million had been paid to 1. Action taken in contrary to the officers as language the Public Enterprises proficiency allowance. Circulars and directed to send explanation to the Committee on this matter.

Ministry of Higher Education

2. The academic allowance had 2. The procedure doesnâ&#x20AC;&#x2122;t been considered in the comply with the circulars computation of salaries, issued by the contributions to the EPF, ETF Commissioner General of and gratuity. Labour and directed to submit a report to the Committee.

Aug. 18, 2010

1. It has been decided to terminate 1. A detailed report on this the joint venture entered into joint venture was called in with Union Fish Products within one month Company Ltd. but legal issues have arisen over the matter.

Ceylon Fisheries Corporation Ministry of Fisheries & Aquatic Resources

The miscellaneous debtor 2. Recovery of debts is at an balance as at 31.12.2009 was unsatisfactory level. Rs. 43 million.

3. Action had not been taken to 3. A detailed report was called recover assets amounting to Rs. in within three months. 50,099,843 transferred to Ceylon Fishery Harbours Corporation. Aug. 19, 2010 Sri Lanka Rupavahini Corporation Ministry of Mass Media & Information

Contd...

1. The Post of CEO had been 1. It was directed to delegate created irrespective of the fact the duties between the post that there is no provision for of Director General and such a post under the CEO, avoiding any Rupavahini Act. possible conflict. 2. Action had not been taken to 2. Political parties had recover Rs. 42,649,586 deliberately delayed the receivable from various payments and a report political parties for the use of air including the names of time during election campaigns , those political parties, and although directions had been the amounts due and action issued during the last COPE taken against them, was meeting. called in within two months.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 3. Despite the direction 3. One month was given to given at the last COPE meeting take necessary action and Sri Lanka to recover Rs. 10,000,000 from report to the Committee. Rupavahini Corporation Mihin Lanka, no action had been taken as at 27th July, 2010.

4. An amount of Rs. 2,508,624 4. A methodology should be which includes the advances established to recover all paid to the officers had been the dues from the officers written off as most of them are prior to their retirement or no longer in the service. being terminated. 5. The net profit which had been 5. A large sum of money is 137 million in 2006 had spent on salaries and bonus decreased up to 4.7 million by to the staff with excess 2009. cadre and directed to introduce a retirement scheme to bring down the expenditure. Aug. 20, 2010 Sri Lanka Samurdhi Authority Ministry of Economic Development

1. Some of the directions 1. CAO/AO agreed to submit given at the previous COPE a detailed report when the meeting had been partly Committee requests. completed and some had not been carried out at all. Partly completed directions (i) Incorporation of the Samurdhi Banks. Relevant amendments to the Samurdhi Act have not been completed. (ii) The Authority had failed to explain how the granting of loans to the beneficiaries helps the national economy at large.

Contd…

2. The following projects remain 2. A detailed report was called uncompleted and some of them in regarding all these had been handed over to the projects. other institutes. (1) Tissue Culture Project – Nillamba (2) Rice Procession Centre – Kebithigollawa

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry (3) Metal Crushing Project Dimbulagala/Ameemara (4) Coir Dust Basket Project â&#x20AC;&#x201C; Hettipola Sri Lanka (5) Fruit Export Project Samurdhi 3. In comparison with the figures in 3. A detailed report was Authority 2008, the expenditure of the sought stating a list of all Authority on Rural projects under each Development projects had category, the number of increased from 83 M. to 1611 completed projects and M., while that of social incompleted projects of it. development projects had increased by two fold.

4. A computer network system is 4. CAO/AO was directed to not available to the Samurdhi take prompt action to Banks. implement the computer network system for Samurdhi Banks. Sept. 07, 2010 1. 2008 and 2009 Annual Reports 1. CAO/AO was directed to had not been tabled in take action to present the Parliament. reports without further University of delay. Sri Jayewardene 2. For the years 2009 & 2010 each, 2. At least one meeting in -pura only two Audit & Management every three months should have been held. Committee meetings had been Ministry of held. Higher Education 3. Attention has not been given as 3. It was directed to submit a progress report on directed in the previous COPE formulation of the meeting regarding supervision and reviewing the progress on Corporate plan within one the targets of the Corporate Plan month time. and 2006/2010 Corporate plan had not been updated.

Contdâ&#x20AC;Ś

4. A sum of Rs.3,010,188 had been 4. The CAO was advised to resolve the problem, spent on initial plans of a waste having appointed a water refining centre without getting the ownership of the committee. land verified.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE

5. A fund named as â&#x20AC;&#x153; Vice 5. There is no accountability Chancellors Fundâ&#x20AC;? was being of this fund and it was maintained despite the fact that directed to take action to no provision for such a fund was legalize the Fund. given by the University Act. University of Sri Jayewardene -pura

6. Since the follow up actions had 6. A detailed report was called not been taken in time, the in including the names of university had experienced a the officials responsible for loss of Rs. 9.83 million which this incident. could have been recovered from the consultancy firm due to the collapse of the roof of the library building. 7. It was directed to prepare 7. There was Rs.69 million to be agreements in the future recovered from the lecturers including provisions to those who had breached settle the due amounts agreements. from EPF in case of breach of agreements. 8.

Although a land in 8. No feasibility study had Borelesgamuwa was purchased been carried out before the to provide accommodation for purchase of the land. students, construction work had been stopped due to drainage problems.

Sept. 09, 2010 1. An amount of Rs. 17,789,658 1.(i) The CAO was directed to was to be recovered from 28 scrutinize the lecturers those who had breached possibilities to amend University of Moratuwa agreements and bonds. the Act to avoid such instances. Ministry of Higher (ii) Chairman, UGC was directed to submit a list Education of names of such lecturers and officers in all universities. 2. The Committee kept on record that compared to the other universities; performance of University of Moratuwa was satisfactory.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Sept. 23, 2010 National Institute of Business Management Ministry of Youth Affairs

Problems Comments & Decisions of the COPE

1. Annual reports for the years 2008 1. The CAO/AO stated that & 2009 had not been tabled in the reports had been sent to Parliament to date. the Ministry for approval. 2. Audit & Management Committee 2. Need to hold meetings at meetings had not been held least one in every three regularly. months was emphasized. 3. An income of Rs. 1,126,099 had 3. Strong dissatisfaction was been lost due to the withdrawal extended. An alternative of fixed deposits one week method should have been before the maturity to make found to pay the payments to the contractors. contractors. 4. A sum of Rs. 301,976 had been 4. The CAO/AO was directed written off from the dues to be to enter into an agreement recovered from the lecturers of with the lecturers before the Institute due to the inability them leave the country to to recover them. avoid this type of losses in the future. 5. A sum of Rs. 3.9 million had been paid as salaries for the 5. Since these kinds of actions employees without obtaining the lead to various malpractices approval of the salaries & Cadre and issues, it was Commission. recommended to get the approval of the Salaries and Cadre Commission before making such appointments.

1. The Corporate Plan had been 1. The CAO/AO was directed prepared just to be submitted to to prepare the Action Plan the Committee before the according to the Corporate Sept. 24, 2010 examination. Plan 2010 â&#x20AC;&#x201C; 2014, and to submit the same to the Coconut Committee after getting the Cultivation approval of the Board of Board Directors. Ministry of 2. The existence of the Coconut 2. The CAO was directed to Plantation cultivation Board, Coconut see whether these three Industries Research Institute, and Institutes could be Coconut Development Board as amalgamated into one three different bodies which entity, and to submit a carryout functions of report to the Committee Contd... overlapping nature hinders the within two months. progress of the sector.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Coconut Cultivation Board

Problems Comments & Decisions of the COPE

3. Livestock project implemented in 3. A report was called in coconut gardens had been within three months time unsuccessful. having taken action to expand livestock project. 4. A loss of Rs. 1.7 million had 4. The CAO stated that the been experienced from the egg Board had taken action production unit of the model against the person who had coconut garden in Mahayaya. involved in the misappropriation of funds. 5. 195 vacancies remain unfilled as 5. The CAO/AO was directed at 24.09.2010. to see whether the filling of these vacancies is necessary if the amalgamation of the Institutions takes place. 6.

Oct. 06, 2010

Although 3,44,000 infected 6. A detailed report was called coconut trees had been identified, in within three months. the pace at which the precautionary action being taken to prevent the spread of the disease is not in a satisfactory level.

1. No annual Report had been 1. CAO/AO was directed to presented to the Parliament after present all the outstanding 2005. reports without further delay.

Agricultural & Agrarian Insurance Board

2. As directed in the previous 2. CAO/AO was directed to COPE meeting, 3.5 million out get the issue solved with of Rs. 5 million which had been the Ministry of released to Agrarian Fair, had Agriculture. not been recovered.

Ministry of Finance &

3. In the previous COPE meeting, a 3. CAO/AO was directed to massive fraud with regard to the submit a report on the payments of compensation for present position of this the farmers victimized by the issue within two weeks. closure of Mavil Aru sluice gate had been identified and had directed to present a report to the committee on the matter.

Planning

Contd...

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Agricultural & Agrarian Insurance Board

Problems Comments & Decisions of the COPE

4. The Corporate Plan for 2009 â&#x20AC;&#x201C; 4. The CAO/AO was directed 2012 had not been updated to take action to rectify whereas the Action Plan had these shortcomings. been prepared without being based on the Corporate Plan. 5. An amount of Rs. 1,908,815 5. The CAO/AO was directed which was paid to 04 employees to attend to the matter and who had been released to other take necessary actions. institutions had not been reimbursed.

Oct. 07, 2010 Open University of Sri Lanka Ministry of Higher Education

1. The amount to be recovered from 1. The CAO/AO stated that the lecturers who had breached the action was being taken agreements is Rs. 40,671,948. to recover this amount. 2. Re-valuation of assets had been 2. The CAO/AO agreed to carried out in a poor manner. rectify all the shortcomings taken place at the revaluation. 3. Three regional centers had been 3. The CAO agreed to get the constructed spending Rs. clearance early. 18,716,902 without getting the ownership of the lands verified. 4. The printing activities of the 4. The CAO/AO was directed university are performed at an to submit a detailed report unsatisfactory level and an on this within one month excessive cost incurred due to time. the fact that the printing had been done outside, while some printing machines had been idling for years. 5. Rs. 6.6 million had been paid as proficiency language allowance contrary to thePublic Enterprises Circulars.

Oct. 08, 2010 Buddhist & Pali University Ministry of Higher Education Contd...

5. The CAO stated that the newly recruited officers are not paid so.

1. Corporate Plan had not been 1. The CAO was directed to prepared according to the assist the University when treasury circulars. the Corporate Plan is prepared.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 2. The University has encountered a 2. The land with the extent of problem of increasing the 5 acres provided by the number of students as each government had not been Buddhist & Pali locally enrolled student should used effectively. University be given hostel facility.

3. Due to the legal matters arisen 3. Continuation of this between the University and situation may affect the several employees, for which students, Institute and also several cases are pending before to the officers involved the court, the University had irrespective of the fact that spent nearly Rs. 2 million so far these charges are false or as payments for lawyers. not, and therefore, the CAO was directed to see the possibilities of settling these issues immediately and send a report to the Committee accordingly. 4. An excess amount of Rs. 632,342 4. The CAO/AO agreed to had been paid as O.T. to the staff formulate a method to by giving more O.T. hours, rectify the issue. contrary to the Public Enterprises Circular.

Oct. 19, 2010 Hector Kobbekaduw a Agrarian Research & Training Institute Ministry of Agriculture

Contd...

1. The Corporate Plan for 2009 â&#x20AC;&#x201C; 1. The CAO/AO was directed 2013 had been prepared to re-prepare the Corporate contrary to the Public Plan and also to update it Enterprises Circular. on rolling plan basis. 2. Audit & Management Committee 2. It was directed to meet at for the year 2010 had met only least once in every three twice. months time. 3. A significant delay ranging from 3. The CAO agreed to take 01 to 03 years was observed in action to avoid such delays completing researches. in the future. 4. Action had not been taken to 4. A detailed report regarding recover Rs.11.46 million from these outstanding amounts 06 scholarship debtors. was called in within one month. 5. An aid amounting to US$ 65000 5. Money granted had not received for research work had been used for the intended been used for printing books. purpose.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE

Hector Kobbekaduw a Agrarian Research & Training Institute

6. The carder of the institute had 6. It was directed to inform not been approved by the Dpt. of the committee, the treasury Management Services and 23 and the Auditor General employees had been recruited after receiving the contrary to the scheme of necessary approval. recruitment.

Oct. 20, 2010

1. An updated Corporate Plan is not 1. CAO agreed to submit an available. updated Corporate Plan to the relevant authorities.

Ceylon Shipping Corporation Ministry of Ports & Aviation

Oct. 21, 2010 Cey- Nor Foundation Ltd. Ministry of Fisheries & Aquatic Resources Development

Contd...

2. The investments valued at Rs. 2. The CAO stated that they 47,937,900 cannot be verified had received Scrip due to the unavailability of share dividends also but the share certificates. certificates had been misplaced. It was directed to take actions to get it back. 3. A refundable advance of Rs.50 3. It was directed to take million obtained from the action to settle the Shipping Development Fund outstanding balances administered by the SLPA in without allowing them to 1997 had not been settled. be displayed in final accounts. 1. The net assets worth of Rs. 1. The CAO was directed to 12,752,650 of Fish Net Factory take the assets back. at Gurunagar had been taken over by the North Sea Ltd., but no income had been received by the Govt. 2. An outstanding withholding tax 2. It was directed to take amounting to Rs. 2.6 million is necessary approval to write being carried forward from the off this balance. year 2001, as the action cannot be taken due to the unavailability of documents. 3. No action had been taken against 3. The CAO stated that legal the person who evaded the action would be taken. payment of balance of Rs. 393,865 of a fishing boat worth of Rs. 2 million.

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Date/Name of Major Issues the Institute Identified & Ministry

Cey- Nor Foundation Ltd.

Nov. 09, 2010 Lanka Sathosa Ltd. Ministry of Cooperatives & Internal Trade

Problems Comments & Decisions of the COPE

4. Reports and documents regarding 4. The Committee directed to accounting matters had not been submit all the relevant given to the A.G.â&#x20AC;&#x2122;s Dept. reports to the AuditorGeneralâ&#x20AC;&#x2122;s Dept.

1. 12 buildings had been obtained 1. The CAO was directed to on rent from CWE without take remedial action to reaching any agreement in settle these transactions. respect of rent and Rs. 106.5 million was payable to the CWE in respect of the assets and services supplied. 2. The Company had spent 36 2. The Committee directed to million for the purchase of introduce alternative polypropylene bags. methods to cut down the expenditure. 3. A proper reconciliation had not 3. The CAO agreed to correct been carried out with the daily the accounts. sales returns obtained from shops and the registers of monthly sales.

Nov. 30, 2010 Sri Lanka Telecom

Underpayment telecommunication levy for period from March 2003 December 2009 amounted to 6,074,368,463.

of 1. A detailed report analyzing the the amount of levy paid in each year was called in. to Rs.

Ministry of Telecommuni 2. The Dept. of Inland Revenue had charged a tax of Rs. 643 cation & Information million for the years 1993/1994 Technology and 1994/1995. December 01, 2010 Sri Lankan Airlines

Ministry of Ports & Aviation Contd..

1. A loss of Rs. 9.3 billion had been reported for the financial year 2008/2009.

1. As a whole, it was informed that loss had been reported due to escalation of fuel prices & global economic crisis and loss had been brought down to the break even in the current year.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 2. A net loss of Rs. 352.89 million 2. Company benefited by Sri Lankan had been experienced under the the programme Airlines Fuel Risk Management however the particular Programme. loss resulted during the last 4 months

December 02, 2010 Sir John Kotalawala Defence University Ministry of Defence

1. Tabling of Annual Reports in 1. The CAO/AO agreed to present all the outstanding Parliament had not been done. reports including 2009 as early as possible. 2. An Action Plan for the Corporate 2. The CAO/AO was directed Plan of 2010 had not been to follow the guidelines prepared. given in the Public Enterprises Circular No. 12, when preparing the Action Plan. 3. The approval had not been 3. The CAO/AO agreed to take action to obtain the obtained for the deposit of Rs. 5,000,000 made in the State covering approval of the Mortgage & Investment Bank Hon. Minister of Finance. for the implementation of a loan scheme to the staff of the University. 4. Having observed that the figures submitted by the 4. A significant decrease is University were observed in relation to the contradictory, it was student intake and no graduate directed to submit a report passing out each year. with correct figures.

December 03, 2010 Sri Lanka Savings Bank Ministry of Finance & Planning

1. Action had not been taken to 1. It was directed to review the review the Corporate Plan and Corporate Plan annually the Action Plan by the Board of and also to prepare the Directors. Action Plan based on the Corporate Plan. 2. A sum of Rs.78.4 million 2. The case is pending before deposited in the Habib Bank by the Supreme Court. the then Pramuka Savings Bank had not been settled by the successor of the Habib Bank, ie Hatton National Bank Ltd and the verdict issued by the court over the matter, is not favourable to the Sri Lanka Savings Bank.

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Date/Name of Major Issues the Institute Identified & Ministry

December 07, 2010 Mihin Lanka (Pvt.) Ltd. Ministry of Civil Aviation

Problems Comments & Decisions of the COPE

1. The Company is running at a 1. The CAO stated that the significant loss as follows; company had made a 16 2007/2008 – Rs. 3,356 million million operational profit 2008/2009 – Rs. 4,657 million for the last 6 months which 2009/2010 – Rs. 5,722 million can be viewed as a positive sign of turn back. 2. The current liability of the Company had been Rs. 2.4 billion. 3. The figures furnished by the 3. It was directed to submit the Company are different from following information those provided by the A.G.’s within one month. Dept. and evidence submitted is 1) The Capital Input insufficient. 2) Loss & Profit of the Mihin Lanka 3) No. of Passengers carried 4. The interest had not been paid in 4. The CAO mentioned that the loan would be settled relation to the loans obtained by the Treasury. from Airport Aviation Services (Pvt.) Ltd. for Rs. 500,000,000. 5. The Company had obtained a 5. The CAO stated that the bank overdraft has been paid bank overdraft amounting to Rs. off with the interest. 381.7 million.

December 08, 2010 Hingurana Sugar Industries Ltd. Ministry of State Resources & Enterprise Development

1. Action is being taken to wind up the Institute. The management and the assets had been handed over to the Gal oya Plantations Ltd. by the Treasury but still, 277.7 hectares of land remains under the possession of the Hingurana Sugar Industries Ltd.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

December 09, 2010 Sri Lanka Rubber Manufacturi ng & Export Corporation Ministry of State Resources & Enterprise Development

Problems Comments & Decisions of the COPE

1. The private auditors had stopped 1. The CAO stated that the its functions in the Corporation action would be taken to due to non payment of Rs. 3.1 settle the dues to get the lakhs owed to them, and more service of the auditors over, they had held some again. documents in their possession. 2. The Corporation owes Rs. 115 million to the Peopleâ&#x20AC;&#x2122;s Bank and Rs. 1385 million to the General Treasury. 3. Various malpractices had taken 3. The Committee directed to place during the time of the submit a detailed report previous management. including the names of the previous Board Members, the way the Corporation was led to a loss incurring situation, and the persons responsible for that and legal action taking place regarding the Corporation. 4. The present management is 4. A full report was called in unaware of the closure of within a monthâ&#x20AC;&#x2122;s time. Matugama Rubber Factory and certain malpractices and misappropriation of funds in the Corporation.

January 04 , 2011 Rajarata University of Sri Lanka Ministry of Higher Education

Contd..

1. Annual report for the year 2009 1. It was directed to table the had not been tabled in annual report within two Parliament. weeks. 2. A rent of Rs.9,979,000 had been 2. It was directed to get a paid in respect of 57 houses used report from the Dept. of as student hostels without Valuation prior to the obtaining a proper valuation. payments of this kind in the future. 3. A loan balance of Rs. 670,942/remains outstanding for a period 3. This amount remains unof 01 to 03 years which is due recovered due to clear from 58 employees who had inefficiency of the retired, vacated and transferred management. from their posts.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Rajarata University of Sri Lanka

Problems Comments & Decisions of the COPE

4. Action had not been taken to 4. It was directed to take all recover security bonds possible action to recover amounting to Rs.2,593,185 due these amounts. to breach of agreements by the lecturers those who had not returned after completion of studies abroad. 5. Action had not been taken as per 5. It was directed to disclose the agreement, to get the the assets when preparing ownership of the assets worth of the accounts. Rs. 41 million belonging to the IRQUE project.

1. January 05, 2011 Paddy Marketing Board Ministry of Co-operatives

& Internal Trade

No record was available with 1. An interim report, including regard to certain leased out stores a list of stores that had and a lease rent totaling already been rented out and Rs.24,957,044/remains the number of stores that receivable as at 31.12.2010. had been functioning at present, was called in.

2. An amount of Rs.533,044,709/- 2. It was directed to submit an remains unrecovered and the total interim report stating the outstanding payable to various amount payable and creditors as at 31.12.2009 is receivable in relation to Rs.2,138,777,007/government institutions. 3. The Board had no adequate 3. The CAO/AO was facilities to store the bumper instructed to take necessary harvest of paddy expected in the steps to face the situation. coming season.

January 20, 2011

Independent Television Network and Lakhanda Radio Ministry of Mass Media and Information

1. Annual report for the year 2009 1. It was directed to take had not been tabled. action to table it as early as possible. 2. The radio channel had incurred a 2. Due to the amalgamation of significant loss, not shown in the accounts of the radio accounts channel and the TV channel, the loss of the radio channel has not been highlighted.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

February 8 , 2011 Janatha Estates Development Board Ministry of States Resources and Enterprise Development

February 10, 2011 Kahatagaha Graphite Lanka Ltd. Ministry of Industries and Commerce

February 23, 2011 National Paper Company Ltd.

Problems Comments & Decisions of the COPE

1. No Annual report has been tabled 1. It was directed to submit after the year 2006. the rest of the reports within next three months. 2. The institution had been running 2. It was directed to submit a at a loss for the past few years. report within one month, out of 17 estates 10 are running stating the estates that at a loss should be kept under the institute and also the action that should be taken with respect to the estates running at a loss.

1. Eighteen Annual reports had not been tabled in Parliament for the period from 1992/1993 to 2009/2010 and the accounts for 18 years had not been submitted for audit.

1. No information available and the present Management makes an attempt to update the accounts.

2. The favorable condition that was 2. The Company should find prevailing at the time the the possibilities of Government took over the introducing promotional management had deteriorated by programmes and also to now. initiate a joint venture with foreign entrepreneurs dealing with advanced 3. Loan amounting to Rs. 54 technology. million, obtained by the earlier management had to be taken over by the present Management, another Rs. 16 million to be settled.

1. The Company is continuing with 1. It was directed to submit a loss and it has been decided to report stating the action that can be taken to improve the lease out the Embilipitya factory to an external party for 30 years. Embilipitiya and Valchchenai factories.

Ministry of State Resources & Enterprise Development

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Date/Name of Major Issues the Institute Identified & Ministry

February 24 , 2011 B.C.C.Lanka Ltd. Ministry of State Resources

Problems Comments & Decisions of the COPE

1. The Committee noted that the 1. The Committee was Company had a liability of informed that the Company Rs.487 millions to the Treasury has taken steps to settle the and Rs.100 millions to the Bank dues by selling their of Ceylon. properties to the UDA. 2. A land of 212 perches belonging 2. The Committee directed the to the BCC had been sold to a CAO/AO to submit a private party for Rs.87 millions detailed report on all the and presently the land had been lands of that nature sold by left out without being used for BCC, indicating the parties any valid purpose. to whom such lands had been sold.

08, 1. For the year 2009/2010, there 1. It was informed that the loss had been a loss of Rs,30 was due to the salaries paid millions. to the staff who had been sent on compulsory leave Lanka Salusala Ltd. during the restructuring process Ministry of State Resources March 2011

March 09, 2011 Sri Lanka Broadcasting Corporation Ministry of and Mass Media Information

Contd...

1. Only two Audit & Management 1. It was directed to hold the Committee meetings had been prescribed number of held for the year 2010. meetings in the future. 2. There had been an excess staff of 329 in the SLBC Cadre. 2.

The Committee was informed that it had been decided to transfer the excessive staff to the other channels of the SLBC as they had been in service for the last 10 to 12 years.

3. It has not been able to recover 3. It was directed to take the accumulated sum of Rs. 97.3 proper approval from the million ,the outstanding Treasury to write off the receivable amount up to the year unrecoverable out standings. 2006 which had reduced only upto Rs. 51 million by 2010.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Sri Lanka Broadcasting Corporation

Problems Comments & Decisions of the COPE

4. The following weaknesses were 4. It was directed to submit a observed. report indicating the action i. High administration cost that could be taken to ii. Excess staff overcome this situation. iii. Lack of research and new developments iv. Less differentiation in the aired programmes v. No proper costing and pricing system vi. Non adherence to Laws and regulations 5. The loss of Rs.727 million 5. Having expressed its incurred in 2009 had been dissatisfaction, the Auditor adjusted and displayed as a profit General was directed to look of Rs.47 million in 2010 financial into the matter. statements by adjusting with the Government grant.

March 22 , 2011 National Science & Technology Commission Ministry of Technology & Research

March 23 , 2011 Chillaw Plantations Ltd. Ministry of Coconut Development & Janatha Estate Development

1. Annual reports after the year 1. It was agreed to table the outstanding reports by April, 2007 had not been tabled in Parliament. 2011. 2. Since 1999, only one institution 2. As per the Act, it is required to review four institutions had been reviewed in addition to the two institutions which were per annum and directed to being reviewed. submit a report within two months, indicating the methodology as to how the Commission could streamline the Institutions which carry out the functions of overlapping nature. 1. Due to an arbitration process, it 1. It was directed to submit a had been difficult to take over the report with regard to the profits made from the year management of the company which had been handed over to 1992 together with the the Wayamba Plantations Ltd Management agreement despite the continuous efforts with the Wayamba Plantations Ltd. made from 1994. Nevertheless, in 2002, the lease agreement had been again extended for 15 years and as a result, Rs. 124 million

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry had been paid as compensation at early termination of the agreement. Chillaw Plantations Ltd. 2. The administration cost of 2. It was directed to submit a Chillaw Plantations had gone up report on the administration by 94% in 2010. cost with a break down.

April 5 , 2011 Coconut Research Board Ministry of Coconut Development & Janatha Estate Development

1. No Annual report has been tabled 1. It was directed to table the after the year 2007. outstanding reports as early as possible. 2. A loss of Rs. 581,200 had been 2. This situation had arisen incurred due to the sale of since the board had not adhered to the accepted 62,400 coconuts to a private procedure. institution. 3. The board had spent Rs. 18.73 3. No permanent solution had been found even after million since 2006 for research spending a large sum of purposes to control the Coconut Wilt Disease in addition to the money. removal of the affected coconut trees from the field at a cost of Rs. 30.65 million. 4. The Committee considered that 4. It is recommended to amalgamate these three the Coconut Cultivation Board , institutes if they are The Coconut Research Institute and the Coconut Development functioning with Authority are three entities with overlapping objectives. overlapping functions.

April 6 , 2011 Uva Wellassa University Ministry of Higher Education

Contd..

1. A vehicle had been hired by the 1. It was informed that the first University without considering and the second quotations the lowest quotation. had been withdrawn by the owners and therefore, the tender had been offered to the third lowest quotation as there was no other alternative. 2. The positions of the bursar and 2. The Committee was the registrar had been on acting informed that it had been basis for a considerable period. difficult to recruit new personnel for the existing salary scales.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

3. Uva Wellassa University

April 7 , 2011 Kalubovitiya na Tea Factory Ltd. Ministry of Plantation Industies

Problems Comments & Decisions of the COPE

Percentage of employments 3. The Committee expressed received by the students its pleasure on this completed the first 05 degree achievement programmes as follows. • Bachelor of Animal Science-96% • BSc in Computer Science & Techg.-84% • BBM in Enterp. & Mgt.77% • B. Tech in Science & Techg-71% • BSc in export Agri.-63%

1. The Corporate plan , Action plan 1. It was directed to submit , Annual Budget, quarterly such reports without further reports had not been submitted delay. to the treasury , Auditor General The Committee expressed or the Parliament. its dissatisfaction on this. 2. The annual tea production shows 2. It was directed to submit a a declining trend for the period report on this matter within from 2005 to 2009, although the three months time to the price of tea had increased over Department of Public the period. Enterprises to monitor the situation closely. 3. It was observed that there is a 3. This shows the poor level of difference of Rs. 4,269,344 recording entries in ledgers. between the audited account balances and the ledger balances and further, a difference of Rs. 19,423,126 between the Head office account balance and the relevant factory account balances. There was a difference of Rs. 15,527,107 between 14 ledger account balances and the relevant balances appearing in the Trial balance.

4. A sum of Rs.22,465,416 which 4. It was directed to send a should have been refunded to Sri report after solving the Lanka Tea Board had not been problem. returned. 44

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Date/Name of Major Issues the Institute Identified & Ministry

May 03 , 2011 University of Jaffna Ministry of Higher Education

Problems Comments & Decisions of the COPE

1. Annual reports from 2007 had to 1. It was directed to table them be tabled in Parliament. without further delay. 2. The Waste Water Disposal 2. The Vice Chancellor had project which had initially been unaware of this and estimated to Rs. 9,004,500 had agreed to look into the been temporarily abandoned as matter. the Water Supply & Drainage Board had increased the cost upto Rs.18,188,695. 3. Action had not been taken to 3. The Chairman of the UGC recover an amount of Rs. was directed to take action 117,530,741 due from 133 to recover these dues. lecturers who had breached agreements and bonds. 4. Number of audit queries had not 4. It was directed to answer been answered these queries without further delay.

May 05 , 2011

1. The Annual reports for 2008 and 1. It was agreed to table them 2009 had not been tabled. by 19th May, 2011.

National Institute of Library & Information Science

2. The Action plan had not been 2. It was agreed to submit the prepared in accordance with the revised plans within two Corporate plan. months time.

Ministry of Higher Education May 06 , 2011 Post Graduate Institute of Agriculture Ministry of Higher Education

1. Rs. 1,208,989 had been paid for 1. It was directed to get the overtime exceeding the limit approval of the UGC for the allocated for the year 2006. excess amount. 2. There is a high rate of drop-outs compared to the number of 2. The Committee was enrollments of students. informed that some students give up the course after completing the theory part as the research part has to be done on full time basis.

