Parliamentary Series No. 236 of the Seventh Parliament of the Democratic Socialist Republic of Sri Lanka (First Session)

Parliamentary Series No. 236 of The Seventh Parliament of The Democratic Socialist Republic of Sri Lanka (First Session)

Second Report

From The Committee on Public Enterprises

Presented by Hon. DEW. Gunasekara Chairman of the Committee on 23rd of July, 2013

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

Honourable Members of the Committee on Public Enterprises First Session of the Seventh Parliament

01 Hon.DEW Gunasekara (Chairman) 02 Hon.(Mrs.) Pavithra Devi Wanniarachchi 03 Hon.A.D.Susil Premajayantha 04 Hon.(Dr.) Rajitha Senaratne 05 Hon. Chandrasiri Gajadeera 06 Hon. A.P.Jagath Pushpakumara 07 Hon. T.B.Ekanayake 08 Hon.Mahinda Amaraweera 09 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 i PARLIAMENTARY SERIES NO. 236

Composition of the Sub Committee I of the Committee on Public Enterprises.

01. Hon. A.D.Susil Premajayantha (Chairman)

02. Hon. (Mrs) Pavithra Devi Wanniarachchi

03. Hon. (Dr.) Rajitha Senarathna

04. Hon. Chandrasiri Gajadeera

05. Hon. T.B.Ekanayake 06. Hon. Mahinda Amaraweera

07. Hon. Lakshman Kiriella 08. Hon. Ravi Karunanayake

09. Hon. Dayasiri Jayasekara 10. Hon. Sujeewa Senasinghe

Composition of the Sub Committee II of the Committee on Public Enterprises.

01. Hon. Karu Jayasuriya (Chairman) 02. Hon. A.P.Jagath Pushpakumara

03. Hon. S.M.Chandrasena 04. Hon. (Dr.) Mervyn Silva

05. Hon. Sarana Gunawardene

06. Hon. Weerakumara Dissanayake 07. Hon. (Al-Haj) A.H.M.Azwer

08. Hon. Sajith Premadasa 09. Hon. Sunil Handunnetti

10. Hon. Namal Rajapaksa

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

Composition of the Sub Committee III of the Committee on Public Enterprises.

01. Hon. Lasantha Alagiyawanna (Chairman)

02. Hon. Arjuna Ranatunga 03. Hon. M.T. Hasen Ali

04. Hon. A. Vinayagamoorthy

05. Hon. (Ven.) Athuraliye Rathana Thero

06. Hon. Seeniththamby Yoheswaran

07. Hon. Eran Wickramaratne 08. Hon. (Prof.) Rajiva Wijesinha

09. Hon. E. Saravanapavan 10. Hon. (Mrs.) Rosy Senanayake

COPE Secretariat

01 M.N.Peiris ,Asst. Director (Admin) 02 Indrani Senarathne (Principal Officer-upto 31.03.2013) 03 A.C.P.Suriyapperuma (Principal Officer-from 01.04.2013) 04 Jagath Wickramasinghe (Deputy Principal Officer) 05 Ranjith Fernando (Asst. Principal Officer) 06 Umanga Panditha (Asst. Principal Officer) 07 W.G.S.Shantha (Parliamentary Officer) 08 Prabha Thilakarathne (Parliamentary Officer) 09 M.A.K.D.C.Kumara (Parliamentary Officer)

iii PARLIAMENTARY SERIES NO. 236

Contents Page

 List of Tables xii  Chairman’s Note 1  Preface 2  General Observations /Recommendations 4  Report on the cases referred to the Commission to investigate alle- 13 gations of Bribery or Corruption  Increasing the Effectiveness of COPE 13  Financial Results of the Examined Institutions 16  Institutions Offered with Unfavourable Audit Opinions 34  List of Appendixes 35 » Appendix A:Issues Discussed by the Main Committee 37 * Atomic Energy Authority 39 * State Timber Corporation 39 * National Savings Bank 40 * Associated Newspapers Company Ltd. 42 * Central Engineering Consultancy Bureau 44 * Employees’ Trust Fund Board 45 * National Lotteries Board 46 * Insurance Board of Sri Lanka 51 * Board of Investment 52 * Sri Lanka Ports Authority 54 * Ceylon Petroleum Corporation 57 * Ceylon Electricity Board 59 * Ceylon Shipping Corporation Ltd. 61 * Road Development Authority 61 * Sri Lanka Tourism Development Authority 63 * Sri Lanka Land Reclamation & Development Corporation 67 * Regional Development Bank 70 * Bank of Ceylon 71 iv REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

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* National Housing Development Authority 74

* State Engineering Corporation 75

* Mihin Lanka Ltd. 79

* Sri Lanka Broadcasting Corporation 81

* Housing Development Finance Corporation Bank (HDFC) 83

* ITN & Lakhanda Radio 84

* Sri Lanka Transport Board 85

* Lanka Sathosa Ltd. 86

* Development Lotteries Board 87

* Janatha Estate Development Board 88

* Local Loans Development Fund 89

* National Enterprise Development Authority 91 * Sri Lanka Export Credit Insurance Corporation 91 * Mahapola Higher Education ScholarshipTrust Fund 92 * National Paper Company Ltd. 94 * National Institute of Cooperative Development 96 * B.C.C.Lanka Ltd. 99 * Elkaduwa Plantations Ltd. 100 * Hingurana Sugar Industries Ltd. 100 * Ceylon Fertilizer Company Ltd. 101 * Janatha Fertilizer Enterprise Ltd. 103 * Kahatagaha Graphite Lanka Ltd. 103 * Mantai Salt Ltd. 104 * North Sea Ltd. 105 * Thurusaviya Fund 106 * Kalubovitiyana Tea Factory Ltd. 107 * Sri Lanka Rubber Manufacturing Export Corporation Ltd. 109 * Kantale Sugar Industries Ltd. 110 * Lanka Salusala Ltd. 111 * STC General Trading Company Ltd. 111 v PARLIAMENTARY SERIES NO. 236

Page * Sri Lankan Airlines Ltd. 112

* Chilaw Plantations Ltd. 113

* Kurunegala Plantations Ltd. 115

* Central Cultural Fund 116

* Cey-Nor Foundation Ltd. 119

* Lanka Mineral Sands Ltd. 121

* Skills Development Fund Ltd. 122

* Paranthan Chemicals Ltd. 123

* Sir John Kotalawala Defence University 125

* National Dangerous Drugs Control Board 127

* Rakna Arakshana Lanka Ltd. 129

* Lanka Logistics Ltd. 129

* Milk Industries of Lanka Ltd. (MILCO) 130

* Lady Lochore Loan Fund 132 * Sri Lanka Savings Bank Ltd. 134 * National Insurance Trust Fund 135 * State Pharmaceuticals Corporation 138 * Lakdiva Engineering Co. Ltd. 142 * Distance Learning Centre Ltd. 143 * Cooperative Wholesale Establishment 145 * State Trading (COOP) Wholesale Co. Ltd. 148 * Provident Fund for Buddhist & Pali University 150 * Universities Pension Fund & Provident Fund 151 * Eastern University 152 * Botanical Garden Trust Fund 155 * Lanka Phosphate Ltd. 157 * National Water Supply &Drainage Board 160 * Agriculture & Agrarian Insurance Board 162 * State Pharmaceuticals Manufacturing Corporation 164 * Securities & Exchange Commission 166 vi REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

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» Appendix B: Issues Discussed by the Sub Committee - I 169

* Institute of Indigenous Medicine 171 * Open University 172 * Post graduate Institute of English 174 * National Institute of Education 174 * SL Press Council 175 * Tower Hall Theater Foundation 176 * National Youth Services Council 178 * SL Institute of Development Administration 180 * Post graduate Institute of Archeology 181 * University of Colombo School of Computing 181 * University of Visual & Performing Arts 182 * Institute of Policy Studies 183 * National Human Resources Development Council 184 * Official Languages Commission 185 * Sri Lanka Bureau of Foreign Employment 185 * Tertiary & Vocational Education Commission 186 * National Institute of Library & Information Science 186 * National Institute of Business Management 188 * Postgraduate Institute of Medicine 189 * University of Kelaniya 190 * Buddhist & Pali University 192 * Institute of Human Resources Advancement 194 * Institute of Technology-University of Moratuwa 194 * University of Moratuwa 195 * J.R. Jayawardena Cultural Centre 196 * National Institute of Language Education & Training 198 * Sri Lanka Foundation 199 * South Eastern University 200 * Swami Vipulananda Institute of Aesthetic Studies 201 * University of Jaffna 202

vii PARLIAMENTARY SERIES NO. 236

Page * Uva Wellassa University 205 * Sri Lanka Institute of Advanced Tech. Education 205 * University of Colombo 206 * Rajarata University of Sri Lanka 206 * University of Ruhuna 206 * National Apprt. & Industrial Training Authority 207 * Selacine Television Institute 207 * University of Vocational Technology 208 * Vocational Training Authority 208 * Buddasravaka Bikkhu University of Sri Lanka 209 * Post Grad. Institute of Pali & Buddhist Studies 210 * University of Peradeniya 210 * Wayamba University 210 * University of Sabaragamuwa 211 * University of Sri Jayawardenapura 212 * Sugathadasa National Sports Complex Authority 213 * Sri Lanka Institute of Fundamental Studies 213 * Saumyamoorthi Thondaman Memorial Foundation 214 * Galle Heritage Foundation 214 * Institute of Biochemistry Molecular Biology & Biotechnology 215 * Post Graduate Institute of Agriculture 215 * Post Graduate Institute of Science 215 * National Centre for Advanced Studies in Humanities and So- 216 cial Sciences * SL Institute of Local Governance 216 * Information & Communication Technology Agency 216 » Appendix C: Issues Discussed by the Sub Committee - II 217 * Coconut Cultivation Board 219 * Land Survey Council 219 * Colombo Commercial Fertilizer Com. Ltd. 220 * Hector Kobbekaduwa Agrarian Research & Training Institute 221

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

Page * National Aquatic Resources Research & Development Agency 222

* Udarata Development Authority 224

* National Institute of Fisheries & Nautical Engineering 225

* Palmyra Development Board 226

* National Institute of Plantation Management 228

* Tea Research Institute of Sri Lanka 229

* Tea Small Holdings Development Authority 230

* SL Cashew Corporation 232

* Land Reform Commission 233

* Condominium Management Authority 235

* Institute of Construction Training & Development 236

* Janatha Estate Development Board 238

* Mahaweli Authority of Sri Lanka 238

* Sri Lanka State Plantations Corporation 240

* Tea Shakthi Fund 242

* Coconut Development Authority 244

* Coconut Research Board 245

* Hadabima Authority of Sri Lanka 246 * Sri Lanka Council for Agricultural Research Policy 248 * Sri Lanka National Freedom from Hunger Campaign Board 249 * National Aquaculture Development Authority 250 * Rubber Research Board 251 * Consumer Affairs Authority 252 * National Livestock Development Board 253 * Sugarcane Research Institute 254 * Vegetable Development Board 256 * Fruit Development Board 256 * Pulses & Grain Research & Production Authority 256 * Paddy Marketing Board 256 ix PARLIAMENTARY SERIES NO. 236

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» Appendix D: Issues Discussed by the Sub Committee - III 259

* SL Accounting & Auditing Standards Monitoring Board 261 * Public Utilities Commission of SL 261 * Social Security Board 262 * Wijaya Kumaratunga Memorial Hospital Board 263 * Gem & Jewellery Research & Training Institute 264 * Marine Environment Protection Authority 265 * National Gem & Jewellery Authority 266 * National Transport Medical Institute 268 * Arthur C. Clarke Centre for Modern Technology 269 * National Engineering Research & Development Centre 270 * National Science & Technology Commission 271 * National Science Foundation 272 * SL Standards Institute 273 * National Institute of Social Development 274 * National Secretariat for Persons with Disabilities 274 * Airport & Aviation Services (Sri Lanka) Ltd 276 * State Printing Corporation 277 * Telecommunications Regulatory Commission of Sri Lanka 277 * SL Institute of Textile & Apparel 279 * Southern Development Authority 280 * Sri Lanka Ayurvedic Drugs Corporation 280 * Geological Survey & Mines Bureau 281 * SL Cement Corporation 283 * Industrial Technology Institute 283 * SL Inventors Commission 286 * SL Accreditation Board for Conformity Assessment 287 * National Building Research Organization 287 * Civil Aviation Authority 288 * Rehabilitation of Persons, Properties & Industries Authority 290 * Defence Service Command & Staff College 291 x REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

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* Ranaviru Seva Authority 292

* Resettlement Authority 294

* National Crafts Council 296

* National Design Centre 297

* Industrial Development Board 297

* SL Handicrafts Board 300

* SL Convention Bureau 300

* SL Institute of Printing 302

* National Film Corporation 302

* Superior Courts Complex Board of Management 304

* SL Judges Institute 305 * National Research Council 306 * National Council for Road Safety 307 * Sustainable Energy Authority 308 * Central Environmental Authority 309 * Ceylon Ceramics Corporation 310 » Appendix E:Index 311

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List of Tables Page

 Table 1 : Action to be taken regarding defunct institutions 7  Table 2 : Institutions running at a loss in 2011 17  Table 3 : Institutions with either profit in 2010 turned into loss in 2011 17 or increased the loss in 2011 as compared with 2010

 Table 4 : Institutions which incurred losses in 2010 but turned into 18 profits in 2011 showing better financial performance

 Table 5 : Institutions with either profit increased or loss decreased in 18 2011 as compared with 2010

 Table 6 : Institutions with profits decreased in 2011 as compared with 20 the year 2010

 Table 7 : Institutions with continuous losses for the years 2009, 2010 21 and 2011

 Table 8 : Institutions turned into deficits in 2011 from excesses in 2010 22 or increased their deficits in 2011 as compared with 2010

 Table 9 : Institutions running at deficits in 2011 24

 Table 10 : Institutions continuously running at deficits for the years 27 2009,2010 & 2011

 Table 11 : Institutions which incurred deficits in 2010 but turned into 30 excess in 2011 or increased their excess in 2011 as compared with 2010

 Table 12 : Institutions which decreased their deficits in 2011 as com- 32 pared with 2010  Table 13 : Institutions which decreased their surplus in 2011 as com- 33 pared with 2010  Table 14.: Institutions offered with an adverse audit opinion 34

 Table 15.: Institutions offered with a disclaimer audit opinion 34

xii REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA Chairman’s Note

The present Parliamentary Committee on Public Enterprises commenced its work on 8th June, 2010. During the period of its operation since then, the Committee was able to complete the examination of financial accounts relating to 229 state institutions in the first round (2010/2011) and submitted its First Report to Parliament on 01.12.2011. In the second round (2012/2013), the Committee completed examination of 244 State Institutions and its Second Report is hereby presented to Parliament. An Interim Report has already been submitted to Parliament on 25th October, 2012 in respect of 32 institutions.

I believe that this exercise is an unprecedented and distinguished record in the history of our legislature. I take this opportunity to thank the Honourable Members of the COPE for their commitment and devotion. I do deeply appreciate the tireless efforts made by the Au- ditor General, his Deputies and staff and thank them for their share of contribution to ac- complish this record. The co-operation extended by the officials of the General Treasury ( The Department of Public Enterprises and the Department of National Budget) at all sittings of the COPE is commendable.

It was a very strenuous and painful task for the Secretary and his staff of the COPE to record evidence and analyze them meticulously relating to such a large number of Institutions within a short period of time. They deserve to be rewarded by way of helping them to enhance their knowledge and skills.

The Honourable members of the COPE, at the sittings of the COPE sessions in dealing with the public officials acted with deep sense of responsibility. They were firm and stern but courteous and pleasant. I believe that the committee was able to enhance the prestige and dignity of the Parliament and earn the confidence and admiration of the people.

The Committee’s work during the three years of its operation has had a tremendous impact on the Financial discipline of the public enterprises. This is evidenced by the satisfactory performance and improvements.

The attention of the executive should be drawn to the need for enhancing the quality of leadership of the Public Enterprises through the appointment of professional, experienced and skilled personnel. They should be made fully answerable and accountable for their performance. This can be ensured by the maximum degree of autonomy and minimum degree of interference from above. There is a dearth of professionals in the field of Ac- countancy which can only be corrected through a deserving remuneration.

The Treasury and the Public Administration Ministry should seriously consider these deficiencies in order to enhance the quality of leadership. It is high time that we shift to a higher level of accounting and auditing in keeping with international standards. This is impera- tive in the case of large public enterprises.

DEW Gunasekara, MP Chairman– COPE 1 PARLIAMENTARY SERIES NO. 236

PREFACE

The Parliamentary Committee on Public Enterprises (COPE) for the first Session of the Seventh Parliament presents its Second Report to Parliament in terms of the Stand- ing Order 126. This report covers the findings of the Committee on 211 Public Enterprises made in the course of its examinations during the period 1st January 2012 to 31st March 2013. In keeping with the pledge given to Parliament, the Committee has already presented an interim report on 25th October 2012 in respect of 32 Institutions examined by the Main Committee. Thus the total number of Institutions examined by the Committee during the relevant period is 244. These Institutions have been classified as follows:  Regulatory Bodies  Promotional Agencies  State-owned Enterprises  Educational Agencies  Development Agencies  Research Institutions

The Committee wishes to report to Parliament, in response to the concerns expressed by the Honourable Members, that it took upon itself the responsibility of monitoring and reviewing the follow-up measures on the findings and recommendations, made in the First Report.

In our view, the follow-up measures have had an impact on the control of public Finance. This is evidenced by the progress of a large number of State Enterprises. Regu- lar submission of Annual Reports, Corporate Plans, Action Plans, Financial Statements, Answers to Audit Queries, replacement of erring Heads of Institutions, changes in Boards of Management, Investigations by Bribery Commission, Corrective measures, recovery actions are all responses to our follow up-measures.

The Committee also carried out an awareness programme on financial discipline amongst the senior public officers in five provinces-Western, Southern, Uva, North West- ern and Northern with the assistance of the Ministry of Parliamentary Affairs.

It is our observation that the automatic controls of Public Finance namely the Ap- propriation Act, Fiscal Management (Responsibility) Act, Financial Regulations, Treasury Circulars, Public Administration Circulars etc., by themselves cannot ensure financial discipline. It reiterates with emphasis, the fact that constitutional responsibility for financial controls rests mainly on the Chief Accounting Officers, (Secretaries to Ministries) who are the Constitutional link between the Legislature and the Executive.

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

For the convenience of the Honourable Members, the Committee, in its Second Report has highlighted the performance of the strategic Business Enterprises in terms of (i) Loss/deficit -incurring (ii) Continuous loss/deficit increasing (iii) Increasing profits/surplus and (iv) Decreasing profits/surplus.

The Committee has made a series of recommendations both general and specific in addition to its observations and findings.

The Committee wishes to inform the Parliament that it would take all possible steps to present hereafter Quarterly reports of the COPE to enable the authorities to take prompt remedial measures. It will also provide the opportunity to the Hounourable members to raise any issue on the floor of the House as other wise they would have to await one long year until the final report is presented.

During the period from 1st January, 2012 to 31st March, 2013 the Committee examined 244 Public Enterprises as stipulated below.

No. of Institutions Committee Chairman Examined 2012-2013 2010-2011 Main Committee Hon.DEW Gunasekara 110* 92 Sub Committee -I Hon. A.D.Susil Premajayantha 55 39 Sub Committee -II Hon. Karu Jayasuriya 33 39 Sub Committee -III Hon.Lasantha Alagiyawanna 46 59 Total 244 229

 *Includes 32 Institutions examined as per Interim Report.  There were 247 examinations in respect of the 244 institutions.

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GENERAL OBSERVATIONS & RECOMMENDATIONS

The following general observations are made in relation to the institutions examined. Find- ing solutions for certain problems mentioned here is beyond the scope of those institutions as they require a broad intervention of the Treasury along with radical changes in the existing policies.

01. Need for Increasing the Existing Salary Scales of Professionals in the Public Sector

The Committee, as explained in the Interim Report for 2012 tabled on 25.10.2012, reiterates the importance of increasing the professional capacity in the public sector. However, it goes without saying that the professionals cannot be either recruited or retained with the existing salary scales in the Public Sector. Because of this situation, certain institutions had been compelled to recruit personnel to the high ranking posts on contract basis which leads to a serious problem with regard to the responsibility and the accountability of those personnel recruited on contract basis.

Recommendation The Treasury is therefore recommended to take immediate action to raise the salaries and other remuneration of these posts to avoid any possible collapse of the public sector.

02. Appointment of Private Auditors

In addition to the institutions coming under the purview of the Auditor General, there are institutions which are audited by the external audit firms nominated by the Treasury under the approval of the Auditor General. However, the Committee observed that there is neither a proper mechanism nor a criteria in selecting private auditors which sometimes poses questions on the acceptability of the audited accounts.

Recommendation The Committee, recommends to formulate a healthy system in appointing private auditors, securing effective accountability towards the public money.

03. Improper Financial Planning.

The greatest challenge faced by the public enterprises with a commercial basis is that they are required to compromise on catering to the national interest of the country whilst being engaged in a highly competitive dynamic business environment. The severe losses of the Ceylon Electricity Board, Mihin Lanka Ltd. etc. had been due to the under-selling of their services for not being able to pass the burden on to the General Public. If this situation is not addressed promptly, the institutions like CEB, CPC, Mihin Lanka Ltd. are on the verge of a collapse as entities which would in turn affect the banking sector in the country.

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

Recommendation The Committee recommends that the Central Bank with the General Treasury should formulate a system to monitor the lending process of the banks to such businesses , avoiding the risk of any possible collapse of the banking system.

04. Releasing Employees and Motor Vehicles to the Line Ministry

The Committee observed several instances where the employees had been released to the line Ministry contrary to the Treasury Circulars whilst their salaries and allowances being borne by the institutions they belonged to. For instance, the National Housing Develop- ment Authority had paid Rs.9.77 million as salaries and allowances of 37 employees released to the line Ministry. In addition , the Committee also identified certain instances where the motor vehicles had been released to the line Ministry.

Recommendation The Committee strongly recommends that this is a practice which should be discouraged by all means. The General Treasury is recommended to have a close monitoring whether the public corporations and other institutions strictly adhere to the Treasury guidelines, as otherwise such practices would badly affect the well being of the respective institutions.

05. Strengthening Internal Audit

The Internal Audit function of certain public enterprises was found to be inadequate mainly due to the shortage of staff and the Committee stressed the need for strengthening this unit in each institution by providing required resources. Further, it identified certain institutions with no internal audit division at all. Effective internal audit secure the financial accountability of the institution, and it also reduces the work load of the Auditor General. Furthermore, the internal audit could timely reveal information about fraudulent acts and the errant officers/employees could be dealt with timely.

Recommendation The Committee recommends that the General Treasury and the Ministry of Public Admin- istration should equip the institutions with the sufficient auditing staff as well as the experienced Government Accountants. Also, the Committee recommends providing adequate training facilities to the officers engaged in the internal audit functions.

