Did People’s Bank Fudge Tender Procedures Over Digital Banking & Luxury Vehicles?
By Rusiripala Tennakoon –August 4, 2016
Rusiripala Tennakoon
Is People Bank Going Easy With Depositors’ Funds USD 11 Million For Digital Banking And Luxury Vehicles Costing? Are Tender Procedures Followed?
Bank of Ceylon (BOC) and Peoples Bank (PB) are the two major state owned commercial Banks in this country. Both Banks from years occupied the envious leading position in the Banking Industry. Having successfully emerged from a capital inadequacy in 1992 they became the leading players in the country’s economy and as the principal commercial banking agent for the SOE’s and the Government of Sri Lanka.
Till the beginning of last year BOC & PB were placed No.1 and 2 in the order of pre tax profit generation classification among the commercial banks. While the BOC still maintains the No. 1 placement, the PB has gone down to the 4th position in the 1st Quarter of 2016 and to the 5th position in the 2nd Quarter. It is a notable decline which requires a focused attention mainly for the reason that it is a wholly owned state bank.
Due to reports appearing publicly the affairs of the PB had become the talking point within the financial circles and its Ex-employees had written to the Auditor General pin pointing questionable areas in the published accounts of the Bank. Reportedly the matter is now under a review and investigation according to the Auditor General.
Among the issues high-lighted are the following:
- Bank has failed to make adequate provisions in respect of retirement benefit funds in accordance with the actuarial determinations. This short-fall has been identified as an amount exceeding Rs. 13 Billion superficially while it is alleged by those raising the issue to be more complicated and grave than it appears, with the short-fall running to above 17 Billion, in real terms.
- Funds belonging to the contributors of a Widows & Orphans Pension scheme are carried in the books of the Bank without being shown as a liability.
- The income generation statistics show a poor performance in the commercial operations sector while the large share of the income is derived from Government of Sri Lanka operations in the Bank.
- Development oriented lending activities have not shown any marked progress over several years now.
- Loan-loss provisioning is manipulated by down playing allowing un-ethical rescheduling of over due facilities.
- The percentage of pawning advances reflect a major proportion of the total advances segment thereby evidencing under performance in the development oriented lending areas.
- In addition it has been pointed out to the Auditor General that the Bank has written off a huge sum amounting to Rs. 3 Billion from the profits as losses against the Oil Hedging transactions entered into by the Bank. No one has been held responsible for the colossal loss which involves depositors as well as public finds.
The PB over a period of 13 years, continues to engage the services of Senior Officials hired on contract with very high payments and emolument packages with no parallel else-where. Even the CEO/GM of the fully state owned bank is a contract employee, recruited many years ago for an entirely different job, he is paid over Rs. 2 Million per month as salary in addition to a massive comprehensive package of other fringe benefits which could be valued more than Rs. 1 Million a month.