Contd...

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 3.Without following the 3. The Committee Post procurement guidelines emphasized the need of Graduate purchases exceeding Rs. 02 following correct Institute of Agriculture million had been made. procedures.

May 25 , 2011 Kantale Sugar Industries Ltd. Ministry of State Resources & Enterprise Development

1. Rs. 16,606,331 had to be 1. The company had acted in a recovered from, the owner of the lethargic manner in the process of recovering the Company in 2003, and further, dues and it was directed to he had sold the vehicles belonged to the company. take early action to recover the dues from the former owner. 2. Action had not been taken to recover the lease payment 2. It was informed that the receivable for 7,286 acres from company had been closed down and the owners had the Agro Trading Lanka Private gone abroad. Ltd. 3. Cabinet had decided to lease out itsâ&#x20AC;&#x2122; operations under long term lease agreement or to have Govt/Private joint venture business

May 26 , 2011 Atomic Energy Authority Ministry of Power & Energy

Contd...

3. It was revealed that, the Govt. had already advertised to find out a suitable investor and prepared guidelines to be issued to the bidders.

1. The Committee observed that 1. It was informed that they 62% of the debtors out of the had been able to recover debtor balance, had been 50% of the debtors and that Government Institutions whereas the amount had been the rest had been from the private reduced to 1 million. sector. 2.

It was observed that the 2. The Committee directed the Corporate Plan prepared for the CAO/AO to revise the period 2010-2014 had been Corporate Plan including incomplete. new goals and to prepare the Action Plan and the budget based on the Corporate Plan.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE

Atomic Energy Authority

3. The Committee enquired about 3.The Committee was the use of nuclear power as an informed that, it has been alternate energy source in the planned to establish a Country. regulatory Council to look into the entire Nuclear Power Project.

June 07 , 2011

1. SWOT analysis, the financial 1. The Committee directed the data and the future plans had not CAO/AO to look into these been included in the Corporate shortcomings when Plan prepared for the period of preparing the Corporate 2006 â&#x20AC;&#x201C; 2015 ( 10 years ), and Plan. also not updated.

South Eastern University of Sri Lanka Ministry of Higher Education

2. Annual Reports from the year 2. The CAO/AO accepted the 1998 to 2004 and also 2006 to delay and stated that by now 2010 had not been presented in all reports upto the year Parliament, whereas the 2005 2009 had been submitted to Annual Report had been the Cabinet for approval, presented in Parliament in and would take early action February 2009. to present them in Parliament and agreed to keep the Hon. Minister informed of this situation in order to get his assistance to get this expedited. 3. The Committee queried about 3. University had already held Audit & Management Committee 02 meetings for the year meetings. 2011, and agreed to hold the balance as had been prescribed before the end of the year.

Contd..

4. The Committee enquired as to 4. The CAO/AO stated that why the vacancies in the due to the war situation at Academic and Non-Academic that time, the University had cadre had not been filled. a problem of obtaining proper resource personnel, but by now they had called for applications, and would be able to recruit staff early.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 5. The Committee queried as to 5. The CAO/AO stated that why UGC approval had not been due to lack of staff, the obtained for Honorarium University had to pay those South payments amounting to Rs. allowances. The AO further Eastern 248,411/-. stated that at present they University of are obtaining approval from the UGC for such payments. Sri Lanka

6. University had violated the University Act by giving promotions to lecturers who had not completed Postgraduate degree within 8 years.

June 08, 2011 Distance Learning Centre Ltd Presidential Secretariat

June 10, 2011 Institute of Biochemistry Molecular Biology and

6. Directed to get advice from the UGC to correct this situation.

1.The Committee enquired about 1. Corporate plans had been the Corporate Plan prepared for the period20112013.

The Committee wanted a 2. It was informed that DLC clarification regarding the setting was established under a up of the Distance Learning World Bank Project in Centre 2002,as per a loan agreement, Rs.142 million treated as a grant and the balance Rs.32 million as a loan payable in 10 years.

1. Delay in presenting annual 1. Annual reports including reports in Parliament. that for the year 2009, had already been sent to the Printers and action would be taken to table them in Parliament as early as possible.

Biotechnology

Ministry of Higher Education

2. It was further observed that the 2. The CAO/AO explained institution had been behind the that non- availability of target level as far as the number funds, lack of additional of students recruited for certain cadres and the setback courses were concerned. caused in setting up of courses had affected the number of students enrolled for each course.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

June 21, 2011 Eastern University of Sri Lanka Ministry of Higher Education

Problems Comments & Decisions of the COPE

1. Corporate Plan prepared for the 1. Directed to update the period 2010-2015 had not been Corporate Plan and to send a updated. copy of the 2011 Action Plan to the Committee and to the Auditor General. 2. It was observed that a barbed 2. It was informed that, the wire fence had been erected officer in charge, the Rector spending Rs.11,029,167 the had been interdicted and the approval to construct a parapet investigation was being wall with an allocation of Rs.10 conducted. million and further observed that an over payment of Rs.301,000/had also been made. 3. The Committee questioned as to 3. The Committee stressed the why action had not been taken to fact that these lapses had inquire into the Direct Credit occurred as the bank Rs.5,704,648 , the Direct Debit reconciliation had not been Rs.4,952,914, the Unrealized properly and timely done. Deposit Rs.1,527,243 and the unpresented Cheques Rs.4,868,510 4.

The Committee wanted a 4. A detailed list of lost items clarification whether action had had been submitted to the been taken either to recover or to Ministry for approval to write off the losses amounting to write off from the books. Rs.17,860, 815. The Committee directed the institute to obtain the treasury approval for this purpose.

5.The Committee observed that 28 5. The Committee directed the stationary items valued at CAO/AO to submit a report Rs.931,890 had been lying idle regarding this matter. for over 3 years.

Contd...

6. The Committee noted that the 6. Rector concerned had been University had accepted a bid to interdicted and the construct a chain linked fence investigations were under which had been 83.6 % greater way. than the initial estimated cost of Rs.1,299,500 which had also been revised to Rs.1,881,600.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Eastern University of Sri Lanka

Problems Comments & Decisions of the COPE

7. Rs. 70,407,561 had to be recovered due to breach of agreements by the lecturers gone abroad on scholarships

7. Only Rs. 7 million had been recovered. Legal action had been taken after the lapse of the prescribed time period. 8. Directed to see possibilities to convert the existing department of Hinduism to a Faculty.

1. The Committee noted that Rs.6 1. Directed to get the million had been invested in Treasury approval. 2009, by the institution without the treasury approval. Institute of 2. It was brought to the notice Human 2. It was observed by the of the Committee that these Resource Committee that it had been Advancement machines were being used. unable to make use of the two Ministry of finger printing machines since Higher 2008 purchased at the cost of Rs.330,155. Education 3.Directed the UGC to submit 3.Quality assurance of the degree a report indicating the programmes & courses methodology to be adopted to conducted by the Institution was assure the quality of the questioned. courses within a week. June 22 , 2011

June 23, 2011 National Institute of Technical Education

1. The Committee queried the present position of the Institute.

1. It was informed that the Institution was transformed to University of Technology.

The Committee queried about the delay in presentation of 2. Action would be taken to present both the reports in annual reports for the year 2008 and 2009. Parliament very early.

3.The Committee observed that the 3. The Committee was Ministry of informed that action would institute had not taken action to Youth Affairs acquire the assets amounting to be taken to acquire these & Skills Rs.12,368,579/- purchased for assets very early. Development the NORAD project and also an Infinitive Digital Solvent Printer amounting to Rs.1.2 million had been included externally to the Contd.. objectives.

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Date/Name of Major Issues the Institute Identified & Ministry

National Institute of Technical Education

Problems Comments & Decisions of the COPE

4. The Committee enquired whether 4.The Committee was any action had been taken to informed that on the recover Rs.1,148,772/- due from favourable decision given by the lecturers who had vacated the courts against 02 posts and also Rs.200,884 from officers, the institution had the officers who had not started recovering due submitted the certificates after amounts. completion of various courses. 5. The Committee noted that a 5. It was brought to the notice receivable amount of Rs.4.9 of the Committee that they million had been continuously had written to the Treasury brought forward since 2005 for approval to write off this without being recovered. amount.

6. The Committee observed that 6. It was revealed that Secretary to the Ministry Rs.85,000/- had been spent had been occupying this monthly as the rental for the residence as the Chairman official residence of the Vice â&#x20AC;&#x201C; of the Board. Chancellor, where the official residence of the institute had been rented out to a Ministerial Officer for Rs.4146/-.per month

June 24, 2011 Post Graduate Institute of Science Ministry of Higher Education

1. The Committee questioned as to 1. The Committee directed to why certain fixed assets written send a report on this matter off to the worth of within 03 months time. Rs.29,014,191 had been re-used without being revalued and taken into accounts . 2. The Committee noted that a sum 2. The Committee directed the of Rs.111,716,670 had been CAO/ AO to get the existing invested by the Institute without regulations changed in order obtaining the approval. to make the activities of Universities a success. 3.Number of PhDs & Master 3.The Committee appreciates degrees offered by the Institution the situation. had gone up by the year 2010.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry July 05 ,2011

National Centre for Advanced Studies in Humanities and Social Sciences

Problems Comments & Decisions of the COPE

1. The Committee observed that a 1. The Committee pointed out sum of Rs.9,290, 674 had been the importance of amending granted to 7 lecturers not related the act if necessary to cater to the field of Humanities and to the other fields as well. Social Sciences, contrary to the objectives of the Centre.

Ministry of Higher Education

July 06 ,2011 & November 18, 2011 Sri Lanka Cricket Ministry of Sports

1. According to the Income Statement, expenditure of the Cricket Board had been increased by 524% when compared to the year 2009. Following reasons were given.

1. Following information were called for; (i)Expenditure on promoting pool of cricketers from 24 â&#x20AC;&#x201C; 100

(i) Spent more money on the matches (ii)How many of them had played by the A team and under 19 selected to National Team team, (iii)How many has signed (ii) Having increased the National pool agreement with the Cricket up to 100 players and provided them Board, with necessary facilities,

(iv)Details of 30 female (iii) Action taken to promote female cricketers with expenditure. cricket pool.

2. It was informed that, 2. The Committee queried whether Signing has been delayed, the National players signed although the agreements had been forwarded to the Players agreements with the Board. Association. But however they are of the view that cricketers are bound to play, even if the main agreement lapses for a period of six months.

Contd...

3. It was questioned that, how the contract for construction of Hambantota- Suriyawewa ground given to Sri Lanka Ports Authority. As per the CAO/AO, SLPA has the necessary equipment for the construction work.

3. Directed to provide initial documents prepared by the respective Architectural Company.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems the Institute Identified & Ministry 4. The Committee questioned as to why, without renovating the existing ground at Dambulla, Sri Lanka decision taken to construct a new Cricket ground in Hambantota.

Comments & Decisions of the COPE 4. According to the CAO, such a decision was taken as the Dambulla ground was the only available ground to play 15 day and night matches at that time.

5. The Theft of compact disk 5. It was informed that. there had containing the accounts of World been no impact on the information as they had back up Cup was questioned. 6. The Committee was 6. The selection of World Cup informed that, although there Director (Tournament Director) was no scheme of recruitment, was questioned. having consulted the experts in the field, the present director was selected. 7. Following shortcomings/ weaknesses were observed. (i) Total liabilities being Rs. 6.1 billion, with the total assets were only Rs. 3.1 billion (ii) Requesting of a loan from the Bank of Ceylon (iii)Income receivable from the ICC not yet being recovered 8. The Committee questioned how the M/s Summerset Entertainment Venture was selected as telecaster of Sri Lanka Premier League Matches (SLPL). It was informed, that has been done after obtaining 05 bids having advertised in the Web site. Contd...

7. Replied that to pay the liability, they have applied the loan from the Bank of Ceylon. and the ICC would pay the due amount when audited expenses are forwarded The Committee directed to send a report including income and expenditure of the Board from the year 2009 to date.

8. The Committeeâ&#x20AC;&#x2122;s concern was giving telecasting right to M/s Carlton Sports Network by M/s Summerset Entertainment Venture. Following information were requested by the Committee; (i) The tender procedure that was followed in regard to the selection of M/s Summerset Entertainment Venture, (ii) Board of Directors and Shareholders of the Summerset Entertainment Venture,

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE (iii) The date on which this company had been registered in Singapore, (iv) A detailed report on the Carlton Sports Network and the relationship between these two companies, (v) Previous tournaments that had been telecast by these two companies, and their experience in this field.

Sri Lanka Cricket

The dissatisfaction of the Committee was expressed on offering the tender to an organization in which the Secretary of the Cricket Board was functioning as the CEO. 9. The Committee queried as to 9. It was revealed that on a how the contracts were given to the Cabinet decision, the companies. (Sooriyawewa) Hambantota ground was given to Sri Lanka Ports Authority, and other two to the State Engineering Corporation. It was brought to the notice of the Committee that the total loan obtained by the Board had been Rs. 22.5 million. 10. Payment of Rs. 650,000/- to 10. It was revealed that this amount had been paid to some some officers was questioned. officers for doing a good job in the Australian tour, on approval of the interim committee. Directed to send a list of names of them.

Contd...

11. The Committee questioned as to how, the agreement entered into between the Cricket Board and the Galle Municipal Council had been terminated and now the maintenance of the stadium is done by the Southern Provincial Cricket Association.

11. Directed to submit the agreement signed between the SL Cricket & the Southern Provincial Cricket Association.

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Date/Name of Major Issues the Institute Identified & Ministry

Sri Lanka Cricket

Problems Comments & Decisions of the COPE

12. In contrary to the tender document, the agreement signed between the Sri Lanka Cricket and the Summerset Entertainment Venture, a separate clause had been entered, i.e. the sponsor had a right to sell the team for a further 25 years’. Enquired when there is no track record what was the rational to offer the tender to Summerset Entertainment.

12. It was revealed that on the approval of the Interim Committee, chairman and CEO had signed the agreement. Having questioned about the nature of the bank guarantee, directed the CAO to discus with the Hon. Minister in this regard and submit a report. The Committee was of the opinion that disciplinary action should be taken against the persons involved in this transaction.

13. It was noted by the Committee 13. The former CEO stated that either a Corporate Plan or an that the Institute had never Action Plan had not been prepared such documents prepared by the Sri Lanka earlier. And it was further Cricket. stated that the Corporate Plan newly prepared for the period 2011-2015 and the Action Plan would be tabled before the Committee on this day itself.

Contd...

14. The Committee observed that 14. The Committee directed the Sri Lanka Cricket had paid the CAO/AO to submit Rs.1,460,000 to SLIDA for an following details to the assessment of Cadre , in which Committee. case the following shortcomings • A copy of the report of were noted. the SLIDA approved by the Sri Lanka • Acceptable procedure for Cricket. promotion not being introduced. • Letter of instructions received from the Hon. • Salary structure and age Minister to obtain the limit for each post not being included services of SLIDA in the cadre requirement • Proposal to increase the • A report on the 18 present cadre 267 up to 727 personnel who are above in 2013 without any 55 years with their justification for expansion names, designations and of work salaries & incentives.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Sri Lanka Cricket

Problems Comments & Decisions of the COPE

15.The Committee noted that 47 employees had been recruited in 2010 and most of them did not have the basic qualifications and experience relevant to the particular post

15. Although the officials of the former Board stated that the selection had been done following the scheme of recruitment, the committee having observed that there had been certain instances where the scheme of recruitment had not been followed, directed to submit the following documents to the Committee within a month’s time. •

•

16. The Committee observed that the initial estimate for construction of the 03 playgrounds Hambanthota, Pallekele & Kettarama had been Rs.3.3 billion where the total expenditure had been Rs.7.18 billion

The paper advertisement which the posts had been advertised in. 38 and 45 applications received for the posts of HR Executive and the Data Entry Operator respectively with the finding of the interviews held.

16. The Committee directed the officials of the Cricket Board to submit a detail report with regard to the price escalation and all other relevant information to the Committee of these 03 play grounds.

17. It was reported to the 17. Independence of the audit Committee of certain instances needs to be maintained. where the requested information had not provided with to the Auditor General. July 08 , 2011

Buddhasrawaka Bhiksu University

1. The Committee observed that 1. The CAO/AO was directed the Annual Report for the year to take early action to table 2009 had not been tabled in that in Parliament. Parliament.

Contd….

was

observed

that

the 2. Directed to submit the 56

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry Estimated Balance Sheet as at the aforesaid statement within end of the year and the Estimated two weeks time to the BuddhasrawCash Flow statement had not Committee. aka Bhiksu University been included in the Budget as per the Circular No. PED/12.

Ministry of Higher Education

July 07th 2011 Sri Lanka Foundation Presidential Secretariat

3. The Committee enquired as to why action had not been taken to recover Rs.1,998,417/the amount in respect of surety for foreign travels and other agreements, from the 02 trainee lecturers whose service had been terminated.

3. As the CAO /AO stated that there had been a balance of Rs.252,200/and Rs.555,257/respectively to be recovered from those two lecturers and the legal assistance of the Attorney â&#x20AC;&#x201C;Generalâ&#x20AC;&#x2122;s Dept had been sought for this purpose, the Committee directed the CAO /AO to submit a report on the action taken in this regard to the Committee. 1. It was observed that the Annual 1. The Committee directed the Report for the year 2009 had not CAO/AO to take early been presented in Parliament. action to table the same in Parliament. 2. The Committee observed that the 2. The CAO/AO stated that by out of total amount of Rs.43.9 now the Institute had million received as Capital utilized balance funds to Grants for the period of 2006purchase equipments and the 2010, only Rs.39.1 million had delay was due to tender been utilized. procedure. 3. The Committee enquired as to 3. It was brought to the notice why the investments of the of the Committee that due to Institute had gradually been cut the situation prevailing in down. the country and also the grants received from the Treasury had gradually been cut down the Institute had to use these investments for essential expenses. 4. The Committee observed that the 4.

Contd..

vision and the objectives indicated in the Corporate Plan had been contradictory to those specified in

The Committee was informed that at a discussion had with H.E. the President it had been decided to

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE

the Sri Lanka Foundation Act.

Sri Lanka Foundation

July 19, 2011 Institute of Fundamental Studies Ministry of Technology & Research

August 09, 2011 Bank of Ceylon Ministry of Finance & Planning

amend the Act accordingly.

5. The Committee observed that a 5. As the CAO/ AO explained tender valued at Rs.18.74 that on a ministerial Tender million had been awarded for Board decision the contract construction of the Head Office was awarded and due to the and as the proposed land had contract being terminated in been taken over by the UDA and 2004, the institute took a the contract also had been decision to execute the terminated, the mobilization Bank Guarantee in which advance of Rs.3.4 million could case the contractor had not be recovered. obtained an injunction order and had filed a case, the Committee directed to submit a report on this matter. 1. In the Corporate Plan prepared 1. The Committee directed for the period of 2010 â&#x20AC;&#x201C; 2014, the the CAO/AO to get this main components had not been process expedited. included and it had not been approved by the Board of Directors. 2. The fixed assets valued at Rs. 2. It was stated that a 371,946,503/- had become zero Committee had been as at December 2011, where appointed to re-value those action had not been taken to assets, and it is under revalue and account for those process. assets in terms of SL Accounting Standards No. 18. 1. The Committee observed that a 2. As the CAO/AO stated that loan of Rs.340 million had been the loan approved to M/s. granted to M/s. International International Grocers Grocers Alliance. Alliance, possessing 40% of the shares of the Sathosa Retail Company had been given by a cheque to the General Treasury to pay half the value of the above shares. the Committee directed the CAO/AO to submit a report on the whole issue to the Committee.

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Date/Name of Major Issues the Institute Identified & Ministry

Bank of Ceylon

Problems Comments & Decisions of the COPE

2. The Committee observed that 2. The CAO/AO stated that Bank had granted Rs. 150 million only Rs. 24 million had been to Mahinda Offset Printers as a loan settled by M/s. Mahinda Offset Printers and informed the Committee that they had taken several measures to strengthen the Credit management and Recovery management to reduce such kind of risks in future. 3. The Committee noted that the Bank had granted loans to six 3. The CAO/AO stated that private companies without any some of these companies adequate securities and the were involved in apparel outstanding balance of those industry, and some had gone loans as at 31.5.2011 had been under liquidation, and that US $ 0.899 million ( Rs. 90 the Bank would take legal million), and enquired about the action to recover the due current position. balances.

Contd...

4. The Committee questioned with regard to a loss of Rs. 33.9 million in connection with 4. The CAO/AO stated that the initial loss had been Rs. robbed articles in Badulla 83.9 million, and that the Branch. Bank received 50% from the Insurance Company, and the loss had been reduced to Rs. 33.9 million and also stated that the Police had been able to trace 17.9 kilos of gold, and that by selling those gold, the Bank could cover their loss, but the gold was still under the Police custody. 5. The Committee observed that 40 advance payments had been 5. The CAO/AO stated that granted by 8 branches, where a the Bank was closely single installment had not been monitoring, and that already paid, and the outstanding balance most of the loans had been as at 31.12.2009 had been Rs. re-scheduled, and would 1,283 million. take early action to recover the dues.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 6. Rs. 100 million overdraft granted to Omega International 6. Bank would re-schedule the pvt ltd. against a mortgage O/D. Bank of Ceylon property and present outstanding amount is Rs. 103.31 million. The O/D had been granted within one day which is doughtful.

7. Payment of PAYE tax on behalf 7. It was informed that, this of the employees by the Bank. cannot be stopped due to unrest of the employees. 8. Granting leasing facilities of Rs. 44 million to 09 branches without 8. As per the CAO this leasing facility was to purchase obtaining any collateral. excavators and those excavators themselves are collateral. 9. Non performing loans amounting to Rs. 2,286,948,763/- and non 9. According to the CAO, performing overdrafts amounting Bank is negotiating with the to Rs. 653,078,128/- given to 10 customers. & 15 customers respectively. 10. BOC had granted a loan of Rs. 3.2 million to the Sri Lanka Cricket. 11. Card Centre-Rs. 52 & 44 millions had been written off and 11. Now a special unit has been set up to look into the waived off respectively. credit card transaction. August 10 , 2011 National Institute of Education Ministry of Finance & Planning

Contdâ&#x20AC;Ś

1. The Committee observed that the 1. Directed to prepare the Corporate Plan for the period Corporate Plan as explained 2008 â&#x20AC;&#x201C; 2012 had not been by the Committee prepared as per the PED Circular No. 12, and informed that the responsibilities had not been fixed as per the goals of the Institute, and also the previous and future forecast data had not been included in the Corporate Plan. 2. The Committee questioned as to 2. It was informed that the why the 2009 Annual Report had 2009 Annual Report had not been presented in Parliament. been submitted to the

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

National Institute of Education

Problems Comments & Decisions of the COPE Cabinet for approval, and once it is approved, action would be taken to table the 2009 Annual Report in Parliament without further delay.

3. The Committee observed the 3. As per the explanation there following shortcomings of the had been change of syllabuses from Grade 1 to NIE and enquired the reasons. Grade 13 in the year 2010, i. Operating expenses for the year training of teacher advisors 2010 , increased when compared and also 8000 un-trained with 2009. teachers had been trained in the year 2010, where the ii Development Centre Charges and expenses of the Institute had Workshop charges increased increased. iii. The deficit as at 2010 had been Rs. 48.5 million 4. The Committee observed that a 4. A Committee had been appointed to inquire into this digital camera and a video matter and the relevant camera worth of Rs. 29,950 and report had already been Rs. 95,000 respectively had been prepared. misplaced in the Planning Division of the NIE.

August 11 , 2011 Peopleâ&#x20AC;&#x2122;s Bank Ministry of Finance & Planning

Contdâ&#x20AC;Ś

. 1. The Committee observed the following shortcomings in the Internal Audit Section. (a) The Committee directed (a)The post of Chief Internal the CAO / AO to re arrange Auditor had been placed under the organizational chart the Senior Deputy Manager in placing the post of Internal the organizational structure, Auditor in the correct whereas it should have been position placed under the Chief Executive officer of the Bank. (b)it was revealed that the post had not been vacant for (b)The post of Chief Internal a long time, and when the Auditor had been vacant for a post fell vacant, the Deputy long time. Internal Auditor was promoted to that post on acting basis within a period of only 04 months.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 2. As per the directive given at the 2. As per the Cabinet decision, last COPE meeting held on this property had been 09.05.2007, the Committee handed over to the Sri Lanka People’s Bank enquired the current position with Army, and that the Bank had regard to a property of the been informed that the Veytex, which had presently Ministry of Lands would been transferred to the People’s pay the value of this Bank. property amounting to Rs. 315 million to the People’s Bank.

3. The Committee observed an 3. At present the Bank had unidentified balance of Rs. been able to recover a large 4,451,811 as at December 2008 amount and the balance due, in the current account maintained could be recovered before the end of 2011. The by the Card Centre. Committee observed that card centre of the People’s Bank had not shown a progress as that of the other Banks. 4. The Committee enquired the 4 The CAO/AO stated that, current position with regard to this amount had been the outstanding amount of reduced to Rs. 120 million, Rs.467.42 million due from the out of which Rs. 61 million Ceylinco Group of Companies. is to be re-scheduled. August 25 , 2011 Sri Lanka Bureau of Foreign Employment Ministry of Foreign Employment Promotion and Welfare

Contd...

1. The Committee observed that the 1. The Committee directed the 2009 Annual Report had not been CAO/AO to send a report with presented in Parliament. regard to the 2007, 2008 & 2009 Annual Reports to the Committee, indicating the date of submission to the Ministry, Cabinet, and Parliament, etc. 2. The Committee noted that there 2. All the vacancies in key have been a number of vacancies posts had already been to be filled in the key posts of the filled. bureau.

3. The Committee observed the 3. The Committee directed the following shortcomings in the CAO/AO to report on this Foreign Employment Agency and to discuss with the Company (Pvt) Ltd, a subsidiary Hon.Minister with regard to company of the Foreign the necessasity to continue Employment Bureau. with this agency.

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Date/Name of Major Issues the Institute Identified & Ministry

Sri Lanka Bureau of Foreign Employment

Problems Comments & Decisions of the COPE

i.The private auditors had disclaimed the accounts for the years 2007, 2008, & 2009 of this Agency. ii.The financial statements for the years 2009 & 2010 of the subsidiary company had not been consolidated with the financial statements of the Bureau, iii.The Bureau had invested Rs. 5 million in the share capital since 1997, and only Rs. 1,380,000 had been received in return for the years 2006/2007. 4..The Committee having observed that a payment of Rs. 2 million had been made in 2009 to the Sri Lanka Foreign Employment Agency, by the Bureau, without the approval of the Cabinet.

4. The Committee directed the CAO/AO to submit the relevant information too, to the Committee with copy to Auditor General.

5. The Committee observed that a 5. The CAO/AO was directed to submit a detailed report to the Co-ordinator had been appointed Auditor-General on the for the Korean language Training appointment of this person, Programme, and paid a sum of and the Auditor-General would Rs. 882,337 as salaries & make his observations and allowances and other perks, send it to the Committee. without the approval of the Dept. of Management Services. 6. The Committee enquired as to 6. The Committee directed why the staff of the Examinations the CAO/AO to explain Dept., and the staff of the Bureau the position to the Auditorwho worked with the holding of General. Korean Language proficiency exams had been paid Rs. 8,036,590 and Rs. 1,971,650 respectively, in the year 2008.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

August 23 , 2011 Ceylon Petroleum Corporation Ministry of Petroleum Industries

Problems Comments & Decisions of the COPE

1. The Committee queried about the 1. According to the tabling of Annual Report. CAO/AO, 2007 Annual Report had been prepared at the correct time but the Attorney General had advised the Corporation not to publish the report, until the 02 Supreme court cases and the foreign arbitration would be finalized and that the 2009 Annual Report had also been drafted,the Committee enquired whether the Corporation had any documentary proof from the Attorney General in this regard and directed the CAO to discuss this matter with the Attorney General and to obtain a clarification in writing and also to submit a report to the Committee in this regard. 2. The Committee queried as to 2. As the CAO/AO stated that they need to take action to why the vacancies had not been restructure the cadre filled. revising the salary scales, the Committee directed the CAO/AO to submit their proposals with all suggestion to the Treasury for approval. 3. 3. The Committee observed that there had been a large amount of outstanding debtor balances due to be recovered by the Corporation from various institutions, and also Bank Guarantees had not been obtained from those institutions.

Contd...

As the Treasury Representative, informed the Committee that the Cabinet had decided to grant a bond of Rs. 60 billion to the Corporation to cover the debtor balances from the CEB and other Govt. entities, the Committee directed the CAO/AO to take action to obtain Bank Guarantees whenever essential.

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Date/Name of Major Issues the Institute Identified & Ministry

Ceylon Petroleum Corporation

Problems Comments & Decisions of the COPE

4. The Committee observed that there had been some transactions 4. The Committee directed the CAO/AO to continue with taken place with some foreign them having entered into companies. agreements.

1) The Committee observed that the 1) It was informed that the 2008 & 2009 Annual Annual Reports for the years Reports had been prepared 2008 & 2009 had not been and submitted to the presented in Parliament, and also State Timber Cabinet for approval. the Procurement Plan had not Corporation. been prepared by the Ministry of Corporation.. Environment 2) The committee enquired the 2) As the CAO/AO stated that they had been informed by current position about the the Attorney General that Investment of Rs. 30 Million there had been no evidence with a Private Company. to file a criminal case against this Company, and that now they are in the process of filing a civil case against this company, and all documents relating to this agreement had been submitted to the Attorney Generalâ&#x20AC;&#x2122;s Dept. Having had a lengthy discussion, the Committee directed the CAO/AO to submit a detailed report with regard to this private company to the Committee within 2 weeks time. August 24 , 2011

Contd...

The Treasury 3). The Committee queried about 3). Representative informed not obtaining written approval to write off Rs. 14.4 million the Committee that there is worth of Debtors no special guideline to instruct any Govt. Enterprise to send the details of their debtor balances to the Treasury for the approval to write off. It

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE was also stated that at present the Treasury was having continuous discussions to have a policy decision with regard to these matters, and a circular to this effect would be issued in due course.

State Timber Corporation.

. 4). The Committee observed that 4). Due to some problems in there had been a loss of Rs. 11 their financial system, these million and 29 million losses had been indicated, respectively for the years 2007 and after analyzing and & 2008. identifying the errors, the loss had decreased gradually.