06. Unsatisfactory Debt Management

It should be noted that the debt management of most of the public institutions is extremely unsatisfactory and as a result, large amount of debtor balances had been outstanding for a significant period of time. For the lapses in the agreements and sometimes for not taking action within the required time period, some debtor balances are in a non recoverable state.

PARLIAMENTARY SERIES NO. 236

Recommendation It is recommended to institute a special debt collecting unit in each institution, which should timely take action to recover the debts, and stern action need to be taken against the officers who would deliberately make delays.

07. Advance Payments on Contracts

Even though the maximum amount of advances payable to contractors for assigned works had been limited to 20% of the total, the Committee observed instances where this regula- tion had been violated by certain institutions. Further, in certain such transactions, even a security bond had not been obtained.

Recommendation It is recommended that the General Treasury and the respective line ministry, should draw the attention of the institution, towards the procurement guidelines, and direct them for strict adherence of those. It is also recommended that if there would be any loss incurred as a result of any breach of such guidelines, the officer or officers responsible should be se- verely dealt with irrespective of their positions.

08. Overstaffing

The losses incurred by certain institutions such as Sri Lanka Transport Board and plantation companies had been mainly due to the excess staff in the institutions.

Recommendation The Committee recommends making them retire through a VRS system in order to make these institutions survive further.

09. Redundant Institutions

There were certain institutions which were non-operational at the moment but they continue to exist without being wound up due to various reasons. The Vegetable Development Board, Fruit Development Board, Pulses & Grain Research and Production Authority, State Trading (COOP) Wholesale Com. Ltd., Janatha Fertilizer Com. Ltd. had not been operational for a significant period but remain without being liquidated though the Cabinet approval to do so in relation to certain such institutions had been given several years ago. As per the information provided by the Department of Public Enterprises, the defunct institutions are given in table 1 on page 7.

In addition to the institutions which are not operating at the moment, the Committee identified certain institutions which possess no viability of continuing further. The Lakdiva En- gineering Company Ltd., a company which is engaged in repairing and manufacturing of bodies of busses for Sri Lanka Transport Board was found to have an annual output of only four and the Committee recommends winding up this institution and absorbs its staff into the staff of CTB.

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

Table 1: Action to be taken regarding defunct institutions

No. Defunct Institution Action to be taken 01. Janatha Fertilizer Enterprises Ltd. To be liquidated 02. Hingurana Sugar Industries Ltd. To be re-established 03. Kantale Sugar Industries Ltd. To be re-established 04. Sri Lanka Rubber Manufacturing Export Corporation Ltd. To be liquidated 05. Lanka Salusala Ltd. To be restructured 06. Lanka Fabrics Ltd. To be liquidated 07. Co-operative Wholesale Establishment To be re-established 08. State Trading (COOP) Wholesale Company Ltd. Proposed to be liquidated

10. Subsidiaries of state owned institutions not accountable to the Parliament

The certain subsidiaries of state owned institutions, despite the Government being the major share holder, seem to have gone beyond the control of the parental organization and the representation of the Government in the director boards of those institutions had been only nominal.

Recommendation It is recommended that the respective Standing Orders of Parliament should be so amended that the Auditor General could be empowered to undertake the audit of the accounts of such subsidiaries and, they should be brought under the purview of the COPE scrutiny.

11. Adverse Role of Trade Unions on Decision Making.

The Committee is of the opinion that the role played by certain trade unions operating in some state institutions is such that they should be held responsible to a significant extent for the unsatisfactory performance of those institutions. Their influence in relation to recruitments is sometimes detrimental to the institution. The Water Supplies & Drainage Board has been unable to recruit more professionally qualified accountants due to the pres- sure of non professional accountants who demand a 50% quota of recruitments relating to accountants for the internal staff. Further, in most of the regional centres, there are no professional accountants other than the promoted staff. Therefore, the institution is faced with a serious difficulty in getting adjusted to the new accounting standards to be made effective from 2012 accounts.

Recommendation The heads of institutions and the members of board of directors should maintain a cordial rapport with the union leaders and get their support to run the organization smoothly.

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12. Dearth of qualified Actuaries

Inadequacy of actuaries not only in the public sector but also in the country as a whole is considered by the Committee as a serious issue experienced by the country at the moment as the need to foresee the future risks is felt more important than ever before. For instance, the collapse of the Agrarian and Agricultural Insurance Board had been mainly due to the inability to foresee the non-viability of its pension scheme.

13. Need for Shifting to a Cost Accounting System

The Committee stresses the importance of shifting to a cost accounting system which ena- bles the management to implement the most appropriate course of action based on the cost efficiency and capability. However, the dearth of cost accountants in the public sector will be a serious issue to meet this requirement and the Committee expects the treasury to take action in this regard as early as possible.

14. Appointment of heads of institutions and members to the Board of Directors

The Committee is of the opinion that the appointment of personnel as heads of institutions should be made only by considering their qualifications and experience in the relevant discipline. The matter remains the same even in relation to the appointment of board members as their decision making has a huge dependency on their knowledge and experience in the relevant area of interest .

15. Presentation of Annual Reports in Parliament

As per the Public Enterprises Circular No.12, the annual reports of all public corporations should be tabled in Parliament within 150 days after the close of the financial year .At the inception of its proceedings by the Committee in 2010, the status of tabling annual reports in Parliament was found to be very unsatisfactory , as there was a heavy back-log of outstanding annual reports related to many institutions. However, according to the records as at 30.06.2013, a significant improvement has been made since nearly 82% out of the institutions, other than those established under the Companies Act, had already tabled the An- nual report for 2009 and nearly 71% had tabled the report for 2010. Even though most of the state owned limited liability companies do table their annual reports in Parliament, some institutions had not tabled their reports on the ground that there is no such provision in the Companies Act.

The institutions which had not tabled the 2009 and 2010 annual reports are shown separately on the pages 9 and 10 based on the records as at 30.06.2013.

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

Institutions which had not tabled the 2009 Annual Report (As at 30.06.2013)

01. Botanical Garden Trust Fund 02. Central Engineering Consultancy Bureau 03. Defence Service Command & Staff College 04. Galle Heritage Foundation 05. Gem & Jewellery Research and Training Institute 06. Information & Communication Technology Agency 07. Institute of Human Resources Advancement 08. J.R. Jayawardena Centre 09. Janatha Estate Development Board 10. Lady Lochore Loan Fund 11. Land Reform Commission 12. Mahapola Higher Education Trust Fund 13. Mahaweli Authority 14. National Council for Road Safety 15. National Gem & Jewellery Authority 16. National Research Council 17. National Secretariat for Persons with Disabilities 18. Provident Fund for Buddhist & Pali University 19. Saumyamoorthi Thondaman Memorial Foundation 20. Sri Lanka Convention Bureau 21. Sri Lanka Handicrafts Board 22. Sri Lanka State Plantation Corporation 23. Southern Development Authority 24. Sri Lanka Broadcasting Corporation 25. Sri Lanka Transport Board 26. Swamy Vipulananda Institute of Aesthetic Studies 27. Tea Shakthi Fund 28. Telecommunications Regulatory Commission of Sri Lanka 29. University of Sabaragamuwa

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30. Universities Pension Fund & Provident Fund 31. University of Visual & Performing Arts

Institutions which had not tabled the 2010 Annual Report (As at 30.06.2013)

01. Botanical Garden Trust Fund

02. Buddhist & Pali University 03. Central Environmental Authority 04. Ceylon Ceramics Corporation 05. Ceylon Petroleum Corporation. 06. Cooperative Wholesale Establishment 07. Defence Service Command & Staff College 08. Galle Heritage Foundation 09. Gem & Jewellery Research and Training Institute 10. Information & Communication Technology Agency Ltd. 11. Institute of Human Resources Advancement 12. Institute of Technology 13. J.R. Jayawardena Centre 14. Janatha Estate Development Board 15. Lady Lochore Loan Fund 16. Mahapola Higher Education Trust Fund 17. National Centre for Advanced Studies 18. National Council for Road Safety 19. National Gem & Jewellery Authority 20. National Housing Development Authority 21. National Livestock Development Board 22. National Research Council 23. National Secretariat for Persons with Disabilities 24. National Transport Medical Institute 25. National Water Supply & Drainage Board

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

26. Post Graduate Institute of Agriculture

27. Post graduate Institute of Archeology 28. Post graduate Institute of English

29. Postgraduate Institute of Medicine 30. Provident Fund for Buddhist & Pali University

31. Saumyamoorthi Thondaman Memorial Foundation 32. Sri Lanka Cashew Corporation 33. Sri Lanka Council for Agricultural Research Policy 34. Sri Lanka Foundation 35. Sri Lanka Handicrafts Board 36. Sri Lanka State Plantation Corporation 37. Sri Lanka Broadcasting Corporation 38. Sri Lanka Transport Board 39. State Engineering Corporation 40. Sugarcane Research Institute 41. Swamy Vipulananda Institute of Aesthetic Studies 42. Tea Shakthi Fund 43. Telecommunications Regulatory Commission of Sri Lanka 44. University of Sabaragamuwa 45. Universities Pension Fund & Provident Fund 46. University of Rajarata 47. University of Visual & Performing Arts 48. Uva Wellassa University

11 PARLIAMENTARY SERIES NO. 236

16. Capacity Building & Strengthening the Auditor General’s Department and the COPE Secretariat.

The need of strengthening and enhancing the capacity of the Auditor General’s Depart- ment and the COPE secretariat is strongly recommended by the Committee since the efficiency and the effectiveness of the Committee depend on these two important elements to a greater extent. Giving an opportunity to gain experience and knowledge on the practices related to oversight committees in other countries may be instrumental for them to cater a better contribution towards the Committee.

The Committee strongly views that the salary of the Auditor General determined by the Parliament is not in keeping the position of the country’s Auditor General and is incon- sistent with the constitutional appointment that he hold. The urgent attention of the legislature as well as of the executive is drawn to this grave anomaly. The intervention and initia- tive of the Hon. Speaker is warranted in this regard

17. Need for a better performance audit on state institutions

It is the view of the Committee that the aspect of performance audit should be extended further in addition to the traditional financial auditing in order to assess the achievement in relation to the economy, efficiency and the effectiveness in the employment of available resources by the public enterprises. The performance audit carried out by the Auditor Gen- eral’s Department in relation to the solid waste management in urban councils, matters related to the Timber Corporation and the environmental issues in consequence of the non- closure of the deserted mines could be noted as commendable initiatives taken by the Au- ditor General’s Department in implementing this new type of audit practiced in many other countries.

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

Cases referred to the Commission to Investigate Allegations of Bribery or Corruption

The Committee has received reports relating to thirteen (13) cases referred to the Commis- sion to investigate allegations of Bribery or Corruption. Of the 13 cases, ten cases have been disposed of on the ground of inadequacy of evidence. The other three cases are pending under investigation and prosecution.

Increasing the Effectiveness of the COPE

The following measures, on the basis of self evaluation, are recommended to adopt in order to increase the effectiveness of the committee.

1 Publication of COPE Reports

1.1. The COPE will present to Parliament its findings and recommendations every three months. The first reporting period shall be from July to September 2013. 1.2. An Annual report may be made available depending on its necessity.

2. Parliamentary Debate

2.1. An Annual debate will be called for within a month of the release of the COPE annual report. 2.2. Further, the debates will be called for as and when required based on the quarterly report.

3. Notice of COPE Investigations

3.1. The COPE Secretariat will publish the names of institutions that are being listed for COPE scrutiny at least one month before the institution presents itself before the COPE. 3.2. Notwithstanding 3.1 above, the COPE will summon institutions to appear before the Committee at short notice if warranted.

4. Chairman’s Sub-Committee

4.1. There will be a Sub-committee comprising at least one member from each party represented in Parliament. The Sub-committee will be headed by the Chairman of the COPE. 4.2. The main functions of the Sub-committee with the assistance of the Secretariat will be to : (a) Identify institutions for scrutiny. There will be a grading of government insti tutions by losses, risks undertaken, loss of reputation and strategic importance to country. 13 PARLIAMENTARY SERIES NO. 236

(b) Propose the Agenda to the COPE. The Agenda will include the time table. The frequency of an institution being summoned will be based on its grading as in (a) of 4.2. (c) Finalize reports.

4.3. The creation of government institutions outside a Parliament Act will have to be notified to the COPE Secretariat by the relevant Secretary to the Ministry and the Reg- istrar of Companies. The Ministry Secretaries and the Registrar of Companies will be notified.

5. Scrutiny of Institutions will be focused on the following areas amongst others:

5.1. Performance against objectives and plans set out by the institutions. 5.2. Financial performance. 5.3. Compliance with accounting standards, regulations and law. 5.4. Governance. 5.5. Suitability of Board Members will be evaluated based on : (a) Minimum qualifications and/or experience criteria to be adopted. (b) Specialized knowledge/experience where necessary. (c) Each Board to be profiled for required disciplines and skill levels. (d) The Auditor will submit a compliance report to COPE on the profile of Board Members as per (a), (b), and (c) of 5.5.

5.6. Suitability of the Senior Management will be evaluated based on the followings. (a) Senior Management team to be identified by organizational position. (b) A ‘fit for job’ to be adopted by a Board for CEO and Senior Management. (c) The Auditor will submit a compliance report to the COPE on the ‘fit for job’ criteria for Senior Management as per (a) and (b) of 5.6. (d) Ensuring sufficient resources are allocated for human resource training and that the key functions are covered.

6. On-the-Spot Investigations:

As and when it is necessary, the Committee will make On-the-spot inspections into selected institutions to get a broader understanding on the matters needed to be investigated. Initiating this practice, the Committee has already made On-the-spot investigations into the Sri Jayawardenapura Hospital ,Institute of Tourism and Hotel Management and on the directive of the Committee the Auditor General had made a special investigation into the matter related to the import of contaminated fuel by the Ceylon Petroleum Corporation of which the report had already been submitted to the Hon. Speaker.

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

7. Follow up Action

7.1. The COPE will specify legal, disciplinary, recovery and corrective actions immediately on completion of the meeting with the institution. 7.2. The commitment on each action will be tied to a time frame. 7.3. The Secretariat will make presentations to the COPE on the progress to follow up action at a special meeting convened each quarter.

8. Those found wanting for further investigation on fraud, cheating and corruption to be :

8.1. Brought before COPE for detailed investigation. 8.2. Referred to the relevant Ministry for action. 8.3. Where appropriate, referred to the Anti Bribery and Corruption Commission. 8.4. Where action had been taken under 8.1. and 8.2. ,information will be provided to Par- liament.

9. Information for a comprehensive understanding by Members of the COPE

9.1. The COPE Secretariat will coordinate information to be made available to Members at least one week ahead of a meeting. 9.2. The information must include : (a) The Auditor General’s reports (b) Relevant media/public reports (c) Relevant information from the House of Parliament (d) Any other relevant information.

10. Data Bank

To increase the comparative understanding of members, immediate steps will be taken to set up a data bank or outsource the requirements of a data bank so that the institutions can be evaluated in a comparative landscape for better performance.

15 PARLIAMENTARY SERIES NO. 236

Financial Results of Examined Institutions

As reported by the Auditor General, the financial results of the examined institutions for the years of 2010 and 2011are given below based on the following categorization.

Loss/profit of Limited Liability Companies and Strategic Business Enterprises

 Table 2 : Institutions running at a loss in 2011

 Table 3 : Institutions with either profit in 2010 turned into loss in 2011 or increased the loss in 2011 as compared with 2010

 Table 4 : Institutions which incurred losses in 2010 but turned into profits in 2011 showing better financial performance

 Table 5 : Institutions with either profit increased or loss decreased in 2011 as compared with 2010  Table 6 : Institutions with profits decreased in 2011 as compared with the year 2010

 Table 7 : Institutions with continuous losses for the years 2009, 2010 and 2011 Deficit/Surplus of Non Commercial Public Enterprises

 Table 8 : Institutions turned into deficits in 2011 from excesses in 2010 or increased their deficits in 2011 as compared with 2010

 Table 9 : Institutions running at deficits in 2011

 Table 10 : Institutions continuously running at deficits for the years 2009,2010 & 2011

 Table 11 : Institutions which incurred deficits in 2010 but turned into excess in 2011 or increased their excess in 2011 as compared with 2010

 Table 12 : Institutions which decreased their deficits in 2011 as compared with 2010

 Table 13 : Institutions which decreased their surplus in 2011 as compared with 2010

Based on the nature of incorporation, the institutions found under each category had been assigned with the following abbreviations.  LLC - Limited Liability Company  SBE - Strategic Business Enterprise  RMI - Regulatory & Monitoring Institution  UTI - Universities, Research and Other Training Institutions  DNP - Other Development & Non - Profit Oriented Institutions

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

Loss/profit of Limited Liability Companies and Strategic Business Enterprises

Table 2: Institutions running at a loss in 2011

No. Name of the Entity Type 2011 Rs.’000 01. Ceylon Electricity Board SBE (19,265,543) 02. Ceylon Fisheries Corporation SBE (68,970) 03. Ceylon Petroleum Corporation SBE (94,508,394) 04. Elkaduwawa Plantation Ltd. LLC (29,734) 05. Kantale Sugar Industries Ltd LLC (100,152) 06. Lakdiva Engineering Co. Pvt. Ltd. LLC (5,300) 07. Lanka Salusala Ltd LLC (25,654) 08. Mihin Lanka Ltd. LLC (940,489) 09. MILCO Ltd LLC (215,521) 10. National Paper Co. Ltd. LLC (73,713) 11. Sri Lanka Ceramics Corporation SBE (104,173) 12. Sri Lanka State Plantation Corporation SBE (52,413) 13. Sri Lanka Rubber manufact. Export Corp. SBE (2,729) 14. Sri Lankan Air Lines Ltd LLC (17,161,040) 15. State Trading Wholesale Estab. Co Ltd. LLC (4,403)

Table 3: Institutions with either profit in 2010 turned into loss in 2011 or increased the loss in 2011 as compared with 2010

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 01. Ceylon Electricity Board SBE (19,265,543) 4,831,985 02. Ceylon Fisheries Corporation SBE (68,970) (59,424) 03. Ceylon Petroleum Corporation SBE (94,508,394) (26,922,820) 04. Elkaduwawa Plantation Ltd. LLC (29,734) (4,407) 05. Kantale Sugar Industries Ltd LLC (100,152) (9,717) 06. Lakdiva Engineering Co. Pvt. Ltd. LLC (5,300) 3,879 07. Lanka Salusala Ltd LLC (25,654) (17,098)

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No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 08. MILCO Ltd LLC (215,521) 110,663 09. Sri Lanka Ceramics Corporation SBE (104,173) (77,259) 10. Sri Lanka State Plantation Corporation SBE (52,413) (14,175) 11. Sri Lankan Air Lines Ltd LLC (17,161,040) (377,750) 12. State Trading Wholesale Estab. Co Ltd. LLC (4,403) (3,011)

Table 4: Institutions which incurred losses in 2010 but turned into profits in 2011 showing better financial performance

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 01. Agricultural & Agrarian Insurance Board SBE 87,675 (147,407)

02. Associated Newspapers of Ceylon Ltd. LLC 14,036 (359782) 03. B.C.C Lanka Ltd LLC 7,318 (23,184) 04. National Water Supply and Drainage SBE 474,466 (5,849,894) Board 05. Paddy Marketing Board SBE 264,126 (346,747) 06. Sri Lanka Cashew Corporation SBE 20,449 (15,055) 07. Sri Lanka Ports Authority SBE 782,231 (1,248,134) 08. Sri Lanka Tea Board SBE 17,851 (24,502) 09. Urban Development Authority SBE 242,576 (275,887)

Table 5: Institutions with either profit increased or loss decreased in 2011 as compared with 2010 No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 01 Airport & Aviation Services Ltd. LLC 3,121,000 1,865,000 02 Ayurvedic Drugs Corporation SBE 63,879 6,016 03 Bank of Ceylon SBE 15,545,765 10,052,569 04 Central Bank of Sri Lanka SBE 47,431,799 12,635,220 05 Ceylon Fertilizer Co Ltd. LLC 95,407 73,979 06 Development Lotteries Board SBE 1,318,519 937,913

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

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 07 Housing Devp.and Financial Cooperation Bank SBE 414,288 188,907 08 Hingurana Sugar Industries Ltd LLC 36 - 09 Independent Television Network & Lakhanda LLC 682,002 495,231 Radio Ltd. 10 Kahatagaha Grapite Lanka Ltd. LLC 37,769 1,486 11 Kurunegala Plantation Ltd. LLC 225,163 154,529 12 Lanka Minerals Sand Ltd. LLC 1,109,569 678,362 13 Lanka Phosphate ltd LLC 201,418 126,001 14 Mantai Salt Ltd LLC 3,876 254 15 Mihin Lanka (Pvt) Ltd. LLC (940,489) (1,221,378) 16 National Film Corporation SBE 2,418 784 17 National Lotteries Board SBE 395,982 263,031 18 National Paper Co. Ltd. LLC (73,713) (212,193) 19 National Institute of Business Management SBE 300,329 111,752 20 National Livestock Development Board SBE 250,195 178,945 21 Paranthan Chemicals Ltd LLC 31,624 22,223 22 People’s Bank SBE 15,310,666 8,771,077 23 Rakna Arakshana Lanka Ltd. LLC 318,293 131,819 24 Regional Development Bank SBE 1,478,582 809,668 25 Sri Lanka Export Credit Insurance Corporation SBE 113,249 108,188 26 Sri Lanka Handicrafts Board SBE 49,629 6,034 27 Sri Lanka Land Reclamation Development SBE 398,655 135,581 Corporation

28. Sri Lanka Rupavahini Corporation SBE 172,079 42,120 29. Sri Lanka Savings Bank Ltd. LLC 497,528 294,573 30. Sri Lanka Tea Board SBE 17,851 (24,502) 31. Sri Lanka Telecom Ltd. LLC 6,535,000 5,961,000 32. Sri Lanka Rubber manufacturing Export Corpo- SBE (2,729) (3,580)

33. State Engineering Corporation SBE 252,975 133,063 34. State Mortgage and Investment Bank SBE 731,088 638,464

PARLIAMENTARY SERIES NO. 236

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 35. State Pharmaceuticals Corporation SBE 515,843 483,775 36. State Printing Corporation SBE 133,688 92,128 37. STC General Trading Co. Ltd LLC 79,929 58,783 38 State Development and Construction SBE 88,750 22,374 Corporation

Table 6: Institutions with profits decreased in 2011 as compared with the year 2010

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 01. Board of Investments SBE 149,987 182,676 02. Central Engineering Consultancy Bureau SBE 361,320 666,487 03. Chillaw Plantation Ltd LLC 97,125 114,163 04. Colombo Commercial Fertilizer Limited LLC 264,860 326,514 05. Co-operative Wholesale Establishment SBE 2,029 2,300 06. Employees Trust Fund Board SBE 11,570,694 14,588,421 07. Information & Communication Technology LLC 9,549 13,903