5) The Committee observed that the 5) The Committee directed the Corporate Plan for the period CAO/AO to update the 2008 -2012 had not been Corporate Plan accordingly prepared as per the PED/12 and the targets expected to be achieved yearly had not included in the Corporate Plan.

6) The Committee noted that only 6) The Committee directed the the objective with regard to sale CAO/AO to take action to of timber had been included in include all the objectives as the Action Plan. per the Corporate Plan

7). The Committee observed that the Corporation had granted an interest free loan of Rs. 2 million in the year 1988 to the Kataragama Astaphala Fund and the outstanding balance as at 30.06.2011 had been Rs. 1,115,000. Contd...

7) Public Trustee Dept. had agreed to settle this amount on installment basis, out of the funds collected by them.

8) The Committee enquired as to why 8). As the CAO/AO stated that action had not been taken by the as this British Company Corporation to recover Rs. 11.87 was no longer in existence million receivable from a private in Sri Lanka, they had no company, since 1983. way to recover this amount,

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Date/Name of Major Issues the Institute Identified & Ministry

State Timber Corporation.

Problems Comments & Decisions of the COPE the Committee directed the CAO/AO to write to the British High Commission and find out some information about this company, and also to discuss with the AuditorGeneral and to see as to what action they could take to write off this amount.

9) The Committee observed that the 9) Since the CAO/AO stated Corporation had selected a that this decision had been contractor to construct 12 taken by the then Chairman stocking sheds without any of the Corporation, without evaluation by the Technical the knowledge of the Evaluation Committee, and also General Manager, the the tender had not been offered Committee wanted the to the lowest tenderer, thereby CAO to make aware of the Corporation had incurred a such malpractices to the loss of Rs. 580,896. Hon. Minister. 10. The vehicle, bearing the No.65- 10. The CAO/AO was directed 4013, taken away by a former to keep H.E.the president as minister, had not been returned well as the Hon. Minister although several reminders were informed of this matter and sent. also to lodge an entry in the Police in this regard.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

August 26 , 2011 National Water Supply Drainage Board. Ministry of Water Supply & Drainage

Problems Comments & Decisions of the COPE

1. As per the accounts of the Water 1. Up to 30th June, 2011, the Board, the total outstanding Water Board had paid Rs. amount due to be paid to the 1,100 million to the Treasury as at 31st December, Treasury and the Board had 2010 had been Rs. 5.4 billion. come to an agreement with the treasury to pay Rs. 200 & million annually to settle outstanding amount. 2. The percentage of Non Revenue 2. It was stated that the Water Water (NRW) had been 33% in Board had taken action to the year 2010, wanted the replace the pipe lines in CAO/AO to see whether they order to arrest this situation could reduce the NRW to an acceptable level, by which, the Water Board could reduce its loss. 3. An unidentified balance of Rs. 3. On several occasions, the 1,179,693,016 had been shown Water Board had made in accounts since 1994, and in attempts to reconcile these addition, an unidentified amount balances, but due to nonof Rs. 119 million had been availability of the relevant disclosed in the year 2010. documents, they had failed to complete this task. With regard to Rs. 119 million balances as at year 2010, the CAO/AO stated that out of 110 accounts, 61 accounts had been reconciled by now.

4. The Water Board has only 04 professionally qualified Accountants, and the rest of the officers engaged in the accounting task were from the promoted staff.

4. The Committee directed the CAO/AO to submit a report on staff vacancies and the recruitment procedures to the Committee.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE

The Treasury September 07 1. An outstanding balance of Rs. 1. 52 billion had been due to the Representative informed 2011 & CPC and that amount had been the Committee that the October 17 taken over by the Treasury. Cabinet had agreed to grant 2011 a bond of Rs. 50.9 billion to CPC through the Bank of Ceylon, and that the Ceylon Treasury had taken over Electricity this liability. Board Ministry of Power & Energy

2. Only 02 Audit & Management 2. A large scale public Committee meetings each had enterprises, like CEB been held in the years 2010 & should hold Audit & 2011. Management Committee meetings at least once a month. 3.

4,644 man power had been 3. It was stated that as and outsourced by the CEB in a when they require persons situation where there are 2161 for urgent work, they obtain vacancies. services from the private companies.

4. The directive dated 18.03.2009, 4. The CAO had requested the given by the COPE, to take a Attorney General to decision on Mr.Caldera reconsider his opinion considering the previous inquiry providing more information report and the ruling of the and the Attorney General Attorney General, had not been had accepted that the implemented decision taken by the Board of directors to exonerate Mr. Caldera from the charges is legal.

Contd...

5. Proper documentation had not 5. It was directed to submit been maintained by the CEB in proper evidence to the audit respect of the transformers as well as the Committee handed over to the Lanka within two weeks time. Transformers Ltd., either for repairs or to be condemned and details of transformers to be returned to CEB by LTL.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Ceylon Electricity Board

Problems Comments & Decisions of the COPE

6. The liquidated damages of Rs. 6. This issue had arisen due to 41.7 million had not been confusion with regard to the recovered by the CEB from the due date of the open cycle IPP firm which had failed to operation and in the end, achieve the open cycle operation the board had decided that on the due date. the due date had not lapsed by then as an extension of two months had been given. The Committee directed to submit the Board decision within 2 weeks time to the Committee. 7. The CEB had invested a sum of 7. It was stated that, 8% Rs. 628,002,640 for purchase of returns on revalued assets shares of LECO Ltd., but no are required to declare dividends had been declared by dividends, as per the loan the Company for the years 2002, agreement with Asian 2003, 2007 & 2008. Development Bank and this target had not been achieved by LECO for the last few years.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 1) The Committee observed that 1).As the CAO/AO stated that the Corporate Plan prepared for there had been a delay, but September 09 the period 2011 – 2015 had not after obtaining Board , 2011 been submitted to the relevant approval in march 2011, it National authorities. had been submitted to the Transport line Ministry, AuditorGeneral’s Dept. and the Commission Treasury with the Action Ministry of Plan. and that the Corporate Private Plan had been submitted to Transport the Auditor-General’s Dept. Services on 28.07.2011. the Committee directed the CAO to look into this matter and report back.

2). The Committee observed that 2) 2008 & 2009 Annual Reports had already been the Annual Reports for 2008, submitted to the Cabinet, 2009 and 2010 had not been and action would be taken tabled in Parliament. to table 2008 & 2009 Annual Reports in Parliament early and agreed to table the Annual Reports from 2010 in Parliament before the prescribed period of time

Contd...

3) The Committee observed that the 3) Due to the matter that the projects had been continued Commission had spent Rs. 20 to the following year, this million exceeding the provisions money had been utilized for granted by the Treasury in the that particular year’s year 2009 to carry out 05 projects and agreed to see projects, out of which Rs.13 that such shortcomings in million had been recorded in an accounts would not occur in accrued account without future considering that amount as an expenditure of the projects in 2010. 4) It was informed that, in certain projects log sheets 4) The Committee noted that due to were received after about 2 reconciliation had not been done, months on the completion differences of Rs. 3.2 million, of projects, so that these Rs. 1.8 million and Rs. 6.9 amounts had been carried million in the years 2008, 2009 forward for the following and 2010 respectively had been year shown in the accounts.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

National Transport Commission

September 20, 2011 Water Resources Board Ministry of Irrigation & Water Rresources Management

Problems Comments & Decisions of the COPE

5) The Committee observed that 5) The Committee directed the Rs. 17.696 million and Rs. CAO/AO to obtain covering approval from the 147.696 million had been invested in the fixed deposits respective parties as early without the concurrence of the as possible. Hon. Minister of Finance and the approval of the Minister in charge

1. Annual reports for the years of 1. It was directed to table them 2008 and 2009 are yet to be as early as possible. tabled. 2. It was directed to get the 2. A sum of Rs.3,285,640 had been assistance of the spent to carry out the commissioner of Lands and improvements of the temporary obtain the title deeds. building situated on a land without securing the legal title of the land. 3. Rs. 204,547 had been paid to a 3. It was informed that there was no fund in the account retired officer as a surcharge for to pay his gratuity at the the delay in the payment of time of his retirement. gratuity.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems the Institute Identified & Ministry 1. The amount to be recovered from lecturers due to breach of agreements is Rs.105 million. September 21, 2011 2. There are 173 unanswered audit queries out of 287 audit queries University of issued for the period from 2008 Perdeniya to 2011. Ministry of 3. Rs. 31,494,765 had been paid as Higher language proficiency allowance. Eduacation 4. Rs.12,383,503 had been paid for 3 lecturers to follow a post graduate diploma which had not been completed by these three lecturers and moreover, an amount of Rs.1,058,048 had been paid as salaries although they had been on No-Pay leave.

Comments & Decisions of the COPE 1. It was informed that every possible action is taken to recover the dues.

2. It was directed to send replies without further delay. 3. The allowance had been paid in contrary to the circulars. 4. It was directed to hold an inquiry against the officers responsible for this payment and also to recover the paid amount.

5. A temporary lecturer had been 5. It was stated that an inquiry paid a sum of Rs.1,231,905 is being conducted. without obtaining a security bond and this lecturer had not reported to the University after studies in overseas. 6. The same supplier had 6. A stock of furniture worth of under took to deliver items Rs.12,613,263 and in good conditions without Rs.16,220,542 for the Ivor any additional charges. Jennings Hostel and this stock is not upto the standards. 7. A professor had obtained salaries 7. Action has been taken to recover the additional and allowances from the amounts paid. university as well as from three other institutions amounting to Rs.2,046,016 and Rs.1,493,000 for the same period. 8. A payment of Rs. 500,000 had 8. It was stated that the construction work will be been paid as consultancy charges started once the allocation to the State Engineering is released from the Corporation without entering Treasury. into an agreement where the construction work is yet to be started.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 1. There is a delay in tabling 1. It was agreed to table the September outstanding reports at 22, 2011 Annual reports in parliament. earliest. 2. The number of employees are Sri Lanka around 34,000 whereas the 2. The Committee was Transport number of busses in operation Board informed that action is are 5225. being taken to increase the number of busses up to Ministry of 6000 by the end of 2011. Transport 3. Although the revenue of the 3. This is due to non control of the expenditure and board has increased, the directed to pay attention on expenditure also had increased this matter. drastically.

4. Rs.14,178,548 had been paid 4. It was revealed that the over during the period from 2005 to draft facility was obtained 2010 for issuing cheques without to pay salaries and agreed considering the liquidity. to refrain from obtaining OD facilities in future. 5. There is a loss of Rs. 5 million 5. It was agreed to take action to rectify the matter. per year due to unlimited leaves obtained by drivers and conductors. 6. There was an outstanding of 6. It was stated that action is being taken to recover the Rs.11,397,657 due from 5 depots dues. for special transport hires and Rs.124,809,177 from the Ministry of Disaster and Relief Services for providing busses for the transport of refugees. 7. A case had been filed 7. The board had received neither against the person. the rent nor the shop even after the lapse of the leased period by leasing a shop at Pettah. September 23, 2011 Geological Survey & Mines Bureau

1. Annual reports for the years of 1. It was directed to table them 2008 and 2009 had not been as early as possible. tabled. 2. It was informed that the 2. Fixed assets had not been revaluation process is under revalued and accounted. way.

Ministry of Environment

3. Action has not been taken to 3. It was informed that the report the damages caused to 7 action has been taken to motor vehicles in 10 instances,

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry to the Auditor General in terms furnish these details to Contd.. Audit. of Financial Regulations. Geological 4. The accounts of the Geological 4. It was stated that action Survey & Survey and Mines company Mines would be taken accordingly established by the company had Bureau to correct the issue. not been shown.

October 06, 2011 Sri Lanka Ports Authority Ministry of Ports & Aviation

Contd...

1. Out of the estimated total 1. It was informed that a Consultancy fees of Rs.978 decision has been taken to millions, in the construction of develop the Gall port as a the Galle Port, a sum of Rs.455.5 commercial/leisure port millions had been incurred up to without damaging the the end of 2008 and due to the preliminary plans as the delay in other works on Hambanthota Port is being construction contract, the constructed as a good consultancy service had been handling port. suspended temporarily at the moment.

2. As far as the information 2. It was informed that a provided with regard to each decision has been taken to port including their location, develop most of the other funding agency, and funding ports as commercial/leisure mode i.e: loan or grant, it was ports to overcome these observed that the authority had losses. to bear an unbearable foreign exchange loans of which the foreign exchange rates changes rapidly and except for the Colombo Port, most of the other ports were running at a loss. 3. It was stated that the 3. The present actual carder of the authority had not recruited authority is 11,067 out of which staff for the Hambanthota 9700 are employed in Colombo. but as and when necessary, the staff is being released to Hambanthota. 4. According to an agreement 4. It was informed that the Authority has no other entered into between the alternative other than Authority and the South Asian paying these taxes for 35 Gateway Terminal, the years from the year 1999,as Authority had paid an indirect per the agreement, although taxes amounting to the shortcoming had been Rs.284,402,724 for a period of identified. 11 years.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Sri Lanka Ports Authority

Problems Comments & Decisions of the COPE

5. An expenditure of Rs.9,292,676 5. The Committee was had been incurred on carrying informed that this had been out repairs to the official formerly, the official quarters of a former deputy quarters of the former Dy. minister who had no connection Minister & that they had with the Authority. written to the Ministry of Public Administration to reimburse this expenditure. 6. The maintenance of the Gall 6. It was informed that a trade Face Green is provided by the union in the Authority had Sri Lanka Ports Authority where been collecting money from a private party had been allowed the users of the premises to collect money from the users and it is used for the of the premises. welfare of the staff. 7. The debtor balance of shipping 7. It was directed to recover agents as at 30.08.2011 had been the possible balances which Rs.1,595,139,778. are within the credit period and to write off the rest with necessary approval. 8. There is a recoverable rent 8. It was stated that all income of Rs.93,403,172 as at necessary action has been 31.08.2011 of which Rs. taken to recover this 55,517,194 had been remaining amount. for more than 5 years. 9. Two cranes purchased at a cost 9. A suitable track had been of Rs.444 million in the year built at the moment. 2008 had been idling even by 30.06.2010. 10. In the Oluwil Nautical Training 10. The Committee was Institute, the number of students informed that it is expected following the courses was less to implement some courses than 20 although a staff of 102 after the completion of had been deployed for the construction work of the purpose. Oluwil Port.

Contdâ&#x20AC;Ś

11. Sri Lanka Ports Authority had engaged in several controversial 11. It was informed that the construction work including Authority had involved Suriya Wewa Cricket stadium with these construction and the Ceremonial Hall at the works upon Cabinet Araliyagaha Mandiraya. decisions and for the

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE construction of the Cricket ground Sri Lanka cricket had paid Rs.1200 million so far and for the Ceremonial hall, Rs.11.9 million had been reimbursed out of the total expenditure of Rs.35 million.

Sri Lanka Ports Authority

1. The Corporate plan for the period 1. It was directed to revise the Corporate plan. 2011-2015 contains number of shortcomings. October 12, 2011 Development Lotteries Board Ministry of Finance & Planning

The matter had been 2. 26 motor vehicles had been 2. referred to the Bribery & obtained on hire basis for a Corruption commission. period of four years making an advance payment of Rs. 24 million contrary to the FR and without the concurrence of the Ministry. 3.

Without following the 3. It has been informed that the said transaction had procurement procedure, 14,075 T taken place during the shirts had been purchased. previous management.

4. The building in Union Place 4. The Committee was informed that the board which was purchased for Rs.421 occupied in the new million remains closed down for building in 2008. three years and the office of the board had been maintaining in a leased building paying Rs. 16.1 million as the rent. 5. Rs. 276,673,546/- had been 5. It was informed that this action had been taken with invested in Treasury Bills and a view to earning an Fix deposits in 21 instances in interest. 2008 without the approval of the Ministry. 6. The procument procedure of the 6.

Contd...

Government had not been applied in connection with the promotional expenditure of Rs.17,750,000/- incurred in the year 2009.

The Committee was informed that this had happened during the previous management.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Development Lotteries Board

Problems Comments & Decisions of the COPE

7. A sum of Rs. 6,339,148/- had been paid to officers as the Attendance and Transport Allowance without the Treasury approval. 8. A loss of Rs.624,633/- had been incurred due to the failure to encash the Tax Reserve Certificates within 03 years. 9. The procument guide lines had

not been followed in selecting a service provider for the printing of lottery tickets and had incurred an expense of Rs. 75 million .

October 12, 2011 Lanka Mineral Sands Ltd. Ministry of State Resources & Enterprise Development

The Committee was informed that this practice is in existence for a long time.

8. It was directed to write off this amount with the necessary approval.

9. It was informed that, as per the Cabinet decision, the tenderer who produced the lowest tender was selected to enter into an agreement till 2012.

Even though the COPE had 1. It was stated that a sub directed not to market mineral committee had been sands without offering tenders, appointed to check the 15,750 MT of Ilmenite at US$ variances in the World 100.74 per MT and 445 MT of Market. The Committee Rutile at US$ 846.65 per MT directed to submit separate had been sold to the previous reports by the Internal buyer without calling for Auditor and the Institution. tenders. By that time, the market price of Ilmenite and Rutile amounted to US$ 311 and US$ 1776 per MT respectively and as such the estimated loss amounted to Rs.408,835,843/-

2. It was observed that there are 2. It was directed to get the three officers including the Cabinet approval. General Manager who are above 60 years.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry October 13, 2011

National Building Research Organization

Problems Comments & Decisions of the COPE

1. There are 27 vacancies in the approved carder of 223.

Ministry of Disaster Management

October 14, 2011

Air Port & Aviation Services Ltd. Ministry of Civil Aviation

October 18, 2011

The Committee was informed that the approved cadre has been revised and that the new cadre is 273 and further it was mentioned that the organization had been confronted with a financial problem to fill all the vacancies.

1. The institution had not prepared 1. It was agreed combined financial statements amalgamation and instead three financial ambiguity with statements are prepared. the ownership lands is cleared.

to do the once the regard to of certain

2. Rs.17,691,195 had been paid as 2. It was agreed to submit a report on the land interest due to the delays acquisition process. experienced in the land acquisition process during the last two years. 3. The company had not paid the 3. The treasury was directed to dues this year which had to be send all the particulars with paid for the loans obtained. regard to those outstanding amounts and informed the CAO/AO to send a reply once those particulars are sent by the treasury. 1. The following irregularities were 1. It was directed to submit a reported regarding the buildings report on the abandoned buildings and the others. owned by the Authority.

Mahaweli Authority

Ministry of Irrigation & Water Resources Management

180 buildings had been abandoned without carrying out any repairs.

204 buildings and official residences remain idle in 03 regions.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry c) 200 and 193 official residences in Walawa and Welikanda Contd... respectively had been used by unauthorized parties.

Mahaweli Authority

2. The lease installments amounting 2. It was informed that the to Rs.1,185,400 recoverable prescribed period for any from the Venture Capital (Pvt) legal action has been lapsed company had not been recovered as these loans are dated and the self employment loans back to more than 10 years granted to private parties and the Venture Capital amounting to Rs.7,412,353 had Company is also under been outstanding. liquidation. Therefore, the Committee directed to write off these amounts if there is no way of recovering.

3. It can not be satisfied with the 3. It was directed to obtain the way the Authority had leased out rentals as per the agreement the lands for telecommunication for fixing of the posts and posts and moreover, the rentals not for the land value. It for those transactions had not was also directed to submit been obtained. a report on the lands including the number of lands leased out for this purpose island wide and the parties to which these lands had been leased out and also the copies of the agreements with the amount obtained for each post. 4. Eight vehicles belonging to the 4. It was stated that one vehicle had been received Ministry had been taken out by out of the eight vehicles. the Hon. Ministers when their portfolios have been changed.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 1. The difference between the 1. Although it was stated that October 19, balances shown in the financial those balances had been 2011 statements and those appearing reconciled by now, the Sri Lanka in the relevant ledger accounts is Committee directed to State Rs.4,125,534,243. submit a report indicating Plantations as to how these balances had been reconciled. Corporation

Ministry of State Resources & Enterprise Development October 19, 2011 National Lotteries Board Ministry of Finance

2. The lease rent amounting to 2. Almost half of the due Rs.8.5 million remains unamount is from Sri Lanka recovered from 6 institutions as Broadcasting Corporation. at 30.09.2011.

1. Internal audit of the institute is 1. It was directed to establish carried out by an external audit an internal audit unit from firm. the institute once the contracted period with the private firm is over. 2. A large amount of money had 2. It was directed to submit a been spent for modernization on breakdown of the a rented building and for the expenditure. three years from 2008 to 2010, the amount spent had been Rs.8,123,348. 3. The total debtor balance as at 3. It was informed that every 30.09.2011 is Rs.207 million. possible action is being taken to recover the debts. 4. The loss incurred by the board 4. The board had not received upon the investment in the On any dividend by this line National Lottery Company investment. had been Rs.983 million and that amount has been written off from the books upon a cabinet decision.

Contd...

5. Advances amounting to Rs.29 5. It was directed to submit the million which exceeds the 20% names of the advertising of the contract amount had been firms and the amount paid to granted as mobilization advance each firm from year 2009 to and it is a violation of the 2011. Government procurement guidelines.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 6. When printing the lottery tickets, the 6. The answer of the CAO was National board gets 50% of the tickets that giving the quota only Lotteries printed by the State Printing to one printer would create Board Corporation and the rest is printed a monopoly. by a private company.

October 20, 2011 University of Ruhuna (Ministry of Higher Education)

Contd...

No Annual report has come 1. It was directed to table the outstanding reports before before the Parliament after 2005. the commencement of the Budget.

2. Out of the 175 audit queries 2. It was directed to reply all the audit queries with copies issued since 2000, 112 queries to the Committee. still remain unanswered. 3. The Corporate plan prepared for 3. It was agreed to take necessary action at the period 2011-2015 had not earliest. been approved by the Council . 4. It was observed that the 4. It was stated that there are some problems regarding following assets had been idling. the generator and the land. It was further mentioned a) 312 KW generator that it was not economical to use the mobile Clinic, b) 62 acres out of the Gam Udawa received during the grounds belonging to the faculty Tsunami Period and of agriculture. ( valued at Rs.184 therefore the institute is million) willing to donate it to any c) Mobile Clinic valued at US $ institution willing to make 450,000 use of it. d) Stock of medical equipment received as a donation. 5. The construction work has 5. The construction of the examination come to a standstill as the hall had been abandoned after first and the second spending Rs. 377,770. contractors had abandoned work but now, the contract had been awarded to CECB. 6. It was revealed that these 6. Nine research projects had been research projects had been abandoned after spending Rs. abandoned as some of the 1,388,590. members of the academic staff had gone overseas abandoning the projects.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE 7. Since it was mentioned that there was a problem with regard to the brand and its obsolete condition, the Committee directed to submit a comprehensive report on this matter.

University of Ruhuna

7. The Internet Protocol Telephone System installed spending Rs. 4,375,678 had not been used for the said purpose so far.

October 20, 2011

1. Annual reports for the years of 1. It was directed to table all 2008, 2009 and 2010 had not the outstanding reports as been tabled. early as possible.

University of Kelaniya Ministry of Higher Education

October 21, 2011 Sri Lanka Institute of Development Administrati on Ministry of Public Administrati on & Home Affairs

October 21, 2011 Land Reforms Commission Presidential Secretariat Contd...

2. There are 254 vacancies.

It was informed that the institute is in the process of filling the vacancies.

3. Due to number of accounting 3. It was directed to discuss deficiencies, the audit opinion for this issue with the Auditor the 2010 had been disclaimed. General and take action to correct it. 1. Audit & Management Committee 1. This is essential for the meetings had not been held for going concern of the the year 2011. institution. 2. Fully depreciated non- current 2. The institution had not assets which are in use, had not followed to the SLAS 18. been revalued and brought to accounts.

The Auditor General had expressed a disclaimer opinion on the financial statements for number of years.

1. It was directed to pay attention on the SLA standards when preparing accounts, large amount of unsettled balances, unrecognized lands acquired by the Commission and the non moving debtor balance of Rs. 2,140,531,267 remained over a period exceeding 8 years.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Land Reforms Commission

Problems Comments & Decisions of the COPE

2. According to a judgment of the Supreme Court on a case filed on non allocation of the minimum of the land for the land lord on land taken over by the Government, a sum of Rs. 148,715,363/- had to be paid to the plaintiff.

2.The appeal made against the former verdict had also been defeated and the institute has to pay this amount to the particular party with interest.

3. Contrary to the circular of 3. It was informed that these Government lands, there had shortcomings had been been cases where the lease corrected by now. agreements had not been entered into, non-cancellation of lease agreements following the breach of conditions and defaulting of payments and not renewing lease agreements. 4. It was observed that a 15 acres 4. The Government is land in Mirigama had been deprived of obtaining a leased out for a period of 50 large income due to the years subject to lease rent of failure in reviewing the Rs.7,000,000/- and as per the lease agreement and it was conditions laid down in the directed to submit a copy of agreement entered into in 1995, the agreement with the the institute can not either cancel recommendations of the or take any step on this matter. legal officer and a list of such lands that had been leased out to private parties.

5. A three acre land in Homagama 5. The Committee was had been leased out to a private informed that the party had party without entering into a agreed to settle this amount lease agreement and the amount in installments and by then to be recovered from the party is Rs. 17 lakhs had been Rs.2,430,311/recovered.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems the Institute Identified & Ministry October 24, 2011 1. Rs. 3.1 million mobilization advances relating to the Sri Lanka Beddagana Project remains Land unsettled for over 5 years. Reclamation Development 2. A cost of Rs.22,329,882/Corporation incurred for two projects had not been recovered from the relevant Ministry of Pradeshiya Sabhas although Defence several attempts were made.

Comments & Decisions of the COPE

1. It was informed that the Corporation has written to the Judicial Services Commission in this regard. 2. The said amount had been written off from the 2010 accounts.

3. The Corporation had sustained a 3. It was revealed that the Mayura place construction total loss of Rs. 28 million in the project had been abandoned projects related to Mayura Place, due to lack of funds and the Tewatte and Bere Lake. Tewatta Project had brought a loss due to the changes made on the original plan. The loss related to the Bere Lake project is due to the non settlement of payments by the Ports Authority for the additional work carried out. 4. According to the present Act, the 4. It is recommended to amend provisions available to stop the Act to get the necessary filling of lands are limited. authority. 5. In a situation where there is an 5. It was informed that the amount of Rs.9,964,782 due Corporation had taken from the Land Reclamation and action to recover this Development company, another amount. advance of Rs. 2,054,249 had been paid to the same company to start another project. October 24, 2011 Lanka Logistics Ltd. Ministry of Defence

1. The Annual reports are not tabled 1. It was directed to table the by the company in Parliament annual reports in and the CAO stated that they are Parliament. not expected to do so other than sending to the Treasury. 2. There is a recoverable amount of 2. Requests had been made to Rs.1,219 million from armed settle the dues. forces.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry 1. Annual reports for the period 1. It was directed to take early from 2007-2010 had not been action to table them before October 24, the commencement of the tabled. 2011 budget. Urban Development 2. It was agreed to submit a 2. The ongoing 65000 housing units revised corporate plan Authority project in the Colombo city had including this project as not been included in the well. Corporate plan for the period 2008-2012. Ministry of Defence 3. An excess staff was observed in 3. It was directed to revise the carder paying the attention some grades whereas vacancies to the salaries of the in some grades. professionals when the carder is revised by the Dept. of Management Services.

4. The accumulated loss as at the end of 2007 is 4. The Committee was informed that this amount Rs.1,110,213,520/had come down to Rs.143 million in 2010 after recovering the receivables. 5. Public tenders had not been 5. The recipients had been selected by a Committee called for the sale of houses at appointed by the Ministry Dematagoda Housing Scheme in addition to the displaced and the capability of the people and according to the recipients for payment has not CAO, the recovery has been ascertained and as such, a been delayed due to the sum of Rs.80,496,000/- was due delay caused in issuing from recipients. deeds.

6. A sum of Rs.8,909,035/- had 6. It was stated that action has been taken to recover the been due from 24 lessees of the outstanding amounts. old world market shell. Contd..

7. An un-recovered rent income 7. It was directed to take action to recover the amounting to Rs.615,775,883 amount that could be are due from the Colombo recovered and, with the Central Super Market Complex. necessary approval, to write off the rest.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

Problems Comments & Decisions of the COPE

Urban Development Authority

8. 43.9 perches had been sold by 8. A detailed report was called the Sri Lanka Land Reclamation in. and Development Corporation without obtaining the approval of the UDA.

October 25, 2011

1. There was an outstanding sum of 1. This transaction is in contrary to the objectives of Rs. 36.4 million recoverable the authority and it was from an Australian company ,but directed to submit a due to a time bar , it stays detailed report including unrecoverable to date . the persons responsible in taking a decision to operate a television network and to submit the final report of the Bribery & Corruption Commission given with regard to Mr. Ruwan Kasiwatte, the director who was in charge of the project..

Southern Development Authority Ministry of Economic Development

2. As per the minutes of the 2. It was directed to write to previous COPE meeting, a sum the Ministry and get this of Rs. 6,694,450/- had been paid amount reimbursed. as salaries to 10 employees released to the Ministry of Nation Building & Estate Infrastructure. 3. The Kirala Kela project which 3. All the persons, contributed consumed Rs.7,113,104/- had to take this collective been a fruitless project. decision must be penalized. 4. Although, Rs.13,607,115/- had 4. It was directed to submit a been deposited with different report on the acquisition of divisional secretaries for lands. acquisition of lands, no effective action has been taken even upto 2010. Contd...

5. The Kohila Vagura Project in the 5. Such a situation had arisen Karandeniya electorate had been as the Authority is acting in abandoned after spending Rs. contrary to its objectives. 5,627,923/-

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues the Institute Identified & Ministry

6. Southern Development Authority

Problems Comments & Decisions of the COPE

The expenditure of Rs. 6. It was informed that the 10,539,989 incurred due to land legal action had been taken acquisition, had become fruitless against the Ministry of as the planned projects had not Fisheries and the Laugh been implemented yet. Gas company responsible for the non-implementation of the projects.

7. A sum of Rs.450,725/- had been 7. It was directed to recover paid to the former Coordinator the amount from the even after he had left office. Coordinator and to report to the Committee.

October 25, 2011

Samurdhi Authority

Ministry of Economic Development

Contd...

8. No dividends had been received 8. It was directed to submit a for the amount of Rs.43.888 detailed report of this million invested in the Venture company including the capital. current monetary position. 1. There is a large number of 1. It was directed to do an vacancies. assessment before filling the vacancies. 2. In the Fruit Export Project at 2. It was directed to hold an Galgamuwa, Rs.4.7 million internal inquiry against the cheque had been written in persons involved in this favour of a particular personâ&#x20AC;&#x2122;s matter and report it to the name, without writing it to the Committee. name of the institution. 3. The Director board should 3. A loss of Rs.164 million had be made responsible for this been incurred by a leasing issue and directed to what programme where an agreement action could be taken had not been entered into with against the Board of the leasing company with regard Directors. to the leasing amounting to Rs.230 million. These type of 4. A sum of Rs.4,005,000/- had 4. shortcomings had resulted been defrauded by 19 members due to the fact that the of the staff of the Samurdhi internal audit was not Bank, Nuwara Eliya by strong enough. recording as payments made to the beneficiaries. 5. The Wellawaya Samurdhi Maha 5. It was directed not to allow Samgam had invested any Maha Samgam to Rs.2,200,000/- in the Pramukha invest money in any Bank Bank which could not be without obtaining the recovered and a sum of approval of the Director

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry Rs.14,785,000/had been Board. defrauded by producing Samurdhi fictitious fixed deposit Authority certificates.

6. A sum of Rs.3,789,500/- had been obtained as loans by 23 6. The matter had been officers of the Padiyapelella referred to the CID and it Banku Sangam by introducing was directed to submit a fictitious names. report on this. October 28, 2011 Wayamba University Ministry of Higher Education

1. Some resources owned by the 1. It was directed to submit University had been idling for explanations for all such certain period of time. resources. 2. University had not credited 2. It was directed to take money received for various action to correct the matter. courses to the University Fund in terms of the University Act. 3. The salaries and allowances had 3. It was directed to see that been paid to the academic staff the academics sign the without confirming the arrival and departure attendance. properly. 4. The recoverable amount due to 4. After deducting from the breach of agreement by a gratuity and provident fund, lecturer who had not returned to there is a balance of Rs.3 work after the completion of million where the studies had been Rs.3,193,898/university had come to compromise to recover it in installments.

October 28, 2011

Post Graduate Institute of Pali & Buddhist Ministry of Higher Education

1. The Corporate plan prepared for 1. It was directed to revise the the period 2010-2015, contains plan. number of short comings.

2. Since the inception in1975, the 2. It was informed that the institute has been functioning in institute is in the process of a rented building and Rs. 40 finding a suitable place to million had been paid as rent build the institution. from the year 1994 up to now. The annual rent of the present place is Rs.4,500,000/-.

Contd..

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of the Institute & Ministry Post Graduate Institute of Pali & Buddhist

October 31, 2011 National Savings Bank Ministry of Finance & Planning

Major Issues Identified

Problems Comments & Decisions of the COPE

3. It was mentioned that the 3. The Committee institute has only two old vehicles recommended the decision. and that it is intended to purchase a van and a car with the money invested for that purpose.

1. In comparison to year 2009, the 1. The reason for the decrease had been due to the interest income in 2010 had decreased by Rs.903,966,000/investments made in treasury bills or Treasury Bonds as per the Act. 2.

The contribution to the 2. It was due to a policy decision taken with the consolidated fund, which had Treasury. been 94% in 2008, had reduced to 49% by 2010.

3.The Branch at Chatham street had 3. It was stated that the Bank is expecting that the been vested in the Government compensation would be due to security reasons and the amount receivable as per the cost received by the Government. of the land amounting to Rs.34,600,000 is yet to be received.

4. The fraudulent cash withdrawls 4. It was directed to submit a detailed report on this. as at 31.12.2010 amounted to Rs. 19,836,607/- and adequate action has not been taken. 5. The External Security Service 5. The tenders had been called had been selected at a cost of under limited number of quotations as some of the Rs.45 million without following suppliers were omitted on procurement guidelines. the instructions of the Ministry of Defence.

Contd..

6. Three loans amounting to Rs.12 6. It was directed to acquire the land immediately. million had been granted to a customer against a mortgaged property which had been valued in three instances differently out 90

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry of which the first valuation was claimed to be very high National according to the provincial Savings Bank valuer. But the bank had neglected the opinion of the valuer. 7. According to the CAO/AO, 7. Rs.2,351,520/- had been paid as the bank had planned to rent for building which had not construct a building in the been used even upto 30.09.2009. head office premises and as a result, some officers were to shift to the said building. But this move had got delayed due to the delay experienced in the construction work.

October 31, 2011

Lankaputhra Development Bank Ministry of Finance & Planning

8. 866 Banking Assistants had been 8. It was stated that they were recruited without conducting recruited as per the scheme examinations. of recruitments. 1. Annual reports for the years of 1. The Committee directed to 2009 and 2010 had not been table the reports as early as possible. tabled. 2. The Bank doesnâ&#x20AC;&#x2122;t have a full 2. It was directed to discuss time internal auditor. with the Treasury and take early action to fill the vacancies of the major positions. 3. The Corporate plan contains 3. It was directed to revise the number of shortcomings. Corporate plan. 4. The opinion given on the 4. It was directed to submit the accounts by the Auditors is management letter of given unqualified. by the auditors. 5. Out of the total portfolio of 5. The Committee was Rs.2.3 billion, the non informed that most of the performing loans had been loans are now being settled. Rs.1.3 billion and the current ratio had been 55% .

Contd...

6. It can not be satisfied with the way

the Bank had rescheduled some of 6. It was directed to submit a detailed report on these the loans given to customers and outstanding. also on the action taken to recover the loans.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems Comments & Decisions of the Institute Identified the COPE & Ministry i) Bettons Group of Companies – Rs.

Lankaputhra Development Bank

300 million ii) Eksath Dheewara Udana Thrift & Credit Co-op Society – Rs. 75 million iii) Torana Music Distributors Ltd. – Rs. 21 million iv) Nandana Auto Products (Pvt) Ltd. – Rs. 42 million

7. By the 2007 budget, Rs. 1000 million had been allocated for 7. It was directed to submit a report including the amount re-structuring the garment obtained by the Budget, factories and the recovery of the number of factories obtained loans granted out of this this facility, no of factories provision is not satisfactory. which had been restructured and the number of factories which had not settled the loans.

October 31, 2011 University of Sabaragamu wa Ministry of Higher Education

1. Key positions such as Registrar 1. It was directed to make the and Bursar remain vacant and no place more attractive so that qualified applicant had been more people may apply. found although it was advertised 4 times. 2. A lady officer serving in the post 2. It was informed that the of Computer Data Processing Police investigation is Operator in the University has underway and the submitted a bogus educational Committee directed to certificate, but action has not submit a report within one been taken against her. month after the inquiry at the University level 3. A senior lecturer who had been treated as a person vacated the post in the University of Peradeniya has been recruited as a senior lecturer, contrary to the University Establishment Code.

3. It was directed to inform the persons concerned, about the unlawful action and not to follow that in the future.

4. A sum of Rs. 139,000 had been paid 4. The Committee directed in favour of a certain employee of to take early action against the University in their personal this person and report back names for hiring 03 buses to to the Committee within participate in the Annual general one month Meeting, of their Trade Union. But Contd..

it had been confirmed that these buses were engaged in their normal duties.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Major Issues & Problems the Institute Identified & Ministry 5. Four camping tents had been purchased at a cost of Rs.780,000/- for the Dept. of Tourist Management but these University of tents had been impossible to be Sabaragamu used due to the fact that the ground sheets had not been wa supplied. Tents had been utilized spreading polythene sheets.

November 14, 2011

Road Development Authority & Maga Neguma Companies Ministry of Ports & Highways

Comments & Decisions of the COPE 5. It was directed to inform the Company that the matter is treated as finalized and that the retention money of 20 % will be retained.

1. The companies had claimed that 1. However, except, Maga they do not come under the Neguma Road Construction & Development Company , purview of the COPE and as the other two companies such, they are not supposed to had been present and the come for the examinations. Further, there was an ambiguity matter related to the formation of the companies as to whether the Maga Neguma was kept open to be companies were established discussed. The CAO was purely as per a cabinet decision. also directed to clarify the legal position on these three companies within three weeks. 2. It was stated that the Maga Neguma Companies are given projects without tenders only for work in urgent nature and that it does not exceed 5% of the total provision received from the Government.

2. The Committee directed to submit a report on how much was given to the Maga Neguma companies and other outside companies with or without tenders.

3. There were 89 vacancies in the carde of Engineers at the end of 2010.

The Committee was informed that , due to poor salaries paid , it is difficult to retain the engineers.

4. The deficit in the financial 4. This has happened as the statement of the Authority has RDA does more work amounted to Rs.7 billion. exceeding the provisions received from the Treasury.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Major Issues & Problems the Institute Identified & Ministry 1. A contract has been awarded to a private company at a cost of November Rs.22.2 million only to prepare 15, 2011 the Corporate Plan which is Telecommuni behind quality. cation Regulatory Commission 2. Only one Audit and Management Committee Presidential meeting had been held for the Secretariat year 2010 and one for the year 2011 up to September.

Comments & Decisions of the COPE 1. Bribery & Corruption Commission had informed that the investigations could not be carried out further and the case is still under the investigations of the CID.

2. Being a large scale institution, it should be held at least 4 times a year.

3. The Development of 3. According to the CAO, Sri Telecommunication Tax Lanka Telecom pays amounted to Rs.6,672 million only1/3 of the above Tax to had been under paid by Sri the TRC and accordingly, Lanka Telecom during the Rs.995 million had been period from 03 March 2003 to received so far. 31 December 2010. 4. The total debtor balance as at 4. Non payments for the the end of the year is frequencies used by Rs.3,154,106,357/- where a various institutions had balance of Rs.254,714,539/been the prominent reason had been remaining for the and it was stated that the period ranging from 02 to 19 institute does not expect to years. take action regarding the national institutions. 5. A vehicle valued at 5. Requests had been made to Rs.7,304,348/- belonging to get the vehicle back. TRC had been released to the Ministry of Posts and Telecommunication in the year 2005. 6. The Committee 6. Discussed the difficulties in emphasized the retaining the skilled staff due to requirement of poor salary scales. professional staff in TRC & was of the view that to facilitate such requirements professional training needs to be given.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Appendix C

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Appendix C Major issues and Problems Discussed at the meetings of Sub Committee I (Finance) of Committee on Public Enterprises Date/Name of Institution and Ministry Sep. 13th 2010 Institute of Policy Studies (Ministry of Technology & Research)

Sep. 14th 2010 Local Loans & Development Fund (Ministry of Finance & Planning)

Major Issues and Problems Discussed

Comments by the COPE and Decisions

1. The Corporate Plan has not been prepared according to the guidelines provided in the Public Enterprises Circular.

1. All specified items in the Circular should be included when preparing the Corporate Plan.

2. Treasury approval has not been obtained for the Operating Manual.

2. As the Institution had already submitted it to the Treasury, immediate intervention of Treasury is needed.

3. Audit Committee has not been appointed

3. As the treasury representative has not been nominated, it is required to appoint treasury representative very soon.

4. Receivables from two employees released from the Institution had not been recovered.

4. As the two officers had been released to the treasury, this amount should be reimbursed from the Treasury.

5. A foreign grant had been obtained directly to the institution violating the State Accounts Circular No. 30/94 of 20.04.1994.

5. As the foreign grants should channel through the Department of External Resources, this should be regularized.

6. Bonus had been paid to the staff without obtaining the prior approval from the relevant authorities.

6. Approval of the Cabinet of Ministers, Ministry of Public Administration/ Treasury needs to be taken as per the Public Enterprises Circular No. 95 of June 1994.

1. Vacancies exist without being filled 1. The process of getting approval of the Salaries and Cadre Commission for considerable period of time in needs to be expedited. the Institution. 2. Loans that had been granted for the 2. Feasibility study should be done for each Projects in Certain Local Authorities project and should follow the guidelines of had not been recovered. the Institution providing grants. 3. Provision for bad debts had not been 3.It is required to keep a certain percentage as made when preparing accounts. provision for bad debts in future.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Institution and Ministry Sep. 16th 2010 Superior Courts Complex Board of Management

Major Issues and Problems Discussed 1.

Comments by the COPE and Decisions

Loans receivable from other Institutions had not been recovered.

1. Board of Directors has the authority to take a decision to accommodate the offices under the Ministry without a rent and take actions to recover dues from other institutions.

2. Quarters had been provided to the officers on rent free basis without obtaining the prior approval.

2. Approval of the Ministry of Public Administration and the Treasury need to be taken.

(Ministry of Justice)

3. Recurrent expenditure had been 3. A gratuity plan need to be prepared increased as the cost per employee and discuss with the Treasury to have had gone up due to salary increases separate provision for gratuity payments. and calculation of gratuity based on the last salary drawn by employees.

Sep. 16th 2010 Sri Lanka Export Development Board

1. A report has not been submitted as per the directives given in the previous Committee meeting regarding the expenditure incurred in “Rajarata Expo” Exhibition.

1. A report should be submitted with necessary details within 2 weeks.

2. Rent has not been received from the Trade Stalls operated in Chennai, India.

2. The CAO/AO agreed to take action to recover the dues from Bank Guarantees, where receivables could not be recovered.

(Ministry of Industries & Commerce)

3. Lack of performances observed as 3. The CAO/AO agreed to submit a report regarding these shortcomings. several projects and activities had not been carried –out as planned.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Institution and Ministry Sep. 16th 2010 Sri Lanka Convention Bureau (Ministry of Economic Development)

Major Issues and Problems Discussed

Comments by the COPE and Decisions

1. Expected performance has not been 1. As figures reflected the low performances the reports should be updated with actual achieved during the year 2009. figures. 2. There had been an un -reconciled amount of Rs 19 million in the year 2. A report should be submitted with all 2009. categories within two weeks’ time. 3. Money has been invested in the call deposit without being obtained the 3.Process of obtaining the Treasury approval to concurrence of the Minister of keep the deposit should be expedited. Finance. 4. Incorrect accounting procedure has 4. This should be rectified in preparing been practiced in preparing of P & L accounts from next year onwards. account.

Sep. 17th 2010 Securities & Exchange Commission of Sri Lanka (Ministry of Finance & Planning)

1. Three officers who had visited India on official matter had not submitted the reports.

1. The CAO/AO agreed to submit the reports as per the Circular issued by the Ministry of Finance & Planning.

2. A sum of Rs. 7.6 million has been incurred to pay bonus for the staff without paying attention to Treasury Circulars.

2. Treasury circulars need to be followed and covering approval should be obtained for this.

3. Vehicle leasing facilities have been provided for the higher positions of the commission on contributory basis.

3. The CAO/AO agreed to re-think about the system and report to the Committee regarding the action taken and employees share made in respect of this.

4. Huge amount of Rs. 25,922,288/- has been incurred as rental for the office building and car parking fees.

4. It is recommended that having their own office building and parking area would be a better solution.

5. Some reports necessary for auditing has not been provided for Auditor General’s Department by the Internal Auditors.

5. The CAO/AO agreed to take immediate action to forward the said documents after receiving the list of required documents from the Auditor General’s Department.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Institution and Ministry Sep. 17th 2010 Tower Hall Theater Foundation (Ministry of National Heritage & Cultural Affairs)

Major Issues and Problems Discussed

Comments by the COPE and Decisions

1. The Corporate Plan for the Year 2007-2011 and Action Plan has been prepared, but not updated.

1. It is recommended to update Corporate Plan and Action Plan as a rolling plan.

2. Staff has been recruited in excess to the approved cadre.

2. As the new recruitment scheme has been already submitted for Treasury approval, regularization process should be done soon.

3. Annual Reports for the years of 2006 and 2008 has not been presented to the Parliament.

3. Annual reports need to be presented to the Parliament very early.

4. An Accountant who was under interdiction for 2002-2005, and was on compulsory leave since March 2009 had been paid salaries.

4. Since the preliminary inquiry has not been conducted within three months the Labour Tribunal has directed to do the payments. Therefore preliminary inquiry should be conducted without further delay.

Internal construction and the 5. The institution should confine its activities consultancy services have been to the objectives laid down at the time of carried out in contrary to the establishment. objectives of the Institution.

6. 10% allowance of the profit has been 6. The Treasury was directed to look into the paid to the Project Manager, who matter. also in charge of the contract, without prior approval from the Treasury. 7. The commemoration Ceremony had 7. It is recommended to hold the not been held of the late Commemoration Ceremony in a suitable Mr. Ranasinghe Premadasa, the manner. founder of the Tower Hall Theater on st 01 May. 8. Consultancy services had been 8. Action should be taken to obtain the provided by the institution for the ownership of the building in consultation programmes in a Building located in with the Hon. Prime Minister & the Western the â&#x20AC;&#x2DC;Race Courseâ&#x20AC;&#x2122; which is owned by Provincial Council. the Western Provincial Council.

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Institution and Ministry Sep. 17th 2010 Sri Lanka Institute of Local Governance (Ministry of Local Government & Provincial Councils)

Major Issues and Problems Discussed

Comments by the COPE and Decisions

1. Annual Reports have not been 1. The CAO/AO agreed to submit 2009 Annual Report to the Parliament within two weeksâ&#x20AC;&#x2122; presented to the Parliament since time. Annual Reports from 2005-2008 2005. should also be sent to the COPE within a week. Procedures should be followed to table all the reports to the Parliament. 2. Three members have not been appointed to the Governing Council.

2. It is required to get those members nominated very soon with the consultation of the Hon. Minister.

3. There was a delay in conducting 3. The CAO/AO agreed to hold the Audit and Management Committee meetings without Audit and Management Committee further delay. meetings.

4. Due to delay in construction, the land 4. The immediate action is needed to regularize the situation. owned by the UDA had been sold to another party by the UDA, which was initially agreed to purchase by this institution at Rs. 15 million. As cancellation fee of the contract entered in to, the UDA had charged Rs. 1.3 million and the balance had been invested in fixed deposits without obtaining the required approval. 5. Stock of books which are not relevant 5. Action should be taken to donate the books to libraries of the Local government to the Provincial Councils has been Institutions after valuation and Action purchased incurring a considerable Taken Report should be submitted to the cost. Committee. The CAO/AO agreed that approval of the Governing Council would be obtained to purchase books in future. 6. There were shortcomings in 6. More attention should be paid to include real estimates for the programmes in preparing preparing estimates for the training Corporate Plan. courses and as such expenditures were not compatible with the allocations made.

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Institution and Ministry Sep. 21st 2010 Sri Lanka Accounting & Auditing Standards Monitoring Board (Ministry of Finance & Planning)

Major Issues and Problems Discussed

Comments by the COPE and Decisions

1. Appointment of Board members had 1. Early action is needed to appoint all been delayed and Board meetings members for the Board and to conduct have not been held in time. Board meetings. 2. Internal Audit has not been carried 2. It is recommended to carry out Internal out either by the Institute or Internal Audit functions through the Internal Audit Audit Division of the Ministry. Division of the Ministry. 3. Corporate plan has not been prepared 3.The CAO/AO agreed to submit the revised according to the guidelines provided Corporate Plan after finalizing. in the Public Enterprises Circular. 4. Low level of performances has been 4.The Committee emphasized the necessity of observed in relation to the reviewing continuous reporting of the activities of the of annual reports of the institutions. large institutions to the COPE and it is agreed to seriously consider this matter in the main COPE meeting. 5. Actions have not been taken 5. Since there is no provision to impose a against the institutions that have penalty in the existing law, it is emphasized not provided annual financial the necessity of amending the existing law. statements to the AG’s Department. 6. A representative of Sri Lanka 6. The view has been appreciated by the Chartered Accountants expressed the Committee and agreed to give directives to willingness of their members to chair the Treasury after being discussed in the the Audit Committees of Main Committee. Government institutions.

Dec. 08th 2010 Udarata Development Authority (Ministry of Economic Development)

Contd.

1. Corporate Plan has not been updated 1. It is recommended to include Projects and Action Plan has not been connected with the “Gama Naguma” in the prepared based on the Corporate new Corporate Plans and Action Plans to Plan. avoid implementation of programmes in haphazard manner.

2. Annual Report for the year 2009 has 2. The CAO/AO agreed to take early action to present the Annual Report for the year 2009. not been presented in the Parliament.

100

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Institution and Ministry Udarata Development Authority

Major Issues and Problems Discussed

Comments by the COPE and Decisions

3. Some of the vehicles belonging to the Authority have not been registered under the name of the Authority.

3. As these vehicles belong to the Ministry the CAO agreed to look into the matter and report to the Committee within two weeks.

4. A payment of Rs. 2.5 million has 4. It was directed to carry out an inquiry regarding this and report to the Committee been made for the earth work within one month. connected with the construction of Ambuluwawa Concrete Road, which has been covered under another contract. 5. The Committee seriously enquired 5. The Committee directed the CAO/AO to send detailed explanation to the Committee the following failed projects in regarding these matters. which a lot of malpractices had been occurred. i.

AmbuluwawaGanetanna construction

Road

ii. Hakurutale, Hanguranketha soap production project iii. Construction of marketing and information centre at Badulla iv. Construction of two water tanks at Dankanda-Dambagolla v. Collapse of construction wall at childrenâ&#x20AC;&#x2122;s park, Pilimatalawa. vi. Construction work of Kathapallana anicut abandoned halfway. vii. A retired officer earning two salaries working in two government institutions. viii. Loss of Rs. 1.3 million due to overpayment in purchasing roofing sheets, not compatible with the specifications required. Contd.

101

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Institution and Ministry Udarata Development Authority

Major Issues and Problems Discussed

Comments by the COPE and Decisions

ix. Providing mobile phones to the officers on contract basis resulting a recoverable amount of Rs. 39, 478/- from 4 terminated officers. x.Opening of a bank account without obtaining approval from treasury in which balance was Rs. 47 million.

Dec. 08th 2010 Sri Lanka Tourism Promotion Bureau (Ministry of Economic Development)

1. A difference between the VAT 1. The Committee pointed out that the amounts refund receivables and Tax return should be claimed within the stipulated time amounts in the accounts of the period. The written confirmation from the Bureau has been observed. Department of Inland Revenue need to be taken and should send copies to the Committee and the Auditor General. 2. Differences in the accounts of 2. As the CAO stated that the accounts has been adjusted and books have been then SLTPB and Sri Lanka Tourism reconciled, the Committee needed an Development Authority (SLTDA) explanation as to how this adjustment has has not been reconciled. been made. 3. Foreign and local advances given to 3. Since it is mentioned that 80% has already been recovered, immediate steps should be officers have not been recovered. taken to recover the balance. 4. A huge sum of money incurred in 4. As it is explained that the amount is not a due from any party, but the difference Hikkaduwa Beach Festival has not between income and expenditure, been recovered from the respective sponsors. particulars with regard to the income and expenditure for each year of the said project need to be sent for the reference of the Committee. The amounts should be written off from the accounts with the approval of Treasury and the Director Board 5. A project named Small Miracle 5. Further explanation regarding this should be Branding Programme has been submitted to the Committee within two abandoned after spending huge sum days. of money.

Contd.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/Name of Institution and Ministry Sri Lanka Tourism Promotion Bureau

Dec. 09th 2010 Industrial Development Board (Ministry of Traditional Industries and Small Enterprise Development)

Major Issues and Problems Discussed

Comments by the COPE and Decisions

6. It has been observed that huge sum of 6. Complete report should be submitted to the money has been spent in IFFA film Committee soon after the internal audit has festival. been completed.

1. Post of Finance Manager has been 1. The post should be re-advertised and fill the vacancy according to the correct filled without following the correct procedures. It is recommended to fill all the procedure. vacancies existing and report back to the Committee within two months. 2. Annual Reports have not been tabled 2. Prompt action should be taken to present the Annual reports to the Parliament. to the Parliament in time. 3. Number of audit queries has been 3. Adequate attention should be paid by the unattended to over the years. Institution to answer audit queries without delay in the future and Internal Auditor of the Ministry should look into this matter. 4. A Generator purchased to the Board 4. Detailed report should be submitted to the Committee regarding this within two has been sold out without being used months. incurring a lost. 5. It is observed that electrical power 5. The CAO/AO agreed to submit a report within two weeks after distributing them potter wheels have not been among eligible members. distributed properly among members of a co-operative society. 6. Neither the money nor the materials 6. A report should be submitted to the Committee regarding the outstanding has been received from the Sri Lanka balances within one month. Customs and Handicrafts Board after payment is being made. 7. Lack of evidence to ensure the 7. It is required to send explanations to the Committee. receipt of cash in transactions made with large scale industrialists is observed. 8. Proper reconciliation has not been 8. As the explanation given has been rejected by the Committee the CAO/AO agreed to done in relation to seven bank reconcile them when preparing final accounts. accounts for the year 2010.

Contd.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/Name of Institution and Ministry Industrial Development Board

Dec. 09th 2010 Insurance Board of Sri Lanka (Ministry of Finance & Planning)

Major Issues and Problems Discussed

Comments by the COPE and Decisions

9. The Institute has being running at a 9. Serious concern should be paid to minimize loss over the years and explanations the loss and detailed report regarding the given with respect to the Auditor audit observations should be submitted after Generals observations were not calling the explanations for each and every satisfactory. query from the relevant parties. 1. The Corporate Plan for the period 1. Since the new Corporate Plan for the period of 2011- 2013 had been already drafted, the of 2008-2010 had not been CAO agreed to address the shortcomings prepared as per the guidelines of pointed out by the Committee in that the Public Enterprises Circular. report. 2. It is observed that the internal 2. Since it is stated that the 2009 accounts had been drafted, the Committee directed the Audit Reports had not been CAO to submit the same after finalizing submitted to the Auditor General. without further delay. 3. The Committee noted that there 3. It was stated that until the new Act being passed recruitment had been delayed. had been vacancies in the cadre However the committee directed the CAO including the post of Director to fill the vacancy of Director General early. General. 4. The Committee observed that 4. The CAO was directed to take early action to streamline the mechanism. proper mechanism for third party insurance claims does not exist. 5. The Board has violated the PED 5. The CAO agreed to obtain the Treasury approval for all the payments. circular No. 95 of 1984 by granting more than one allowance per year and paying medical expenses and festival advances. 6. The Committee observed that the 6. The CAO was directed to discuss this with IBSL had not been exempted from the Treasury and get the Insurance Board paying income tax. exempted from paying income tax. 7. The deficit from operating 7. The Committee directed the CAO to adapt a activities had been increased. methodology to reduce the deficit.

104

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry th

June 28 2011 Rubber Research Board (Ministry of Plantation Industries)

June 28th 2011 National Enterprise Development Authority (Ministry of Industry & Commerce)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Kumarawaththa and Narampola Estates had reported losses during the period 2008 and 2009. Without the legal ownership of the said lands Institute had spent more than Rs. 10 million for carrying out certain activities.

1) Losses had been incurred due to the fact that the 02 sub stations had been set up only for researches and experiments. CAO was directed to take this matter into serious consideration & submit a report within a month regarding the action taken to transfer the ownership of the lands.

2) The steps that had been taken to recover the debtor balance of Rs.7.7 million as at December 2010 was questioned and it was revealed that out of that amount Rs.5.2.million had been given as an advance to the Advisory Services Department to build up a research unit and due to a problem regarding the transfer of deeds, it had been unable to recover the amount.

2) Directed to submit a report within a period of one month indicating the action taken to acquire the land.

3) Action had not been taken to recover surety bonds valued at Rs. 4.9 million from o4 officers.

3) Legal action had been taken and the relevant officers had agreed to pay the dues in installments.

4) Stock verification or Board of survey not carried out, where sum of Rs. 12,432,856/had been in the accounts as closing stock.

4) The Committee was not satisfied with the method adopted.

5) Observed an excess of expenditure over income for last several years.

5) It was revealed that as a result of adopting new accounting standards, a difference in the profit had been occurred. However 41 million profit had been obtained in the year 2009.

1) The Corporate Plan, Action Plan and 1) The Committee directed the CAO/ AO to Annual Budget not being submitted to the submit all the outstanding reports to the Auditor General. Auditor General.

2) Annual Reports for the years 2008 & 2009 2) Since both reports had already been sent for not being tabled in Parliament. printing, directed to take action to table them in Parliament early. 3) It was noted that the Audit Report prepared paying Rs.44,563 to a private institution had not been submitted to the Auditor General.

3) Directed to send a copy of the Audit Report to the Auditor General.

4) Without proper approval 4 employees had been appointed in addition to the approved cadre.

4) Directed to obtain approval from the Dept. of Management Services for the excess staff.

5)Institute was continuously running at a loss

5) It was revealed that losses were due to the accrued building rent, expansion of cadre and extra development programmes.

105

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) The Committee queried about the tabling of Annual Reports for the years 2008 & 2009.

1) The CAO/AO agreed to present both the reports in Parliament within one month.

2) The Committee observed the following shortcomings in the Authority • Corporate Plan and Action Plan not being prepared as per the PED Circular No.12 • Meetings of Board of Directors not being held regularly. • Action not being taken to achieve the objectives of the Authority. 1) Annual Reports for the years 2007, 2008 and 2009 not being tabled in Parliament.

2) The CAO /AO explained the difficulties in achieving targets due to the reasons mentioned below. • Non availability of adequate funds • Overlapping of functions with the other institutions.

June 29 2011 Resettlement Authority (Ministry of Resettlement)

June 29 2011 Rehabilitation of Persons, Properties and Industries Authority (Ministry of Rehabilitation & Prison Reforms)

The Committee noted the following shortcomings in the Corporate Plan for the period 2009-2013. • SWOT analysis not being included • Responsibilities not being assigned to the officers • Operating results of three preceding years not being indicated • The number of goals being indicated in different numbers in the Corporate Plan and the Action Plan 3) A sum of Rs.76,653,006/-granted by the Bank of Ceylon to be given as loans to the people affected by the 1983 riots, not being recovered. The CAO/AO stated that most of these beneficiaries had been self-employed Tamil people and it had been impossible to trace these people and their guarantors. 4)

Action not being taken to recover the annual interest of 1.5% of the capital amount of Rs.128 million invested in the National Housing Scheme where the total amount recoverable including the interest as at 30.06.2010 being Rs.160 million.

1) The Committee directed the CAO/AO to take action to present all the outstanding reports in Parliament. 2) To prepare a revised Corporate Plan.

3) A Cabinet Paper had been submitted seeking approval to write off this amount.

4) The Committee wanted the CAO/AO to discuss this matter with Secretary to the particular Ministry and to inform the committee of the action taken in this regard.