08. Kalubovitiyana Tea Factory Ltd. LLC 30,540 71,657 09. Lanka Logistics Ltd. LLC 8,160 10,825 10. Lanka Sathosa Ltd LLC 2,029 2,300 11. Lankaputhra Development Bank Ltd. LLC 124,395 163,266 12. National Savings Bank SBE 8,951,959 9,776,515 13. North Sea Ltd. LLC 7,485 8,262 14. Sri Lanka Cement Corporation SBE 2,600 5,075 15. Sri Lanka Insurance Corporation Ltd LLC 12,020,118 15,130,395 16. Sri Lanka Broadcasting Corporation SBE 36,415 38,021 17. State Pharmaceuticals Manufacturing Corpora- SBE 244,792 292,317

18. State Timber Corporation SBE 603,498 877,623

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

Table 7: Institutions with continuous losses for the years 2009, 2010 and 2011

No. Name of the Entity Type 2011 2010 2009 Rs.’000 Rs.’000 Rs.’000 01. Ceylon Fisheries Corporation SBE (68,970) (59,424) (103,889) 02. Ceylon Petroleum Corporation SBE (94,508,394) (26,922,820) (11,353,224) 03. Elkaduwawa Plantation Ltd. LLC (29,734) (4,407) (62,024) 04. Janatha Estate Development SBE (257,824) (110,337) (225,075) Board 05. Janatha Fertilizer Enterprise Ltd LLC - (13,972) (105,072) 06. Kantale Sugar Industries Ltd LLC (100,152) (9,717) (13,720) 07. Lanka Salusala Ltd LLC (25,654) (17,098) - 08. Mihin Lanka Ltd. LLC (940,489) (1,221,378) (1,300,470) 09. National Paper Co. Ltd. LLC (73,713) (212,193) (121,360) 10. Sri Lanka Transport Board SBE - (2,120,389) (1,611,702)

11. Sri Lanka Ceramics Corporation SBE (104,173) (77,259) (63,010) 12. Sri Lanka Rubber manufacturing SBE (2,729) (3,580) (4,951) Export Corporation 13. Sri Lankan Air Lines Ltd LLC (17,161,040) (377,750) (2,673,910) 14. State Trading Wholesale Estab- LLC (4,403) (3,010) (3,245)

21 PARLIAMENTARY SERIES NO. 236

Deficit/Surplus of Non Commercial Public Enterprises

Table 8: Institutions turned into deficits in 2011 from excesses in 2010 or increased their deficits in 2011 as compared with 2010

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 01. Ayurvedic Medical Council RMI (1,354) 983 02. Buddasarawaka Bikku University UTI (14,854) (10,902) 03. Buddhist & Pali University of Sri Lanka UTI (62,153) (43,168) 04. Ceylon Fisheries Habour Corporation DNP (190,648) (164,315) 05. Coconut Development Authority DNP (13,851) 19,015 06. Condominium Management Authority RMI (18,952) 42 07. Eastern University UTI (59,498) (55,510) 08. Sri Lanka Export Development Board DNP (19,490) 155,272 09. Galle Heritage Foundation DNP (599) 486 10. Gampaha Wickramarachchi Ayurveda Institute UTI (9,535) (1,646) 11. Institute of Fundamental Studies UTI (14,573) (7,154) 12. Institute of Human Resource Advancement UTI (2,531) 902 13. Institute of Post Harvest Technology UTI (14,336) (6,585) 14. Local Loans & Development Fund DNP (45,777) 21,359 15. National Apprentice & Industrial Training Au- UTI (75,837) (5,008) thority 16. National Aquaculture Development Authority DNP (25,754) (25,249) 17. National Aqucatic Resources Research & UTI (41,313) (39,167) Development Authority 18. National Centre for Advance Studies in human- UTI (149) 436 ities and Social Science 19. National Council For Elders RMI (1,654) 948 20. National Dangerous Drugs Control Board RMI (18,677) (14,874) 21. National Designs Centre UTI (922) 2,385 22. National Institute of Co-operative Develop- UTI (9,913) (7,301) ment 23. National Institute of Plantation Management UTI (4,362) 1511 24. National Institute of Social Development UTI (9,446) (7,597) 25. National Research Council UTI (18,148) (14,903) 22 REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 26. National Science and Tech. Commission RMI (808) 776 27. National Science Foundation UTI (4,659) 4,721 28. National Engineering Research and Develop- UTI (24,792) (6,250) ment Center of Sri Lanka 29. National Institute of Fisheries and nautical UTI (32,419) (13,640) Engineering 30. Postgraduate Institute of Archeology University UTI (4,046) 3,597 of Kelaniya 31. Postgraduate Institute of Management UTI (1,048) 59,079 32. Postgraduate Institute of Medicine UTI (11,119) 27,350 33. Road Development Authority DNP (396,816) (154,887) 34. Rubber Research Board UTI (62,934) (50,533) 35. Saumyamoorthi Thondaman Memorial Foun- UTI (38,065) (11,512) dation 36. Sri Lanka Council for Agricultural Research UTI (8,902) (8,141) Policy 37. Sri Lanka National Freedom from Hunger DNP (6,472) 315 Campaign Board 38. Sri Lanka Institute of Advanced Technological UTI (101,085) (87,810) Education 39. Sri Lanka inventers Commission RMI (7,676) (7,472) 40. Sri Lanka Social Security Board RMI (15,297) (8,766) 41. Southern Development Authority DNP (26,406) (8,673) 42. Swamy Vipulananda Institute of Aesthetic UTI (1,935) (1,485) Studies

43. Supreme Court Complex Board DNP (1,232) (845) 44. Sustainable Energy Authority RMI (30,632) 7,024 45. Tea Research Board UTI (26,816) 2,424 46. Tea Shakthi Fund DNP (84,402) (28,520) 47. Tea Small Holdings Development Authority DNP (12,707) (4,525) 48. Thurusaviya Fund DNP (3,294) (1,390) 49. Tower Hall Theatre Foundation DNP (11,657) (8,456) 50. University of Sabaragamuwa UTI (131,451) (60,788) 51. University of Sri Jayawardenapura UTI (109,829) (37,462)

23 PARLIAMENTARY SERIES NO. 236

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 52. University of Peradeniya UTI (348,897) (174,526) 53. University of Wayamba UTI (100,533) (91,495)

54. University of Ruhuna UTI (212,917) (211,649) 55. University of Vocational Technology UTI (6,844) (2,938) 56. University of Uva -Welassa UTI (2,487) 2,450 57. Vocational Training Authority of Sri Lanka UTI (18,334) 1,734 58. Water Resources board UTI (11,196) 7,135 59. Fishermen’s Pension Social Security Benefit DNP (157,378) (118,098) Scheme 60. Sri Jayawardenapura Hospital Board DNP (19,253) 60,186

Table 9: Institutions running at deficits in 2011 No. Name of the Entity Type 2011 Rs.’000 01. Ayurvedic Medical Council RMI (1,354) 02. Buddasarawaka Bikku University UTI (14,854) 03. Buddhist & Pali University of Sri Lanka UTI (62,153) 04. Ceylon Fisheries Habour Corporation DNP (190,648) 05. Ceynor Foudation DNP (15,883) 06. Coconut Development Authority DNP (13,851) 07. Coconut Research Institute UTI (7,998) 08. Condominium Management Authority RMI (18,952) 09. Defence Service Command and Staff college UTI (2,017) 10. Farmers Pension Social Security Benefit Scheme DNP (3,617,570) 11. Fishermen’s Pension Social Security Benefit Scheme DNP (157,398) 12. Eastern University UTI (59,498) 13. Sri Lanka Export Development Board DNP (19,490) 14. Galle Heritage Foundation DNP (599) 15. Gampaha Wickramarachchi Ayurveda Institute UTI (9,535) 16. Hector Kobbekaduwa Agrarian Research & Training UTI (13,010) Institute

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

No. Name of the Entity Type 2011 Rs.’000 17. Industrial Development Board DNP (6,757) 18. Institute of Construction Training and Development RMI (77,929) 19. Institute of Fundamental Studies UTI (14,573) 20. Institute of Human Resource Advancement UTI (2,531) 21. Institute of Indigenous Medicine UTI (25,848) 22. Institute of Post Harvest Technology UTI (14,336) 23. Insurance Board of Sri Lanka RMI (27,251) 24. Local Loan Development Fund DNP (45,778) 25. Mahaweli Authority of Sri Lanka DNP (150,432) 26. National Apprentice & Industrial Training Authority UTI (75,837) 27. National Aquaculture Development Authority DNP (25,754) 28. National Aqucatic Resources Research & Development UTI (41,313) Authority

29. National Centre for Advance Studies in humanities and UTI (149) Social Science 30. National Council For Elders RMI (1,654) 31. National Crafts Council RMI (2,267) 32. National Dangerous Drugs Control Board RMI (18,677) 33. National Designs Centre UTI (922) 34. National Housing Development Authority DNP (518,293) 35. National Institute of Co-operative Development UTI (9,913) 36. National Institute of Library Information Science Affiliat- UTI (1,332) ed to the University of Colombo 37. National Institute of Plantation Management UTI (4,362) 38. National Institute of Social Development UTI (9,446) 39. National Research Council UTI (18,148) 40. National Science and Technology Commission RMI (808) 41. National Science Foundation UTI (4,659) 42. National Youth Services Council RMI (48,752) 43. National Engineering Research and Development Cen- UTI (24,792)

25 PARLIAMENTARY SERIES NO. 236

No. Name of the Entity Type 2011 Rs.’000

44. National Institute of Fisheries and nautical Engineering UTI (32,419)

45. Palmyrah Development Board, DNP (3,146) 46. Postgraduate Institute of Archeology University of UTI (4,046) Kelaniya

47. Postgraduate Institute of Management UTI (1,048) 48. Postgraduate Institute of Medicine UTI (11,119) 49. Road Development Authority DNP (396,816) 50. Rubber Research Board UTI (62,934) 51. Samurdhi Authority of Sri Lanka DNP (959,997) 52. Saumyamoorthi Thondaman Memorial Foundation UTI (38,065) 53. Security and Exchange Commission RMI (184,994) 54. Sri Lanka Council for Agricultural Research Policy UTI (8,902) 55. Sri Lanka National Freedom from Hunger Campaign DNP (6,472) Board 56. Sri Lanka German Technical Training Institute UTI (12,820) 57. Sri Lanka Institute of Advanced Technological Educa- UTI (101,085) tion 58. Sri Lanka inventers Commission RMI (7,676) 59. Sri Lanka Press Council RMI (877) 60. Sri Lanka Social Security Board RMI (15,297) 61. Southern Development Authority DNP (26,406) 62. Sri Jayawardhanapura Hospital Board DNP (19,253) 63. Sugathadasa National Sport Complex Authority DNP (75,549) 64. Supreme Court Complex Board DNP (1,232) 65. Sustainable Energy Authority RMI (30,632) 66. Tea Research Board UTI (26,816) 67. Tea Shakthi Fund DNP (84,402) 68. Tea Small Holdings Development Authority DNP (12,707) 69. Thurusaviya Fund DNP (3,294) 70. Tower Hall Theatre Foundation DNP (11,657) 71. University of Sabaragamuwa UTI (131,451)

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

No. Name of the Entity Type 2011 Rs.’000

72. University of Sri Jayawardenapura UTI (109,829) 73. University of Peradeniya UTI (348,897) 74. University of Wayamba UTI (100,533) 75. University Grant Commission RMI (4,226) 76. University of Jaffna UTI (60,290) 77. University of Moratuwa UTI (32,113) 78. University of Rajarata UTI (150,924) 79. University of Ruhuna UTI (212,917) 80. University of Vocational Technology UTI (6,844) 81. University of Uva -Welassa UTI (2,487) 82. Vocational Training Authority of Sri Lanka UTI (18,334) 83. Water Resources board UTI (11,196) 84. Wijaya Kumaratunga Memorial Hospital DNP (3,944)

Table 10: Institutions continuously running at deficits for the years 2009,2010 & 2011

No. Name of the Entity Type 2011 2010 2009 Rs.’000 Rs.’000 Rs.’000

01. Buddasarawaka Bikku University UTI (14,854) (10,902) (10,171) 02. Buddhist & Pall University of Sri Lanka UTI (62,153) (43,168) (40,998) 03. Ceylon Fisheries Habour Corporation DNP (190,648) (164,315) (212,969) 04. Ceynor Foudation DNP (15,883) (23,152) (30,071) 05. Coconut Research Institute UTI (7,998) (14,741) (45,847) 06. Defence Service Command and Staff UTI (2,017) (25,050) - college 07. Eastern University UTI (59,498) (55,510) (71,458) 08. Farmers Pension Social Security DNP (3,617,571) (3,921,268) (741,312) Benefit Scheme 09. Gampaha Wickramarachchi Ayurve- UTI (9,535) (1,646) (7,077) da Institute

10. Hector Kobbekaduwa Agrarian Re- UTI (13,010) (13,299) (3,648) search & Training Institute . 27 PARLIAMENTARY SERIES NO. 236

No. Name of the Entity Type 2011 2010 2009 Rs.’000 Rs.’000 Rs.’000 11. Industrial Development Board DNP (6,757) (18,645) (8,280) 12. Institute of Construction Training and RMI (77,929) (78,446) (68,150) Development 13. Institute of Indigenous Medicine UTI (25,848) (38,842) (16,768) 14. Institute of Post Harvest Technology UTI (14,336) (6,585) (2,942)

15. Insurance Board of Sri Lanka RMI (27,251) (29,177) (16,493) 16. Local Loan Development Fund DNP (47,076) (9,338) (25,225) 17. Mahaweli Authority of Sri Lanka DNP (150,432) (475,353) (437,806) 18. National Apprentice & Industrial Train- UTI (75,837) (5,008) (95,544) ing Authority 19. National Aquaculture Development DNP (25,754) (25,249) (31,469) Authority 20. National Aquatic Resources Research UTI (41,313) (39,167) (30,039) & Development Authority 21. National crafts Council RMI (2,267) (6,376) (1,733) 22. National Dangerous Drugs Control RMI (18,677) (14,874) (4,339) Board 23. National Housing Development Au- DNP (518,293) (666,731) (502,659) thority 24. National Institute of Co-operative De- UTI (9,913) (7,301) (6,173) velopment 25. National Institute of Library & Infor- UTI (1,332) (2,575) (2,173) mation Science - University of Colom- bo 26. National Institute of Social Develop- UTI (9,446) (7,597) (9,353) ment 27. National Library Documentation Ser- DNP - (3,054) (3,050) vice Board 28. National Research Council UTI (18,148) (14,903) (18,279) 29. National Youth Services Council RMI (48,752) (100,677) (73,404) 30. National Engineering Research and UTI (24,792) (6,250) (18,280) Development Centre 31. National Institute of Fisheries and UTI (32,419) (13,640) (19,149) nautical Engineering 32. Palmyrah Development Board, DNP (3,146) (14,415) (9,645) 33. Road Development Authority DNP (396,816) (154,887) (1,421,808) 34. Rubber Research Board UTI (62,934) (50,533) (40,051) 35. Samurdhi Authority of Sri Lanka DNP (959,997) (2,605,558) (4,156,196) 28 REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

No. Name of the Entity Type 2011 2010 2009 Rs.’000 Rs.’000 Rs.’000 36 Saumyamoorthi Thondaman Memorial UTI (38,065) (11,512) (1,490) Foundation 37 Security and Exchange Commission of RMI (184,994) (191,085) (175,020) Sri Lanka 38 Sri Lanka Council for Agricultural Re- UTI (8,902) (8,141) (2,754) search Policy

39 Sri Lanka German Technical Training UTI (12,820) (44,579) (783) Institute 40 Sri Lanka Institute of Advanced Tech- UTI (101,085) (87,810) (65,824) nological Education 41 Sri Lanka inventers Commission RMI (7,676) (7,472) (22,953)

42 Sri Lanka Social Security Board RMI (15,297) (8,766) (2,072) 43 South Eastem University UTI (56,672) (92,208) (49,410) 44 Sugathadasa National Sport Complex DNP (75,549) (83,323) (52,129) Authority 45 Supreme Court Complex Board DNP (1,232) (845) (1,193) 46 Tea Shakthi Fund DNP (84,402) (28,520) (4,730) 47 Tea Small Holdings Development DNP (12,707) (4,525) (28,366) Authority

48 Thurusaviya Fund DNP (3,294) (1,390) (824)

49 University of Sabaragamuwa UTI (131,451) (60,788) (78,383)

50 University of Sri Jayawardenapura UTI (109,829) (37,462) (16,473)

51 University of Peradeniya UTI (348,897) (174,526) ·(153,766)

52 University of Wayamba UTI (100,533) (91,495) (70,801)

53 University of Jaffna UTI (60,290) (74,907) (37,149)

54 University of Moratuwa UTI (32,113) (39,435) (93,465)

55 University of Rajarata UTI (150,924) (173,100) (117,597)

56 University of Ruhuna UTI (212,917) (211,649) (232,687)

57 University of Vocational Technology UTI (6,844) (2,938) (3,820)

58 Wijaya Kumaratunga Memorial Hospi- DNP (3,944) (6,510) (3,547) tal

29 PARLIAMENTARY SERIES NO. 236

Table 11: Institutions which incurred deficits in 2010 but turned into excess in 2011 or increased their excess in 2011 as compared with 2010

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 01. Atomic Energy Authority RMI 3,298 (618) 02. Botanical Garden Trust Fund DNP 74,466 6,597 03. Central Cultural Fund DNP 235,010 207,471 04. Civil Aviation Authority RMI 428,898 385125 05. Coconut Cultivation Board DNP 186,511 169,220 06. National Council for Disaster Management & Disas- RMI 20,040 (52,450) ter Management Center 07. Gem & Jewellery Research & Training Institute UTI 383 (779) 08. Geological Survey and Mines Bureau RMI 618,549 469,504 09. Homeopathic Medical Council RMI 75 (383) 10. Industrial Technology Institute UTI 59,319 54,631 11. Institute of Bio chemistry Molecular Biology & Bio- UTI 494 (2,369) technology University of Colombo 12. Institute of Policy Studies UTI 343 (26,294) 13. Institute of Technology University of Moratuwa UTI 4,834 (758) 14. Sri Lanka Inst. of Tourism & Hotel Management UTI 55,649 38,675 15. Lady Lohore Loan Fund DNP 33,367 19,891 16. Land Reform Commission RMI 61,890 10,222 17. Land Survey Council RMI 1,051 (1,580) 18. Marine Environment Protection Authority RMI 142 (46) 19. National Building Research Organization RMI 15,407 1,110 20. National Child protection Authority RMI 6,827 (1,578) 21. National Council For Road Safety RMI 21,878 14,668 22. National Enterprises Development Authority DNP 508 (1,800) 23. National Gem and Jewellery Authority RMI 27,812 (32,966) 24. National Institute of Education UTI 41,078 (48,544) 25. National Institute of Language Education & Training UTI 997 (3,869)

26. National Transport Commission RMI 192,801 68,003

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

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 27. Open University of Sri Lanka UTI 22,671 (130,145) 28. Postgraduate Institute of English UTI 1,710 826 29. Postgraduate Institute of Science UTI 22,346 19,639 30. Public Utilities Commission RMI 55,978 20,726 31. Rana Viru Seva Authority RMI 11,403 10,238 32. Rehabilitation of person's properties and indus- RMI 4,217 2,138 tries authority 33. Resettlement Authority RMI 460 51 34. Salacine Television Institute DNP 7,539 1,014 35. Sir John Kotalawala Defence University UTI 20,889 (2,058) 36. SL Accreditation Board For Conformity Asses. DNP 1,377 (359) 37. Sri Lanaka Cricket DNP 594,673 430,860 38. Sri Lanka Foreign Employment Bureau RMI 606,361 591,077 39. Sri Lanka Foundation Institute UTI 6,251 (14,886) 40. Sri Lanka Institute of Development Admini. UTI 641 481 41. Sri Lanka Institute of Local Governance UTI 2,882 2,255 42. Sri Lanka Institute of Textile and Apparel UTI 13,935 (685) 43. Sri Lanka Judges Institute UTI 2,581 1,135 44. Sri Lanka Standards Institute RMI 101,032 95,957 45. Sri Lanka Tourism Development Authority DNP 132,207 72,274 46. Sri Lanka Tourism Promotion Bureau DNP 658,412 14,828 47. Telecommunication Regulatory Commission of RMI 31,160,506 5,378,271 Sri Lanka 48. Tertiary and Vocational Education Commission DNP 399 (1,634) 49. Universities Provident Fund DNP 193,543 162,346 50. University of Colombo UTI 69,383 57,164 51. University of Colombo School of Computing UTI 73,534 41,511 52. University of Kelaniya UTI 72,937 (113,862) 53. University of Visual & Performing Art UTI 13,066 1,559

31 PARLIAMENTARY SERIES NO. 236

Table 12: Institutions which decreased their deficits in 2011 as compared with 2010

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000 01. Ceynor Foudation DNP (15,883) (23,152) 02. Coconut Research Institute UTI (7,998) (14,741) 03. Defence Service Command and Staff college UTI (2,017) (25,050) 04. Hector Kobbekaduwa Agrarian Research & UTI (13,010) (13,299) Training Institute 05. Industrial Development Board DNP (6,757) (18,645) 06. Institute of Construction Training and Develop- RMI (77,929) (78,446) ment 07. Institute of Indigenous Medicine UTI (25,848) (38,842) 08. Insurance Board of Sri Lanka RMI (27,251) (29,177) 09. Mahaweli Authority of Sri Lanka DNP (150,432) (475,353) 10. National crafts Council RMI (2,267) (6,376) 11. National Housing Development Authority DNP (518,293) (666,731) 12. National Institute of Library Information Sci- UTI (1,332) (2,575) ence Affilited to the University of Colombo 13. National Youth Services Council RMI (48,752) (100,677) 14. Palmyrah Development Board, DNP (3,146) (14,415) 15. Samurdhi Authority of Sri Lanka DNP (959,997) (2,605,558) 16. Security and Exchange Commission RMI (184,994) (191,085) 17. Sri Lanka German Technical Training Institute UTI (12,820) (44,579) 18. Sri Lanka Press Council RMI (877) (889) 19. Sugathadasa National Sport Complex Au- DNP (75,549) (83,323) thority 20. University of Jaffna UTI (60,290) (74,907) 21. University of Moratuwa UTI (32,113) (39,435) 22. University of Rajarata UTI (150,924) (173,100) 23. Wijaya Kumaratunga Memorial Hospital DNP (3,944) (6,510) 24. Farmers Pension Social Security Benefit DNP (3,617,571) (3,921,268) Scheme

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

Table 13: Institutions which decreased their surplus in 2011 as compared with 2010

No. Name of the Entity Type 2011 2010 Rs.’000 Rs.’000

01. Athur C Clerk Center for modern Technology UTI 3,578 5,865

02. Central Environmental Authority RMI 6,305 8,871

03. Consumer Affairs Authority RMI 12,618 21,764

04. Hadabima Authority of sri Lanka DNP 1,313 9,977

05. JR Jayawardena Centre UTI 1,204 3,604

06. Mahapola Higher Education Trust Fund DNP 389,544 433,764 07. National Fund for Persons with Disabilities DNP 390 6,223

08. National Human Resources development RMI 1,084 1,563 Council 09. National Insursance Trust Fund DNP 2,314,700 2,727,559 10. National Transport Medical Institute DNP 45,669 81,672 11. Postgraduate Institute of Agriculture UTI 17,216 19,771 12. Postgraduate Institute of Pali & Buddhist UTI 681 3,735 13. Sri Lanka Book Development Council DNP (321) 2,647 14. Sri Lanka Buddhist & Pali University Provident UTI 5,038 5,490 Fund

15. Sri Lanka Convention Bureau DNP 8,050 33,714 16. Sri Lanka Institute of Tourism and Hotel Man- UTI 55,649 38,675 agement

17. Udarata Development Authority DNP 5,679 7,562

33 PARLIAMENTARY SERIES NO. 236

Institutions Offered with Unfavourable Audit Opinions

The institutions mentioned in Table 14 had been given an adverse audit opinion for the financial years tabulated in and the table 15 shows the institutions offered with a disclaimer audit opinion . Table 14. Institutions offered with an adverse audit opinion

No Institution Audit Year 01. Sri Lanka Council for Agricultural Research Policy 2010 02. Institute of Indigenous Medicine 2011 03. National Library & Documentation Services Board 2010 04. Open University of Sri Lanka 2011

Table 15. Institutions offered with a disclaimer audit opinion.