5) To see whether the Resettlement Authority could be amalgamated with the Rehabilitation of Persons, Properties & Industries Authority as the objectives of the two entities are almost the same. 6) 3858 people being paid at the rate of Rs.12,500/- in contrary to the decision taken to pay Rs. 25,000/- to each married couple displaced and living in camps to run a selfemployment.

6) The Committee was informed that this has been done due to lack of enough funds and the CAO was directed to ask for more funds and regularize the payment.

106

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry 15th August 2011 Condominium Management Authority (Ministry of Construction, Engineering Services , Housing & Common Amenities)

15 August 2011 National Dangerous Drugs Control Board (Ministry of Defence)

Major Issues and Problems Discussed 1)Annual Reports for the years 2004,2006,2007,2008 and 2009 had not been tabled in Parliament.

Comments by the Sub Committee and Decisions 1) To take early action to table all the Annual Reports which had not been presented in Parliament

2) The Committee noted that the objectives of 2) Directed the CAO/AO to prepare the Corporate Plan, and the Action Plan, as the Authority, as per the Act of incorporation explained, and also to submit to the had not been included in the Corporate Plan Committee along with the annual budget. prepared for the period 2011 â&#x20AC;&#x201C; 2015, and also the Action Plan had not been prepared based on the Corporate Plan. 3) The Committee enquired about a sum of Rs. 3) The CAO/AO informed that this amount had 500,000/- paid to an external individual, been paid to the Ceylon Workersâ&#x20AC;&#x2122; Congress on without the approval of the Board of the instructions of the former chairman. Directors. 4) Offering contracts only to a one group of 4) Weakness on the procurement system, contractors in a situation, where only one directed to streamline the system. bidder had responded. 1) Annual Reports for the years 2007, 2008, 1) The CAO was directed to present Annual 2009 and 2010 not being presented in Reports for the years of 2007, 2008 & 2009 by Parliament. the end of September, 2011 and the 2010 Annual Report by November, 2011. 2) Several shortcomings were observed in the Corporate Plan while, Action Plan had also not been prepared based on the Corporate Plan. Variances were observed in the Budget as well. 3) 93 vacancies exist in the cadre.

4) The Financial deficit of the Board had been increasing.

2) Directed to prepare a fresh Corporate plan including the Action Plan & the Annual Budget.

3) The CAO was directed to recruit the required staff after obtaining the approval for the scheme of recruitment. 4) The CAO was directed to take action to overcome the situation & report back to the Committee on action taken.

5) Un-reconciled balance amounting to Rs. 502, 438/- had been brought forward in the accounts since the year 2005.

5) The Committee directed the CAO/AO to take action to correct this error in the accounts.

6) Rs. 2 million advances not being settled.

6) Directed the CAO to take action to recover the outstanding amounts.

7) Lack of supervision over the rehabilitated 7) The CAO/AO was directed to take follow-up personnel by the Board had been observed. action and to strengthen the staff & the Social acceptability and the safety of them facilities to overcome the situation. not being secured due to shortage of resources.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry th

15 August 2011

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) The Committee observed that the Ranaviru Seva Authority had not tabled the Annual Reports from the year 2000 in Parliament.

1) The Committee directed the CAO/AO to table the Annual Reports from 2005 – 2010 within a month’s time in Parliament, and to table the annual reports from 2000- 2004, within 3 months in Parliament and an action plan be sent within two weeks stating as to how they clear the backlog. 2)The Committee directed the CAO/AO to prepare the Corporate Plan as per the guide lines laid down in the PED Circular and to update it annually.

Ranaviru Seva Authority (Ministry of Defence) 2)The Committee noted that targets of the Authority had not been included in the Corporate Plan prepared for the period 2011 – 2015, the Action Plan had not been prepared based on the Corporate Plan, and the Budget too had not been included in the Corporate Plan. 3) The Committee observed that out of Rs. 15 million received as capital grant in 2009, Rs. 10 million had been withdrawn by the Treasury in May 2010, due to nonutilization of funds. The CAO/AO stated that the Authority could not utilize these grants due to the war situation prevailed at that time and also due to non-availability of an Accountant to make the management aware of such shortcoming 4) Inventories and accounts register not maintained and board of survey had not been carried out 15th August 2011 Sri Lanka Inventors Commission (Ministry of Technology & Research)

August 2011

Janatha Fertilizer Enterprise Limited (Ministry of Agrarian Services & Wild Life)

Contd.

3) Directed to obtain instructions from the Management Services Dept. regarding the recruitment of an Accountant, under a situation where the court case is pending against the former accountant.

4) Directed to appoint a committee to act on this having made a work plan.

1) The Committee observed that the Annual 1) Directed to table these reports in Parliament Reports for 2008 & 2009 had not been once the cabinet approval would be granted. tabled in Parliament. 2) Out of 51, 43 audit queries had not been 2) Directed to take action to respond the audit answered for the period 2005-2010. The queries within a month. Committee seriously considered this position. 1) The Committee enquired the current position 1) The major business activity of the company at of the Institute. the moment had been to purchase organic fertilizer from private producers and distribute them throughout the country. He further stated that around 150 to 200 Met. Tons of fertilizer is purchased and distributed per month which can be increased upto 2000 to 3000 Met. Tons. 2)The Committee noted that the Institute had been running at a loss and for the year 2010, the expenditure had been around Rs.17 million whereas the income generated by selling of fertilizer had been Rs. 3,83,735 .

2) The Chairman requested the Committee that he be given a period of time to show a progress.

108

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry Janatha Fertilizer Enterprise Limited

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

3) i. Observed that, Institute had managed to meet operational expenses from the income raised by leasing out of warehouses.

3) i. The Committee Emphasized the existence of the Institute is doubtful with the current market challenges, as the Institute had been experiencing an unfavourable financial position and also considered the fact the decision had been taken by the Cabinet in November 2008 to amalgamate Janatha Fertilizer Enterprise Ltd. with the Ceylon Fertilizer Co. so far not implemented. Committee directed to implement the Cabinet decision or if not at least keep the cabinet informed of the current position.

ii. At this point, the chairman of the Janatha Fertilizer Enterprise Ltd. requested that he be given some more time to show a progress owing to the fact that he had taken some steps to get assistance from the World Vision and the Food and Agriculture Organization to strengthen this company.

ii. It was pointed out that even if the company gets foreign assistance which should channel through the treasury, it is very unlikely that it will receive green light from the treasury on account of unsatisfactory financial status. To submit a report to the Committee on whatever the action taken regarding the Cabinet decision.

4) The Committee observed the following shortcomings in the Institute.

4) To take action to correct these shortcomings within 3 months.

i. Not submitted accounts to the AuditorGeneral, ii. The Audit & Management Committee not being appointed and meetings not being held. iii. Not tabling the Performance Reports in Parliament, iv. Not preparing the Corporate Plan as well as the Action Plan, v. Not adhering to the guidelines given in the Companyâ&#x20AC;&#x2122;s Act, vi. Not taking action to delegate authority as per the Treasury Circulars.

August 16 2011 Sri Lanka Cement Corporation (Ministry of State Resources & Enterprise Development)

1) The Annual Report for the year 2009 had not been presented in Parliament.

1) Annual report is with the Ministry for approval.

2) Internal Audit Reports had not been submitted to the Auditor-General half yearly. 3) 3 equipment valued at Rs. 5.3 million being written off in the year 2007, without obtaining the Treasury approval.

2) The CAO/AO was directed to submit the same very early. 3) These items had now been valued according to the market value, and would be taken into the accounts this year.

Contd.

109

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry Sri Lanka Cement Corporation

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

4) Outstanding debtor balances remained over 5 years as at the end of the year 2010 had been Rs.7.3 million.

4) Already recovered 4 million & directed to recover the outstanding balance.

5) The Committee observed that out of a stock of cement, 9352 cement bags purchased by the Corporation valued at Rs. 2,094,580 had been damaged. The CAO/AO stated that during the war period, the Corporation had a problem in obtaining cement through the sea to Jaffna, and the stock of cement bags had been damaged due to the exposure to the sea for 92 days.

5) The Corporation had to bear up this loss.

6) Although the Cabinet had given instruction to take action to produce cement in Kankasanthurai, action had not been taken to implement.

6) At present only the importation & island wide distribution is being done due to lack of funds.

7) Although the Corporation had sold the 7) As per the agreement the Corporation is not Puttalam Cement Factory and leased out the entitled to get any benefit. limestone depository for 50 years to the Holcem Company, rest of the resources of the Corporation had not been developed. 8) Rs. 104 million & Rs. 15 million had been 8) The CAO agreed to take follow-up action written off in the year 2006, without the regarding the obtaining of Treasury approval. approval of the Treasury.

9) The Cabinet decision taken to transfer the 9) The CAO/AO was directed to transfer the assets & liabilities of the Lanka Cement assets after amalgamation of these two Company to Sri Lanka Cement Corporation institutions. had not been implemented. 10) 180 acres of land, owned by the 10) A complaint has been lodged in police. Corporation had been acquired by the unauthorized people.

August 16 2011 Lakdiva Engineering Company Ltd.

1) The Company had made a proposal to the 1) Directed to take action to amalgamate Treasury, to amalgamate Lakdiva Lakdiva Enginering Company Ltd. with the Engineering Company and the Sri Lanka SLTB as a separate division. Transport Board. 2) The Committee observed the following shortcomings in the Company.

2) The Committee directed the CAO/AO to take action to correct these shortcomings.

(Ministry of Transport) Contd.

(a) The Institution had not been constituted in terms of the Companyâ&#x20AC;&#x2122;s Act,

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry Lakdiva Engineering Company Ltd.

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

(b) Continuous audits had not been carried out, (c) Steps had not been taken to table the Annual Reports for the years 2008, 2009 & 2010, in Parliament. (d) An Internal Audit Division had not been established, (e) Corporate Plan, Action Plan and budgets had not been prepared. 3) The Committee enquired the current position with regard to the fraud that had been taken place on 03.06.2010. The Company had to pay Rs. 8 lakhs to the Security Services, and that Rs. 21 million loss had been incurred to the Company, where the Company had filed a case against the security services to recover the loss, and the security services had filed a case to get Rs. 8 lakhs that the Company owes to pay.

August 16th 2011 Lanka Phosphate Company Ltd. (Ministry of State Resources & Enterprise Development)

September 19 2011 Milko Pvt. Ltd. (Ministry of Livestock & Rural Community Development)

3) Both cases are being heard at the Ja-ela Courts

1) Only 01 Audit & Management Committee 1) Directed to meet once in every three meeting had been held in the year 2010/2011. monthsâ&#x20AC;&#x2122; time in the future.

2) The Committee observed that a sum of Rs. 7 2) Out of 21 million of debtor balances as at million debtor balance had been outstanding December 2009, 7 million had been for over 5 years. recovered by correcting the shortcomings.

3) Payments had been made without the approval of an authorized officer.

Action had been taken to introduce procedures & guidelines to overcome such shortcomings.

1) The Committee enquired the current position 1) In the years 2005/2006 the leakage had been on the leakage of milk reported during the 1.04% and during the past two years it had transportation between the milk collecting been brought down to 0.39% and further centres and the factories. stated that the target is to bring down this amount to 0.25%, and that by now they maintain a very good control between the milk collecting centers and the factories.

2) The Committee observed that the unsettled advances as at 31.03.2010 had been Rs. 15,271,639/-.

2) The CAO/AO stated that by now all advances had been recovered.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry September 19th 2011 Housing Development Finance Corporation (HDFC) Bank (Ministry of Finance & Planning)

September 19th 2011

Major Issues and Problems Discussed

1) Subsidiary Company named as HDFC Real 1) Directed to take quick action to get the title Estate Development Ltd. was running at a deeds transferred and sell the houses. loss and depended upon the financial assistance of the HDFC Bank. The CAO/AO stated that an attempt to demolish 72 houses built up by the said company in Awissawella had failed as the land belonged to the NHDA & UDA. 2) Unidentified deposit balance of customer as at 31.12.2010 had been Rs. 5,938,847/-. It was stated that this amount had been reduced to Rs. 4.5 million by now.

2) The AO agreed to take action to clear these outstanding amounts & report back to the Committee before the end of this year.

3) The Bank had deposited a sum of Rs. 317 million with the Central Bank to facilitate agricultural purposes contrary to the provision of the Act. No. 07 of 1997. The AO stated that the Central Bank had decided that every Bank should contribute 10% for the agricultural purposes.

3) Directed to negotiate this matter with the Central Bank, informing them that HDFC had been questioned by the COPE on this matter.

4) Five mortgaged properties had been sold incurring a loss of Rs. 1,094,971/- to the Bank. 5) The former chairman had been paid Rs. 3,694,475/- as monthly residence and other allowance since 21.11.2000 to 31.12.2009.

4) Directed to explore the possibility of recovering loss and if not, to write off with proper approval. 5) Directed to send the report on the history of this matter.

6) Contrary to the normal interest rate, the Bank had agreed in advertently pay 22.1% fixed deposit of CEB amounts to Rs. 450 Mn. where the overpayment would be Rs. 69,391,353/-.

6) This has been an error done by the Board.

1) Annual Reports for the years 2006 to 2009 had not been presented in Parliament.

1) Directed to take action to table them early and to ensure tabling of Annual Reports within prescribed period of time in future.

Elkaduwa Plantations Ltd. (Ministry of State Resources & Enterprise Development)

Comments by the Sub Committee and Decisions

Services of the General Manager, Accountant and the Administrative Officer who are above 60 years, had been extended. It was stated that the Board approval had been obtained.

2) The Committee expressing that Board of Directors does not have the Authority to do so & Cabinet approval should have been taken, directed the CAO to look into this matter and report back to the Committee with a copy of the approval of the Board of Directors in this regard.

Contd.

112

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry Elkaduwa Plantations Ltd.

Major Issues and Problems Discussed

3) Coconut nuts had been sold in the open 3) The Committee mentioned that the Institution market without following the tender do not have an authority to act in this manner, procedures. The AO stated that after selling and submit a report to the Committee on this 70% of the stock in public auction, the issue. balance had been sold in the open market.

4) It was queried why the Head office of the Alkaduwa Plantations established in Colombo.

4) Directed to send a report as to why the head office cannot be established in Elkaduwa.

5) The General Manager had been paid an incentive as labour allowances.

5) The CAO was directed to look into this matter and take action to recover the full amount. 6) The Committee directed to take action to overcome these management inefficiencies.

6) Loss of Rs. 1,179,077/- had been incurred due to unsystematic tapping of Rubber in the Nalanda Estate. 7) 8 cows had been died in 2011, where no medical certificates had been issued by a Veterinary Surgeon.

September 19th 2011 Central Engineering Consultancy Bureau (Ministry of Irrigation & Water Management)

Kurunegala Plantations Ltd. (Ministry of Coconut Development & Janatha Estate Development)

7) Since investigation is being conducted, directed to send a report after completing it.

1) Financial Statements had not been prepared 1) Directed the CAO/AO to withdraw the in accordance with the SLAS 13 and accounts for the year 2010 and take action to number of shortcomings were observed in furnish a corrected set of accounts to the audit them. within two monthsâ&#x20AC;&#x2122; time. And also directed the CAO/AO to inform the Hon. Minister of these shortcomings, and if necessary to present a Cabinet paper to introduce appropriate methodology.

2) There had been a debtor balance of Rs. 1,597,867,922/- . September 19th 2011

Comments by the Sub Committee and Decisions

2) Directed to see whether always certified bills are obtained.

1) A superintendent was transferred to another 1) The CAO was directed to take actions against section on his wrongful administration, but him and report back to the Committee, he had resigned from the post before taking including by whom this person had been any legal action. Later he had been appointed to the present position and the appointed as Coordinating officer in the requirement of the post of coordinating officer Chillaw Plantations. to the Chillaw Plantations.

2) Actual yield and the number of trees per acre 2) The CAO/AO was directed to take action to in the estates were at low levels compared to overcome this situation. accepted levels.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry November 14th 2011 SL Export Credit Insurance Corporation (Ministry of Finance & Planning)

November 14th 2011

SL Social Security Board (Ministry of Finance & Planning)

Contd.

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Internal Audit for the years 2010 & 2011 had not been done & Annual Audit Plan or the Interim Audit Report had also not been submitted.

1) The Committee stressed that it is compulsory to submit the Internal Audit Plan to the Auditor General.

2) The concurrence of the Ministry of Finance & Planning had not been obtained for the investment of Rs. 242.6 million in Treasury Bills and Rs. 258.8 in U.S. Dollar fixed deposits.

2) The CAO was directed to get the approval of the Ministry in terms of the Finance Act.

3) The Corporation had invested Rs. 25.5 Mn. in private banks.

3) The AO was advised to get prior approval of the Ministry in the future investments.

4) 50% to 80 % of the total cost had been paid as mobilization advances for supplies and services contrary to the maximum payable 20% as per the Procurement Guidelines.

4) The CAO was directed to follow the rules and regulations or otherwise get the approval of the Treasury in case of urgent services.

5) Claims paid to exporters had not been recovered. The AO stated that according to the insurance main contract there is no way of recovering the claims.

5) The CAO was directed to submit a list of names of the clients that are going to be written off and names of the clients already written off from the accounts.

1) It was observed that the 147 posts amounting to 14% of the total cadre had been vacant.

1) The CAO was directed to fill the vacancies at earliest possible or to revise the cadre.

2) Approval of the Ministry had not been obtained for the investment of Rs. 807,165,121/- in the year 2009. The CAO stated that 2011 investments approved by the Board had been submitted for the concurrence of the Minister.

2) The Committee informed the CAO to keep the Treasury informed of these details.

3) Rs. 2.8 Mn. of the Pension Fund had been spent to pay distress loans to the employees, contrary to the objectives. 4) Premium amounting to Rs. 6,475,406/- of Pension & Social Security Benefit Scheme that had been directly credited to the Bank Accounts had not been identified and posted.

3) The Committee directed not to follow such practices in future.

5) Some of the targets that had been included in the Action Plan had not been achieved.

5) The CAO was directed to review the progress in Programme review meetings & furnish the progress to the Committee. 6) The CAO was directed to send a report including the date of calling for tenders, details of the bidders etc. and the present progress of the project.

6) The contract had been offered to Advent Techniques in Bangalore subject to a bond worth of US $ 159.

4) The CAO was directed to correct the situation.

114

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry SL Social Security Board

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

7) New officers had been appointed on contract basis without the approval of the Ministry.

7) The Committee stressed that approval of the Ministry of Finance should be obtained for such appointments and directed to send the list of the names of the officers who had been appointed on contract basis. 8) The CAO was directed to implement a new methodology to enroll new members.

8) A new building had been purchased at Rs. 80 Mn. in other city even though District office is located in Nuwara Eliya. But no members had been enrolled from the Plantation sector. 9) The Committee questioned whether any awareness programmes had been conducted abroad to recruit Sri Lankan work force. The AO stated that two programmes had been conducted in Kuwait and Singapore. 10) Investment of Rs. 531 Mn. had been done in Peoples Leasing Company.

November 14th 2011 Swami Vipulananda Institute of Aesthetic Studies (Ministry of Higher Education)

9) The AO was directed to furnish the expenditure incurred in these promotional programmes to the Committee.

10)

1) The Corporate Plan and the Action Plan had not been prepared in accordance with the Public Enterprises Circular.

The CAO was directed to look into the present status of the investment due to the current problem in the stock market. 1) The CAO was directed to prepare the Corporate Plan for the period of 2010-2015 in line with the Circular.

2) Annual reports for the years of 2007-2010 had not been presented in Parliament.

2) The CAO was directed to present them by the end of December, 2011.

3) Cost of student gone upto Rs. 10,518 in 2010 compared to 2009.

3) This has caused due to more student intake in 2010.

4) Capital provision of Rs. 9.9 Mn. made use for recurrent purposes contrary to FR.

4) Directed not to recur.

5) Physical verification of fixed assets had not been carried out in year 2008 and 2009.

5) The CAO was directed to carry out physical verification of assets soon.

6) 10 computers had been procured without following the open tender procedures. It was stated that they were purchased at same price which was decided after calling tenders by the Eastern University. 7) 43 cheques of Rs. 5,804,719/- written in favour of several suppliers had been taken over by the Store keeper and Senior Assistant Bursar without posting them to the suppliers and 21 cheques written in 6 months back had been kept in the office without issuing to the relevant parties in the year 2010. 8) Rs. 966,000/- incurred for the private security services in the year 2010 while permanent security officers were engaged.

6) The CAO was directed to call fresh quotations in future.

7) The CAO was directed to send detailed report regarding the matter.

8) The CAO Was directed to send a report explaining the reasons.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry November 14th& 15th2011 Consumer Affairs Authority (Ministry of Cooperatives & Internal Trade)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) The Committee observed that there is a 1) The CAO was directed to appoint less large number of member on the Board of number of members in consultation with the Directors and was of the view that the effect Hon. Minister. is very less. 2) The Committee observed that some 2) The CAO was directed to submit essential elements had not been embodied in comprehensive Corporate Plan for the years the Corporate Plan prepared for the period of 2011-2013. of 2010-2012. 3) The Committee observed following 3) The CAO was directed to report back to the shortcomings with regard to the internal Committee after regularizing the said audit; shortcomings. Treasury was also directed to i. No internal audit had been done in the follow-up. year 2010 ii. Internal Auditor had only been appointed in January 2011 iii. Action had not been taken to obtain approval for the supporting staff for the internal audit iv. Representative of the Auditor General was not invited to audit committee meetings. 4) The post of Director General had been 4) The CAO was directed to take immediate vacant for 20 months. Interview was held, action regarding these matters and to send the and 4 persons including two internal officers names of officers who are in acting posts. had required qualifications, but applications are called again without selecting one person from them. In addition 07 posts had been vacant from 10 August, 2010 and 07 officers covering the duties on acting basis. 5) Even though Board members should be 5) The CAO was directed to consider the fact comprised of variety of experiences, some when appointing Board members and Hon. present members do not have such Minister be informed regarding this. qualifications. Out of 08 members appointed 02 do not possess any qualifications.

Contd.

6) Vacancies exist in different categories had 6) The CAO was directed to recruit employees been 104 as at 27 October, 2011, while 17 for approved posts. persons had been recruited on daily paid and contract basis even though there is no such provision in the approved cadre. It was stated that approval for 6 persons had already been taken. 7) A consultant over 60 years of age had been 7) The CAO was directed to rectify the recruited without the approval of the situation. Cabinet. 8) Attendance of the Board members had been 8) The CAO was directed to submit list of the at a low level for the board meetings. It was names of members who had less interest to stated that only14 members attend regularly. the Hon. Minister.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry Consumer Affairs Authority

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

9) Fines receivable by the authority amounting 9) The CAO was directed to furnish the age to Rs. 1,152,544 had not been recovered. As analysis without further delay, and also to this money comes through the Ministry of find a mechanism to obtain fines in time. justice, they had written to expedite this payment. The age analysis of the fines receivable had not been submitted as requested, in the previous COPE meeting. 10) It was noted that even though every trader 10) The Committee directed to expedite the shall register with the Authority at Rs. process of amending Act. 100,000/- per annum, no one had registered so far. It was stated that Act is being amended since this is not practically possible. 11) An officer with less qualifications had been 11) The CAO was directed to look into the recruited for the post of Director (Finance) matter and report back to the Committee. without the formal approval and he had been confirmed thereafter. Further he had been placed 2 increments above the relevant salary scale. 12) Media office which is not included in the 12) The Committee seriously considered this cadre had been filled on contract basis to irregularity and directed the CAO to rectify the media unit established in year 2010 and the situation and to strictly follow the despite the payment of monthly hire charge Treasury Circulars and FR. of Rs 50,000/- for a motor vehicle and monthly supply of 120 Litres of fuel, Board had approved unlimited supply of fuel for him.

13) 11 employees of the Authority had been 13) The CAO/AO was informed that they are paid overtime exceeding the monthly responsible for these irregularities ant to send salary in certain months of 2010 and it the names of Media Officer and other 11 exceeds 75% of the salary in certain employees to the Committee. instances. It was stated that these officers are attached to the media unit. 14) It was observed that arrival and departure 14) The CAO/AO was directed to send the of 13 employees had not been recorded in names of 13 officers to the Committee. attendance register, but full salaries had been paid. It was stated that one of them is an investigation officer and hence his authorizing letter is considered as the attendance for him.

Contd.

15) Stenography service had been procured at 15) The CAO was directed to regularize these Rs. 263,900/- and Rs. 235,000/- in year appointments after obtaining Treasury 2010 and 2011 respectively. The CAO approval. stated that this particular stenographer was attached to the Ministers Office and was retired under VRS.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry Consumer Affairs Authority

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

16) Motor vehicles had been assigned to 5 16) The CAO was directed to immediately Directors who are not entitled to and fuel discontinue this practice and Treasury was allowances had been paid to them in year also directed to stop this practice from now 2009 contrary to the Treasury Circulars. on. 17) There were some irregularities in providing 17) The Committee emphasized the importance benefits to the Chairman and the Directors of appointing staff according to the Para 03 of the Institution. of the Consumer Affairs Authority Act and directed the CAO to regularize the matter.

18) 07 employees had been deployed in the 18) The CAO was directed to send a progress Ministry Office by 19 May 2011 and their report in on raids monthly and to rectify the deployment had been extended by one year situation. with effect from 01 June and 01 July had been approved. Further 06 employees recruited on contract basis had been deployed in Nikaweratiya area, though there is no regional office. 19)

i) Only 15 commodities had been named as 19) i) The CAO was directed to send the list of fixed commodities after establishing the the commodities that are already named as Authority. fixed commodities. ii) The Committee expressed its dissatisfaction over not taking proper action with regard to the importation of the low quality cement to the country and stated that the Authority had not given considerable attention for its responsibility. The CAO sated that now they had taken action to check the quality of the cement.

ii) The CAO was directed to send a report indicating the date on which this cement lot had been imported and what action had been taken.

iii) The Committee also enquired about issues of several other fixed commodities.

iii) The CAO/AO was informed that they have authority to check the quality of the goods without waiting till complaints and directed to perform duties stipulated in the Act.

20) Rs. 36,000/- per month had been paid for 20) The CAO was directed to send the cleaning the building till April 2011. The agreement to the Committee and AG. amount paid for Cleaning Company had been increased to Rs. 70,000/- per month on their request.

118

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry th

November 15 2011 National Apprentice & Industrial Training Authority (NAITA) (Ministry of Youth Affairs & Skills Development)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Annual Reports for the years 2009 &2010 1) The CAO was directed to take action to had not been presented in Parliament. present them in Parliament before the budget. 2) 73 officials had been appointed without the approval of Dept. of Management Services. The CAO stated that they could be absorbed since the total cadre had now been approved.

2) The CAO was directed to absorb the rest of the official when the Scheme of Recruitment is approved.

3) Committee noted that the highest rate of 34.8 % apprentices who vacated courses had been recorded in the year 2010. It was stated that lack of supervisors was the major cause for this and it was difficult to recruit suitable staff due to non-attractive salary scales.

3) The CAO was directed to do the needful to improve monitoring and to reduce drop-outs. He was also informed to adopt a methodology to recruit staff on contract basis.

4) The depreciation of fixed assets purchased from grants had not been correctly identified and the post of Financial Chief had been vacant.

4) The CAO was directed to rectify the situation.

5) Advances granted to 20 external Institutions during 1999 to 2008 had not been settled. It was stated that outstanding balance by 2011 is only Rs. 97,000/-.

5) The CAO was directed to send the details to the Auditor General.

6) There had been debtor balances over 5 years amounted to Rs. 3.1 Mn out of which Rs. 2.1 Mn had been over 10 years and proper action had not been taken to recover the dues. It was stated that current balance is only about Rs. 2.5 - 3.0 Lakhs.

6) The CAO was directed to take action to recover the dues and keep the AG informed.

7) Two officers had been released to the line 7) The CAO was directed to get written approval Ministry, while one officer had been from the Treasury. released to the external Institution without obtaining the Cabinet approval and salaries and allowances had been paid by the Institution during 2006-2010.

Contd.

8) The Chairman and the Deputy Chairman 8) The CAO was directed to ensure that this had had consumed excess fuel without will not happen in the future and appreciated obtaining proper approval. However the the present position. present Chairman had performed his duties without obtaining salaries and allowances since the year 2010. 9) Rs. 400/- per year had been charged from a 9) The CAO was directed to send a future plan student for welfare fund by the 3 national on farewell activities to the Committee. centres without proper approval and no welfare had been done.

119

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry National Apprentice & Industrial Training Authority (NAITA)

November 15th 2011 State Engineering Corporation of SL (SEC) (Ministry of Construction, Engineering Services , Housing & Common Amenities)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

10)Building had been constructed to establish 710)The CAO was directed to send details on the 7 training centres without taking over progress. the ownership of the lands to the Authority. It was stated that ownership transferring is being done. 11)Reports regarding the 7 vehicles accidents 11)The CAO was directed to send legal documents regarding the investigations done had not been furnished to the AG. to the AG. 1) Annual reports for the years 2007, 2008 & 1) The CAO was directed to table them without 2009 had not been presented in Parliament. further delay. 2) Shortcomings were observed in the 2) The CAO was directed to prepare it including Corporate Plan prepared for the years 2011the quantitative values of the targets. 2015. 3) The Committee enquired about the 3) The CAO was directed to report the progress unidentified VAT to be settled. The CAO to the Committee. stated that a tax officer and also a committee is appointed to look into this matter. 4) There was an unrecovered debtor balance of 4) The Committee directed to send the details of Rs. 335 Mn. this balance. 5) Poor performances had been observed in 5) The CAO was directed to take necessary following divisions. steps to overcome the situation. i. Mechanical and Electrical division had been running at a loss in past 10 years. (Rs. 73.5 Mn.) ii. Dolomite Pre-Mix Yard at Matale was also running at a loss during past 13 years except year 2006. (Rs. 4.8 Mn.) iii. Bricks and Carpentry manufacturing Yard( Rs. 10.42 Mn.) iv. Aluminum Yard at Ratmalana incurred a loss in year 2010. ( Rs. 2.8 Mn.) v. The labour cost of the Mechanical and Electrical Division at Ratmalana had been 338% compared to the income.

6) 156 officers had been recruited without 6) The Committee directed to send explanations getting approval of the Department of regarding the cadre situation. Management Services and 187 unskilled employees had made permanent in excess of the approved cadre. The actual total cadre exists was 2406 as at 30th June 2011 where approved cadre is only 2068. Contd.

120

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry State Engineering Corporation of SL (SEC)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

07) Following observations had been made regarding some contracts: i) Losses incurred in 47 contracts during 2007-2010 ii) Loss of Rs. 301.3 Mn .incurred on 64 constructions executed in 2009-2010. iii) Invoices for the constructions amounted to Rs. 18.7 Mn. had not been furnished and bills for the constructions of Rs. 20.2 Mn. had been delayed in 2008-2009.

07) The CAO was directed to take action to mitigate losses and to send a complete report to the Committee on these matters.

08) Overpayment of VAT had been done in 2009.

08) The CAO was directed to take actions to recover the over payment and to correct the calculations in the current year accounts.

09) Rs. 2,033,006/- had been paid as the 09) The Committee directed to send a report overtime and holiday pay for the drivers in including the details of hired vehicles, rates addition to the hired charges of those and expenses. vehicles as per the agreement. 10) Two motor vehicles of the Institution and other 08 vehicles procured on hire basis paying a sum of Rs. 1,298,226/- had been released to the Ministry contrary to the Public Enterprises Circular.

10) The CAO was directed to send a full report on this payments and vehicles to the Committee.

1) (i) Corporate Plans

1) (i) The CAO/AO stated that initially there had been one plan covering the period 20092013. Subsequently another plan had been prepared for 2011-2015. The Committee emphasized that the Corporate Plan should be a rolling plan for a continuous period of time and questioned how the Institution works with a number of Corporate Plans which are getting frequent changes.

November 15th 2011 Board of Investment (BOI) (Ministry of Economic Development)

(ii) The Committee questioned about the targets of the institution

(ii)

The CAO/AO stated that;

(a) Earn 5% of the GDP of the country by way of investments., earlier it had been 2% (b) Re-organizing BOI sector-wise (iii) Achievements expected in re investments of 1290 million of US $ in 2011.

Contd. (iii) In the first nine months 600US $ achievement shown.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

2) For the capital and recurrent budget,

2) Treasury approval has been requested, but

initially got the Treasury approval. But for amendments such approval has not been obtained. 3) How many zones coming under BOI and what are the problems undergoing?

not yet obtained. Directed to follow-up and also to send a copy of amended budget.

3) There are 12 zones and 125000 workers

employed. They have a problem of having labour, and at present working with the Samurdhi Authority to overcome this. In addition they build hostels in Wathupitiwala and Biyagama. Investors are carrying out a building project of hostels in Kandy. 4) Labour cost per month. 4) It would depend on the sectors; For a labourer – 100US $ Semi-skilled labourer – 115 US $ Manager – 200 US $ The Committee was of the view that this cost is very high and the investments will not be encouraged. 5) Low rate of investors coming 5) In 2010 there was a decline due to series of elections held. But in 2011 it has come to a reasonable amount. 6) What is the period of time taking a company 6) It cannot be generalized, and depend on the to be formed? type of the project. Committees’ view was that, BOI taken a long time when compared to India and Bangladesh. 7) Directed to send a detailed report to the 7) Out of 37 companies underutilized and the Committee. factories closed, how many workers lost their jobs, what was the last day of existence, when the final accounts were submitted during the year 2010 and 2011? 8) Biyagama, Wathupitiwala, Mirigama in 2007. 8) Questioned about the Zones went in to This was caused by under underutilization of losses. projects and closing down of companies. High expenditure on water was also a main factor. Directed to send a full report on this. 09) Last presented report was 2007.2008 9) Presentation of Annual reports prepared. But not sent to the Ministry. Directed to present all outstanding reports within one month. 10) Now an international arbitration is going on. 10) Merbok Transactions 11) Vidyodaya Ayurvedic Private Medical College.

11) Now under litigation.

12) Perth State

12) They have come to an agreement with the Plantation Corporation to manage this. Now the land has been taken back and earning profit. Chairman was directed to send a report having looked into.

122

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry Board of Investment (BOI)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

13) Accounts receivable and payable

14)

13) Normal receivables are ground rent charged from the companies within the Zone and the annual fee from out of the Zone. If the Company is closed, it is impossible to recover and litigation process is started. There had been 249 million of doubtful 14). Directed to send a report and provision debtors. could have been made on doubtful debtors.

15) Unit cost of electricity

15) Varied according to the sector. Very roughly it is 12.5 US $ cents per week.

16)100 million outstanding to be recovered 16) This has been in connection with providing from 09 Government institutions. some caps to the Army. Directed to send a report. 17) Incoming of investors and signing of 17) Recently about 30 companies came in agreement during a week and roughly about 08 agreements were signed on Thursdays of the week which has been set apart to that purpose. 18) 142 million not being paid to the 18) As they were not getting any fund from the consolidated fund in 2010. Government they have got permission from the treasury. But they had paid a lump sum. Directed to send a copy of the letter of the Treasury.

19) Vehicle loans granted without the necessary 19) Subsequently submitted. Directed to report. documents

20) PAYE tax

20) Done on a board directive. Directed to get the approval from the treasury.

21) Violated the Inland Revenue Circular in 21) Directed to send explanation to the 2010 in paying PAYE tax. Committee. 22) 05 executive staff had been on contract 22) The CAO was directed to send the cadre basis while 54 posts had been vacant. position in detail to the Committee. 23)Proper incentive scheme had not been 23)The CAO was directed to send a report to the prepared yet for the staff. Committee.

24) Employees had been released to the line 24)The Committee Ministry contrary to the Circulars. explanation.

directed

send

25)Motor vehicles had been released to the line 25) The CAO was directed to send a report. Ministry and spent Rs. 6.9 Mn for repairs contrary to the Circulars. 26) What are the projects got tax released in years 2008, 2009 and 2010?

26) The CAO was directed to send a detailed report about these projects.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry November 15th 2011 Central Environmental Authority (Ministry of Environment)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Annual Reports for the years 2008, 2009 and 2010 had not been presented in Parliament.

1) The CAO was directed to expedite the presentation of said reports in Parliament.

2) The Committee was not satisfied with the action taken to handle public complaints and follow up actions on the same.

2) The CAO was directed to take whatever the actions needed to handle them more appropriately.

3) It was noted that the 77 vacancies exist in the Authority. 30 vacancies had been filled by now. The CAO stated that District and Divisional Secretaries request environmental officers from the Authority as well.

3) The Committees view was that there is no need of attaching CEA officers in District Secretariats and Divisional Secretariats and directed to attach officers where essential after establishing branch offices of CEA.

4) According to the Corporate Plan 2008-2012 it was the main target to amend the National Environmental Act. It had not been done so far.

4) The CAO was directed to expedite the amendment of Act.

5) Attendance allowances had been paid to officers contrary to the provisions in Public Enterprises Circular.

5) The CAO was directed to obtain the Treasury approval at earliest possible.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Appendix D

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________ Appendix D

Issues Discussed at the Meetings of the Sub Committee II (Agriculture & Media) of the Committee on Public Enterprises

Date/Name of the Institution and Ministry

Major Issues/Problems Discussed

1. Delay in presenting Accounts to Audit

1. Financial statement should be presented to Audit in time

2. Internal Audit Unit is not functioning in the Fund

2. Ministry Internal Audit should oversee the Accounts until a new internal Auditor is appointed

3. Electrically operated gate to be fixed at the premises of the Peradeniya Botanical garden had not been in operation after spending Rs.1.36 million

3. Directed the NERD Institution to expedite the construction

4. Only 3 members in the board of trustee, but as per the Act it should be 4.

4. Due to the change of the Ministry, number of the members of the Board had been reduced to 3, directed to amend the Act accordingly.

1. Annual Reports had not been tabled in Parliament from the inception

1. Action should be taken to table Annual Reports immediately

2. Internal Audit Unit is not functioning in the Institute

2. To get assistance of the Ministry Internal Audit

3. Organizational chart is not get registered with the Dept. of Public Enterprises

3. This type of delays should be overcome promptly

17th August, 2010 Botanical Garden Trust Fund (Ministry of Economic Development)

18th August, 2010 Sri Lanka Institute of Printing (Ministry of Youth Affairs)

Comments by the Sub Committee & Decisions

125

1. Discussed the qualifications of the higher level staff 19th August, 2010 Institute of Post Harvest Technology

2. Annual Reports had not been tabled in Parliament since 2006 3. Action Plan for 2010 had not been submitted to COPE

(Ministry of Agriculture) 4. Vegetables & fruits display units had been purchased and sold at a lower cost than purchased value incurring a loss of Rs. 1,845,000/- in 2009 5. Rs. 600,000/-had been spent to repair 20 years old machine used to produce noodles

6. Assets & Liabilities taken over from the Paddy Marketing board had not been settled in time due to poor response from the Govt. valuer 7. It has been observed a considerable increase in administrative & establishment expenses from 2006 to 2008 8. Approved limits for fuel had exceeded in the year 2008 by the Chairman, amounting to Rs. 102,441/9. Officers had been appointed on acting basis without filling the existing vacancies

1. Directed to send the qualifications of the all higher level officials within a week 2. To table the all outstanding Annual Reports within next 2 months 3. Action plan should be submitted to COPE & the Auditor General 4. Government rules & regulations should be followed by the Institution

5. A survey should be done to find out whether this machine would be able to cater the present market requirement & the working conditions of the machine 6. The response of the Govt. Valuer is very unsatisfactory and directed to settle this matter within 3 months time

7. Directed to submit a report justifying the expenses

8. Although it had been used for official purposes prior approval should be taken by the officers, Directed to obtain covering approval 9. To fill all the vacancies, once the scheme of recruitment is approved from the Dept. of Management Services 126

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________ Date/Name of the Major Issues/Problems Discussed Comments by the Sub Committee Institution and & Decisions Ministry

1. Delay in Presentation Annual Report for 2009

1. Directed to take action to present Annual Reports in time

2. Audit & Management Committees had not been held

2. It is essential to hold Audit & Management Committees regularly & directed to furnish the management report for Audit

3. Financial targets had not been included in the Corporate plan prepared for the period 20102013

3. Corporate Plan has to be amended & to be more realistic

4. Payment of arrears of allowances for the Chairman & the Vice Chairman had made a surplus of Rs. 77,408/- in the year 2008, No proper approval had been obtained

4. Explanation given is not accepted by the Committee

5. Due to the poor salary scales of the Council only Actg. Appointments could be made to the posts of Secretary & the Accountant

5. Salaries do not match with the professional qualifications

19th August 2010 Land Survey Council (Ministry of Land & Land Development)

127

1. Annual reports had not been presented to parliament after 2007

1. Directed to take immediate action to present Annual Reports in Parliament

2. Debtor balances amounting to Rs.3,171,594/- had not been recovered

2. Most of the Institutions had followed a lethargic way of recovering debtor balances, A proper mechanism should be followed

3. Guide lines in the establishment code had not been followed when promotions & appointments were given

3. Directed to get further advice from the Treasury

4. Corporate plan had not been updated for the year 2010

4. Directed to submit the updated Corporate Plan within 3 months

5. Nine Officers attached to NARA had been released to other entities

5. To submit a report to the Committee in this regard

1. Delay in submitting Budget

1. Budget should be submitted prior to the commencement of the particular year

20th August,2010 National Aquatic Resources Research & Development Agency (Ministry of Fisheries & Aquatic Resources Development)

23rd September,2010

State Printing Corporation

(Ministry of Mass Media & Information)

2. Audit & Management Committees are not held properly

2. Directed to meet at least once in every 3 months

3. Chief Internal Auditor post had been vacant since 2007

3. Directed to appoint a permanent Chief Internal Auditor immediately

4. Corporate plan prepared For the period 2009-2013 had not been updated

4. To update the Corporate plan on yearly basis 5. Committee was of the view that the Administration of the Corporation is in better position when compared with the other Institutions.

128

1. The Company had not been registered under Companies Act since it operates under a competent authority

1. Immediate action should be taken to register the Company before the 2012 budget

2. Debtor balance of Rs. 60 million had been written off without Treasury approval

2. The Committee seriously considered the illegal writing off of the debtor balances, since no way to correct it advised to get the covering approval & submit a detail report to the Committee

3. An association in Anuradhapura district had distributed 41,571.45 M.T. of fertilizer in contrary to the recommendations of the committee

3. Directed to submit a report to the Committee before the commencement of the 2012 Budget

4. Audit & Management Committees had not been held for the year 2010

4. The Committee emphasized the requirement of holding the Audit & Management Committee meetings regularly

5. Internal Auditor had been functioning also in the post of Sales Manager, due to the permanent post holder was sent on compulsory leave

5. Internal Auditorâ&#x20AC;&#x2122;s work should be independent as to maintain the transparency

6. No approved cadre in the Company, Scheme of recruitment is under preparation

6. Agreed to submit the scheme of recruitment for Treasury approval within 6 months

7. Unrealistic budgeting in the Company

7. Directed to prepare the Budget for the year 2011

23rd September 2010

Colombo Commercial Fertilizer Co. Ltd.

(Ministry of Agriculture)

Contd...

129

Colombo Commercial Fertilizer Co. Ltd

8. Audit & Management Committees had not been held for the year 2010

8. To hold the Committee meetings without further delay

9. Internal applications were called for the post of A.O. and later cancelled the interview due to the malpractices of the applicants, appointed someone else considering performance & experience

9. Directed to call fresh applications for the post

130

O6th October, 2010 Sugarcane Research Institute (Ministry of Plantation Industries)

1. Performance indicators had not been included in the Corporate plan for the period 2008 â&#x20AC;&#x201C; 2012

1. To update the Corporate plan in a way of a rolling plan and submit the new Corporate plan within one month

2. 2007 â&#x20AC;&#x201C; 2009 Annual Reports had not been tabled in Parliament

2. To present the annual reports in Parliament before 2012 Budget and 2010 annual accounts should be tabled prior to the due date

3. Without the legal ownership of the land, Institute had spent Rs. 8.61 million to develop it

3. Secretary to the Ministry should intervene to find a solution since Mahaweli Authority, the landowner is reluctant to transfer the ownership

4. Revaluation of assets is in the process

4. To finalize the valuation process before 2010 and include those figures in accounts 5. To submit the report to the Committee in this regard

5. Discussed about the Meerut Oven system 06th October, 2010 Tertiary & Vocational Education Commission (Ministry of Youth Affairs)

1. Annual report for the year 2009 had not been tabled in Parliament

1. Directed to take early action to table the annual report & the accounts for the year 2010

2. Vocational Education & Training Plan had been only completed for the Sabaragamuwa Province

2. Vocational Education & Training Plans(VET) should be completed for other provinces soon

3. Out of 7 Advisory Committees established for various industrial fields only 5 Committees had met

3. Action should be taken to convene all 7 Advisory Committees after appointing the Board of Directors 4. Action should be taken to get the balance research reports, Government funds should be invested for the betterment of the Country by implementing the recommendations where possible

4. After spending Rs. 1.19 million for 14 research programmes only 10 reports had been submitted with the recommendations

131

1. Some objectives had not been included in the Corporate Plan

1. Action Plan should be prepared annually based on the Corporate Plan

2. Two projects worth Rs. 1,429,698/- had not been implemented due to technical problems & lack of specific instructions from the donor agency

2. Since the money is deposited in the Ministry Account & the Central Bank account, action should be taken to implement those projects very soon

3. NERD had spent only a little money for research & development work due to lack of engineering staff

3. This situation had occurred due to the Poor salary scales to the Engineers

4. Annual reports from 2003 to 2005 & from 2008 to 2009 had not been tabled in Parliament

4. Directed to table all outstanding annual reports early

13th October, 2010 National Engineering Research & Development Centre â&#x20AC;&#x201C; (NERD) (Ministry of Technology & Research)

14th October, 2010 Sugathadasa National Sports Complex Authority (Ministry of Sports)

Contd...

1. Corporate Plan & Action Plan had not been prepared

1. Directed to prepare the corporate plan in accordance with the PED circular

2. Most of the stadiums had been running at a loss

2. A new methodology should be adopted when stadiums are given on rent

3. Out of Rs. 38,145,344/- of debtor balance, Rs. 25 million was due from the SL Cricket Association, and discussions held were not fruitful.

3. To recover debtor balances before the end of year 2010

4. Without staff being absorbed, R. Premadasa Stadium had been given on 30 years lease to SL Cricket Association and the Salaries to the Staff had to be paid by the Sports Complex

4. To discuss with the Cricket Association and get it solved

132

Sugathadasa National Sports Complex Authority

5. Without obtaining the ownership, Sports Complex is using several vehicles belonging to the other Institutions 6. Annual Reports for the years 2008 & 2009 had not been presented to Parliament 7. Audit & Management Committee had met once for the year 2010 1. Annual Report for the period 2007 â&#x20AC;&#x201C; 2009 had not been tabled in Parliament

3rd November, 2010

National Agricultural Diversification & Settlement Authority (Hadabima Authority) (Ministry of Agriculture)

2. 28 employees had been deployed on contract basis at sales outlets in Peradeniya, in addition to the approved cadre, and they are paid out of the daily income of the sales outlets 3. Corporate Plan had been prepared on yearly basis, instead of preparing it on long term basis. 4. Two buildings had been constructed by the Authority without the legal ownership of the lands and later action had been taken to acquire those lands 5. Serious fraudulent act had taken place while distributing of 14 Persian cattle, neither it had been given as per the approved distribution list nor transferred to Ududumbara divisional secretariat as per the requirement

5. Ownership should transferred immediately

get

6. Early action is needed to present the Annual Reports in Parliament 7. Directed to meet once in every 3 months

1. Directed to table the Reports within 2 weeks

2. Directed to see the possibilities to make them permanent with the approval of the Dept. of Management services 3. Wrong procedure had been adopted, and the Corporate plan should be prepared for the longer period of the Institution 4. Authority must be vigilant before the construction had taken place

5. Legal action recommended by the Committee against the Youth Services Officer at Ududumbara, Divisional Secretariat & any other officer involved in this regard Directed to submit a report to the Committee within one month 133

03rd November, 2010 SL Institute of Textile Apparel (Ministry of Industry & Commerce)

03 November,2010 SL Council for Agriculture Research Policy

1. Institute of Textile Apparel has been established as a result of the amalgamation of Textile Training & Service Center and the Clothing Industry Training Institute

1. Directed to submit the winding up accounts early

2. Separate Annual reports had been presented to Parliament before amalgamation

2. To Table all outstanding annual reports

3. New Director General will be appointed by January, 2011 after obtaining approval for new scheme of recruitment

3. Action to be taken to expand the consultancy services & research facilities of the Apparel Industry In Sri Lanka

1. Corporate Plan had not been prepared as per the circular guidelines & some activities had not been implemented and not updated annually

1. A new Corporate Plan is needed to be prepared and submit to the Committee within 2 months

2. Identified shortcomings in the present National Agriculture Research Policy

2. Amendment to the Act is necessary to meet the present requirement and improvement of infrastructure and communication facilities are emphasized in the new policy to be adopted

3. No Audit & Management Committees were held for the year 2010

3. Directed to hold the meetings without further delay

(Ministry of Agriculture)

4. Considerable number of project reports had not been furnished as per the Project agreement

4. Legal action to be taken against those who had breached the agreements and pointed out those agreements should be only with the Research Officers

Contdâ&#x20AC;Ś

134

SL Council for Agriculture Research Policy

5. In contrary to the Act, Research Officers had been conducted their own researches with foreign donors directly

5. Directed to submit a report in respect of all irregular projects and to take action to stop projects in such nature

6. Internal Audit Plan & Audit reports had not been furnished to Auditor General

6. Directed to furnish all such reports to AG in future

7. Annual reports for the year 2009 had not been tabled in Parliament

7. To table all outstanding reports in Parliament

8. To obtain the foreign funds, the executive director of the council had signed agreements with donor agencies without treasury approval

8. Take action to stop such malpractices immediately

1. .Main objectives had not been included in the Corporate plan for the years 2010-2012

1. To reformulate a new Corporate plan incorporating the main objectives of the Commission

Official Languages Commission

2. Annual reports for 2004-2008 had not been presented to Parliament

2. Early action is needed to present the Annual report

(Ministry of Official Languages & Social Integration)

3. Fund received from the foreign donors had not been included in the Financial statement

3. All funds from the foreign donors should come through the External Resources Department and should be included in the financial statement

4. Normal practice of the Commission is to remit the income from the Government & non Governmental Organizations in a deposit account which had not been reflected in the Commissionâ&#x20AC;&#x2122;s accounts

4. Accounting policy of the Commission should be revised, present practice indicates a serious lapse of the accounting system, directed to submit a report regarding all the income received from the year 2005

08th November, 2010

Contd..

135

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________ Date/Name of the Major Issues/Problems Discussed Comments by the Sub Committee Institution and & Decisions Ministry 5. A special allowance of Rs. 5. An illegal payment had been 624,390/- had been paid for done by the Commission, Official Languages the years 2006, 2007 & 2009 Either to obtain the covering Commission on pending approval approval or to recover from the officers concern 6. Allocation of Rs. 2.3 million had not been utilized for some 6. Programmes were not held programmes as planned by the due to the non functioning of Commission the Board of Governors

08th November, 2010

Arther C. Clarke Institute for Modern Technologies (Ministry of Technology & Research)

1. The researches had been delayed due to existence of 46 vacancies in the Institute. The salaries & cadre Committee had turned down the request of increasing the salaries

1. Obstacle to recruit staff was the low remuneration paid to them. Self generated funds had been paid as allowances to the staff to overcome this situation which was appreciated by the Committee

2. Audit & Management Committee had not been appointed for the current year due to the unawareness of the composition

2. Directed to hold the meetings as soon as possible

3. Observed the delays in the incubator project

3. pointed out the importance of having collaboration with the health sector

4. Annual reports had not been tabled for the years 2004,2005,2008 & 2009

4. To table the Annual Reports immediately

136

08th November, 2010 Disaster Management Centre (Ministry of Disaster Management)

10th November,2010 National Council for Elders

(Ministry of Social Services)

Contd...

1. Corporate plan for the year 2010-2014 had not been approved by the Council

1. Directed to get the approval when the council meets in December 2010

2. Annual reports from 20072009 had not been tabled

2. Directed to take action to table those Annual Reports including the 2010 Report

3. Audit & Management Committees had not been held due to non functioning of the Director Board, participated in the Ministerial Committees

3. To appoint Audit & Management Committees after amending the ACT

4. Advance of Rs. 4 million had been erroneously accounted as for the National Safety Day expenses out of which a portion had been spent for another project

4. Directed to maintain separate accounts for separate projects otherwise it misleads the situation

5. National Disaster Management Plan & the National Emergency Operating Plan had been prepared and waiting for the concurrence of the Council

5. Directed to submit copies of all these reports to the AG

1. Contradiction between the Council & the Management Services Department in respect of the name of the council, which made delays in promotions and the recruitments for 5 years

1. Directed to discuses with the higher officials and get the scheme of recruitment finalized.

2. long delay in presenting 20052009 Annual reports in Parliament

2. Annual reports should be tabled in Parliament at the prescribed period of time

3. No Internal Audit unit is functioning in the Council

3. To get the assistance of the Ministry Internal Audit

4. Audit & Management Committee had not been

4. Audit & Committee

Management should be 137

5. Corporate plan had not been updated for the period 20042008

5. A New Corporate Plan including all activities should be prepared for the period 2011 â&#x20AC;&#x201C; 2016

6. A Fixed Assets Register had not been maintained

6. Fixed Assets register should be audited & submit to the Committee within 3 months

7. Around 8 lakhs of elders Identity cards had been issued by the Council

7. Methodology should be adopted to revalidate the identify cards annually

1. Annual Report for 2009 & 2010 had not been tabled in Parliament

1. Annual reports should be submitted to Parliament within the stipulated time frame

2. No Internal Audit unit in the council

2. Ministry Internal Audit oversees the functions

3. Audit & Management Committee had met only once for the year 2009

3. Be ensure to meet once in every three months

4. Even though the Council had sent reminders to some News papers to get registered or renewed license, and poor response received from them

4. Directed to take action against those Institutions & revise the registration fee

5. Complaints had been received by the general public which are under review

5. Action should be taken to investigate & settle those complaints within three months time

6. Observed that the Director, Information had not participated in the Board meetings

6. Directed to participate in the Board meetings in future

National Council for Elders

10th November, 2010 Sri Lanka Press Council (Ministry of Mass Media & information)

Contd...

138

Sri Lanka Press Council

03rd December, 2010

Human Resource Development Council (Ministry of Youth Affairs)

7. Rs. 1.6 million had been in fixed deposit accounts without the Treasury approval

7. Directed to obtain Treasury approval

8. Committee emphasized that some news items written by journalists would harm the general public & the country

8. To enhance the standard & the quality of the journalism, necessity of setting up a government institute to train journalists is identified

1. Audit & Management Committees had met only once in the year 2010

1. To meet at least once in every three months time

2. Form 2005 Annual reports had not presented to Parliament

2. Before 10th December, 2010 directed to present all outstanding annual reports in Parliament

3. Action had been taken to change the titles of some skilled job categories

3. Make aware of the general public regarding the changes of the job titles

4. Receipts & payments amounting to Rs. 6,758,149/spent for conducting capacity Development programmes had not been disclosed in the accounts

4. Shortcomings occurred due to absence of professional Accountant in the Council

5. A consultant serving on contract basis in the Council had obtained Rs. 264,475/- as salaries & allowances while working in another company

5. To submit a report to the Committee

Contdâ&#x20AC;Ś

139

the

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________ Date/Name of the Major Issues/Problems Discussed Comments by the Sub Committee Institution and & Decisions Ministry 6. Rs. 15,051,075/- had been 6. Since no progress report Human Resource given to another Govt. submitted by that Institution Development Institution to train 3780 directed to submit a report to Council persons with the consent of the COPE the Chairman violating the tender procedure

7. Ministry of Vocational & Technical Training had provided Rs. 1.5 million to improve the awareness creation of the school leavers out of which Rs. 1,487,032/had been spent for stage decorations, lightening & publicity 8. Rs. 1,545,765/- had been spent on the preparation of the hand book on construction industries, only the draft English version submitted to Audit

May 23

8. Directed to submit a report to COPE

1. Present position of the Board is enquired.

1. As per the Gazette notification of April 2010 Government had decided to wind up the Textile Quota Board.

2. Annual reports since 2006 had not been presented in Parliament

2. The Committee directed to prepare all the outstanding reports and to present in Parliament without further delay

2011

Textile Quota Board ( Ministry of Industry & Commerce)

7. Objective had not been achieved by the council directed to submit a report to the COPE regarding that

It was observed that out of the total contractual amount of Rs.921,265/- a sum of Rs.552,709 had been paid to a private audit firm to introduce an electronic monitoring system where the contractor has failed to supply the service

The Committee was informed that it had been decided to convert the system in order to facilitate the activities of the institution.

140

1. No annual reports had been presented in Parliament after 1999

1. Directed the CAO/AO to table completed reports in Parliament within a period of one month.

2. Corporate Plan for the period 2011-2013 had not been approved by the Board of Directors due to short comings

2. Directed to submit the corrected one for approval

May 23 rd 2011

1. The Committee observed the following shortcomings.

Manthai Salt Ltd.

•

1. Action should be taken to present all the outstanding Annual Reports in Parliament early.

( Ministry of Industry & Commerce

•

May 23 rd 2011 Sri Lanka National Freedom from Hunger Campaign ( Ministry of Agriculture)

•

Audited accounts for the period 2009/2010 had not been presented to the Auditor General Financial Accounts for the period 2010/2011 had not been prepared. Annual Reports from the year 2008 had not been presented in Parliament.

2. A cash cheque worth Rs. 2 million issued by the Company as a donation in favour of the Ministry of Industry & Commerce had not been received by the Ministry.

2. Directed to submit a report to the Committee in this regard and hand over the matter to the fraud Bureau for further investigation

The Committee was made aware that this has been done on the instructions given by the former Chairman of the Company.

141

May 24 th 2011 & September 13th 2011 Lanka Fabrics Limited ( Ministry of State Resources & Enterprise Development)

1. There had been a debtor balance of Rs.3.9 million and a credit balance of Rs.2.8 million and as a result of setting off of debtor balance against the credit balance only Rs. 01 million debtor balance was remaining

1. To write off the amounts due from the 2 tsunami victims after obtaining necessary approval.

2. The Committee enquired action taken regarding the following matters.

2. No action had been taken regarding these issues. Directed to hand over these allegations to the Fraud Bureau and submit a report within 2 weeks.

•

Purchase of Handlooms valued at Rs.6.5 millions from the private sector violating Government procurement procedure on the Chairman’s influence Cash collection of show rooms being taken away by the chairman for private purposes Improper use of petty cash imprest by the chairman for private purposes The loan amounting to Rs.8 million obtained from the SME Bank not being properly utilized.

Lanka Fabrics would be resummoned within 3 months to review the progress.

3. Amalgamation of Lanka 3. As It is not viable to maintain Fabrics Ltd. with Lak Sala as per Lanka Fabrics with its objectives & available resources, the Cabinet had the Cabinet decision. approved a VRS in respect of the 5 officers and with the willingness of the other 3 officers, directed the Treasury to submit a Cabinet paper seeking approval to absorb those 3 officers to the Ministry of Industries for which Lanka Fabrics was earlier attached to.

142

May 24 th 2011 National Secretariat of Persons with Disabilities

1. Following shortcomings were observed by the Committee.

• •

( Ministry of Social Services)

•

1. To take immediate action in order to overcome these shortcomings.

Corporate Plan, had not been prepared No internal audit division had been functioning. Audit & Management Committee meetings had not been held regularly. Certain appointments which had been made without the approval of the Dept. of Management Services.

As per the Cabinet decision ,8% of the income of Supiri Wasana Sampatha had to be given to the institution for the benefit of persons with disabilities.

2. The Committee brought to the notice of the CAO/AO that the supporting documents on the following expenses had not been furnished to the audit. •

•

2. The CAO/AO was directed to look into this matter and do the needful.

Donation of Rs.8,851,994/sent to the District SecretariatJaffna Rs.9,800,408/- given away for the repairs of the houses of the disabled persons. Rs.21,998,424/-given away for construction of houses

143

May 24th 2011 National Institute of Social Development

1. Annual reports for the year 2008 and 2009 had not been tabled in Parliament.

1. To take early action to table those reports together with that for 2010, in Parliament.

2. No Internal Audit division in the Institute

2. Carry out the Internal Audit functions by the Ministry

1. It was observed that the institute had tabled Annual Reports only up to the year 2008.

1. To expedite the tabling of Annual Reports for the years 2009 and 2010 in Parliament.

2. Following shortcomings had been observed in the Corporate Plan for the Period 2009-2013

2. To prepare a fresh Corporate Plan for the period 20112015 taking the new projects and researches into consideration.

( Ministry of Social Services)

May 30th 2011

•

Industrial Technology Institute

•

( Ministry of Technology & Research)

•

Not updated considering the current trends Organizational Chart with all the posts not included. Operating results of three preceding years not analyzed.