No Institution Audit Year 01. Colombo Commercial Fertilizer Limited 2011 02. Ceylon Fisheries Harbour Corporation 2010 03. Saumyamoorthi Thondaman Memorial Foundation 2010 & 2011 04. University of Kelaniya 2010 05. Open University of Sri Lanka 2010 06. University of Peradeniya 2010 & 2011 07. Postgraduate Institute of Agriculture 2010 & 2011 08. Janatha Estate Development Board 2010 & 2011 09. Sri Lanka State Plantation Corporation 2010 & 2011 10. Ayurvedic Drugs Corporation 2010 & 2011 11. Vocational Training Authority of Sri Lanka 2010 & 2011 12. Land Reform Commission 2010 & 2011 13. Ceylon Petroleum Corporation 2010 14. Mahaweli Authority of Sri Lanka 2010 & 2011 15. National Youth Services Council 2010 & 2011 16. National Institute of Fisheries and Nautical Engineering 2010 & 2011 17. Co-operative Wholesale Establishment 2010 18. Paddy Marketing Board 2010 34 REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

List of Appendixes

Page Appendix A Issues Discussed by the Main Committee 37 Appendix B Issues Discussed by the Sub Committee-I 169 Appendix C Issues Discussed by the Sub Committee-II 217 Appendix D Issues Discussed by the Sub Committee-III 259 Appendix E Index 311

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

Appendix A

Issues discussed at the Meetings of the Main Committee of the Committee on Public Enterprises.

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 Comments & Decisions of Institution & Ministry Identified the COPE

Atomic Energy 1. The Committee questioned 1. It was stated that all the Authority about the radiation testing milk products, fish, done for food items. canned fish, etc. imported October 09th, 2012 to the country were tested for radiation, and only (Ministry of Power & after verification AEA Energy) issue the certificate to the importer. The CAO/AO was directed to take action to publish the items that had been contaminated with radiation to make aware the general public.

2. when the food items were 2. It was directed to add a tested for radiation, only the para to the new Act which samples given by the was being prepared so Health Ministry had been that to get the power vest- tested by the AEA. ed in the Authority to collect and check random samples.

3. Due to the delay in the im- 3. It was directed to expe- plementation of the Multi- dite the construction work purpose Gamma irradiation and implement the pro- Facility (MGIF) project, ject. donation allocated by the International Atomic Ener- gy Authority (IAEA) for staff training had not been received. State Timber Corpora- 1. Internal Audit Reports had 1. The CAO/AO agreed to tion not been furnished to the submit all the internal Auditor General. audit reports as well as October 10th, 2012 the Audit & Management Committee Reports to the (Ministry of Environ- audit. ment ) 2. The Committee enquired 2. the CAO/AO stated that

the current position regard- no certificate was issued

ing the undervaluation of on the standard of the

imported timber. imported timber and the

Corporation had request-

ed the line Ministry and

the Ministry of Finance to Contd... provide the 39 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

authority to the Corpora- tion to issue such certificate on the standard of the imported timber. The CAO/AO was directed to take action to make provisions to the Act accordingly. 3. The Committee observed 3. The Committee directed that a loss of Rs. 580,896/- the CAO/AO to submit a had incurred due to non- detailed report to the Au- awarding of the contract of ditor General explaining 12 stacking huts to the low- the matter. est tenderer. The CAO/AO stated that the tenders had been called only for the Mir- igama Depot, but in addition stacking huts had been obtained for 11 such depots in the outstation, where they had to pay Rs. 48,000/- as transport charges.

National Savings Bank 1. The Rs. 390 million had 1. It was directed to conduct been invested in “The Fi- an internal inquiry and October 11th, 2012 nance Company” which was submit all relevant docu- in a negative return on a ments with regard to the (Ministry of Finance decision taken by a Sub - Board decision to the & Planning) committee of the Board of Committee. Directors.

* Committee decision had been taken to summon the former Chairman, NSB and the then Board of Directors.

* The Committee directed the CAO to issue guidelines to all the Treasury Officials working on the Director Boards, to keep him informed immediately when any Board of Directors of Public Enter- Contd... prises planning to take a

40 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 Comments & Decisions of Institution & Ministry Identified the COPE decision on a transaction which could be unusual or unhealthy to the respective Institution. 2. Procurement Plan had not 2. The CAO/AO agreed to been prepared by the Bank. prepare a procurement plan from the next year.

3. Frauds amounting to Rs. 19 3. Out of Rs. 19 million, Rs. million and Rs. 17 million 8 million had been recov- had taken place in the years ered and another Rs. 2.5 2010 and 2011 respectively million had been received in various branch offices. from the Insurance Com- pany for the fraud in Ban- darawela Branch. The CAO/AO stated that full amount of losses could be recovered for the fraud occurred in Galle Branch. He further stated that action had been taken against the responsible officers for these frauds.

4. It was observed that 59 4. The CAO/AO stated that branches of the Bank had awareness programmes/ been running at a loss. workshops had been conducted to branch manag- ers to make those branches profitable.

5. One particular land had been 5. Out of the total amount valued in three instances and Rs. 6.1 million and Rs granted 03 loans amounting 0.9 million had been set- to Rs. 12 million to an indi- tled in the years 2011 and vidual. 2012 respectively. The CAO/AO stated that if the receiver of loans defaults the payments action would be taken to auction the property to obtain the balance payment. Contd...

41 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 6. The Committee questioned 6. The CAO/AO stated that about the year 2013 fore- they had planned to cast of the Bank. achieve the following targets;

(i) To increase the No. of branches from 216 to 250.

(ii) Savings to be increased from 18 percent to 23 percent in another four years,

(iii) To increase the No. of housing loans from 6000 to 8200

(iv) To increase the foreign remittances from Rs. 12 billion to Rs. 20 billion.

(v) To increase the investments in the Treasury Bills and Bonds upto Rs. 135 billion and the expected profit for the year 2013 is Rs. 6.7 billion. Associated Newspa- 1. It was brought to the no- 1. The Committee wanted the pers of Ceylon Ltd. tice of the Committee that CAO/AO to take necessary the officials of the Auditor action to ensure that the October 12th 2012 Generals‟ Department had activities of the officers of found it difficult at times the Auditor General‟s De- (Ministry of Mass in obtaining certain re- partment be unaffected by Media & Information) quired information owing the said circular. to a circular issued by the company secretary regarding the information furnished to external parties.

2. The Committee questioned 2. The CAO stated that they

about the outstanding debt- had been able to bring

or balances connected with down the bad debt percent-

publishing of advertise- age below 0.01%. He was

ments on credit basis. directed to send a report on

this matter to the Commit-

tee.

Contd...

42 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 Comments & Decisions of Institution & Ministry Identified the COPE 3. The sales of newspapers 3. The CAO/AO stated that had decreased by 8% the introduction of the while the advertising reve- electronic media, internet, nue had increased by 4%. other tabloids available for accessing information and the contents of the ANCL‟s newspapers, had created this situation. He was directed to send the information with regard to the proportions allocated for the government and the private sector for publishing advertisements. 4. It was seriously considered 4. The CAO/AO was directed the fact that ANCL had not to formulate an editorial been able to maintain a policy. balance reporting in newspapers with regard to polit- ical matters and further noted that this factor must have significantly affected the sales of newspapers.

5. Rs.20,472,934/- payable 5. As the CAO/AO stated that by a private printing press the institution had agreed for the printing papers to settle a portion in the obtained on contract basis, following week and also to had not been recovered. furnish a payment plan to settle the balance, directed the CAO/AO to submit a copy of the same to the Committee having expressed its dissatisfaction for not taking adequate action for nearly three years.

6. The Committee also noted 6. The CAO/AO was directed that the 95,410 kg of print- to send information on this ing papers given to another transaction to the Commit- private printing press in tee and pointed out the 2010 had not been re- importance of entering into turned to the ANCL. agreements in the event of such urgent transactions. Contd...

43 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 7. No adequate action had 7. The CAO/AO was directed been taken since 2004 on to take prompt action to the case in relation to an interdict this officer and officer who had been giv- hold an inquiry. en an advance of Rs.250,000/- for carrying out a drought relief programme. 8. The company had released 8. The Committee wanted the number of vehicles includ- CAO/AO to submit a re- ing the hired vehicles to port to the Committee other government institu- thereon. tions during the period from 2007 to 2010.

Central Engineering 1. The Ministry had decided 1. The CECB should be as- Consultancy Bureau to call for international signed with the task as they bidders to select a consul- claim to have the capability October 23rd 2012 tancy firm for the con- to provide the consultancy struction of the Uma Oya on this project. (Ministry of Irrigation Dam without offering it to & Water Resources the CECB coming under Management) its own Ministry.

2. The loss incurred on 11 2. The losses, as explained by

projects in the year 2011 the CAO, had been mainly

had been Rs.294.54 mil- due to the projects imple-

lion. mented in the North after

the war, giving no concern

on the profits. The long

delays taken by the so

called Rate Committee to

approve the rates had also

been a reason for this situa-

tion.

3. The total debtor balance as 3. Out of the total outstand- at 31.12.2011 had been ing, 95% had been due Rs.3,708,187,389. from Govt. institutions and the Committee directed the CAO to submit a list of debtors indicating the amount due from each debtor.

Contd...

44 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 Comments & Decisions of Institution & Ministry Identified the COPE 4. The retention money amount- 4. The Committee decided ing to Rs.185,128,485/- had to discuss with the Secre- been outstanding for 25 pro- tary to the Ministry of jects as at 31.12.2011 due to Housing and Construc- the inefficiency of the Rate tion on the issues arisen Committee. due to the Rate Commit- tee.

Employees’ Trust 1. Internal Audit Report for the 1. Directed the CAO/AO to Fund Board year 2012 had not been sub- regularize the matter. mitted to the Auditor Gen- th October 24 , 2012 eral.

(Ministry of Finance 2. Rs. 141,625/- had been fraud- 2. The CAO/AO stated that & Planning ) ulently transferred to another the Request had been account by a Labour Officer. made to the EPF to obtain that amount of money and the disciplinary action against this officer need to be taken by the

Department of Labour.

3. The Committee observed that 3. The AO stated that they action had not been taken as were not in a position to directed at the previous stop these payments since COPE meeting to rectify the the employees had been irregular payment of incen- enjoying this privilege tives and allowances and also since 1992. The Treasury the grant of loans to the staff officials stated that the at an interest rate of 4.2% Treasury was then in the which had been against the process of revising its Treasury circulars. circulars and that these sorts of issues would also be addressed during this review.

4. Action had not been taken to 4. The CAO/AO was di- recover the investment inter- rected to furnish a report est of Rs.10,291,556/- and on this transaction to the Rs.15,574,073/- due from the Committee including the Elkaduwa Plantations Ltd. names of the board of and the Vanik Incorporation directors functioned at Company respectively. that time. Contd...

45 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. When questioned by the 5. The CAO/AO was di- Committee the CAO/AO rected to furnish a break- stated that the ETF had so far up of the income of the invested in 92 Companies. ETF along with the income generated out of the investments made in the 92 companies. 6. The Committee wanted the CAO /AO to submit a report on the number of new members enrolled with the Fund from the year 2005. National Lotteries 1. The Committee expressed its 1. The CAO/AO stated that Board serious dissatisfaction for not since the existing salary taking action to establish an scale had been incompati- October 25th, 2012 & Internal Audit Division in the ble with the experience March 11th, 2013 institution without getting it required, it was difficult done by a private firm as per to recruit staff to the in- the directive given at the last ternal audit division and COPE meeting. hence the approval had (Ministry of Finance been sought from the & Planning) Treasury for a special salary scale. The Com- mittee wanted the Treas- ury Officials to look into this matter and directed the CAO/AO to solve the problem within three months. 2. Excess cadre had been exist- 2. The CAO/AO was died in the Institution and the rected to submit the ap- CAO/AO stated that they had proval of the Ministry been recruited on contract given in this regard. basis under the approval of the Ministry. 3. The Committee observed that 3. The Committee stressed the institution had still been the importance of main- maintaining its office in a taining a proper coordina- rented building and Rs.96 tion with the relevant million had been spent so far authorities and viewed as rent and renovation be- that it was high time to sides a provision of Rs.618 consider about the estab- million had been allocated to lishment of institutions Contd... construct a new building. The outside the capital of the 46 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 Comments & Decisions of Institution & Ministry Identified the COPE CAO/AO stated that the con- country without concen- struction had got delayed as trating all into Colombo the approval of the UDA had hub. not been granted due to the nonconformity of the proposed building with the Mas- ter Plan of the UDA. 4. The Committee was not satis- 4. The CAO/AO was di- fied with the pace at which rected to report the pro- the action was being taken to gress of course of action publish the prize structure in taken in this regard with- the gazette. in three months to the Committee.

5. The covering approval had 5. The Treasury was di- not yet been obtained with rected to expedite its de- regard to the advanced pay- cision making process ment made exceeding the and also to review these allowed limit of 20%. kind of restrictions in accordance with the current requirements

6. The Committee was seriously 6. The Committee directed concerned that the printing of to furnish a full report on a portion of lottery tickets this transaction to the had been offered to the same Committee. private firm since 1995 without calling for a new tender after the termination of the agreement entered into in the year 1995 for 3 years. 7. It was found that the covering 7. The CAO/AO was di- approval had not yet been rected to conduct an in- obtained from the Treasury quiry for not adhering to for the 50% advanced pay- the COPE directive. ment made with regard to the software development project. 8. The Committee further ob- 8. The CAO/AO was di- served that a sum of Rs.19 rected to regularize the million out of the total re- matter and also to provide ceivable amount of Rs.171 the Committee with a million had been written off report as to why the treas- without the approval of the ury approval was not Contd... Treasury. obtained.

47 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE

9. The Committee enquired 9. It was stated that the post as to why the post of had been filled on acting Asst. General Manager basis for not being able to (Dealer Admin.) had recruit a qualified person been vacant since through the interview called 23.08.2011. in this respect.

10. The post of Deputy Gen- 10. It was stated that they were eral Manager (Finance) compelled to do so since a had been retained on qualified chartered Ac- contract basis for nearly countant could not be re- 10 years. cruited with the existing low salary scales in the Public Sector.

11. It was noted that the de- 11. The Committee wanted the cision taken to establish CAO/AO look into this the head office of the decision again. institution in Ham- banthota was absurd since a number of parties including the staff and dealers fell into trouble with this move.

12. The Committee enquired 12. It was stated that only a about the ticket printing 50% of printing of tickets cost amounting to was tendered since the State Rs.293,504,383/- which Printing Corporation was was claimed to have no offered the rest of the as- evidence to prove that signment without going any tender procedure had through a tender procedure been followed. as per a cabinet decision.

13. It was brought to the 13. The Committee expressed notice of the Committee its serious dissatisfaction that the institution had for not getting the approval paid festival advances of the treasury in this con- with a total of nection and advised to ob- Rs.3,212,120/- based on tain the Treasury approval the monthly salary alt- prior to the next appearance hough the maximum before the Committee. amount payable as per the National Budget Cir- Contd... cular 142 was Rs.5000/-.

48 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 Comments & Decisions of the Institution & Ministry Identified COPE

14. The Gratuity Payment 14. The Committee directed Act had been violated as the CAO/AO to take action the gratuity payments had to recover the overpaid not been made consider- amount. ing the half-month-salary and the amount thus paid during the year 2011 had been Rs.12,126,300/-.

15. The Committee discussed 15. It was stated that the main about the Airport Super reason for the loss of prof- Draw lottery which had itability of this ticket had continuously been mak- been the impact of increasing losses. ing the taxes. The CAO/ AO was directed to send a report to the Committee stating the number of tickets sold so far and the names of the winners of each draw held upto then.

16. The balances of the Re- 16. It was stated that it had ward Reserve Account been released on the re- and the Reserve Account quest of the Ministry. had decreased by 74.4% and 48% respectively due to an amount of Rs.702 million had been credited to the consolidated fund.

17. The Committee observed 17. The CAO/AO was directed that the allegations made to inquire into the matter. by certain principals in the Kilinochchi district who denied the receipt of the items, claimed to have been handed over at the opening of the lottery ticket delivery office in Kilinochchi, for the distribution among the school children and par- ents. Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

18. The Committee discussed 18. It was stated that they about the joint venture had to stop this lottery as entered into with a Norwe- it had started to make gian Company regarding losses after about one and an Online lottery and the half years from its incep- Committee enquired as to tion and the loss amount- why its financial details ed to around Rs.700 mil- were not to be observed in lion had been written off the balance sheet. on a Cabinet decision. The Committee directed to submit a report on the entire loss incurred out of this business together with the copy of the cabinet approval given to write off the loss.

19. The advertising expenses 19. The CAO/AO was di- of the Board had been dis- rected to furnish a report cussed. within two weeks on the event wise figures of advertising expenses above Rs.200,000/- incurred from 2010 along with the details regarding the function, name of the institution etc. 20. It was discussed in detail 20. The CAO/AO was di- about the unclaimed prize rected to send a detailed money which was sup- report on it. Further, the posed to be sent to the Auditor General was di- treasury as per the Act rected to make an audit on these unclaimed prizes and submit a report to the Committee. 21. The Committee concerned 21. The CAO/AO stated that the matter related to the the Bribery or Corruption Gajma & Co. Ltd., which Commission had had an had been the Tax Consult- investigation into the ant of the institution sever- allegations and agreed to al years ago. furnish a detailed report to the Committee in this regard.

Contd...

50 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 Comments & Decisions of the Institution & Ministry Identified COPE 22. The Committee ques- 24. It was stated that no such tioned as to whether the programme had been institution sponsored any sponsored other than the sports programmes tele- commercials. The CAO/ cast in TV channels. AO was directed to furnish details on the amounts given to each media channel for commercials event by event.

Insurance Board of 1. Performance could not be 1. The Committee wanted Sri Lanka measured as the targets the CAO/AO to rectify the were not clearly men- lapses pointed out. October 25th, 2012 tioned in the Corporate (Ministry of Finance plan of the institution & Planning) prepared for the period from 2012 to 2014.

2. Current status of the ac- 2. The CAO/AO stated that tion taken with regard to the recommendations and the effective implementa- suggestions had been sent tion of the Third Party to amend the section No. Insurance had been ques- 105 of the Motor Traffic tioned. Act to the Dept. of Motor Traffic and was in the process in order to enable implementation. The Committee suggested that the matter under concerned should be discussed with the Insurance companies as well.

3. Ownership of the two 3. The officials of the Treas- leased motor vehicles ury stated that they were which was being used by in the process of reviewing two directors with a fuel the older circulars and allowance had been trans- agreed to attend to these ferred to the two directors kind of issues during the and since then, a fuel al- review. lowance of Rs.50,000/- had also been paid against the Treasury Circulars.

51 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Board of Investment 1. The Committee queried 1. It was agreed to send a about the investment regard- report on this investment th November 14 , 2012 ing the Hyatt Regency Hotel to the Committee. and enquired the basis of (Ministry of Economic approving this investment Development ) without giving due attention on their share capital.

2. All efforts taken by the BOI 2. The Committee wanted to promote investments be- the direct involvement of came immaterial at the end the Chairman to ensure due to the inefficiency exist- that the investors are ca- ing in other related institu- tered more efficiently. tions and the commitment of the staff down the hierarchy of the BOI was also not satisfactory.

3. The current position of the 3. The CAO/AO informed dispute existing between the the Committee that a BOI and the Merbok Ltd. compromise had been which had led to a number of reached to transfer a land arbitrations between the two with an extent of 537 parties had been questioned. acres on condition that unfavourable clauses to the BOI in the agreement were removed and later the BOI had gone back on the consensus as the verdict of the courts issued at the end had been favourable to the BOI.

4. The Committee observed 4. The Committee directed that the time spent on the the CAO/AO to look into transfer of the lands had the possibilities of estab- been too long at times. lishing a unit inside the BOI, with the cooperation of the Land Commissioner, to sort Contd... out the land matters early.

52 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 Comments & Decisions of Institution & Ministry Identified the COPE

5. Having referred to several inci- 5. The Committee wanted dents taken place in relation to the involvement of the certain projects on housing BOI in these kinds of complexes, it was discussed situations to protect the about the rogue investors those General Public. who collected money from people before the commencement of Business and quit the country later suspending the project halfway.

6. Acreage of the extent of land 6. The CAO/AO stated in the Perth Estate purchased that later they had for Rs.120 million had been identified a private different from the land area land of 146 acres with- determined by the survey car- in the purchased extent ried out in 2009. of land and the only available solution was to take over the ownership of the land from the private owner and pay compensation.

7. The Committee noted that the 7. The CAO/AO stated amount of bad debts had been that a committee had increased. been appointed to review these debtor balances and agreed to finalize it within three months.

8. It was pointed out that the rele- 8. The CAO/AO was vant treasury circulars had directed to send a re- been violated in certain in- port in this regard with stances as the VRS had been a copy of the relevant granted to the employees those circular to the Commit- who had not been entitled to tee. receive.