3. The committee noted that 04 officers employed in a project had been paid special allowances amounting to Rs. 478,214/- without obtaining the treasury approval.

3. As per the CAO/ AO’s explanation, these allowances had been paid in accordance with the Public Finance Circular No.380

4. It was observed that an amount of Rs.723, 257 had been incurred as welfare expenditure of the officers without the approval of the Dept. of the Public Enterprises.

4. The Committee stressed the importance of obtaining the approval for the purposes as such.

144

May 31st 2011 Sri Lanka Institute of Tourism and Hotel Management

1. Delay in the presentation of Annual Reports in Parliament

1. The CAO/ AO was directed to present all the outstanding annual reports in Parliament

2. Corporate Plan had not been prepared.

2. Directed to submit the Corporate Plan for the period 2011-2016 to the Committee.

1. Annual reports for the year 2008 and 2009 had not been tabled in Parliament.

1. The CAO / AO was directed to expedite the process without delay.

2. The Committee stressed the fact that as the performance indicators were not available in the Corporate Plan for the period 2009-2011, it had been unable to evaluate the activities.

3. Internal Adit Programme had net been submitted to the Auditor- General. The post of Internal Auditor was vacant.

3. Agreed to submit the Audit Programme to the Auditor General, once the vacant post of Internal Auditor is filled.

4. Audit & Management Committee had not been held regularly.

4. Directed to hold the meetings as prescribed in the PED Circular.

5. Enquired whether any action had been taken to recover miscellaneous debtors of Rs.11 million and Rs.12 million for the years 2008 and 2009 respectively. As the CAO/AO explained, that by April 2011 there was only Rs.18 million to be recovered.

5. The Committee directed to submit a full report indicating the age analysis on this.

( Ministry of Economic Development)

May 31st 2011 Sri Lanka Tourism Development Authority ( Ministry of Economic Development)

To submit the revised Corporate Plan without further delay

145

1. Corporate Plan had not been prepared by the Institute.

2. Approval of the Dept. of Management Services had not been obtained for the staff cadre.

As the AO stated that the Corporate Plan for the period 2012 â&#x20AC;&#x201C; 2014 had been prepared and submitted to the line Ministry, the Committee directed the CAO/AO to submit same to the Committee and the Auditor-General

The CAO/AO agreed to submit the revised cadre with the approval of the Board of Directors, to the Dept. of Management Services for approval.

As per the Management that there had been certain difficulties in the past and although their income had gone down as a result, up to June 2011, the Company had been able to obtain a profit of Rs. 8 million

Production process of the Company was stopped due to terrorist activities, and at present company is in progress.

Directed the CAO to look into this matter and to submit a report indicating whether proper tender procedure had been adopted and the chairman had been instructed to rectify this matter since he had violated the Company Act.

September 13th 2011 Paranthan Chemicals Company Ltd.

3. The profits of the Company had been on the gradual decline.

(Ministry of State Resources & Enterprise Development) 4. Production activities of the company are queried.

5. The Committee observed that the lorry bearing No. WP- LH 7916 had been obtained on the basis of monthly rental of Rs. 173,000 on a 3 year lease agreement, and this vehicle had been registered under the name of the present Chairman of the Company.

146

September 16th 2011 Sri Lanka Accreditation Board for Conformity Assessment

( Ministry of Technology & Research)

1. The Committee queried about the not holding the Audit & Management Committee meetings. 2. No permanent staff in the Internal Audit, and also half yearly audit reports had not been furnished to the Audit as per the Finance Act 38 of 1971. 3. Corporate Plan for the period 2011 â&#x20AC;&#x201C; 2015 had not been prepared in terms of the PED Circular No. 12 of 2nd June, 2003. 4. Asia pacific Accreditation Corporation had pointed out 33 shortcomings of the Board.

Training programmes had not been conducted as targeted in the Action Plan.

6. Audit opinion had not been included in the Annual Reports.

1. To hold at least one meeting in every three months time

2. Delay in submitting audit reports, and agreed to submit them early.

3. Directed the CAO/AO to take action to update it verifying the shortcomings pointed out by the Committee. 4. As per the CAO/AO there had been only 03 major issues, and those had been corrected. Board had obtained the Membership of the Asia Pacific Accreditation Corporation & International Accreditation Corporation. 5. It has been revealed that, due to the shortage of staff, the Board could not conduct the training programmes.

6. This situation should corrected in future.

147

1. 2008 & 2009 Annual Reports had not been tabled in Parliament.

1. Directed to take early action to present them in Parliament

2. Corporate Plan for the period 2009 â&#x20AC;&#x201C; 2013 had not been prepared according to the PED/12 Circular.

2. The CAO/AO was directed to revise the Corporate Plan as explained by the AuditorGeneral and to submit to the Committee and the Auditor General

3. Internal audit reports had not been furnished to the audit and the Internal Audit unit is not functioning properly. September 16th 2011 Sri Lanka Cashew Corporation ( Ministry of Minor Export Crop Promotion)

3. Directed to submit the report very early and also to streamline the functioning of the Internal Audit

4. The Committee observed that a loss of Rs. 5,621,590 had been incurred due to fire broke out in the Haggala & Mahaoya seed gardens and in the Moneragala Estate, and also serious damages had been caused to the seed nursery and the cultivated land.

4. As per the explanation, due to wind fire such a loss must have occurred and further stated that over the past period, 100 acres of land in Batticaloa was also destroyed by wind fire.

5. Cashew yield had been dropped when compared with that of private sector.

5. Taken various steps in this regard.

6. Considered on possible byproducts allied with the cashew fruit.

6. Preparation of cashew wine had been already started. It was said more funds need to focus on other products.

148

September 16th 2011 West Coast Pvt Ltd.

1. No permanent Chairman in the Company.

1. Earlier Chairman had retired and a new Chairman is yet to be appointed.

2. All members of the Director Board had not been present for the COPE meeting.

2. If the majority of shares are owned by the Government, such institutions could be summoned before COPE.

(Ministry of Power & Energy)

Secretary to the Ministry of Power & Energy explained that, Attorney General had given a ruling that no provision in the Standing Orders to summon them.

October 14th 2011

1. Annual Reports for the years 2005, 2007, 2008 & 2009 had not been tabled in Parliament.

National Housing Development Authority & National Equipment and Machinery Organization (NEMO) Ministry of Construction, Engineering Services, Housing & Common Amenities

2. Procurement Plan had not been prepared. 3. Following shortcomings were observed in the corporate plan â&#x20AC;˘

Objectives as per the Act had not been included

â&#x20AC;˘

How the targets could be achieved was not made clear

1. Directed to take early action to table all the Annual reports gone in to arrears and the Annual Report for 2010 before the end of 2011. 2. To take action to submit early 3. Directed to develop the Corporate Plan as explained by the Committee and to prepare the Action Plan based on the Corporate Plan.

149

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________ Date/Name of the Major Issues/Problems Discussed Comments by the Sub Committee Institution and & Decisions Ministry 4. Matter had been referred to 4. Sale of property at Liberty Plaza to OVDC Institution the CID as per the previous COPE directive; however CID has informed no criminal offence had taken National Housing place, therefore the Ministry Development had referred this to the Authority Attorney General. It has been & revealed that, the former National Chairman & the Director Equipment and Board had decided the value Machinery without consulting the Chief Organization Valuer. (NEMO)

5. Land at Kirimandala Mawatha, Narahenpita had been sold to an Eco Housing Project for Rs. 75 million in 2004 on Govt. valuation & due to some problems another valuation was taken in 2007 i.e of Rs. 121.5 million, in which Director Board & the Cabinet approval had been obtained 6. Authority had incurred losses continuously during the past 5 years.

Contd...

7. Large number of underutilized lands owned by the Authority.

5. As per the COPE directive Authority had not submitted the required information, directed to submit ; valuation obtained earlier on this land, the directive given to obtain new valuation and the report so received, and the cabinet approval to sell the land with all other necessary documents. 6. Authority had faced a risky situation due to incurring losses, directed the Management to pay more attention on this. 7. To use those lands in a manner to obtain revenue to the Authority and submit a detailed report regarding the lands belonging to the Authority island wide.

150

National Housing Development Authority & National Equipment and Machinery Organization (NEMO)

8. NEMO also had incurred losses during the past 5 years.

8. Decision had been taken to amalgamate NEMO with the State Engineering Corporation as a separate division.

9. An estimated loss of Rs. 1,000 million had incurred as a result of not following good management practices, with regard to the housing project at Darley Road

9. Directed to send a report on this.

1. Corporation had submitted a new Corporate Plan very recently to the Auditor General.

1. After going through the document Auditor General would give the comments.

October 14th ,2011 State Development & Construction Corporation

(Ministry of Construction, Engineering Services, Housing & Common Amenities)

2. Construction revenue had not been prepared in accordance with the SL Accounting standards.

2. Auditor General was not satisfied with the prepared Accounts, directed to discuss with the AG for further clarification.

3. Annual reports from the year 2007 had not been tabled in Parliament.

3. Directed to table all outstanding reports before the end of the year.

Contdâ&#x20AC;Ś

151

State Development & Construction Corporation

4. Due to non availability of original receipts of the deposits made by the Corporation in external Institutions, amounting to Rs. 2,755,878 in 2009 & Rs. 4,204,247 in 2010, it had been doubtful to trace them.

4. A team of officials had been appointed to investigate the receipts & to rectify the matter.

5. Rent of Rs. 9.2 million and Rs. 27 million in Devcoshowa Company .

5. Out of Rs. 9.2 million, Rs. 7.2 million had been received as dividends. Management has agreed to obtain Rs. 27 million, once the Liquidation had taken place

152

17th October,2011 Public Utilities Commission (Ministry of Finance & Planning)

1. Annual Reports had not been tabled for the year 2008.

1. To expedite the presentation of reports

2. Internal Audit unit had not been established. Post of Internal Auditor had fallen vacant.

2. Due to non availability of an Internal Auditor, this unit had not been established and agreed to hold the meetings after recruitment had done.

3. 04 vacancies had been filled without the approval of the Salaries & Cadre Commission and 18 officers had been paid on the same grounds. The CAO/AO stated that they had done so, as per the provisions laid down in the Act. 4. Legal position of the Commission as a regulator of water, electricity & petroleum industries was enquired by the Committee.

3. Commission should be abide-by the Management Services Circulars even though there is a provision.

4. At present the Commission has the Authority over the Electricity Industry and amendment to the Acts should be carried out to have the regulatory powers of water & petroleum industries

153

1. Annual Reports for the years 2008 & 2009 had not been tabled.

1. To take action to table all outstanding Annual Reports in Parliament

2. Out of the 32 farms, 15 farms had incurred a loss of Rs.80,861,214/-.

2. Most of the farms incurred losses are in the dry zone areas. Directed to take action to make them profitable.

3. Trade debtor balance up to 2010 had been Rs. 15 million

3. It has been revealed that Rs. 9 million debtor balances have to be recovered including the bad debts. Directed to write off the balances which could not be traced after taking necessary approval.

4. Enquired the position on the shortage of food & cash amounting to Rs.900,000/-

4. This fraud had taken place over a period of time & NLDB had handed over this matter to the Legal Authorities.

October 17th 2011 National Livestock Development Board (Ministry of Livestock & Rural Community Development)

5. Dishonored cheques amounted to Rs. 02 million

5. Matter has been handed over to the CID. 6. The Committee appreciated the high standards maintained by the new Management, although there had been lapses in the past.

154

1. Annual reports for the years 2009 & 2010 had not been tabled in Parliament.

1. To take early action to table both reports

2. Audit & Management Committees had not been held for the year 2011

2. Directed to hold meetings quarterly

3. A Number of shortcomings were observed in the corporate plan for the period 2011-2015 and it had not been approved by the Board of Directors.

3. Directed to prepare the Corporate Plan in a way of a rolling Plan and to revise it annually

4. Directed to reconcile the differences in the 2011 accounts

Institute of Technology

4. Differences had been observed in the General Reserve Account, Capital grant Account, and the Fund Account

Ministry of Higher Education

5. Students intake had been increased only from 350 to 360 in the year 2010

5. As per the AO, with the present facilities available Institute could not increase the student intake

6. A large amount of Capital grant had been underutilized.

6. Directed to make use of grants in full.

October 17 2011

155

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Appendix E

PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Appendix E Issues discussed at the meetings of the Sub Committee III (Education & Health) of the Committee on Public Enterprises

Date/ Name of Institution and Ministry July 22nd 2010

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Student drop out rate being increased.

1) Directed the Institute to discuss with the Ministry of Higher Education, University Grants Commission and University of Colombo to find a solution and advised them to revise the curriculum in accordance with the global market.

2) A sum of Rs. 712,812 obtained from the WHO, had been retained in a current account from 2006 to 2009.

2) The Committee was dissatisfied over the situation and directed to submit a report.

3) UGC granted Rs. 2 million and Rs. 500,000 in two instances for development of IT unit and construct counters respectively but the institution had not fulfilled the objectives.

3) The Committee directed the institute to correct the situation and to report back to the Committee.

4) Rs. 496,250 being incurred as lawyers fee paid to private lawyers without getting the services of the Attorney Generalâ&#x20AC;&#x2122;s Department, on certain court cases. 1) The Committee observed that the net profit of the Corporation had been decreasing gradually.

4) Full report was called from the CAO on this matter.

Institute of Indigenous Medicine (Ministry of Higher Education)

July 22nd 2010 Sri Lanka Ayurvedic Drugs Corporation ( Ministry of Indigenous Medicine )

August 10th 2010 Sri Lanka Institute of Advanced Technological Education ( Ministry of Higher Education )

1) The Committee suggested adopting a new methodology to increase the income of the regional sales outlets.

2) Recovery of debts was unsatisfactory. Some debts had been existing since 1999.

2) The Committee was not satisfied about the situation and directed to certain corrective measures to be taken to streamline the position.

3) The Committee considered the present position of the accounting package which is being used by the Corporation prepared by a private company on a payment of a large some of money.

3) The Committee was of the view that the situation should be corrected and directed them to report back to the Committee with the agreement between the Corporation and Software company to see whether the company had acted accordingly.

1) Institution had taken the value of a land and buildings thereon of which the legal ownership had not been vested to them, into their accounts

1) The Committee directed the CAO/AO to regularize this matter.

2) The Committee noted that the institution had recruited 3 Accountants, on an adhoc way, without getting the required written approval from the Treasury.

2) The Committee stressed that the verbal approval canâ&#x20AC;&#x2122;t be treated as valid, advised the CAO to look into this matter and obtain the written approval.

156

REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry

August 11th 2010 National Transport Medical Institute ( Ministry of Transport)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) The Committee noted that financial authority had not been delegated to the Officials from the year 2007.

1) Directed CAO/AO to act in accordance with the financial regulations.

2) Organizational chart had not been registered with the approval for the scheme of recruitment not obtained.

2) The Committee directed the CAO/AO to regularize this and to get the approval from the Treasury.

3) Recovery of Rs. 415,000 and Rs. 3,847,091 from Metropolitan Bus company and the Kalutara Driving School, not being done.

3) No action has been taken to recover the money.

4) Asset Register had not been updated.

4) Directed to update the register.

5) The board of survey reports and the reports pertaining to the value of stocks of the head office and branches, not being submitted to the Audit. 1) The Committee observed that there had been variances between the budgeted figures and the actual figures.

5) Attention of the CAO/AO was drawn in this.

August 11th 2010 Postgraduate Institute of Archeology ( Ministry of Higher Education )

2) The Committee noted that the shortages of books were occurred in the library.

2) The Committee enquires what action had been taken by the Institute. The CAO/ AO stated that they had planned to computerize.

3) There had been a delay in releasing examination results.

3) The Committee was not satisfied about the situation and directed the CAO/AO to adopt a new methodology.

1) The Committee had observed the following major short comings of the Council.

. 1) The Committee directed to discuss all the matters with the Hon. Minister concern and advised to rectify the shortcomings.

• September 15th 2010 Homeopathic Medical Council ( Ministry of Indigenous Medicine )

1) The Committee stated that the Institute could have made this in order, by a supplementary estimate or having a separate vote for this kind of unexpected expenses.

•

Audit & Management Committee had not been appointed. Annual reports had not been tabled in Parliament from the inception Corporate Plan, Annual Action Plan & budget had not been prepared

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Date/ Name of Institution and Ministry

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) The Committee noted that the Fixed Assets Register was not properly updated.

1) The Committee directed to update the Fixed Assets Register in accordance with the Sri Lanka Accounting Standards.

2) The Committee noted that the Inventory items valued at Rs. 8.7 million purchased by the institute had been issued to external parties.

2) The Committee observed that the physical verification was not done so far.

3) Without obtaining the approval from the Treasury the Institute had invested money in fixed deposits.

3) The Committee stressed their dissatisfaction over it and advised to take requisite approval before deposit money.

1) The Institute had not taken action to fill the 59 vacancies owing to the lack of knowledge on circular instructions.

1) The Committee was of the view that this was a clear negligence of the Treasury representative on the Board of directors and stressed that he/she should have enlightened the institution properly.

2) A contract worth Rs. 1.6 million for the renovation of the sewerage system had been granted without signing an agreement.

2) The Committee was dissatisfied over the situation and CAO/AO agreed that such shortcomings would not occur in the future.

3) Without following proper procurement procedures, the institution had hired two motor vehicles.

3) Satisfactory explanation was not given.

4) Rs. 24.8 million which had been spent for 186 projects.

4) The Committee observed that the follow up action on research grants had not been adequate and the respective ledger had not been updated and computerized.

5) After obtaining research grants of Rs. 586,160 two lecturers had vacated posts and gone abroad without refunding the money.

5) According to the signed agreement, they are permitted to hand over the research to other person in the team, but in this case, even that was not happened. The CAO/AO agreed to introduce new clauses into the agreements to overcome such situations.

6) Two projects involving US $ 78,000 for the improvement of the management of the coastal system. The CAO/AO informed due to the problem of co-ordination these projects were halfway suspended and funds had to be returned to the donor countries.

6) The Committee noted and advised the CAO/AO that the officials had to be more responsible and should take actions to minimize these types of shortcomings.

September 21st 2010 Postgraduate Institute of Medicine ( Ministry of Higher Education )

September 21st 2010 National Science Foundation ( Ministry of Technology & Research )

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions 1) The Committee directed the CAO/AO to submit a report to the Committee within two weeks time regarding this matter.

( Ministry of Higher Education )

1) EPF benefits had not been paid within three months to some of the employees, and noted that they had been invested EPF money in the fixed deposits and interest had been remitted after deducting the withholding tax. Whereas the interest should be deducted subject to providing tax report.

September 28th 2010

1) Only one student had been able to complete MA degree course.

1) The Committee directed the UGC Chairman to discuss with the Vice Chancellor, Secretary to the Ministry and other relevant officials and ensure to adopt a new model, and also several information were called for.

2) Contrary to the Establishment code a senior Asst. Registrar had been paid Rs. 150,000 for covering the duties of an Asst. Registrar.

2) The Committee was of the view that the PGIE should have taken approval from the UGC for such payments.

September 28th 2010 University of Colombo School of Computing

1) Annual report for 2008 and 2009 had not been presented in Parliament.

1) Directed to expedite.

( Ministry of Higher Education)

2) Underutilization of funds received under SIDA, Ph.D programme Rs. 51,999,948.

2) Only Rs. 26,019,570 had been spent subsequently this moneys had been spent on the relevant objectives. 1) The Dean of the Medical Faculty showed his dissatisfaction regarding the construction. The Committee directed the CAO/AO to submit a report regarding this matter. 2) The Committee wanted UGC Chairman to have a discussion with the Treasury officials and the Secretary to the Ministry regarding this matter.

September 21st 2010 Provident Fund for Buddhist & Pali University

Postgraduate Institute of English ( Ministry of Higher Education)

1) 83% of work of the proposed building for clinical medicine of the faculty of Medicine had been completed.

September 28th 2010 University of Colombo ( Ministry of Higher Education )

September 28th 2010 Universities Provident Fund/ Universities Pension Fund ( Ministry of Higher Education )

2) The Committee noted that the Rs.677, 575,541 had been invested in state banks without obtaining the Treasury approval.

3) Annual Report for 2005 to 2008 not presented.

3) Directed to expedite.

4) Moneys not paid back by the officers went abroad on educational purposes, breaching the agreements entered into.

4) Directed to report with more information

1) Universities Provident Fund had incurred a loss of Rs. 332,789 due to investing of money in a private bank.

1) The CAO/AO explained that they had a net profit of Rs. 1 million. But the Committee was of the view that, had they deposited money in the fixed deposits in the state banks they would have had more profit than this. 2) The CAO/AO stated that already they had presented a Cabinet Memorandum to rectify the error.

2) The Committee observed that the Provident Fund had erroneously considered the other allowances for as computation of contributions.

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Date/ Name of Institution and Ministry

October 1st 2010 National Youth Services Council ( Ministry of Youth Affairs)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Difference of Rs. 14,670,645 between the fixed asset register and the subsidiary books and the not submission of detailed schedules in respect of fixed assets valued at Rs. 124,217,913 made to the audit. 2) Outstanding balances of Rs. 2,508,406 remaining for a long period.

1) The Committee directed to submit a report regarding this matter with copy to the Auditor General.

3) The Committee noted that the Buildings valued at Rs. 88.2 million had been constructed on lands not belonging to the council. 4) Investment of Rs. 4,032,360 had been made in the Youth Services Company Ltd.

2) The Committee directed to take action to recover as much as possible and to get the Attorney Generalâ&#x20AC;&#x2122;s opinion in this regard. 3) The Committee directed to take steps to get the ownership of the lands immediately.

4) The Committee noted that they had not got any benefit out of this investment.

October 1st 2010 & September 14 th 2011

1) The Committee noted that the outstanding debtor balance is Rs. 156,082,438 and out of that Rs. 2,421,582 remained outstanding for 3 to 5 years.

1) The CAO/AO brought to the notice to the Committee that the Ministry of Health had agreed to settle Rs.2.3 million within two months.

State Pharmaceuticals Manufacturing Corporation

2). Data Base system installed for stock control of the Corporation spending Rs. 13,744,174 had not been properly functioning.

2). The CAO/AO stated that the supplier had agreed to install a new version free of charge

1) The Committee discussed about the Corporate Plan , objectives, and functions of the Center.

1) The Committee directed to submit a Corporate Plan, even though its objectives are very limited.

2) The Committee observed that the Center had not complied with the accepted Tender Procedures. 3) Rs. 9.7 million had been invested in Pramuka Bank in 2002, but neither the interest nor the principal amount had been able to be received by the Center. The CAO stated that it had been loss to the Center.

2) The CAO agreed to look into this matter.

The Committee observed that Rs. 57.8 million had been invested in non-governmental financial institutions in the year 2008 in contrary to the circular No. PED/33. The CAO/AO stated that due to high interest rates, center had invested money.

Directed the CAO to invest these moneys in a State Bank.

( Ministry of Health )

October 12th 2010 J.R.Jayawardana Center for Historical Research, Archives and Library ( Presidential Secretariat)

3) The Committee considered this as a loss to the Center.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry October 12th 2010 Mahapola Higher Education Scholarship Trust Fund ( Presidential Secretariat)

October 12 2010 University of Visual & Performing Arts ( Ministry of Higher Education )

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) The Committee questioned about the investment of Rs. 4 billion in National Wealth Corporation Company. Out of which no dividend received. But the CAO stated that they had received nearly a bonus of Rs.300 million.

1) The Committee wanted a report with regard to the establishment of the National Wealth Corporation and their transactions.

2) Find a methodology to recover the moneys given to the students by way of grant when they are employed.

2) Directed the CAO to look into this.

1) The Committee observed that out of Rs.205 M and Rs.193 M provided for the construction of the hostel only Rs. 5.9 M had been spent for pre-preparation. The construction work had not yet been started. 2) The Committee observed that settlement of advance amounting to Rs. 648,144 had been delayed.

1) The Tenders had been called for and contracts would be awarded end of this year. Committee considered this as a serious delay.

3) 391 students qualified for the entrance not being enrolled up to 30th September. April 8 th 2011

National Institute of Co-operative Development

1) The Committee observed that the construction of the Auditorium initiated in 2001, paying Rs.2.2 million to a consultant, had not been completed yet.

2) The CAO/AO brought to the notice of the Committee that they had recovered majority and there had been a balance of Rs. 59,000 / - to be settled and this could be settled at the end of this year. 3) Due to closure of University for various reasons this has happened. Theses students will also be enrolled in 2010. 1) Directed to submit a full report to the Committee very early, including also as to why legal action had not been taken against the Consultant.

( Ministry of Cooperative & Internal Trade) April 8 th 2011 National Institute of Language Education & Training ( Ministry of National Languages & Social Integration)

1) Questioned as to whether any action had been taken against the former chairman who had violated rules and regulations. 2) Enquired about the present position of the Corporate Plan 3) The Committee questioned the presentation of Annual Reports for the period 2008-2010 in Parliament. 4) Auditor General pointed out that the Cooperation rendered by the Institution towards the officers of the Auditor Generalâ&#x20AC;&#x2122;s Department is very unsatisfactory. The Committee was very serious on this.

1) Directed to take action based on the investigation report. 2) The Committee wanted the CAO/AO to send the updated Corporate plan to the Committee. 3) The Committee directed the CAO/AO to streamline the presentation of the annual reports.

4) Disciplinary action should be taken against the officers responsible for this matter.

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Date/ Name of Institution and Ministry

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) The Committee enquired as to what actions had been taken with regard to the act of fraud committed by a Senior Manager.

1) It has been revealed that the responsible officer had been interdicted and actions had been already taken to file a case against him.

1) The Committee raised the following matters.

1) The Institute has ignored and disregarded the Government Circulars and directed to adhere to the Government Circulars instructions.

April 8 th 2011

Gem & Jewellery Research & Training Institute

( Ministry of Environment)

April 8 th 2011

Out of Rs.36 million of treasury grants only a very low percentage had been utilized. . • Additional fuel claimed by the Chairman of the Institution contrary to the Para 02 of the Public Enterprises Circular No.50 of 28 July, 2008. • The salaries of the Staff being increased by the Chairman without the approval of the Department of Management Services. • The director General of the Institute had taken a number of duty leave, without forwarding the programme. 1) Observed that the Annual Reports for the years 2005, 2008,2009 and 2010 had not been presented in Parliament •

1) Directed to present all the outstanding reports and to present in Parliament without further delay.

Central Cultural Fund ( Ministry of Culture & the Arts )

April 8 th 2011

2) Enquired as to why 1330 cheques for the value of Rs.72,851,419 had been written when the bank had no sufficient money and as to why action had not been taken on cheques issued that had not been presented for payment for over 06 months.. 1) Annual Reports since 2007, had not been presented in Parliament .

2) The Committee seriously considered this as a clear violation of financial regulations.

1) Directed to present all the outstanding reports in Parliament without further delay.

Institute of Construction Training & Development

2) Actions had not been taken to recover outstanding balances from NEMO, CHPB and other institutions amounting to Rs.114.5 million, Rs.4.1 million and Rs.2.5 million respectively.

2) Directed to submit a full report in this regard. However the CAO stated that recovery of debt from NEMO is doubtful.

( Ministry of Construction Engineering Services, Housing and Common Amenities)

3) Actions had not been taken to recover VAT receivables amounting to Rs.1,128,270 from the Dept. of Inland Revenue. Explanation is that even though it was reminded, the Dept. of Inland Revenue evades, the payment.

3) Responsibility of recovering dues should be assigned to the treasury representative on the board.

4) Directed to discuss with the Treasury and get cleared.

Thurusaviya Fund

4) Due to unavailability of the original receipts with the Institute, it was doubtful, to recover Rs. 1,722,563 of deposits made with external Institutions. 1) Even though the Corporate plan for the period 2011-2015 had been submitted, it had not been compatible with the budget and also the Action Plan is not in line with the Corporate Plan.

( Ministry of Plantation Industries)

No Corporate Plan for the previous year had been prepared.

April 8 th 2011

1) The Committee pointed out that as the institute was continuously running at a loss. Existence of a proper Corporate Plan is very vital.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry April 8 th 2011

National Institute of Plantation Management ( Ministry of Plantation Industries)

April 8 th 2011

Tea Research Institute of Sri Lanka ( Ministry of Plantation Industries)

April 29 th 2011

Skills Development Fund Limited ( Ministry of Youth Affairs & Skills Development

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Action plan for 2010 was not compatible with either the Corporate plan or the budget and moreover, the institute had been unable to achieve some of the targets in the previous Corporate Plan.

1) A proper Corporate Plan should be prepared.

2) Non existence of internal audit division in the institute and the non-receipt of internal audit report by the Auditor General. 3) New strategies of Tea plucking introduced to the workers in the field, is questioned. 4) Reduction in number of courses and the number of students participated in 2009.

2) Audit is done by the internal audit of the ministry and CAO/AO was directed to send the reports to the Auditor General in time. 3) Tea pluckers need to be trained ensuring the durability of tea bushes.

Reason for reduction of courses was due to shortage of staff. As the industry was in a problem due to world economic crisis, the industrialists did not want to enroll these employees in training programme. 1) Corporate Plan had not been reviewed since 2008 in terms of the section 5:1:3 of the Circular No.PED 12 of 02 nd June 2003 and the Action Plan had not been prepared in order to meet the targets in the Corporate Plan and Annual budget also had not been prepared in line with the Action Plan. 2). A sum of Rs.23,121,329 outstanding , caused by breach of agreements by the officers who went abroad.

Lady Lochore Loan Fund ( Ministry of Finance & Planning) Contd… Lady Lochore Loan

2).The Committee directed the CAO/AO to write off the amounts from the books after obtaining the approval from the treasury.

3) Legal action had not been taken against the external parties encroached an extent of 17.675 hectares of land belonging to the Tea Research Institute.

3) Since these lands were being cultivated by these people over generations, the Committee directed to submit a detailed report within a period of one month.

1) The Committee observed shortcomings.