53 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE Sri Lanka Ports 1. The Committee questioned 1. The Committee was of the Authority about the current position view that the legal action of the capital amounting to should have been taken November 15th, 2012 US$ 2,424,285 for which against the SAGT and the Board Decision had been CAO/AO agreed to look (Ministry of Ports & taken to write-off from the into the matter. The CAO/ Highways) total amount receivable AO was also directed to from the SAGT. send the copy of the original agreement and the legal documents pertaining to this issue to the Committee. 2. The Trade Union had col- 2. The CAO/AO stated that lected money exceeding after having completed the Rs.7 million by the end of internal investigation the June 2011 from the Galle legal opinion had been Face Green and a report in sought from the Attorney this regard had not been General to get the money sent as per the directive back. given in the previous COPE meeting.

3. It was queried about 3. The CAO/AO stated that thedebtor balance amount- total amount receivable by ing to Rs. 1,356 million then was Rs. 376 million receivable from the Ship- and only Rs.26 to be re- ping Agents. ceived from the Shipping Agents and that could be recovered very soon. He further added that the balance part to be recovered was from the Govt. Institu- tions, Three Forces and some were under litigation. 4. The Committee observed 4. The AO stated that one that the annual interest agreement had already been payable on the Hambanto- signed with an investor and ta Port Development Pro- another six agreements ject was as follows and would be signed under the enquired about the future stage I before the end of steps to be taken to earn 2012 which was worth US$ more income. 514 million. He further add-

year 2012 – Rs. 2,208 million ed that by then another 9 year 2013 – Rs. 2,479 million investors had been consid- year 2014 – Rs. 2,233 million ered under the Stage-II who Contd... year 2015 – Rs. 1,987 million would invest US$ 1105 year 2016 – Rs. 1,742 million 54 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 Comments & Decisions of Institution & Ministry Identified the COPE

million and the re- exports of vehicles had already been started under this project and that would be expanded further. The CAO/AO was directed to send the details regarding the re- exports to the Commit- tee.

5. As the Committee questioned 5. It was directed to send

about the number of ships details to the COPE.

that had been arrived at the

Hambantota Port, the AO

stated that 06 and 18 ships

had been arrived in the years

2011 and 2012 respectively.

6. The profit/loss gained by the 6. The CAO/AO was di- Authority was discussed. rected to send the Profit & Loss Accounts of the Colombo & Hambantota Ports separately for the years 2011 and 2012 to the Committee. He was also directed to send a report on total investment made for the 1st phase of the Hambantota Port to the Committee Secretariat on the following day itself.

7. The Committee observed that 7. The AO stated that by the balance receivable and then the balance receiva- payable as at 31st December ble had been reduced to 2011 was Rs. 2,554 million about Rs. 726 million and Rs. 6,392 million respec- while the balance paya- tively. ble had been increased to about Rs. 5 billion due to deposits & advance payments.

Contd...

55 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 8. The Committee enquired 8. The CAO/AO stated that as to what steps would be proposals received to de- taken to make Trincoma- velop Trincomalee Port lee and Galle Ports prof- premises in to an invest- itable. ment zone had being considered by then and with regard to the Galle Port, an agreement had already been signed with a consultancy firm to implement a project funded by JICA. He was directed to co- ordinate with the relevant ministries regarding the projects to be implemented through a Cabinet sub- committee.

9. The Committee enquired 9. CAO/AO admitted the fact

about the unusual valua- and stated that it had been

tion of 1.45 perches of done in the year 2005 and

land situated at Rock corrective measures were

House Lane by a private being taken by then.

Audit Firm.

10. It was questioned as to 10. The CAO/AO stated that why the single recom- the total amount had been mendation for enhancing spent under four compo- the efficiency of Colom- nents and only the sum of bo Port on which Rs. US$ 0.2 million spent for 399.65 million had been one component had be- spent as consultancy fee come fruitless as it had had not been implement- been abandoned due to the ed. policy changes of the Gov- ernment.

11. The Committee observed 11. The CAO/AO stated that

that the food supply cen- as the ownership of the

tre and a sanitary build- said land had been vested

ings system constructed in women and children of

at a cost of Rs. 17 million the country it was difficult

had been idled and mo- to come to an agreement

nopoly rights of the sale with external parties and

of cool drinks at the trade the money collected had

stalls had been sold for been used for the mainte-

Rs. 5.5 million by a nance by the Authority.

Trade Union without the The Committee was of the

approval of the SLPA at view that some percentage Contd... the Galle Face Green. of money should be given 56 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 Comments & Decisions of the Institution & Ministry Identified COPE

for the welfare of the women and children of the country in collaboration with the relevant ministry and the CAO/AO agreed. He was also directed to report back to the Com- mittee in this regard. Ceylon Petroleum 1. The Committee noted 1. The CAO/AO stated that Corporation that since the CPC had the auditors had not been prepared the consolidated appointed by the CPSTL, November 16th, 2012 accounts for 2011 based and at every Board Meet- on the unaudited finan- ing, the CPC had stressed (Ministry of Petroleum cial statements of Ceylon the need of having audited Industries ) Petroleum Storage Ter- accounts to prepare the minal Ltd. (CPSTL), consolidated accounts, those accounts were not and also the CPC had acceptable. written to the CPSTL requesting them to submit the audited accounts. The CAO was directed to look into this matter and to send the list of names of the Members of the Board of Directors of the CPSTL, to summon them on a future date before- COPE.

2. The CPC had been incur- 2. The CAO/AO stated that ring losses gradually 60% of the loss had been from the year 2008, and a due to the sale of fuel to loss of Rs. 94,508 million the CEB at subsidized with a negative net asset rates, and the loss incurred position of Rs. 131,324/- upto 30.09.2012 had been million had been shown Rs. 77.7 billion out of in the year 2011. which Rs. 41 billion had been due to the sale of fuel to the CEB. He also agreed to submit the relevant documents to the Committee on the following Monday.

Contd...

57 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3. The Committee observed 3. The CAO/AO stated that that when the Muthurajawe- already 50 % of the stor- la Storage and Distribution age and distribution is Terminal has a storage ca- done through the Mu- pacity of around 85 percent thurajawela terminal, but and could be distributed due to the low cost of through the new technology, transport by train, and the CPC had been using the also to avoid delays when Kollonnawa Station for the distributing fuel from one storage and distribution. station, the CPC had been using the Kollonnawa Station for storage and distribution. The CAO/ AO was directed to look into this and find out the most efficient method for the storage and distribution of fuel.

4. The Committee also pointed 4. The Committee directed

out that due to the old pipe- the CAO/AO to submit a

lines system that had been report to the Committee

using by the Kollonnawa on the amount spent for

Installation for pumping demurrage charges by the

fuel from the port to Kollon- CPC.

nawa, the CPC had to pay

demurrage charges.

5. It was queried about the 5. As per the CAO/AO the Hedging Transaction and Attorney General had the loss incurred by the CPC informed the CPC in writ- in this regard. ing only with regard to 02 cases, i.e. with the Stand- ard Chartered Bank and Citi Bank, and that the Attorney General‟s Dept. is handling these cases. The CAO/AO and the Director Board of the CPC was directed to submit a detailed report on the Hedging Transaction and the cases with all 05 banks. (Standard Char- tered Bank, Citi Bank, Deutsche Bank, People‟s Bank and the Commercial Contd... Bank of Ceylon Ltd. ) 58 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 Comments & Decisions of Institution & Ministry Identified the COPE 6. It was enquired about the 6. As the Committee was following issues with regard not satisfied with the ex- to the importation of fuel; planations given by the CPC officials in this re- (i) Importation of low stand- gard, informed the Audi- ard petrol from ENOC in tor General to investigate June 2012 into these matters and (ii) Importation of low stand- submit a report to the ard fuel for aircrafts in March Committee. 2012

(iii) Importation of low standard diesel from VITOL Company in July 2012. 7. The Committee observed that 7. The CAO/AO was di- the CPC had made an over- rected to submit the Cabi- payment to the Fujairah Pe- net decision of the above troleum Products Ltd., for the transaction to the Com- purchase of low sulphur Fuel mittee. oil. Ceylon Electricity 1. It was queried as to why the 1. The CAO/AO stated that Board Coal Power Plant in No- the possibility for any rochchole had not been able thermal power plant to November 19th, 2012 to show a satisfactory perfor- experience various prob- mance as expected initially. lems at the beginning of (Ministry of Power & its operations was inevi- Energy ) table and was optimistic that the plant under concern would reach to a stable operation soon. 2. It was highly concerned by 2. As stated by the CAO/ the Committee that the differ- AO, the total loss of the ence between the income and CEB by the end of 2012 expenditure of the CEB con- would be around Rs. 65 tinuously increasing due to billion. the escalating generation cost which would ultimately lead to a severe financial crisis. 3. It was observed that the post 3. The CAO/AO was di- of Finance Manager had been rected to furnish a report vacant as well as the post of on these two matters to- Human Resources Manager gether with the reasons had not been borne by a pro- for the difficulty in re- fessionally qualified person- cruiting a professional in Contd... nel on the subject . the respective discipline

59 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE rather than appointing an Engineer who does not posses required qualifications to the latter post. 4. Dissatisfaction of the 4. The CAO/AO was directed to Committee was ex- send details on the available pressed for misleading corporate plan with the date on the Committee by sub- which it was approved by the mitting an erroneous Board of Directors, names of corporate plan for 2009 the board members and the -2013 containing no progress of the preparation of information regarding a new corporate plan. The 2013. CAO/AO was further directed to take disciplinary action against the officers who had prepared and sent the irrespon- sible document dated 26.04. 2012 to the Committee as replies to the matters referred to in the Minutes of the meeting held on 17.10.2011. 5. The Committee dis- 5. The CAO/AO was directed to cussed on the debt bur- send the following documents/ den of the CEB. reports to the Committee.

(a) A copy of the fixed assets register with the written down value.

(b) Total debt burden as at the date of examination

(c) All financial information including the details on the loan amounts obtained along with the moratorium 6. The Committee dis- 6. The CAO/AO was directed to cussed about the sub- send all the information re- sidiaries coming under quested on these subsidiaries the CEB and referring including the names and ad- to the directive given dresses of the board members thereon at the last of those companies within a COPE meeting, it was week. noted that certain requested details had not been sent to the Com- mittee. 60 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 Comments & Decisions of Institution & Ministry Identified the COPE

Ceylon Shipping Cor- 1. The Committee questioned 1. The CAO/AO stated that poration Ltd. about the present status of the there were only two ships fleet of ships of the company. vested with the company November 20th, 2012 at the moment and action was being taken to sell (Ministry of Ports & one of them and an arbi- Highways ) tration was going on with regard to the other ves- sel ,leased out to “ Triple S Company which had defaulted the payment of hire charges. It was also revealed that the documents in relation to the purchase of two new ves- sels had already been submitted to the Special Cabinet Review Commit- tee for consideration. 2. This institution which had 2. The CAO/AO was di- been a profitable venture at a rected to send a report to time had fallen into the pre- the Committee and to be sent deplorable position ei- more concern on this ther due to the inefficiency in matter in the attempt of the management or due to the reviving the company liberalization taken place in under the new manage- 1989 exposing the institution ment. to a highly competitive environment. Road Development 1. The Committee observed that 1. The CAO/AO was di- Authority the actual financial position rected to take appropriate of the Authority had not been action to streamline the November 20th, 2012 indicated in the financial situation. statements as proper account- (Ministry of Ports & ing system had not been fol- Highways) lowed and the net assets had also gone into minus figures.

2. It was queried about the for- 2. The CAO/AO stated that

mation of “Maganeguma” they were established as

Companies. per the Cabinet decision

taken in the year 2004

and the Committee di-

rected him to submit the

same to the Committee. Contd...

61 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE

3. It was brought to the no- 3. The Auditor General was tice of the Committee that informed to intervene in this there were no provisions matter to get clarified to audit those companies whether there was any pos- by the Authority or the sibility for them to audit Auditor General. those companies and report back to the Committee. The CAO/AO of the Authority was also directed to send the audit reports prepared by the private auditors to the AG.

4. The Committee observed 4. The CAO/AO stated that that estimates had not been Rs. 12.265 million was allo- prepared properly as the cated to construct a pedes- works valued at Rs. trian fence and other small 12.265 million had been constructions, but due to the abandoned and works val- changes in the design that ued at Rs. 13.038 million amount was remained and had been done exceeding for other additional work the estimates of the Co- Rs. 13.038 million had been lombo-Kandy rehabilita- utilized. tion project.

5. The total estimated cost 5. The CAO/AO stated that for the Colombo- since the first and second Katunayake Expressway contract had been awarded project had been increased in the year 2000 and 2008 by 437% when the con- respectively, price escala- tract had been awarded to tion during that period and another contractor to com- some additional work added plete the balance part of to the original design had the project. led to this situation.

6. It was observed that the 6. It was directed to send the total liabilities for contrac- breakdown to the Commit- tors were Rs. 4 billion up tee. to date. Contd...

62 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 Comments & Decisions of Institution & Ministry Identified the COPE

7. The Committee having not- 7. The Committee was of the ed that Rs. 256.592 million view that this had hap- paid in November 2011 to a pened due to poor internal contractor had been with- control of finance by the drawn stating that the meas- Authority and directed to urements were erroneous, send explanation on the for the rehabilitation of above matter to the AG. Udatenna-Mahiyangana- Padiyatalawa road, enquired on what basis the payments were made at first instance.

8. It was enquired as to why 85 8. As the CAO/AO stated vehicles had been released that those 85 vehicles in- to the Ministry and cluded machinery or the “Maganeguma” Companies heavy vehicles used for while 57 vehicles had been construction purposes re- hired for the Authority in- leased to “Maganeguma” curring a cost of Rs. 15.527 companies and 57 vehicles million. had been hired for the transportation, the Com- mittee directed him to send the details to the Committee and inform the AG to get this clarified. 9. Salaries amounting to Rs. 9. The CAO/AO was di- 66.646 million had been rected to send the details paid to the staff who were of them to the Committee. released to the ministry.

Sri Lanka Tourism 1. The post of Chief Executive 1. It was mentioned that the Development Officer had been vacant action would be taken to Authority over a period of one year. fill the vacancy by the Ministry of Economic st November 21 , 2012 Development.

(Ministry of Economic Development )

2. The Corporate Plan had not 2. The CAO/AO admitting been prepared as per the the fact stated that said PED -12 Circular. Circular had been taken into account when preparing the Corporate Plan for Contd... the period of 2013 – 2015.

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3. The Committee noted that 3. It was stressed the need there were number of vacan- of preparing a national cies exist in the Authority, policy for tourism devel- and the AO stated that they opment very early. were not in a position to fill those vacancies due to forth- coming amalgamation of all the institutions under the Act, except the Hotel School.

4. The Committee enquired 4. The CAO/AO was di- about the arrivals of the tour- rected to send a detailed ists to the country and noted report for last two to that even the arrivals had three years on the arri- been doubled during the last vals and current availa- three years, the hotel accom- bility of hotel rooms in modation available had re- the country on star class mained same. basis to the COPE secretariat. 5. The court case which had 5. It was stated that with been filed against the Kalpiti- regard to the “Ipankthiv” ya hotel project had been island the respective in- queried. vestor had done all the work but unable to implement construction until the court case was over and cabinet approval had just been granted to the project in “Uchchimuni” island and the money would be paid by the investor soon after signing the agreement.

6. It was enquired whether 30 6. The CAO/AO was di- million rupees had been in- rected to send a compre- curred for the first project as hensive report on the initial expenditure for adver- Kalpitiya project within tising, tender procedures etc. two weeks‟ time to the for the Kalpitiya project. Au- COPE secretariat. ditor General also pointed out that even though Rs. 92.6 million had been incurred for this project, action had not Contd... been taken to acquire the ownership of the land. 64 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 Comments & Decisions of the Institution & Ministry Identified COPE 7. The Committee queried 7. The CAO/AO directed to about the sinking fund of write-off this with the Rs. 53 million in the Board approval as per the General Treasury which Treasury Circular which was appeared in the ac- stated that the surpluses counts as assets, and the should be sent back to the CAO/AO stated that this Treasury. had been carried forward over a long period from the time of Tourist Board was in existence.

8. The Committee enquired 8. The CAO/AO was directed

as to how the CESS fund to implement a proper

had been managed and mechanism to see whether

the CAO/AO stated that that money had been uti-

Rs. 1.1 billion had been lized in a fruitful manner

received and that money and to consider this matter

had been distributed when preparing the new

among all the 04 institu- Act.

tions under the Act. The

Committee noted that

proper follow-up had not

been done after allocating

the money.

9. The sundry debtor bal- 9. It was stated that when ance amounting to Rs. transferring the accounts of 2.3 million had been out- the Tourist Board they standing as per the ac- were erroneously entered counts, when there were into the accounts and no actual debtors. agreed to rectify the matter after obtaining the approval of the Board of Directors and the Treasury.

10. The Committee pointed 10. It was stated that since it

out that the Govt. Circu- was difficult to obtain ve-

lars had been violated hicles to Rs. 40,000/- on

when using the office lease basis, initially they

vehicles in the following were allowed to obtain

instances. vehicles with the approval

of the Ministry, and later

(i) Pool vehicles had been on Board decision had

used by the officers who been taken to obtain on Rs.

had assigned vehicles. 30,000/- per month basis as

per the Public Administra-

tion Circular 2008. The Contd... 65 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

(ii) Officers had obtained Committee was of the 05 vehicles on the basis of view that additional lease agreements instead of amount paid should be getting them leased by the recovered as per the deci- Authority. sion of the Audit & Man- agement Committee (iii) Fuel allowances had meeting. been paid exceeding the entitled limit.

11. Receivables amounting to 11. It was stated that out of Rs. 901,258/- had not been the 37 rest houses which recovered. had been transferred in 1996 from the Ministry of Public Administration, several rest houses had not paid the lease amount and therefore court cases had been filed to recover the said debtor balances from the lessees. 12. There was no proper mech- 12. The CAO/AO was di- anism to manage assets rected to send a report on (6495 acres of lands and 56 what action would be rest houses) which were taken to value and to in- owned by the Authority. clude in the accounts.

13. The Committee noted that 13. The CAO/AO was di- 28 dishonored cheques rected to take appropriate valued at Rs. 926,057/- had action. been outstanding for a considerable period of time. 14. Overpayment of Rs. 14. The CAO/AO was di- 3,780,253/- to the staff for rected to send a report on a local project had been this to the Committee made contrary to the Man- Secretariat within a agement Services Circular months‟ time. No. 33 of 05th April 2007.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

Sri Lanka Land Recla- 1. The Committee queried 1. It was stated that Action mation & Develop- about the Unauthorized had been taken to publish ment Corporation Reclamation of Lands and the Gazette notification the amendments to be provincial wise and also st November 21 , 2012 made to the Act. the necessary steps had been taken to amend the (Ministry of Defence Act accordingly. The & Urban Develop- CAO/AO was directed to ment ) include those information in the Action Plan as well.

2. It was questioned about 2. It was stated that the the recovery of Money money to be recovered from the Land Reclama- by the LR & DC was tion and Development being received on install- Company which operated ment basis. The Commit- as a subsidiary Company tee directed the CAO/AO of LR & DC. to send a detailed report on recovery of money from the company.

3. Rs.38 million to be recov- 3. As it was stated that this

ered from the Ministry of amount had been con- Economic Development nected to the develop-

for a completed project. ment of a land in Kal-

munai and the Ministry

of Economic Develop-

ment had agreed to settle

that. The CAO/AO was directed to send a report

regarding the progress of

the matter.

4. The Committee observed 4. It was stated that the that a sum of Rs. amount of Rs. 68,208,560/- had been 15,178,378/- within the shown as current liabilities said amount was a refund of which Rs. 65,984,338/- from the Inland Revenue has to be paid to the Gov- Department paid to the ernment as tax. National Defence Levy. The other balances out of Rs. 68,208,560/- had been identified as the provisions from estimates and action was being taken to convert those Contd... balances as the income. 67 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. The respective mainte- 5. It was stated that the pro- nance work of the Luna- ject has to be handed over wa project had not been to the relevant local author- done properly by the LR ities for maintenance after & DC. the completion. However the LR & DC had been subsequently received instructions to do the maintenance work continuously. The CAO/AO was directed to include this activity too in the Action plan for the year 2013.

6. The Committee observed 6. It was stated that the En- that the Enderamulla Town deramulla Town Develop- Development and Dredg- ment Project has to be re ing of Beira Canal imple- commenced after the in- mented by the Corporation structions issued by the at an expenditure of Rs. Central Environment Au- 30.11 million had been thority and the Beira Canal abandoned halfway. project also underway due to the acquisition of the relevant land to the Corpo- ration.

7. The cost of the Minu- 7. The CAO/AO was directed wangoda and Kiribathgoda to inform the Treasury and Projects amounting to Rs. get the necessary approval. 8,814,388/- and Rs.12, 506,116/- respectively had been written off without the Treasury approval.

8. The delay in the payment 8. It was stated that the delay of compensation for the had been due to unclear lands acquired ranged be- ownership of lands, unclear tween 6 to 33 years and deeds and the LR & DC interest payable amounted had already taken steps to to Rs. 345,848,018/- and accelerate the compensa- Rs. 243,620,863/- respec- tion process. tively.

Contd... 68 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 Comments & Decisions of Institution & Ministry Identified the COPE 9. A land of 05 acres 03 9. It was stated that the roods and 13.09 perches in land had been sold by a extent had been released to sales agreement with a a private company for Rs. Cabinet approval to a 489 million in the year BOI approved project, 2005 for a housing project the Fuji Reality Devel- and there was no legal opment Company in the provisions in the agree- year 2005. And also stat- ment for breach of terms ed that the LR & DC was and conditions. concern about the possibilities of reviewing the sales agreement and awaiting the response of the company to that effect.

10. Out of the 151 acres of 10. The AO stated that they land around the Mudun had planned to develop Canal in Peliyagoda area 25 acres at the stage one acquired for Development and accordingly 19 acres by the LR & DC only 19 had been developed but acres had been developed the development plan up to now. had to be revised due to the Katunayake Express way and the newly built Peliyagoda fish market were not in the plan.

11. The Committee enquired 11. It was revealed that the as to why action had not LR & DC had faced dif- been taken to recover the ficulties to find the re- land value of Rs.30.2 mil- sponsible person or insti- lion approximately from tution to take action the relevant party who against the illegal build- built a Kovil in 3.5 acre ing. The CAO/AO was area of the developed land directed to find the re- by the LR & DC or to responsible person and to acquire the land. take legal action for the illegal acquisition and for the unauthorized building.

69 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

Regional Develop- 1. The Committee noted that 1. Since some of the loans ment Bank the Panadura and the Bu- had been granted on for- lathsinhala branches had mer Chairman‟s approval November 22nd, 2012 granted loans amounting to directed the CAO/AO to Rs. 7,300,000/- without ob- see whether any legal ac- (Ministry of Finance taining sufficient securities, tion could be taken against and Planning) and the balance outstanding him, and to submit a de- as at November 2012 had tailed report on the above been Rs. 6,248,686/-. loans granted by those two branches and the action taken against the defaulters to the Committee.

2. It was queried as to what 2. It was stated that a court action had been taken case had been filed against against the 11 officers who the suspects by the CID had made fraudulent with- and a disciplinary inquiry drawals amounting to Rs. had also been conducted 6,181,409/- from the former against the other officers Ruhuna Development Bank who were involved in this during the period January fraudulent act. 2008 to March 2010.

3. The Committee raised a 3. This had been corrected by question with regard to Rs. then, and had been invest- 500 million invested in ed in fixed deposits. commercial papers against the directive given by the General Manager.

4. Twenty six staff loans 4. Those loans had been amounting to Rs. 1,225,597/ granted by the Wayamba - had been given against Development Bank, out of personal guarantee, and cat- which 02 persons had egorized under non- died and the action had performing loans due to been taken to deduct the unsatisfactory recoveries. dues from those who had died, and that legal action would be taken against the balance defaulters.

Contd...

70 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 Comments & Decisions of the Institution & Ministry Identified COPE 5. In contrary to the Central 5. It was stated that this had Bank (Pawning) Regula- taken place prior to the amal- tions the Mathugama and gamation of the Bank, but at Bulathsinhala Branches present the Regional Devel- had taken over articles opment Bank had issued cir- under pawning from the culars to every branch to ad- businessmen amounting here to the regulations, and if to Rs. 27,896,206/-. not disciplinary action would be taken against the officials of those branches.

Bank of Ceylon 1. The current position with 1. It was directed the CAO/AO regard to the recovery of to submit a report indicating November 22nd, 2012 loans amounting to Rs. the current position on the 340 and Rs. 125 million above 02 loans to the Com- (Ministry of Finance from M/s. International mittee. and Planning) Grocers Alliance and M/ s. Mahinda Offset Print- ers respectively had been queried. 2. The Committee queried 2. It was stated that the Bank about Granting Overdraft had obtained approval from Facilities to M/S. Omega the Board of Directors to re- International (Pvt.) ltd. – schedule the Overdraft, and at Rs. 100 million. present M/S Omega Interna- tional has started to pay in installment basis at Rs. 17 lakhs per month, where Rs. 22 million had already been settled. Further it was stated that at the time of re- scheduling the Overdraft, the Bank obtained a new property as security at Unawatuna, where the value of the property had been higher than the outstanding amount.

3. The current position with 3. It was stated that by then Rs. regard to the loan and 18 million had been settled TOD of Rs. 30 million with the full amount of the and Rs. 10 million re- TOD, and a balance of Rs. 72 spectively granted to a million had to be settled, out Cement distribution com- of which Rs. 25 million had pany had been queried. been the capital and the bal- Contd... ance being the interest. 71 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. The Committee observed 4. The CAO/AO stated that that although the Bank had since the Bank had grant- maintained a sufficient Cap- ed more loan facilities, the ital Adequacy Ratio, it had capital adequacy ratio had been gradually deteriorated been reduced, but the during the last 05 years. Bank had taken several measures to increase the Capital Adequacy Ratio.

5. The Committee noted that 5. The CAO/AO stated that the Bank had incurred a net due to the fall of the stock loss of Rs. 1,271 million market, the value of the from investments in securi- investments had been re- ties during the year 2011. duced, but the Bank had been able to show a profit in the year 2011. However the Bank had obtained two valuable properties as collateral in this regard. 6. It was enquired as to what 6. It was stated that the Bank action had been taken by the had been able to recover Bank to recover the loans Rs. 3 million and the granted amounting to Rs. 50 Bank had been at negoti- million and Rs. 1.9 million ating level to recover the to a Chip Board Manufac- balance dues. turing Factory. 7. The Committee having not- 7. It was stated that the Bank ed that 02 NGOs had made had made a complaint to fraudulent transactions the CID, and the investi- through Internet Gateway gations were in progress, Payment System (IPG) where the Bank was also amounting to Rs. 212 mil- awaiting for Attorney lion and Rs. 52 million, en- General‟s advice to take quired the current position. legal action against those NGOs.

8. The Bank had invested Rs. 8. It was stated that to rescue 3,250,450,000/- in the Sri the Sri Lanka Airlines, the Lanka Airlines, but had not 03 state banks decided to obtained any income from invest money, and since the date of investment. the war had been ended and on the improvement of the economy, the Air Line would be able to Contd... make profits. 72 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 Comments & Decisions of the Institution & Ministry Identified COPE

9. The Committee queried as 9. The Committee was of the to why the Bank had view, that the Bank should granted loan facilities to either maintain a limit or the Ceylon Petroleum be capitalized. Board of Corporation to the value Directors of the Bank was of 64% amounting to Rs. also directed to ensure that 372 billion, exceeding the when there had been any Treasury indemnity limit risk on the investments or of 49%. lending to inform such risks to the Treasury in advance.

10. The Committee enquired 10. The CAO/AO was di- the action taken by the rected to submit a report Bank to recover the Non- on these customers includ- Performing Loan balances ing the action taken by the of 10 customers amount- Bank on each customer to ing to Rs. 2,535,321,038/- recover the outstanding and the Non-Performing balances. overdrafts of 15 customers amounting to Rs. 491,073,707/-.

11. It was noted that there had 11. It was stated that there been 33,695/- loans would be such instances amounting to Rs. due to various reasons the 193,757,482,076/- which debtors being unable to had not even paid a single pay the first installment, installment to the Bank. but on discussing with them and re-scheduling the Bank take every possible steps to recover the outstanding amounts.

12. The CAO/AO was directed to submit a report on the advertising budget of the bank and its‟ expenditure made during the last 02 years to the Com- mittee.

73 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE National Housing De- 1. A number of shortcom- 1. The CAO/AO agreed to velopment Authority ings were observed in regularize the matter. the procurement plan rd November 23 , 2012 and also in the Corpo- rate Plan. (Ministry of Construc- tion, Engineering Ser- vices, Housing & Common Amenities ) 2. The Committee en- 2. The CAO/AO was directed quired about the current to send a comprehensive position of the “Jana report on the “Jana Sevana” Sevana” 10 lakhs hous- 10 lakhs housing project ing project. including the number of houses to be built by each stakeholder. 3. It was also enquired 3. The CAO/AO was directed about the “Jana Sevana to send a report to the COPE Viru Upahara” and the “ Secretariat on the same. Sevana Upahara” housing projects.

4. In replying to a query 4. The CAO/AO was directed raised by the Commit- to send the above statistics tee, the CAO/AO stated at AGA division‟s level to that 06 lakhs of families the COPE Secretariat. do not own permanent houses as per the survey done by the Dept. of Census and Statistics. 5. It was also enquired as 5. It was directed to make a to why NHDA had start- policy framework to clear ed to collect loan bal- off this matter and submit a ances since the year cabinet paper if necessary to 2011 from the benefi- write off the balances. ciaries after about 15-16 years and in some instances ownership had not been transferred as well.

Contd... 74 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 Comments & Decisions of the Institution & Ministry Identified COPE

6. It was enquired whether 6. It was stated that instruc- any disciplinary action tions of the Attorney Gen- had been taken against eral had been sought in this the officials responsible regard and disciplinary ac- for the malpractices that tion had not been taken till had been taken place then and due to complexity when selling-off the Lib- of the situation. erty Plaza Circuit Bunga- low of the Authority to OVCD Institution.

7. Progress of the recovery 7. The CAO/AO was directed of loans and the advertis- to submit the details of re- ing budget had been dis- covering loans , the copies cussed. of advertisements given to media, the detailed report of budget allocated for advertising and the expenditure made in this regard in the year 2012.

State Engineering 1. Number of shortcomings 1. Action had been taken to Corporation were observed in the Cor- prepare a complete corpo- porate Plan. rate plan according to the rd November 23 , 2012 Act for the year 2013 including the “Jana Sewana” (Ministry of Construc- mega housing project and tion, Engineering Ser- sales and service Centre of vices, Housing & Peliyagoda. Common Amenities)

2. The current position re- 2. It was stated that the whole garding the unidentified period had been divided into Taxes specially the tax three blocks as 2002 -2006 , liability of Rs.291 2007-2010 and after 2010 450,532/- inclusive of a with the instruction of the penalty of Rs.77,831,984/ Department of Inland Reve- - had been enquired. nue and action had been taken to clear these taxes before March 2013 accordingly.

Contd... 75 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3. The Committee discussed 3. The AO was directed to on the debtor balance of send a report regarding Rs. 316,137,595/- remain- the whole debtor after ing over 05 years and the having discussion with debtor balance of Rs. 3.3 the Secretary to the Min- billion out of which no istry. recovery had been made in the year 2011.

4. The bank overdraft ob- 4. The CAO stated that the tained by the Corporation existing overdraft had had been increased to Rs. been Rs. 143 million, and 441.4 million by 30 Sep- the overdrafts were ob- tember 2012. tained to continue with the construction work not getting interrupted due to lack of provisions obtained from the Govern- ment. He also stated that overdue amounts from the Department of Inland Revenue and Sri Lanka Cricket had been Rs. 356 million and Rs. 730 million respectively. The Committee directed the CAO/AO to send reports to the Committee on offering of contracts to the SEC to develop the cricket grounds, particu- lars of the sub-contractors of the projects, contract documents and outstanding credit balances connected with the development of Cricket grounds. He was further directed to limit the taking of overdrafts considering the high interest rates.

Contd... 76 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 Comments & Decisions of Institution & Ministry Identified the COPE 5. The Mechanical and Electri- 5. As the Committee noted cal Division had been run- the wrong procedure of ning at a loss and the uncer- including the total amount tified bills issued by the Di- of uncertified bills to the vision had been profit, advised the AO to Rs.98,171,804/- in total. prepare accounts according to the accepted Ac- counting Standards. 6. It was observed that 602 6. The CAO/AO was di- employees had been recruit- rected to send a complete ed without obtaining the report to the Committee approval from the Depart- including recruitments, ment of Management Ser- salary scales and work vices. description of these Mar- keting Development officers. 7. The Committee enquired 7. The CAO/AO agreed to about the losses incurred in send a detailed report on 47 contracts exceeding the the said 64 projects. The tendered value of Rs.408.9 CAO/AO was directed to million during the period of send a letter signed by the 2007-2010. It was also ob- Minister of Construction, served that a loss of Rs. Engineering Services, 301.3 million had incurred Housing & Common on 64 constructions in 2009- Amenities to relevant 2010 due to poor manage- Ministries and institutions ment practices. to pay the balances monthly. He was further directed to send a detailed report on the advertising budget of the SEC.

8. Action had not been taken to 8. It was stated that the rele- obtain a sum of Rs. 5.9 mil- vant Bank had agreed to lion deposited in Bank in return Rs. 6 million with Doha due to the joint venture the interest of the money. with a company, being not started.

Contd...

77 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

9. Action had not been taken 9. A Committee had been to clear the unsettled ad- appointed to accelerate vances older than 04 years the process to clear the amounting to Rs 387.85 unsettled advances and million as agreed in the agreed to send the age previous COPE meeting. analysis of the whole unsettled advances to the Committee. The Committee emphasized the responsibility of the Internal Auditor regarding this and directed the CAO/AO to submit a detailed report on these unsettled advances to the Committee.

10. The answers had not been 10. The Internal Auditor submitted for the queries was directed to investi- raised at the previous gate the matter and the COPE meeting on Vehicles CAO/AO was directed belonging to the SEC to submit a complete which had been released to report to the Committee the line Ministry without on the matter relating to obtaining the approval of vehicles of SEC. the Ministry of Finance and Planning. It was also observed that 42 vehicles had been released without approval and a sum of Rs. 9,910,467/- comprising fuel expenses and hire charges had been spent by SEC for the period of 06 months from January to June 2012.

11. SEC had spent a sum of 11. The CAO/AO was di- Rs. 7,744,579/- in the year rected to send a detailed 2011 for newspaper adver- report on expenditure of tisements with the opening Rs. 7,744,579/- for ad- of five projects in which vertisements. the SEC functioned as the contractor. Contd...

78 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 Comments & Decisions of the Institution & Ministry Identified COPE 12. Despite of expenditure 12. Having accepted the fail- incurred on two account- ure of two softwares intro- ing software packages, the duced to improve the Ac- SEC had spent around Rs. counting work, Admin- 1,222,412/- for the third istration and Stock Control package Divisions the AO informed the Committee that they would be able to up- grade the accounting system with newly introduced software which would commence in January 2013. 13. The SEC had purchased 13. The AO agreed to submit two double cab motor a report to the Committee vehicles valued at after an investigation Rs.3,048,960/- on lease done. and some stocks valued at Rs. 32,051,305/- had beenwritten off from the books without obtaining the approval of the Board of Directors. 14. The SEC had donated 14. The AO agreed to submit money amounting to Rs. a report to the Committee 2,782,139/- during the after an investigation of year 2010 without a Cabi- the matter. He was further net approval. directed to send a report regarding the donations of years 2010, 2011 and 2012. Mihin Lanka (Pvt) 1. The CAO/AO made a 1. According to the CAO/ Ltd. briefing on the current AO, the Mihin Lanka had status of the Airlines in- been able to achieve 62% th November 26 , 2012 dustry which had been growth in revenue with a badly affected by the ris- 41% growth in revenue (Ministry of Civil Avi- ing fuel prices of 112% per employee. The passen- ation) when compared with the ger number had also been previous year. increased by 56%. 2. The Committee discussed 2. The Committee wanted about the fleet of air crafts the CAO/AO to send a of the company which copy of the agreement consisted of three air related to the purchase of crafts purchased on dry the latest aircraft to the Contd... lease agreements. Committee and the AO 79 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE

agreed to submit it on the following day itself.

3. The Committee discussed 3. The Committee empha- about the financial posi- sized that the company tion of the company as at should have then either the date of examination dealt with the Government and came to know that to purchase fuel on a subsi- the loss incurred from the dized price or refuel the month of April to Sep- tanks overseas if the fuel tember had been Rs.700 problem had been the main million. It was stated that reason. the cost of fuel had been 43% of the total cost and 60% of the total revenue.

4. It was revealed that the 4. The CAO/AO stated that Mihin Lanka owed nearly they had come to an ar- Rs. 1.6 billion to the CPC rangement with the CPC, for the fuel purchased. having agreed on a formula based price structure where the outstanding was converted to a long term loan with three months credit.

5. It was pointed out that 5. The CAO/AO stated that the remuneration of the the directors were paid board of directors which only a sitting fee. had been Rs.5,400,000 in 2008 had increased to Rs.11,244,991 in 2011.

6. It was enquired whether 6. The AO stated that some there was a business plan airlines make profits as for the company to turn entities on the revenue around the present posi- generated through other tion of the company. airport related operations. The Committee reiterated the importance of amal- gamating the Sri Lankan Airlines with Mihin Lanka and paying more attention on the load factor which Contd... could be increased further.

80 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 Comments & Decisions of the Institution & Ministry Identified COPE 7. It was observed that the 7. The Committee wanted the annual reports for the CAO to look into the mat- years of 2008, 2009 and ter. 2010 had not been tabled in Parliament. Sri Lanka Broadcast- 1. It was noted that although 1. The CAO/AO stated that ing Corporation the Corporation had the voluntary retirement agreed at the previous scheme launched to reduce November 26th, 2012 COPE meeting to bring a the staff was a failure and solution to the issue per- the action had already been (Ministry of Mass taining to the cadre posi- taken to approve the Cadre Media & Information) tion, the SLBC had 349 with the guidance of the Excess employees current- Salaries and Cadre Com- ly. It was also observed mission considering the that 21 officers had been actual needs of the staff. given appointments con- The CAO/AO was directed trary to the Cabinet deci- to submit a complete report sion and 16 of them were regarding these 21 officers appointed without vacan- including their duty lists, cies. payments, date of recruitment etc. within a week.

2. The officer recruited as an 2. The CAO/AO was directed Internal Auditor had been to correct the position im- appointed as the controller mediately. of Kandurata Transmis- sion. Further the Corpora- tion had not answered 14 Audit queries out of 40 in 2009, 12 out of 19 in 2011 and 05 of 2012.

3. There was a debtor bal- 3. It was stated that action ance of approximately Rs. would be taken soon to 70 Million, for the period write off the balances and of 1974 to 2006 which the CAO/AO was directed hadn‟t been recovered and to send a detailed report to the action had not been the Committee on written taken to write off the debt- off balances and due bal- or balances according to ances. The Committee also the instruction given by instructed to appoint a qual- the COPE. Meanwhile ified person as a Finance some debtor balances had Manager to the SLBC to been written off without a rectify all the financial defi- Contd... proper approval. ciencies.

81 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. The Committee noted a bal- 4. The CAO/AO was di- ance of Rs. 6,216,325/- in rected to submit a report to the Suspense Account as at the Committee regarding 31 December 2011 created the action taken and cur- consequent to malpractices. rent position of the Sus- pense Account.

5. It was questioned as to why 5. The CAO/AO was di- the broadcasting time had rected to submit a report been allocated to two enti- regarding the five institu- ties for supply of goods and tions for which they had services to the corporation. provided air time in settlement of goods and services provided for. He was also directed to send a full detail of the Advertising Budget of the Government sector and Private sector to the Committee.

6. The files pertaining to debt- 6. As the fraud had been ors amounting to committed by the SLBC Rs.19,658,489 and officials the matter had Rs.3,817,027 for the periods been handed over to the of 1998 to 2004 and 2004 to CID for investigation. Ac- 2007 respectively had mis- cording to the CAO/AO placed by 31 October 2012. action had also been taken to prevent frauds by com- puterizing the files. A detailed report on misplaced files had been asked.

7. The Committee noted that 7. It was stated that action proper action had not been had been taken to protect taken to protect tapes and the tapes and CDs which CDs containing of songs was identified among them and stories due to mainte- and a research report nance difficulties and also scheduled to be released no development of the unit on the Audio testing unit of Audio testing. with the assistance of the University of Kelaniya.

82 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 Comments & Decisions of Institution & Ministry Identified the COPE HDFC Bank 1. The Committee enquired 1. It was mentioned that the about the Acting appoint- name of DGM (Finance) November 28th, 2012 ment of the post of Gen- had already been sent to eral Manager and ex- the Ministry of Finance (Ministry of Finance pressed its dissatisfaction and Planning for approval and Planning ) over the delay in appoint- and he is the person who ing a General Manager to acts as the General Man- the HDFC Bank in perma- ager of the Bank at pre- nent basis. sent. 2. It was questioned whether 2. The said amount had been the action had been taken reduced to Rs.03 million to settle the unidentified and the process to settle deposit balance of custom- the outstanding balance is ers amounting to Rs. continuing successfully. 5,938,847/- as at 31.12.2010. 3. It was enquired whether 3. The Committee was in- the action had been taken formed that the Central to obtain the fund amount- Bank had not released the ing Rs. 317 million depos- fund yet and continuous ited in the Central Bank discussions were in pro- contrary to the provision gress. of the Act No. 07 of 1997, by the HDFC. 4. The Committee noted that 4. The CAO was directed to contrary to the normal hold a complete and com- interest rates, the Bank prehensive investigation had agreed to pay 22.2% regarding the 450 million to CEB‟s provident fund deposit and to send the for a fixed deposit of Rs. report to the Committee 450 million, where the within one month. over payment of interest would be amounting to He/She was also directed Rs.69 million and en- to submit the followings quired whether the action to the Committee. had been taken to recover the loss. (i) Report of the internal investigation to probe into the lapse commited by the Bank

(ii) Report of the number of loans issued by the Bank and interest rates separately with the cate- Contd... gories of loans.

83 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE (iii) The names of the previous Board Members in the year 2008 with regard to the 450 million deposit received.

(iv) Report of the number of loans issued by each and every branch in the year 2013.

Independent Televi- 1. The Committee enquired 1. The CAO/AO was di- sion Network Ltd. & about the outstanding debtor rected to send a detailed Lakhanda Radio balance of Rs.137 million out report on the outstanding of which Rs.126 million itself debtor balance including December 04th, 2012 had been due from private those which could not be parties. It was further noted recovered due to the (Ministry of Mass that the amount outstanding problems in the agree- Media & Information) for more than five years had ments. been Rs.40 million.

2. It was discussed with regard 2. It was stated that the ear- to the advertising agencies lier practice had been to and their clients who had blacklist only the adver- defaulted payments due for tising agency and that the the published advertisements clients could have got and the Committee ques- their job done through a tioned whether it could be different advertising assured that no advertisement agency. However, at pre- of defaulted companies had sent, the agreements re- been under taken later even lated to advertising are though they had violated entered into with both the agreements once. client and the advertising agency and that, to their understanding, no advertisement had been accepted from the defaulters thereafter.

The CAO/AO was directed to confirm it to the Committee in writing.

The CAO/AO was further directed to send a list of debtors related to adver- Contd... tising together with the amounts due from each 84 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 Comments & Decisions of Institution & Ministry Identified the COPE

and the details of the relevant advertising agencies. It was also directed to take action to recover the outstanding amounts having informed the debtors that the COPE had directed to recover them immediately. 3. The Committee enquired as 3. It was stated that there to why the revenue of the had been an interference Lakhanda Radio had de- problem on the frequency creased. used for this channel by the adjacent frequencies and was optimistic that the situation would be improved with the utilization of the new frequencies.

Sri Lanka Transport 1. Annual reports from the 1. It was stated that the de- Board year 2005 had not been centralized CTB had been tabled in Parliament. re-established in 2005 and December 04th, 2012 due to several unidentified balances bringing forward (Ministry of since then, the finalization Transport) of accounts had been delayed. The CAO/AO was directed to take prompt action to table the reports.

2. Certain allegations related 2. It was agreed to submit a to import of spare parts had copy of the preliminary been considered. report of the inquiry to the Committee.

The CAO/AO was also

directed to submit a report

to the Committee on the

amount of spare parts

purchased during the last

six months period, amount

dispatched to depots and

the amount remaining in

stock at the moment. Contd... 85 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 3. The Committee concerned 3. The Auditor General was on the outstanding EPF directed to submit a report and ETF amounts of over on the legitimacy of this 2.5 billion and also about taking over which had taken taking over of the Private place without the consent of Provident Fund having a the employees. balance of Rs.4 billion by the Labour Department. 4. The Committee noted that 4. The Committee wanted the the bus operations at cer- CAO/AO to address the tain regions did not take matter at regional level since place according to a time a number of passengers in- table. cluding children suffered a lot out of this issue.

Lanka Sathosa Ltd. 1. The Committee discussed 1. Number of outlets had been on the performance of the increased upto 268 and the December 05th, 2012 institution. turn over as at September 2012 was Rs.17 billion. (Ministry of Co- When it was revealed that operatives & Internal the institution had been ex- Trade ) empted from paying taxes, the Committee directed to submit written evidence to that effect.

2. It was discussed about the 2. The Committee stressed the financial management of importance of maintaining a the Institution. proper financial management in the organization as far as the large turn-over was concerned and further noted that the staff of the company was needed to be trained further while im- proving the quality of the goods sold in order to compete with the private sector.