1) To set up an Advisory Board to prepare a comprehensive report indicating future programmes, and submit to COPE within one month.

• • • •

April 29 th 2011

1) The CAO/AO agreed to take necessary steps to revise the Corporate Plan and the annual budget.

the following

Expenditure incurred on skills development had been at a very low level. Number of Board Meeting held had been decreased. No difference in the training programmes/ work shops held by the fund. The Audit & Management Committee had not been conducted properly.

1) Following shortcomings were observed in the fund • Corporate Plans, Action Plans had not been submitted to the audit for 2009 and 2010 • Delay in submitting financial statements to the Audit. • Non performing loan balances for over 10 years

1) Corrective measures to be taken.

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Date/ Name of Institution and Ministry Fund

Major Issues and Problems Discussed â&#x20AC;˘

Comments by the Sub Committee and Decisions

Number of vacancies not filled

2) Main objective of the Fund is to provide short term loans to relieve indebtedness of the Government officers

2) Priority should be given to the employees who draw lower salaries and to extend this loan scheme to other districts too.

April 29 th 2011 Information & Communication Technology Agency of Sri Lanka

1) Enquired about the presentation of annual reports to Parliament. As a practice, ICTA submits Annual Reports to Registrar of companies and General Treasury.

( Ministry of Tele Communication & Information Technology)

2) Corporate plans had not been submitted.

1) All the Institutions funded by the Treasury, should present their Annual Reports in Parliament. The Committee directed to prepare a comprehensive report obtaining advice from the Ministry of Finance regarding the presentation of annual reports in Parliament. 2) The Committee wanted the CAO/AO to prepare Corporate plans for the period 20102015 indicating the programme of work to be implemented in the next couple of years.

April 29 th 2011

1)The Committee observed that the Bambalapitiya Show Room had been closed and sold to a private party without obtaining the approval and the buyer had been carrying out his business in the premises without settling the balance payment of Rs.2.1 million.

1)The Committee directed the CAO/AO to prepare a comprehensive report with regard to this transaction, to the Committee within two weeks time.

2) Required number of the Audit & Management Committee meetings had not been held in the year 2010.

3) Directed to hold required number of Committee meetings as per PED Circular No.12

4) No Annual Reports after 2005 presented in Parliament.

4) The CAO/AO stated that the reports upto year 2009 had already been prepared and would be presented in Parliament as early as possible.

Sri Lanka Handicrafts Board ( Ministry of State Resources & Enterprise Development)

April 29 th 2011

had been

5) Number of unanswered audit queries.

5) Internal Auditor and the Accountant are responsible for answering audit queries in time.

6) Out of the total carder, 52% had been in the management level and 17% engage in sales duties, affecting the work.

6) Emphasize the requirement of preparing a new organization chart and carder to overcome the situation, VRS should be introduced to the rest.

1) The Committee enquired the current position of the institution

1) It had been decided by the Government to lease out all the factories of the Corporation and that the institution would be abolished at the end of the restructuring process and compensation also would be paid, to the existing staff. 2) Rs.26 millions had to be recovered and all the dues for creditors had been settled.

Ceylon Ceramics Corporation ( Ministry of State Resources & Enterprise Development)

2) Questioned about the total debtor balance of the Corporation.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry April 29 th 2011

National Insurance Trust Fund ( Ministry of Finance & Planning)

June 17 th 2011

National Crafts Council ( Ministry of Traditional Industries & Small Enterprise Development)

June 17 th 2011

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Several shortcomings were observed in the Corporate Plan prepared for the period 2010 – 2014.

1) Corporate Plan should be reviewed and amended to give realistic picture.

2) A loan of Rs. 537 million granted by the strike, riot & civil commotion & terrorism fund under concessionary terms to the Galadari Hotel Ltd., and the interest thereon remained without being recovered over a long period of time.

2) It has been revealed that this loan had been provided with by the National Insurance Corporation at that time, and the Bank of Ceylon had issued parata execution to the Galadari Hotel Ltd., since the Bank of Ceylon had been failed to recover this loan from the Galadari Hotel.

1) Out of the total amount of financial provisions received from the Treasury only a small amount had been utilized for the Craft Development, which is one of the objectives of the Council.

1) Over the past years the Council had spent a bigger part of the money allocated to it, for the payment of salaries. But from 2011 an additional amount of Rs.10 million had been allocated for craft development. 3) Now they have built, their own building

2) It was observed that the training division had been operated in a building rented out for a monthly rental of Rs.24,000/- contrary to the Cabinet decision of 23.12.2008. 3) Council is continuously running at a loss.

3) Mainly depend on the Treasury allocation while making a small income by selling their products and rendering service.

4) No Internal Audit unit is functioning and the post of the Internal Auditor has fallen vacant.

4) Directed to recruit and Internal Auditor, early.

1) Legal framework of the Institution was questioned by the Committee.

Selacine Television Institute ( Ministry of Mass Media & Information)

Contd…

The Committee expressed its dissatisfaction over the way of answering audit queries both in verbally and in writing by the Council. 1) Cabinet of Ministers has decided to transform the Institution to a limited liability Company, but no action had been taken by the Institution after submitting Articles of Association to Attorney General’s Department in 2009. A report has to be submitted within a month indicating the future plans.

2) Annual Reports had not been tabled in Parliament since 2006.

2) Although the Annual Reports prior to the year 2009 had not been prepared, the Annual Report for 2009 was under preparation for presentation in Parliament.

3) The Committee observed the following shortcomings. • Delay in submitting financial statements • A register of fixed assets not being maintained.

3) Directed to take action to correct them.

•

Transactions valued at Rs.22,814,944 , Rs.26,187,747 & Rs.36,688,374 in the years 2005,2006 and 2007 respectively

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Major Issues and Problems Discussed

• Selacine Television Institute June 17 th 2011

could not be vouched due to lack of evidence. The approval not obtained from the Dept. of Management Services for the Staff Cadre.

1) The Committee queried about the expansion of the company’s activities.

1) Cabinet had approved an amount of Rs. 152 million for the Development and Expansion of Northsea Ltd., by which they could increase the production by 300 M.tons of fishing nets per annum, and also make 32,000 Nos. of people from fishing community benefited.

2) An amount of Rs.5.5 million had been borrowed from the Paranthan Chemicals, Paddy Marketing Board, GA etc. and enquired the reason. Explained that during the period 2001-2009 , as Northsea was running at a loss, this amount had been borrowed for a Tsunami Development Programme and all the details had been furnished to the Ministry for writing off this amount.

2) Directed to obtain the Treasury approval before writing off.

1) The following shortcomings were noted in the Corporate Plan and the Action Plan • Corporate Plan prepared for the period 2007-2012 had not been in accordance with the PED Circular No.12 • The organizational chart had not been included in the Corporate Plan

1) Directed to revise the Corporate Plan.

2) Although the Government has granted Rs.05 million to the Company neither shares nor dividends had been declared to date on this grant. 1) Certain short comings had been observed in the Corporate Plan and the Action Plan.

3) Directed to do the needful. The Committee commended the good performance of the Company. 1) Directed to submit revised copies of the Corporate Plan and the Action Plan as pointed out by the Auditor General within two weeks.

2) It was observed that a loss of Rs.335,000/- had been incurred on purchase of a Diesel Cab as the lowest tender had not been accepted.

2) As the CAO/ AO stated that the technical committee had rejected the lowest tender as the tenderer had failed to provide the required specifications.

3) Rs.4,018,738 and Rs.4,527,967 being receivable and payable had been disclosing in accounts without being settled for last 5 years and enquired the reason for that.

3) The committee directed to see the possibility to recover dues as much as possible before writing off and to submit report to the committee within 03 weeks time.

4) Laboratory in the Nattarampotha Project had been idling due to lack of staff.

4) Directed to take appropriate action to recruit required staff to overcome such difficulties.

Northsea Limited ( Ministry of Traditional Industries & Small Enterprise Development)

June 17 th 2011

Rakna Arakshana Lanka Limited ( Ministry of Defence)

June 17 th 2011 National Design Centre ( Ministry of Traditional Industries & Small Enterprise Development)

Comments by the Sub Committee and Decisions

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry August 26 th 2011 Tea Small Holdings Development Authority ( Ministry of Plantation Industries)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Following shortcomings were observed in the Corporate Plan prepared for the period 2010 â&#x20AC;&#x201C; 2014.

1) Take action to prepare a fresh Corporate Plan, taking the future targets into consideration.

(i) Some of the objectives of the Authority had not been included in the Corporate Plan (ii) Objectives indicated in the Corporate Plan had not been included in the Action Plan. 2) The Committee noted that out of the miscellaneous debtor balance of Rs. 108,825,873 as at 31.12.2010 an amount of Rs.88,212,038 had still been outstanding. and Rs. 74,001,948 out of that outstanding amount had been due from the Tea Shakthi Fund.

2) With the approval of the Board of Directors, the Authority had written to the Treasury for their approval to write off only a part of that amount, and that advice of the Attorney General had also been sought to take legal action to recover the rest of the amount.

3) Mobilization advances to be recovered as at 31.12.2010 had been Rs. 12,968,728.

3) The Committee directed the CAO/AO to take action to report with regard to these two contractors to the ICTAD of the Ministry of Construction, Engineering Services, Housing and Common Amenities, explaining the matter, and to report to the Committee on the action taken by the ICTAD about these two contractors 4) Directed to take legal action against these factories.

4)The Committee noted that out of Rs. 25 million granted as loans to buy colour separation machines to 5 factories in the private sector and 3 factories of the Tea Shakthi Fund in 1998, Rs. 21,640,455 remained unsettled as at 31.12.2010.

August 26 th 2011 National Book Development Board of Sri Lanka

( Ministry of Education)

5) Action had not been taken to recover Rs. 9,873,192 from the Tea Small Holdings Development societies granted to purchase vehicles on hire purchase basis.

5) Negotiations are going on.

1) Cabinet has decided to amalgamate National Book Development Board with the National Library & Documentation Services Board

1) To explore the necessity of the existence of the Board, the Secretary of Ministry of Education had been directed by the Cabinet to submit a detail report of action of the Board

2) The Committee also noted the following shortcomings of the National Book Development Board.

2) Directed discrepancies.

streamline

the

(a) The Board of Directors had not met for a long time, (b) The Corporate Plan had not been prepared,

Contdâ&#x20AC;Ś

(c) The building in which the books had been stored, had not been properly maintained causing serious damages to the books due to natural causes.

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Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

(d) Action had not been taken to distribute the books among the schools.

National Book Development Board of Sri Lanka

August 26 th 2011

(e) National Book Policy had not been formulated, (f) Clear answers to the audit queries had not been submitted.

1) Since the Authority is governed by 2 Acts, enquired the reason for that.

Civil Aviation Authority ( Ministry of Civil Aviation)

2) Why Sri Lanka should not have a separate entity to conduct aircraft accidents Investigations.

3). A sum of Rs. 321,194,081 had been invested in Treasury bills and term deposits in 39 instances without obtaining the requisite approval and enquired the source of Income.

1) Act No. 34 of 2002 and the Act No. 14 of 2010 are interconnected; Authority had to function in accordance with the provisions laid down in both. 2) Since Sri Lanka is too small to have a separate entity directed to find the ways and means to implement such an entity. 3). As per the CAO/AO the Authority receive income from 03 main sources; (a) Overseas Sales Surcharge, i.e. the amount of US $ 60 received for each ticket sold outside Sri Lanka. (b) 2.5% being retained by the Authority from the Embarkation levy.

4). The Committee observed that as per the Finance Act of 1971, the net surplus of the Authority had to be credited to the Consolidated Fund whereas the Authority had never done that from the inception, and the surplus as at 31.12.2010 had been Rs. 609,650,657

August 26 th 2011 Tea Shakthi Fund ( Ministry of Plantation Industries)

Contdâ&#x20AC;Ś

(c) The interest received on investing cash received from the above two instances 4). The Committee directed the CAO/AO to obtain maximum use of the money when construction is in progress and also to do a cost analysis before purchasing the air craft and to obtain approval from the Treasury explaining all their future plans.

1) The Corporate Plan for the period of 2008-2012 had not been compatible with the objectives and the Action Plan was not in accordance with the Corporate Plan. A new Corporate Plan for the period of 2010 -2014, is now underway. The Committee was dissatisfied with the procedure adopted by the Fund when preparing the Corporate Plan.

1) Report to be sent regarding the procedure, followed when preparing the new Corporate Plan.

2) The Committee observed that Annual reports from Year 2005 to 2009 had not been tabled in Parliament. 3) According to the Auditor General, the Committee observed that there was a large amount of accounting irregularities that had been taken place in the Fund.

2) Report on the preparation and presentation of the Annual Reports from year 2005 -2009.

3)Directed the CAO/AO to take action to rectify all these deficiencies, with the assistance of the officials of the Auditor Generalâ&#x20AC;&#x2122;s Department.

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Date/ Name of Institution and Ministry

Major Issues and Problems Discussed

The Committee also wanted the CAO to discuss with the Hon. Minister about the functions and the Shortcomings of the Fund and have a policy decision whether to continue this Fund as a separate entity or to amalgamate with the Tea Small Holdings Development Authority and report to the Committee.

Tea Shakthi Fund

September 09 th 2011 Sri Lanka Sustainable Energy Authority

Comments by the Sub Committee and Decisions

1) The Committee observed that two vehicles had been reported lost. The AO stated that theses vehicles had handed over to the line Ministry with the written evidence. Ministry informed that these two vehicles are not found in the Ministry.

1) Directed to submit a detailed report and if theses vehicles are not found in the Ministry premises to make a complaint to the police.

2) The Committee noted that Rs. 94,251,955 to be paid to the CEB had not been shown in the Accounts. The CAO/AO stated that these transactions not reflect in the Accounts, as the Sustainable Energy Fund considered as a separate financial body.

1) Even though it is a separate entity, if this is a liability of the Authority this amount should be reflected in the balance sheet. The CAO/AO agreed to correct it. Directed the CAO/AO to submit detailed report with regard to the Sustainable Energy Fund and Sustainable Energy Guarantee Fund.

3) Capital Grant adjustments amounting to Rs. 15,000,000 and project expenditure amounting to Rs. 167.77 Mn shown in financial statement could not be vouched due to the non-availability of proper documentation. 1) The Committee observed that a sum of Rs. 15,391,201 had been spent during the period 1997 â&#x20AC;&#x201C; 2001 for construction of Bio Diversification Centre at Ambuluwawa, where the Board of Directors had decided to write off this amount in 6 years, as this land does not belong to the company, and also the Treasury approval had not been obtained in this regard.

3) Directed to submit all relevant information pertaining to this transaction to the Audit. Progress of this matter to be reported to the Committee.

( Ministry of Power & Energy )

September 09 th 2011 Ceylon Fertilizer Co.Ltd.

( Ministry of Agrarian Services and Wild Life)

1) The Committee directed the CAO/AO to discuss this matter with the Treasury, the Ministry of Agriculture and the Ministry of Cultural Affairs and take action to sort out this matter.

2) The Committee observed that a debtor balance of Rs. 8,807,311 had been written off by the Company without obtaining the Treasury approval.

2)The approval of the Treasury had not been received even though a request made to that effect.

3) The Committee noted that the amount receivable from the authorized dealers as at 31.3.2011 had been Rs. 23,217,583 out of which Rs. 9,002,484 had remained for more than 9 years.

3) Had been referred to the Attorney General.

4) The Committee noted that the amounts to be recovered from the Govt. Institutions as at 31.3.2011 had been Rs. 145,398,893 out of which Rs. 49,727,858 had remained for more than 9 years.

4) The Committee directed the CAO/AO to submit a report to the Committee indicating the amount to be written off from the Govt. Institutions, and the steps taken by the Company to recover these outstanding balances.

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Date/ Name of Institution and Ministry September 14 th 2011

Sri Jayawardenapura General Hospital

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Enquired about the action that had been taken against the officers who committed the fraudulent action on professional fees amounting to Rs. 1,661,950. The CAO/AO stated that hospital carried out a preliminary inquiry and handed over the case to the CID for further action.

1) The Committee directed the CAO/AO to report on the findings of the investigation.

2) No representation from the Auditor Generalâ&#x20AC;&#x2122;s Department in the Audit & Management Committee.

2) Directed to have a representation from the Audit.

3) The Committee noted that there had been non moving stocks value of Rs. 16,700,623.The CAO/AO stated that these equipment had been received from the inception and now not in usable condition.

3) The Committee directed the CAO/AO to appoint a committee to look into this and arrive at a proper decision.

4)Recovery of professional fee from the consultants. Proposals have been made to this effect and the consultants have not agreed and two of them have resigned from the Board on this issue.

4) Directed to introduce a mechanism having consulted the respective parties.

Fraud committed by an officer. Now the case has been handed over to the CID

Directed to report on the findings

1).The Committee queried about Annual Report for the past years.

1) Annual Report for 2009 had been submitted to the Cabinet for approval, and agreed to complete the 2010.

2) Although actions had been taken to submit the Corporate Plans for 2012 -2015 a number of shortcoming were pointed out.

2) Directed to correct it.

3) The Committee observed the following shortcomings/weaknesses in the National Film Corporation. (a) Delays in presentation of Annual Financial Statements

3) The CAO was directed to take early action to rectify these shortcomings except the recovery of loans.

( Ministry of Health)

September 15

2011

National Film Corporation ( Ministry of Mass Media & Information)

(b) Delays in replying to the audit queries, (c) Responsibilities not being assigned to the officials to carry out the duties, (d) Collection of debts unsatisfactory situation.

Contdâ&#x20AC;Ś

being

very

4). Loan amounting to Rs.500,000 had been granted by the Corporation in the year 2009 to a cinema hall when there had been a sum of Rs. 404,719 due from them since the year 2002.

4). Directed to take legal action against the Cinema hall.

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry National Film Corporation

September 15

2011

Ceylon Fishery Harbours Corporation ( Ministry of Fisheries & Aquatic Resources Development)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

5).The Treasury Representative informed the Committee that Rs. 50 million had been approved, but the Corporation had not submitted their Investment Plan to the Treasury to release these funds.

5).The CAO/AO was directed to take early steps to submit the plan.

1). Objectives indicated in the Act of in Corporation had not been included in the Corporate Plan prepared for the period 2011 – 2015, and also Action Plan had not been prepared based on the Corporate Plan.

1). Directed to submit the Corporate Plan and Action Plan to the Committee as well as to the Auditor General after obtaining the approval of the Board

2). Corporation had paid Rs. 2,791,215 as a 60% advance to a private company in July 2007, to supply 8 tanks valued each at Rs. 5,095,075, to the Corporation. The tanks had not been supplied yet, and also the files relating to the transaction had not been furnished to audit.

2) This matter had been already referred to the CID and the Attorney General. The Committee directed the CAO to hold an impartial inquiry and to take disciplinary action against the officers involved, and also to submit a detailed report to the Committee.

3). Action had not been taken to recover the amount of Rs. 2,209,251 given on credit basis for fuel. Corporation had filed 44 court cases, out of which 34 had been with regard to recovery of payments.

3) The Committee directed the CAO/AO to furnish a summary of the 44 court cases and the action to be taken in this regard to the Committee within 3 weeks time.

Directed to take corrective action very early. The shortcomings pointed out by the Committee at the previous COPE meeting had not been corrected. Opinion of the Auditor General had been a disclaimer. Accounting statements to be withdrawn due to shortcomings.

September 15

2011

National Institute of Fisheries & Nautical Engineering ( Ministry of Youth Affairs & Skills Development) Contd…

4) Hire charges had not been levied for loading sand to the lorries, thus the Corporation had incurred loss around Rs. 21,000,000.

4) Action had been to recover that amount and the Corporation had already started levying the hiring charges from the lorries

5) No effective duties had been carried out, even after spending Rs. 224 million for the construction at the Chillaw fishery Harbour.

5). To submit a comprehensive report on this harbour to the Committee.

1). Corporate Plan prepared for the period 2010 – 2013 had not been approved by the Board of Directors.

2) Directed the CAO/AO to prepare the Action Plan in line with the Corporate Plan, and after obtaining the approval of the council, to submit both documents to the Committee as well as the Auditor General.

2)Audit & Management Committee had met only once in the year 2011.

2) Directed the CAO/AO to see that it is met at least quarterly, and to discuss all audit queries at the meeting, before submitting the replies to the audit.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry National Institute of Fisheries & Nautical Engineering

September 15

2011

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

3) Audit opinion was a disclaimer for period 20062010

3) Directed to consult the Auditor General.

4) Enquired the current position with regard to Rs. 6,712,171 to be recovered from the student as course fee and hostel charges.

4) Action had been taken to obtain the approval to write off Rs.5.8 million out of the total amount. Directed the CAO/AO to obtain approval from the Treasury too.

5) Rs. 80,000/- had been paid to a Fisheries Training Asst. to follow a Postgraduate course, where he had vacated the post, after following the course.

5) To take action to recover this amount from the guarantors, and report back to the Committee

1). The Committee observed that the 2008 & 2009 Annual Reports had not been tabled in Parliament.

1). Directed to take action to table 2010 Annual Reports in Parliament, along with the backlog.

2). The Committee enquired as to why the Audit & Management Committee had not been appointed for the year 2010.

2). The Committee directed the CAO/AO to hold the Audit & Management Committee meetings at least once in every three months time.

3). The cement imported by the Lucky Company during the period 31st July, 2007 to 1st July 2011, were not in compliance with the SLS specifications but had been released to the market on 47 occasions.

3). The CAO/AO stated that the SLSI issued the SLS certificate to this Company only in the year 2008, and that they had taken action to suspend their SLS certificate in the year 2010.

1). Observed that the Corporate Plan prepared for the period 2009 â&#x20AC;&#x201C; 2013 had not been approved by the Board of Directors.

1). Directed to submit all the information with regard to the above Corporate Plan to the Committee within two weeks.

2). Out of the approved cadre of 141, the actual cadre had been only 87, and enquired the reasons for not filling the vacancies.

2) Directed to fill the vacancies.

3) Out of Rs. 15.6 million received as fines by the Authority, a sum of Rs. 11.6 million had been transferred to the non-current liabilities while Rs. 4 million had been utilized for staff loan fund, contrary to the Marine Pollution Prevention Act.

3). With the approval of the Director Board, the Authority had used this money for an essential purpose, and wanted the CAO to obtain treasury approval.

Sri Lanka Standards Institute ( Ministry of Technology & Research)

September 15th 2011 Marine Environment Protection Authority ( Ministry of Environment)

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry September 15 th 2011

National Child Protection Authority

( Ministry of Child Development & Womenâ&#x20AC;&#x2122;s Affairs)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Construction of a Resource Center in Kurunegala had been awarded to a contractor without obtaining the TEC report and entering into an agreement; the contractor had stopped the contract half way. The AO stated that this had been awarded by an error and work to the value of only Rs. 82,880/- had to be completed.

1) The Committee directed to submit a detailed report on the above construction work and also to obtain a report from the Divisional Engineer on this construction.

2) The Committee discussed about the Children who affected from the Tsunami. Out of total No. of 2661 Children in 10 districts only 264 had been provided the Foster Parent facility, in terms of the Tsunami( Special Provision) Act No. 16 of 2005

2) Committee directed to submit a report including relevant information of the 264 Children, action taken and the present position of them. Names and the addresses of the balance 2397 Children on the basis of the Divisional Secretariat and the present position of these children.

3) Of funds received for various projects Rs. 4,189,374 had been remained unutilized at 31.12.2008.

3) The Committee directed to submit a report regarding projects - Dialogue Housing Project, Tsunami Scholarship Assistance, Office of the High Commissioner for Australia, UNICEF Child & Youth Centre, ISPCAN Project, Office of the British High Commission and the USA University of Kelaniya. 4) Its being prepared and the Child protection act is also being amended.

4) National Policy on prevention of Child Abuse.

September 15 th 2011 National Aquaculture Development Authority ( Ministry of Fisheries & Aquatic Resources Development)

5) Assets amounting to Rs. 19,471,699 which were fully depreciated as at 01.01.2011, being used without doing a revaluation.

5) Committee had been appointed to revaluate, and such valuation would be taken to accounts.

1) Assets amounting to Rs. 641,175 had not been brought to the Head Office when the Authority was shifted to Pelawatta.

1) The Committee directed to submit a detailed report with regard to this matter.

2) Balances of assets and liabilities amounting to Rs. 672,700,188 could not be satisfactorily vouched / verified or accepted in audit due to non availability of necessary documents

2) The Committee directed the CAO /AO to follow these instructions properly.

Auditor General stated that it should be recorded in the inventory register, when the Authority brings an asset. 3) There had been an outstanding loan balance of Rs.17,245 ,513 and Rs. 2,017, 679 for more than 2 and 5 years respectively.

3) Directed the CAO/AO to do an age analysis and take necessary steps to recover.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry October 13th 2011

Cooperative Wholesale Establishment ( Ministry of Cooperatives & Internal Trade)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Only one Audit & Management Committee meeting held in the year 2011.

1) Directed the CAO/AO to see that the Committee meets at least once in every monthsâ&#x20AC;&#x2122; time.

2) Auditor General had disclaimed the accounts for last 5 to 6 years, even in 2010 accounts they had not taken any action to rectify this situation.

2) The Committee directed the CAO/AO to summon the Board and review all these queries and to submit clear answers to the audit.

The Auditor General added that 10 audit queries had been issued in the year 2010, but none of the queries had been replied by the CWE. Assistance given to the Audit officers by the CWE is very low. 3) The Committee observed

3) Directed to rectify all these matters and to make aware the Hon. Minister.

i. a large number of properties not economically utilized ii. Rs. 4397 million of bonds to be matured in 2016 in addition Rs. 4,063 million liabilities reflecting in the financial statements but these bonds not reflected in the accounts too. iii. 88 employees not properly deployed. th

October 13 2011 STC General Trading Company Ltd. ( Ministry of Co-operatives & Internal Trade )

October 18th 2011

State Trading ( Cooperative Wholesale) Establishment Company Ltd.

1) Committee enquired the debtor balance and the CAO stated that as at today balance is Rs. 209 million.

1) Directed to take every possible steps to recover the debtors.

2) Observed that the accounts for the years 2009/2010, 2010/2011 had not been rendered to the audit.

2) Directed to submit the accounts to the audit before 30th April 2012.

3) The Committee questioned about the revenue. The CAO stated that revenue had gone up to Rs. 150 million per month.

3) The Committee was of the view that the progress of the STC had been satisfactory.

1) Considering the performances, of the institute the Committee observed that the institute had an operational loss of Rs. 3.2 million and Rs. 3.1 million in 2010 and 2011 respectively.

1) The Committee suggested considering all these facts, that this company may be amalgamated with the Co-operative Wholesale Establishment.

Auditor General also pointed out that the going concern of the Company is at a risk level.

( Ministry of Co-operatives & Internal Trade )

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REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ______________________________________________________________________________

Date/ Name of Institution and Ministry October 18th 2011

Employees Trust Fund Board ( Ministry of Finance & Planning)

October 18th 2011 State Pharmaceuticals Corporation ( Ministry of Health)

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

1) Registration of self employed personnel in the ETF was discussed under section 18 of the Act. The AO stated that they had entered into an agreement with the Samurdhi Authority in this regard.

1) The Committee directed the CAO/AO to see whether they could expand this scheme, and to submit a report to the Committee.

2)Contrary to the Treasury Circulars the ETF Board had paid to the staff Rs. 69.5 million and Rs. 39.9 million as incentive allowance and holiday pay respectively.

2) Directed the CAO/AO to rectify this issue.

3) A sum of Rs. 29,293,850 invested in Korea â&#x20AC;&#x201C; Ceylon footwear Company, Magpak and the Veyangoda Textiles Company had been lost due to the liquidation of those company.

3) These investment had been a loss to the institution.

1) Discussed the pricing formula of drugs, the CAO /AO stated that up to 2001 ,the Consumer Affairs Authority had been regulating fixing prices, but the practice had come to an end since 2001.

1) Directed the CAO/AO to submit a report including the information what measures adopted by the SPC to introduce the price control and the rules and regulations adopted by the Consumer Affairs Authority and as to how this practice had ended.

2) Observed that out of stock of 135 million tablets of Ferrous Sulpahte, 74 million tablets had been issued to the patients through Medical Supplies Dept. at a time, National Drugs Assurance Laboratory had confirmed that the drug was substandard.

2) Directed to discuss this issue with Hon. Minister and other relevant authorities.

The CAO/AO stated that in certain instances the MSD had completed issuing of the drugs to the hospitals before reaching the quality assurance report and also the SPC doesnâ&#x20AC;&#x2122;t have enough laboratory facility to check each and every consignment.

October 20th 2011 Palmyra Development Board ( Ministry of Traditional Industries & Small Enterprise Development )

3) Corporation paid Rs. 5.4 million and Rs. 4.1 million respectively for the years 2008 and 2009 PAYE tax of the employees.

3) To Correct the situation after discussing with the Treasury officials.

4) Out dated and substandard drugs worth Rs.43,743,265 and Rs. 22,907,940 being written off.

4) Suppliers who supply low quality drugs be black listed.

1) Discussed about the Corporate Plan, Action Plan, Procurement Plan and the Budget too.

1) Directed the CAO/AO to rectify all these shortcomings pointed out.

2) Observed that Rs. 16.9 million had been incurred on plantation of seed, but progress had not been made available.

2) Directed to submit the necessary information to the Committee and Audit too.

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PARLIAMENTARY SERIES NO. 119 ______________________________________________________________________________

Date/ Name of Institution and Ministry

Major Issues and Problems Discussed

Comments by the Sub Committee and Decisions

Palmyra Development Board

3) Capital grant has been spent in recurrent projects for Palmyra handicraft training.

3) Directed to have separate allocation for this projects

Contd.

4) Due to non availability of records, 29 items in the accounts amounting to Rs. 98,855,051 could not be satisfactorily vouched.

October 20th 2011

1) Observed, that due to accounting deficiencies, Auditor General is unable to express an opinion.

National Library & Documentation Services Board

i. 77 posts including the Accountant post had been vacant.

( Ministry of Education )

ii. 2009 accounts had been in a weak position and 2010 accounts had not been submitted to the audit

1) The Committee showed their dissatisfaction on the performance and the status of the institution and directed the CAO to regularize all theses matters.

ii. Director General had been acting for over a period of one year. iii. Corporate Plan, Action Plan and the Budget had not been prepared in accordance with the Treasury circulars. The CAO admitted the lapses and agreed to take early action to rectify those matters.

176