86 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 Comments & Decisions of Institution & Ministry Identified the COPE Development 1. The Committee enquired as 1. It was stated that they Lotteries Board to why the Internal Audit had then initiated to es- function of the DLB had been tablish an Internal Audit December 07th, 2012 outsourced without establish- Division within the or- ing its own division for the ganization and that the (Ministry of Finance said purpose. recruitment process was & Planning ) in progress. 2. Promotional items worth of 2. It was stated that action Rs. 4 million had been re- had then been taken to ported to be idling in stores. use them in promotional activities. 3. It was pointed out that mak- 3. It was stated that at pre- ing advanced payments ex- sent, they make ad- ceeding the limit of 20% vanced payments on without a performance bond bank guarantees. is at risk and 9 such instances amounting to Rs.12,766,750/- had been identified by the Audit. 4. Rs.51 million for building 4. It was pointed out that construction out of its income the retention of money had been retained without had been irregular as per remitting to the President‟s section 18(1) and 18 (2) Fund. of the Act of the DLB.

5. The Committee enquired 5. It was stated that Rs. about the current position of 6,82,000/- had already the outstanding advances been recovered by then. amounting to Rs.1,539,985/- comprised of advance payments bringing forward since 2007. 6. Fixed assets and physical 6. It was stated that after verification reports on the depreciation, they had lottery branded stalls had not been able to identify been furnished to audit. stalls worth of Rs. 9 million at present and agreed to do the needful at the next Board meeting to write off the book value of the stalls which Contd... had not been physically available.

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE

7. The procument guidelines 7. It was stated that it had had not been followed on been in accordance with a the printing of Develop- Cabinet decision and the ment Fortune, Janajaya and CAO/AO was directed to Saturday Fortune tickets in submit a detailed report to 2010. the Committee in this regard including the names of the board of directors functioned at that moment.

8. The Committee discussed 8. The CAO/AO was di- about the construction of a rected to furnish a detailed studio spending report to the Committee Rs.16,795,252/- in cash with regard to this con- and Rs.33,491,297/- on struction including the credit which had been re- tender procedure followed. ported to be idling even by the time of examination.

9. The CAO/AO was also directed to submit all the details with regard to advertising budget from 2008 to 2012 with a break down on the amounts incurred on each event taken place during this period including the allocation for Rupavahini telecast of the results.

Janatha Estates De- 1. Current financial status of 1. It was stated that the insti- velopment Board the Institution was dis- tution had to settle Rs.1.3 cussed. billion worth of statutory th December 07 , 2012 obligations and as at the date of examination, there (Ministry of State Re- was Rs.2 billion worth of sources & Enterprise total liabilities. It was fur- Development) ther revealed that an accumulated loss of Rs. 6.2 billion was expected at the end of the current year. Contd... 88 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 Comments & Decisions of Institution & Ministry Identified the COPE 2. There was Rs.15 million 2. The CAO/AO was di- worth of receipts issued, at a rected to submit all the time, to external parties by necessary information in certain officers who had this regard to the CID for thus taken money from them investigation. on condition that they would be given blocks of land belonging to the institution. 3. With a view of raising funds 3. The CAO/AO was di- to settle the outstanding rected to submit a copy of statuary obligations it was the valuation reports to suggested to use 70% of the the Committee with a revenue collected from cut- copy to the AG and he ting down of trees planted in agreed to submit it within the estates of the JEDB for a month. timber or to lease out the two acre land in the Vaux- hall street on 99 year lease. A valuation had been made as per the standards of the Timber Corporation on the trees in the estates owned by the institution.

Local Loans and 1. The Committee noted that The Committee wanted Development Fund certain targets included in the CAO/AO to pay at- the Corporate Plan and Ac- tention on this. February 06th, 2013 tion Plan had not been achieved by the Fund. (Ministry of Finance & Planning) 2. The Committee enquired the 2. The CAO/AO informed current position of the re- the Committee that the covery of loans granted to Kandy Municipal Council Dambulla Pradeshiya Saba had commenced settling and Kandy Municipal Coun- the loan in installment cil amounting to Rs. basis. With regard to the 12,000,000/- and Rs. Dambulla Pradeshiya 60,922,475/- respectively, Sabha loan, the CAO/AO under the Perennial Crops stated that due to the Development project in the business being unsuccess- year 1995. ful of the Shopping Com- plex, they were unable to Contd... settle the loan.

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 3. The Committee discussed 3. It was stated that they had at length with regard to the to face various difficulties types of loans granted by in recovering the loans the LLDF to the Local granted through the Urban Govt. bodies. Development Low Income Housing Project (UDLIHP) and as per the agreement the recoveries had to be carried out by the LLDF. The Committee directed to take a policy decision having discussed with the Hon. Minister, on the methodology they could adopt in collecting the loans.

4. It was observed that funds 4. The CAO/AO was directed given to some of the local to submit a detailed report authorities in the Northern including the following Province had been with- information to the Commit- drawn and handed over to tee within a week. the Governor of the North- (i) The Names of the Local ern Province. Authorities to which the loans had been given with the amounts,

(ii) The names of the local authorities from which the money had been withdrawn with the amounts, and the reasons for withdrawal,

(iii) A statement of the un- used money. 5. The Committee discussed 5. The Committee wanted the with regard to the training Secretary to the Treasury to programmes conducted on co-ordinate with those insti- capacity building for finan- tutions and find out the cial management and ac- training programmes that countability by the LLDF are being conducted by and other such institutions. them, and prepare a Train- ing Plan in co-ordination with those institutions, and submit a report to the Com- mittee, including the names of those institutions. Contd...

90 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 Comments & Decisions of Institution & Ministry Identified the COPE 6. The Committee also wanted the Local Govt. Commissioners to pay more attention and introduce new systems in the Local Authorities to enable the general public to get the services without any difficulty, and unnec- essary delay.

National Enterprise 1. Some of the targets in the 1. It was stated that the Or- Development Corporate Plan, had not been ganizational Chart was Authority achieved and the Action Plan prepared based on the & the Budget had not been Corporate Plan, and with February 07th, 2013 prepared based on the Corpo- the available staff, the rate Plan. activities were carried out (Ministry of Industry on priority basis. & Commerce)

2. The Committee enquired the 2. It was stated that they had current position on the estab- taken several steps with lishment of the Technology regard to this fund and Development Fund. they hope to establish the Technology Development Fund within two months‟ time.

3. It was discussed with regard 3. The CAO/AO was di- to SME projects that had rected to submit a list of been carried out by the Au- successful enterprises that thority. had been assisted/ developed by the Author- ity at district level to the Committee. Sri Lanka Export 1. Out of the 27 vacancies exist 1. It was revealed that due Credit Insurance Cor- in the cadre, 15 Nos. or 60% to the prevailing salary poration had been in the executive scales the Corporation grade. had been unable to recruit February 08th, 2013 professional staff and the Committee wanted the (Ministry of Finance Treasury to pay attention and Planning) on the salary structures of the professional staff. Contd...

91 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 2. It was noted that the 2. It was stated that on a di- „Vilasitha Niwasa‟ pur- rective of the then Ministry chased by the Corpora- of Enterprise Development, tion for Rs. 208,973,030/- the Vilasitha Niwasa had in the year 2006 had been been purchased in 2006 and rented out to the Dept. of on their instructions the Police on a monthly rent- buildings had been rented al of Rs. 800,000/- and out to the Police Dept., to be the building had been purchased by them within a acquired by the Govt. in year. However since the Po- June 2010, and handed lice Dept. did not pay the over the ownership to the rental as agreed, the new Dept. of Police and en- management had been able quired the current posi- to obtain the rent with ar- tion. rears, and the acquisition had been done by the Thimbiri- gasyaya Divisional Secretari- at and the Corporation would be expecting compensation from the Divisional Secretar- iat. Mahapola Higher 1. No Audit & Management 1. It was informed that action Education Scholarship Committee Meetings had would be taken to correct the Trust Fund been held in the years situation and agreed to hold 2010, 2011 and 2012. the meetings from the year th February 19 , 2013 2013 regularly.

( Presidential Secre- tariat) 2. The Committee observed 2. It was stated that the money that money which had remained as some of the stu- been made available by dents in the universities had the fund to the universi- not followed the courses for ties for the payment of various reasons, and that scholarships had been money after a month be re- sent back, without being turned to the Mahapola Trust paid to the recipients. Fund from the universities and had been taken as revenue to the Fund. The CAO agreed to obtain a written report from every university once in every two months indicating the percentage of students who were eligible for scholarships, but not Contd... following the courses.

92 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 Comments & Decisions of Institution & Ministry Identified the COPE 3. It was enquired the current 3. It was stated that alt- position of the recovery of hough the Mahapola Value Added Tax and With- Trust Fund had been ex- holding Tax charged by the empted from taxes, under National Wealth Corporation the new provisions there when paying the Interest In- had been no exemptions come to the Trust Fund. for taxes, and that they had several discussions with the Inland Revenue Dept. on this issue, but they were not willing to refund the money. 4. The Committee discussed the 4. It was suggested that if it purpose of the incorporation was not necessary to have of the National Wealth Cor- a third party to generate poration in 2003, and the funds, and the Trust Fund investment procedures. only invests money in the Govt. Banks, action could be taken to abolish the National Wealth Corpora- tion and directed the CAO to submit a report after obtaining the response of the Chief Jus- tice/the Chairman of the Trust Fund Board, within a month to the Commit- tee. 5. It was observed that as per 5. It was suggested to take the objectives of the Act, action to set up few mod- Vocational Training Institute els of vocational training had not been set up to im- institutes and to inform prove the skills of the youth. the Trust Fund Board to set up entrepreneurship development institutes island wide. 6. Although the Trust Fund had 6. The CAO was directed to donated money for school adopt some policy and development activities, some allocate funds for the of the schools had been una- maintenance of such ac- ble to carry out the mainte- tivities and to take action nance work due to non avail- to carry out such projects ability of funds. in North and East provinces too.

93 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE National Paper 1. Current position of the Na- 1. Operations of the Wa- Company Ltd. tional Paper Company Ltd. lachchenai Paper Factory had been discussed. had been re-commenced February 20th, 2013 and the Operations of the Embilipitiya Paper Facto- (Ministry of State ry, which was sold to a Resources & Enter- private investor for Rs.600 prise Development) million out of which Rs.200 million was still outstanding, had been stopped for inadequate investment capacity of the investor. The Seylan Bank had taken action to auction the properties of this factory in lieu of a defaulted loan of Rs.600 million taken by the investor from the Bank. The State Re- sources Management Cor- poration had stopped this process since the lands and other fixed assets were still owned by the Government. Now they are jointly working with the Bank to find a new investor.

The CAO/AO was directed to make the Com- mittee aware of the steps taken by the management to find a new investor, and also to take possible action to prevent the previous management quitting the country. It was further stated that the investor had agreed to pay an annual rent of Rs. 14 million, and if they stop paying the annual rent, the management could take legal action against the investor.

Contd...

94 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 Comments & Decisions of Institution & Ministry Identified the COPE 2. Several robberies had been 2. The CAO/AO was di- taken place in the Embilipitiya rected to submit a report factory. to the Committee within two months time on the action taken by the management against the responsible parties. 3. Referring to the lease agree- 3. It was replied that the ment signed with Os Lanka Mahaweli Authority, Paper Company (Pvt) Ltd, the being the owner of these Committee enquired as to why lands, had given certain the Government valuer had blocks of lands to other computed the lease rental con- parties at times and that sidering only 116 acres when the total land area had it had initially been agreed to decreased upto 116 lease out 353.34 acres. acres by the time it had been surveyed. 4. The following irregularities 4. The CAO was directed had taken place in the Wa- to inquire into those lachchenai Paper Factory for lapses and submit a re- not adhering to the Financial port within a month Regulations, Tender Proce- after taking disciplinary dures, etc. action against those responsible officers. (i) A stock of scrap iron/ disposable items had been sold without following the procurement guidelines and the financial regulations,

(ii) When approval of the Board of Survey had been granted only to sell 04 motors, 125 motors had been sold without obtaining approval from the higher management,

(iii) Tenders had not been called for the repair of the boiler,

(iv) A land with an extent of 18 acres had been given to a private company without signing an agreement or calling for tenders to cultivate maize. Contd... 95 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. It was enquired about a 5. The CAO/AO was di- stock of books stored in the rected to submit a report Colombo Railway Stores indicating the total quanti- which was alleged to be ty that had been stored in prepared with a low quality. the Railway stores and the sales of each month separately.

6. It was discussed about a 6. The CAO was directed to new recruitment made for submit a report on this the post of General Manag- matter including the quali- er, without giving an exten- fications of newly recruit- sion to the former General ed personnel along with Manager. the salary scales.

7. The Chairman, National Paper Company Ltd. Was advised to adhere to the Government rules and regulations when making decisions and to take action to conduct workshops/ seminars to make the staff aware on the government regulations and submit a report to the Committee.

National Institute of 1. The Committee enquired as 1. The Chairman, National Co-operative Develop- to why the Chairman of the Co-operative Board stated ment National Co-operative that due to various rea- Board had participated only sons, he was unable to nd February 22 , 2013 one and two Director Board attend the Director Board Meetings in the years 2011 meetings, but whenever (Ministry of Co- and 2012 respectively. possible he had participat- operatives & Internal ed. The Committee di- Trade) rected him to give priority and ensure that he be present at every Board meeting in the year 2013. 2. The Committee noted that 2. The Institute should make the participation of the it compulsory to follow the chairmen and directors of training courses for all the the weak co-operative socie- chairmen, directors and ties for Training Pro- other officials of the Coop- grammes had been unsatis- erative Societies island Contd... factory. wide.

96 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 Comments & Decisions of the Institution & Ministry Identified COPE 3. It was discussed on the 3. The CAO/AO was directed research activities of the to take action to strengthen Institution. the Research Section since they should have information on the entire co- operatives in the country, and to implement a net work system island wide covering all the Co-operative Shops to compete with the organi- zations of such nature. 4. It was enquired about the 4. The CAO/AO was directed loss making Co-operative to submit the following in- Societies. formation to the Committee.

(i) The total number of Co- operative Societies and the Regional Societies,

(ii) A report on the profit and loss of every marketing section, co-operative society and consumer section as at 31.12.2012.

The CAO/AO was also directed to prepare a report on the action taken to uplift the loss making Regional Socie- ties. 5. Following shortcomings 5. The CAO/AO was directed on the construction of the to send the following infor- auditorium was observed. mation to the Committee on the matter. (i) The construction work had been commenced in (a) The preliminary estimate the year 2001 and the roof of the Auditorium building, of the building had been collapsed in the year (b) The method on which 2005, but action had not this contractor was selected,

been taken to recover the loss amounting to Rs. (c) The parties who had signed the agreement, the 3,907,904 from the consultant and the construc- conditions and the total estimate of the construction, Contd... tion company,

97 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE (ii) Disciplinary action had (d) The amount deposited not been taken as per the by the contractor, Establishment Code against the consultant for obtaining (e) The amount paid to the Rs.2.15 million through contractor, and whether his private practice while work- work had been certified ing in the Public Service, before the payment by the Buildings Dept., or any (iii) Although the construc- other approved person, tion work had not been completed yet, an overpay- (f) As to how a person ment of Rs. 210.5 million already in the Govt. ser- had been incurred for the vice had been selected as construction. the consultant,

(g) A report obtained from the Deputy Sectary (Engineering) on the above consultant,

(h) The total estimate for the rest of the construction and the total amount spent,

(i) The parties entered into the agreement,

(j) The conditions of the agreement,

(k) The current position on the construction work,

(i) A report with regard to the maintenance of the Auditorium, and the income hoping to be received in future. 6. The contracts for security, 6. It was stated that this com- cleaning and cafeteria had pany had been established been awarded to a private under the line Ministry, company without calling and as such the Institute quotations. had obtained their services and the CAO/AO was directed to submit a report on this company to the Committee. Contd...

98 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 Comments & Decisions of the Institution & Ministry Identified COPE 7. Activities carried out by 7. The CAO/AO was directed the Institution was dis- to give more attention on the cussed. followings.

(i) Setting up of model Co- op. villages, model Co-op outlets and Regional Centres,

(ii) Collaborate with other institutions which accom- plish similar tasks.

B.C.C. Lanka Ltd. 1. Four acre land valued at 1. It was stated that the UDA Rs.1220 million which had then informed that they February 26th, 2013 was to be released to the did not need this land, and UDA had been refused that the discussions were in (Ministry of State by the UDA. However, progress with relevant parties Resources & Enter- Rs.40 million had already to develop it on a joint agree- prise Development) been obtained from the ment. UDA for the removal of old buildings and ma- chineries located in the premises. 2. The Committee discussed 2. It was revealed that the total about the total liability of liability of the company had the company. been Rs. 426 million, out of which Rs. 259 million alone had been due for Bank of Ceylon. 3. Measures for increasing 3. It was directed to pay atten- the profits of the Institu- tion on the following matters tion was discussed. to make the company a going concern and increase profits.

(i) To prepare a Business

Plan,

(ii) To improve the quality of the soap,

(iii) To relocate the Oil Re-

finery Unit in Wathupitiwala

and to increase the capacity,

(iv) To find a suitable investor to purchase the lands belonging to the BCC, if the UDA is not interested in buying those lands. 99 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Elkaduwa Plantations 1. The Committee enquired 1. It was stated that the poor Ltd. about the outstanding EPF/ working capital had made ETF payments. it difficult to settle these February 26th, 2013 statuary obligations and that the Ministry had re- (Ministry of State quested further funds from Resources & Enter- the Treasury since the prise Development) amount of Rs. 146 million which had already been received had been released to the State Plantations Corporation and the Ja- natha Estates Development Board. 2. It was discussed about the 2. The CAO/AO was directed going concern of the Com- to prepare a new Business pany. Plan indicating as to how they could achieve their targets on the core-business at least to reach for a going concern. 3. The Committee discussed 3. The CAO/AO was directed about the current perfor- to furnish a Performance mances of the Company. Report for the year 2012 including the current status of the Elkaduwa Planta- tions Ltd.

Hingurana Sugar 1. The Committee pointed out 1. It was advised to present a Industries Ltd. that the ownership of the Cabinet paper to obtain the lands utilized by the ownership of the lands to February 26th, 2013 Hingurna Sugar Industries the Hingurana Sugar Indus- Ltd. was still vested with tries Ltd. (Ministry of Sugar the Government as they had Industry Develop- not been properly trans- ment) ferred at the time of establishing this institution and also due to the fact that it had not been re-registered under the Companies Act. Contd...

100 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 Comments & Decisions of Institution & Ministry Identified the COPE 2. It was brought to the notice 2. The following directives of the Committee that it were given. had been difficult to prepare the final accounts due (i) To initiate the prepara- to the problems associated tion of the accounts based with identification of assets on the list of assets taken which had not been proper- over in 1997, ly done at the time of taking over the management (ii) To prepare the regis- of the company by the ters of Assets and Liabili- Government in 1997. ties based on the current figures, while searching on the unidentified figures,

(iii) To take action to recruit a legal officer/ consultant to look into these problems. 3. It was observed that 500 3. It was stated that these houses had been construct- houses had been constructed by another Government ed for the Tsunami affect- organization in 60 acre ed victims and it had been land in Norochcholai be- handed over to the G.A. of longing to the Hingurana that area but the houses Sugar Industries. had been remaining closed for over a period of 5 years and the matter would be discussed and get it solved. Ceylon Fertilizer 1. The Committee discussed 1. The Committee was of the Company Ltd. on the methodology adopt- opinion that the Auditor ed in selecting private audit General should formulate February 26th, 2013 firms as auditors of certain a criterian in this regard as state institutions. no such comprehensive (Ministry of Agricul- mechanism was seemed to ture) be in existence at the moment. 2. It was enquired as to why 2. These 71 staff were the there had been an excess security guards. As it was staff of 71 in the staff ca- decided to outsource the dre. security services, the Treasury approval had been given to continue with these 71 posts as personal to them. Contd... 101 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

3. The Committee observed 3. Written approval of the that the fertilizer subsidy of Treasury had been given Rs. 130,328,770/- which by then to adjust the ac- had not been confirmed by counts accordingly. the Treasury had shown as income receivable since 1988.

4. Current position on the re- 4. It was stated that these covery of Rs. 23,207,583/- were very old balances, due from authorized dealers and wherever possible the was queried. company had taken legal action against those dealers. The CAO/AO was directed to take action to adopt a methodology to recover the dues since these dealers even at present may have been carrying out their business. He was also directed to submit a report after identifying the debtors, and the steps taken by the company to recover the dues.

5. It was enquired as to how a 5. It was stated that they had sum of Rs. 27 million dur- submitted the methodolo- ing the years 2011/2012 gy in paying the incen- had been paid as staff in- tives to the Treasury for centives in contrary to the approval in 2009, and that PED/12 circular. the company had been paying incentives to the staff on the Board‟s approval. The CAO/AO was directed to send a remind- er to the Treasury for approval, and get it legal- ized.

102 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 Comments & Decisions of Institution & Ministry Identified the COPE Janatha Fertilizer 1. The Committee observed that 1. It was stated that as soon Enterprises Ltd. the Cabinet of Ministers had as they receive the audit decided to wind up the Ja- reports action would be February 26th, 2013 natha Fertilizer Enterprises taken to summon the An- Ltd. in 03 occasions, en- nual General Meeting, (Ministry of Agricul- quired the current position. and take steps to imple- ture) ment the Cabinet decisions by 31st May, 2013. Thereafter a Compensa- tion Committee would be appointed to pay compensation to the staff, and keep a skeleton staff to assist the liquidator. The Committee wanted the auditors to take early action to submit the audit reports before the prescribed date. 2. It was brought to the notice 2. The Committee wanted of the Committee that there the CAO/AO to obtain had been 26 cases, and as per Attorney General‟s views the Cabinet decision all files on this issue. relating to litigation had to be handed over to the Lanka Fertilizer Company, but they had to obtain the approval of the Courts before handing over the files. Kahatagaha Graphite 1. Annual Reports for the years 1. The CAO/AO was di- Lanka Ltd. 2009/2010 and 2010/2011 rected to take action to had not been tabled in Parlia- table the Annual Reports th February 27 , 2013 ment. that were in arrears in Parliament early. (Ministry of Industry & Commerce) 2. Current position of the Ka- 2. It was stated that the hatagaha graphite Lanka Ltd. company would take ac- was discussed. tion to produce locally, whatever possible, in relation to the graphite industry.

Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

3. It was noted that the sales on 3. The Committee was of the the production of the Com- opinion that the Company pany had been declined. should strengthen their marketing research to find out new market opportu- nities to obtain maximum benefit on the sale of graphite to foreign countries. 4. It was observed that an ade- 4. As this officer had been quate internal audit had not appointed only recently been carried out by the Min- that had been occurred istry appointed officer. and the Committee wanted the CAO to take action to strengthen the functions of the Internal Audit Unit.

Mantai Salt Ltd. 1. The Committee enquired as 1. It was revealed that due to to why the production of salt poor soil condition, the th February 27 , 2013 in Jaffna saltern ( Chemma- expected quality of salt ni) had been discontinued could not be produced, (Ministry of Industry from October 2011. and as such the saltern & Commerce) was running at a loss and the management had to stop the production tem- porarily.

2. The current position with 2. It was stated that a com- regard to the cash cheque plaint was made to the amounting to Rs. 2 million Fraud Bureau, and after issued by the Mantai Salt the investigations the Ltd., as donation in favour of Fraud Bureau had in- the Ministry of Industry and formed that there was no Commerce which had not evidence to prove the been received by the Minis- complaint. The Commit- try was enquired. tee was of the opinion that if the Mantai Salt Ltd. had maintained the systems methodically, such a situation would not have occurred. Contd...

104 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 Comments & Decisions of Institution & Ministry Identified the COPE 3. Action that could be taken 3. The following proposals to develop the salt industry were made. and to increase the profits were discussed. (i) To increase the investments on value added products, and to establish new salterns,

(ii) To introduce a cost accounting system and to recruit a Cost Accountant,

(iii) To focus development programmes on core business activities. 4. It was observed that in addi- 4. The CAO agreed to look tion to Rs. 2 million above, into the above and report another Rs. 1,223,326/- had to the Committee. been granted by the Mantai Salt without the approval of the Cabinet.

North Sea Ltd. 1. The Committee queried 1. It was stated that about the Presentation of 2010/2011 Annual Report th February 27 , 2013 Annual Reports in Parlia- had already been tabled in ment. Parliament and 2011/2012 (Ministry of Tradi- Annual Report had been tional Industries & completed, and would be Small Enterprise De- tabled it in Parliament by velopment) the 1st week of April, 2013. 2. It was enquired as to why 2. It was informed the Com- income tax in terms of In- mittee that upto 2011 the land Revenue Act had not company had not paid the been paid by the Company. income tax, but after pointed out by the private auditors the North Sea Ltd. had now taken steps to file the returns to the Inland Revenue Dept. for the year 2013. 3. Rs. 40 million worth of 3. It was stated that action share capital had not been had been taken to transfer reflected in the financial the assets legally to Secre- statements. tary to the Treasury. Contd... 105 PARLIAMENTARY SERIES NO.236

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4. It was noted that the last An- 4. The CAO/AO was di- nual General meeting had rected to ensure that this been held without with out a shortcoming is regular- representation of the Treas- ized. ury (Share Holder), and also the Annual Returns sent to Registrar of Companies were not legal.

Thurusaviya Fund 1. The Committee enquired as 1. It was stated that other to why replies to some audit than 01 audit query is- February 27th, 2013 queries issued by the Auditor sued in the year 2012, General‟s Dept. had not been replies to the rest of the (Ministry of Planta- submitted. audit queries had been tion Industries) furnished.

2. It was noted that there had 2. It was stated that action been 15 vacancies in the staff would be taken to obtain cadre. the approval of the Dept. of Management Services and fill the vacancies before the end of the year. 3. The total amount to be re- 3. These loans had been ceived by the Thurusaviya provided for the persons Fund for providing Advanc- who had been registered es, Scales and Role Pairs for in the Thursaviya Socie- the Thurusaviya Societies ties, and the Fund had had been Rs. 1,377,165/-. now taken action to recover the outstanding amounts.

4. Even though Rs. 466,408/- 4. It was stated that alt- had been incurred for foreign hough the management official visits of the former had sent several remind- Chairman, study reports had ers, he had not furnished not been furnished by him. the study reports.

Contd... 106 REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

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5. There were instances where 5. The CAO/AO was di- the Field Officers had not rected to adopt a meth- carried out their duties as odology to overcome required and the following those shortcomings. shortcomings were observed.

(i) There had been instances where the Advance Pro- grammes had been amended and presented,

(ii) There had been no rela- tionship between the Ad- vance Programmes presented and work done,

(iii) Travelling expenses had been made for the work completed without proper supervision or due approval,

(iv) Advance Programmes had not been furnished in several instances.

6. The Financial status of the 6. The CAO/AO was di- Thurusaviya Fund was dis- rected to take action to cussed and observed that the strengthen the revenue of operational expenditure had the Fund and ensure that been increased when com- the Thursaviya Fund pared with the income. shows a better progress in future.

Kalubovitiyana Tea 1. The Committee enquired 1. Once the installation of Factory Ltd. whether action had been new line for the CTC taken to obtain the quality machines had been com- February 27th, 2013 certificate, according to the pleted, necessary repairs recommendations of the Tea for the machines are (Ministry of Plantation Board. done, action would be Industries) taken to obtain the quality certificate for the Kalubo- vitiyana Tea Factory, and the Deranagala Factory. Contd... 107 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2. The current position with 2. It was stated that having regard to the settlement of discussed with the Hon. Rs. 22,465,416/- payable to Minister, the Board of Di- the Sri Lanka Tea Board. rectors of the Tea Board had approved to write- off this amount from their books of accounts.

3. There had been a difference 3. It was stated that the ac- amounting to Rs. counts had been reconciled 1,876,368/- between the and that action would be balances of 06 stock ac- taken to rectify the accounts and the relevant counts through a private schedules. auditor. The Committee wanted the CAO/AO to select a private auditor from the list of the Auditor General after obtaining the approval from the Treas- ury. 4. The Committee questioned 4. It was stated that they had with regard to the mainte- now taken steps to prepare nance of a Fixed Assets the Fixed Assets Register, Register. and the CAO/AO agreed to submit it to the audit once it is completed.

5. It was enquired as to what 5. It was stated that the BCC action had been taken by Lanka had requested to the Company to recover the reduce the interest rate, and loan amounting to Rs. 10 as such the management million given to BCC was in the process of calcu- Lanka Ltd., at an interest lating the rates according to rate of 22% in the year the recommended interest 2003. rates in the Bank Sector, and the BCC Lanka had agreed to settle the dues.

6. Cheques to the value of Rs. 6. As these cheques had been 798,461/- received from a returned, and since this Broker Company in the company had been closed year 2009 had been can- down, the matter had been celed, but action had not referred to the Attorney been taken to recover this General for his advice. Contd... amount.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 7. As per the Corporate Plan 7. It was stated that the vil- there should be lands in lagers had encroached extent of 08 acres owned by some of the lands around the Derangala Tea Factory, the Tea Factory, and that but the value of the said the Management had re- lands had not been dis- quested the Divisional closed in the accounts. Secretary to survey and inform the exact area of available lands. The Com- mittee wanted the CAO/ AO at least to take the ownership of the lands which are available at present.

8. It was enquired with regard 8. It was stated that the ap- to the vacancy of the post proval of the Dept. of of Internal Auditor. Management Services had been obtained, and that action would be taken to fill the post early.

9. The Committee enquired 9. It was directed the CAO/ about the vehicles belong- AO to submit a detailed ing to the Kalubovitiyana report indicating the num- Tea Factory. ber of vehicles under their custody, the amount spent for maintenance and the basis the allowances had been made.

Sri Lanka Rubber 1. The current status of the 1. It was stated that as per Manufacturing & Corporation was discussed. the Cabinet decision of Export Corporation 2010, 03 institutions; i.e. Ltd. Mawanella Factory, Tyre & Tube Factory and the February 28th, 2013 Baduraliya Factory of the Corporation had been (Ministry of State Re- leased out on long term sources & Enterprise basis, and only the Development) maintenance of the Elpiti- ya Factory is being carried out by the Corporation until they find a suitable investor. Contd... 109 PARLIAMENTARY SERIES NO.236

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2. It was questioned with re- 2. The CAO/AO stated that gard to the liabilities of the after having discussions Corporation to the People‟s with the People‟s Bank, Bank and the Treasury. they had been able to settle the capital. The interest had been exempted. It was further added that after leasing out the Elpitiya Factory, action would be taken to settle the amount due to the Treasury.

Kantale Sugar 1. The current status of the 1. It was stated that at the Industries Ltd. Kantale Sugar Industries was time the Kantale Sugar discussed. Industries was under the February 28th, 2013 Ministry of State Re- sources and Enterprise (Ministry of Sugar Development, an investor Industry Develop- had been selected to hand ment) over the Kantale Sugar Industries, but it was not approved by the Cabinet. He further added that at present the Kantale Sugar Industry is under the Min- istry of Sugar Industry Development. 2. The Committee noted that 2. It was stated that the 2010 the accounts had not been accounts had been audited audited. and agreed to submit the 2011 and 2012 audited accounts to the Auditor General early.

3. Future activities of the 3. The CAO/AO was in- Kantale Sugar Industries formed to prepare a Busi- were discussed. ness Plan and submit to the Committee after taking a policy decision on the future activities of the Institution.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Lanka Salusala Ltd. 1. The current position of the 1. It was stated that the Salu Lanka Salusala Ltd. was Sala is now under re- February 28th, 2013 discussed. structuring process and that they expect to terminate the services of around (Ministry of State Re- 200 excess staff by intro- sources & Enterprise ducing a Voluntary Retire- Development) ment Scheme (VRS).

2. The Committee observed 2. The CAO/AO stated that that the loss of the institu- the institution which de- tion had been increasing pends only on the clothing badly. materials confiscated by the Dept. of Customs, had found it difficult to compete with the strong private sector with the existing business model

STC General Trading 1. The Committee discussed 1. It was stated that there had Co. Ltd. regarding the recovery of been only around the debtor balance amount- Rs.1million to be recov- th February 28 , 2013 ing to Rs.209 million as per ered further from this the directive given at the last amount. (Ministry of Co- COPE meeting. Operatives & Internal Trade)

2. It was discussed about the 2. The official from the expansion of the network. Treasury pointed out the importance of expanding the existing network and also to downsize the degree of dependency on the state sector. 3. It was also noted the risk of recruiting personnel on contract basis for high ranking posts of the institution which would lead to issues on accountability.

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Sri Lankan Airlines 1. On the request of the Com- 1. Although the Company Ltd. mittee the CAO/AO gave a had managed to increase brief account on the previ- the group revenue by 18%, March 01st, 2013 ous year performance of the the operating expenditure company. had also increased by 34% as a result of the steps tak- (Ministry of Civil Avi- en to increase the capacity ation ) factor by around 60%. It was enquired as to why such a decision was taken when no other airline in the industry had gone for capacity increase projects due to the prevailing economic conditions and the CAO/AO stated that, in the long run, the decision to increase the capacity factor would be a right decision although it had led to the increase of net loss then.

2. The Committee discussed 2. It was stated that almost on the losses continued to 60% of the losses incurred be incurring out of the Euro- by the company last year pean destinations. had been due to the Euro- pean operations and that they had downsized the operations in this region after which a favourable outcome had been achieved.

3. It was discussed with regard 3. As it was stated that it to the projected revenue of would be able to come to a the company for the coming breakeven in another 3 to years. 4 years provided that it could maintain the increase of cost around 2% against the generated revenue, the CAO/AO was directed to submit the projected revenue for coming Contd... years to the Committee.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. The Committee enquired 4. The CAO/AO agreed to into the impact on the total send a report to the Com- cost due to the additional mittee on this matter. run of aircrafts to Mattala. 5. The financial position of the 5. The CAO/AO was di- company was extremely rected to pay special atten- unfavourable. tion in this regard since the Banking Sector in the country was also under a threat due to the large borrowings of the company. 6. The Committee was of the view that it was high time to focus attention on for- mulating a new aviation policy as far as the new trends and challenges faced by the industry were concerned and wanted the CAO to work on it. Chilaw Plantations 1. On the request of the Com- Ltd. mittee , the AO gave a briefing on the performance and March 01st, 2013 the activities of the Chilaw Plantations Ltd. He stated that after paying arrears to (Ministry of Coconut the staff as per the collective Development & Ja- agreement from 1992, they natha Estate Develop- had been able to obtain a ment ) profit of Rs. 114 million and Rs. 97 million respectively for the years 2010 and 2011. 2. The Committee enquired the 2. It was stated that the Co- action taken by the Manage- conut Research Board had ment to control the disease been able to find out a named Aceria Coconut Mite predator to control the menace. Aceria Coconut Mite, and that the damage had been reduced by 90% in the Palugaswewa Estate. It was further stated that action had also been taken to establish breeding labs of this predator island Contd... wide. 113 PARLIAMENTARY SERIES NO.236

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3. A query was raised by the 3. Replanting process had Committee with regard to already been commenced the replanting of coconut under the Kapruka Pura- in the North and Eastern wara Programme. Provinces.

4. The Chilaw Plantations 4. The CAO/AO was di- had given loan facilities to rected to ensure that no some of the loss making such money be given to institutions on the request any of the institutions, and of the Treasury. if there had been a request from the Treasury, to release the money to the Treasury.

5. Having discussed about 5. The CAO/AO was di- the coconut estates being rected to adopt a system, blocked out for sale, and where the people who pur- thereby the coconut pro- chase the blocks cultivate duction be declined in the at least 4- 5 coconut plants country. to overcome this situation. It was stated that the Fragmentation Board is under the Ministry of Plan- tations, and that they would request the Frag- mentation Board to make aware the Ministry of Co- conut Development of such institutions who carry out block out of lands to give the necessary instructions.

6. The Committee noted that 6. It was mentioned that he an Estate Superintendent had been appointed for an who had been engaged in extension programme for administrative irregulari- only a period of 02 ties had been appointed as months. the Co-ordinating Officer of the Chilaw Plantations.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Kurunegala Planta- 1. On the request of the Com- tions Ltd. mittee, the AO giving a brief on the performance for March 01st, 2013 the last 02 years stated that after transferring this institute to the Ministry of Coco- (Ministry of Coconut nut Development and Ja- Development & Ja- natha Estates Development natha Estate Develop- in November 2010, they had ment ) been able to get the highest income of Rs. 596 million, and the highest profit of Rs. 226 million in the year 2011. 2. The Committee observed 2. It was stated that reserved that out of acreage of forest area, buildings, 5,352.30 belonging to the roads, marshy lands, etc. Plantations, 716.33 acres had been included in the had not been utilized. 716.33 acres, and that action had been taken to cultivate alternate crops, wherever it was not suitable for coconut cultivation.

3. The documentary evidence 3. It was agreed to submit with regard to the handing the same to the audit. over of 15 hectares of land to the Land Reform Com- mission had not been submitted to the audit.

4. It was questioned on the 4. It was stated that the acre- action taken by the Compa- age of the rubber planta- ny to improve the rubber tion had been increased plantation. and considering the value addition of latex, action had been taken to construct a factory at Attan- galla to produce rubber products.

Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 5. The operations in the 5. It was stated that all the trac- Tractor Division had been tors owned by the Kurune- at a weak level. gala Plantations were being repaired at this workshop Year Loss (Rs.) charging a very reasonable 2011 amount, and that they expect 1,845,069 to repair all the tractors be- 2010 longing to the Institutes that 1,654,886 are under the Ministry of 2009 Coconut Cultivation and 2,095,501 Janatha Estates Develop- ment to overcome this situation. Central Cultural 1. The Committee observed 1. As it was stated that action Fund that even though the Di- plan had already been pre- rector Board Meetings pared to have monthly March 01st, 2013 should be held once a Board meetings for the year month as per the PED/12 2013, and the dates would Circular, the Board Meet- be informed to the Hon. (Ministry of Culture ings had not been held Prime Minister‟s Office in & the Art) accordingly. advance, the Committee wanted the Secretary to the 2010 - 01 meeting Prime Minister to take ap- 2011 - 04 meetings propriate action to summon 2012 - 04 meetings the Board Meetings as scheduled. 2. The Action Plan had not 2. As it was stated that the Ac- been prepared based on tion Plan had been prepared the Corporate Plan, and for the year 2013, the CAO/ also Annual Progress Re- AO was directed to submit port had not been pre- same to the Committee as pared. well as the audit. 3. It was enquired whether 3. The CAO/AO agreed to the Master Procurement submit it after obtaining the Plan for the year 2013 had approval of the Board of been prepared. Directors. However it was pointed out that the approval of the Board of Directors should be obtained prior to the commencement of that particular year, and informed that all these shortcomings were discussed at the last COPE meeting held Contd... on 08.04.2011.

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4. There were 182 vacancies, 4. It was stated that due to and out of the 04 Senior a problem on the previ- Management Level posts, 03 ous Plan of Restructur- of them had been in the acting, there had been a ing positions. delay in filling vacancies, but within a period of one month action would be taken to fill the vacancies.

5. The Committee enquired 5. It was stated that the whether action had been total value of Rs. taken to recover the value of 77,000/- had been recov- the books which had been ered by now from those misplaced at the BMICH officials. The CAO/AO Book Fair, from the respon- was directed to submit sible officers. the relevant details to the audit.

6. Although 7941 jobs at the 6. It was stated that by now cost of Rs. 18,316,038/- had 99% of the planned ac- been planned to be complet- tivities had been com- ed in the Abayagiriya Project pleted. in the year 2011, such activities had not been initiated.

7. It was enquired as to why the 7. It was stated that due to Fund had not been able to unexpected breakdowns, achieve the excavation and a longer period had been preservative activities as required to complete the planned during the years work, but in 2013, the 2010 and 2011. Fund had decided to commence only the projects that could be com- Contd... pleted.

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8. The following unsettled bal- 8. The CAO/AO was di- ances were observed. rected to furnish a report on the staff loans Unsettled Period As at 2011 (Rs.) with an age analysis and the action taken to Debtor Balances recover the outstanding (2–24years) 1,658,005/- balances. The Commit- tee also wanted the Advance Account CAO to give more at- (1–18years) 1,197,401/- tention to the Admin- istration and Finance Staff Loans sections and to take (Over 05 years) 2,913,595/- action to clear the old outstanding balances.

9. An advance of Rs.1,382,055/ 9. It was stated that the - had been paid to a private company did not appear contractor in 2001 for before the courts, and preservation of gravel roads the order had been giv- in the Pollonaruwa Archeol- en on an arbitration ogy complex, but due to case, and the Fund had breach of contract by the now taken action to file contractor, on a case filed by a case in the Supreme the Fund, the court had or- Court with the assis- dered the Company to pay tance of the Attorney Rs. 4,472,151/- to the Fund, General. where the Fund had not taken action to recover the money.

10 It was observed that an audit 10. It was stated that after . opinion had not been given 20 years, in 2009 the on the financial statements audit had declared a due to accounting deficien- subject opinion, and cies. that action had been taken to rectify 75% of the accounting deficiencies in the 2011 accounts. Contd... 118 REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

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11. The following fixed assets 11. The CAO/AO was di- had not been included in the rected to take action to Financial Statements. rectify those errors and also to regularize all (i) 07 buildings acquired in accounting deficiencies, time to time from 1983 and submit a report to amounting to Rs. 414.7 the Committee within 06 million months time.

(ii) 21 vehicles acquired from the year 1984 to 2004 as foreign funded grants

(iii) Action had not been taken to revalue and account the fully depreciated property, plant and equipment totaling to Rs. 132,053,127/- and to dispose the unusable assets Cey-Nor Foundation 1. The Committee enquired 1. It was stated that the Ltd. the current position of the restaurant had been restaurant situated in the leased out to a private March 01st, 2013 Beira Lake. party for 20 years, of which 12 years had been completed by now and (Ministry of Fisheries the tenant pays the rent, & Aquatic Resources) but the profit share is not being paid, as they al- ways show a loss in their accounts, and the Foun- dation frequently send reminders to them.

2. The Committee questioned 2. It was stated that since on the action taken by the this factory had been Foundation to recover net transferred on a Cabinet assets valued at Rs. decision, Treasury had 12,752,650/- of the fishing informed the North Sea net factory belonging to the Ltd., to pay this amount Foundation, but vested in to the Foundation within the North Sea Ltd. 06 months. However upto now the amount had not been settled by them. Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 3. The Committee enquired 3. It was stated that they had the current position on taken legal action to recov- the recovery of the out- er the outstanding balance. standing balance of Rs. 393,865/- on the sale of fishing boat in the year 2009 on installment basis. 4. It was queried on the 4. It was stated that this settlement of the out- amount had to be paid by standing Withholding the Inland Revenue Dept. to Tax amounting to Rs. the Foundation, and after 2.6 million since 2001. having discussions with the Inland Revenue Dept., since there was no evidence to prove the foundation had taken action to write off this amount after obtaining the Board‟s approval. 5. It was observed that the 5. It was stated that on the plant and machinery Treasury instructions the purchased on lease basis assets had now been trans- from the Central Fi- ferred to the North Sea Ltd., nance Company to the and after reporting this po- value of Rs. 19,519,181/ sition to the Central Fi- - are now being utilized nance Company, they had by the North Sea Ltd., released the Cey-Nor Foun- and due to non-payment dation from the relevant of the monthly install- court case. The Committee ment, the Central Fi- wanted the Private Auditors nance Company had to inform the current posi- taken legal action tion to the Auditor- against the Cey –Nor General‟s Dept. Foundation. 6. The Committee was 6. It was stated that they had informed that in contra- explained the matter in ry to the Establishment writing to the Treasury, as Code, a member of a to why he had been holding Provincial Council is both positions, but upto working as the Manag- now no reply had been re- ing Director of the ceived from the Treasury in Foundation. this regard. The Committee wanted the CAO/AO to discuss with the Treasury and get the matter solved.

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Lanka Mineral Sands 1. As per the brief made by 1. The Committee wanted Ltd. the Chairman of the the CAO/AO to enter into Company, they had got a partnerships with the uni- March 04th, 2013 remarkable progress and versities and to take steps dividends had also been to increase the value addi- paid as 500mn, 563 mn tion of the mineral prod- (Ministry of State Re- and 1700mn respectively ucts. sources & Enterprise in the years 2010, 2011 Development) and 2012. It was discussed the action taken by the Company on the value addition to the products.

2. As per the conditions laid 2. It was stated that most down in the agreement, buyers purchase minerals the entire value of the for the Chinese market, minerals needs to be paid and when there had been a in foreign currency with- delay in getting the mon- in 14 days, but there had ey from the foreign buy- been two instances where ers, the local agents settle the goods value had been the amounts in local cur- settled both in foreign rency. currency and the local currency.

3. The Committee enquired 3. It was stated that this as to why action had not transaction had taken been taken to recover Rs. place in the year 2006 12,374,632/- due from during the war period, and Asha Lanka Company for that the agreement had not the purchase of the ship been prepared covering all named “Cordiality” for necessary conditions and scrap iron. It was also although they had request- asked whether they had ed the due amount on entered into any written several occasions, Asha agreement. Lanka had not taken action to settle the dues. The CAO/AO was directed to submit a report on this issue to the Com- mittee.

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Skills Development 1. The Committee discussed 1. The CAO/AO was di- Fund Ltd. on the programmes/ rected to furnish a list of workshops conducted by the names of those pri- March 04th, 2013 the Fund in the year 2012 vate and Govt. Institu- and to be conducted dur- tions that had been ca- ing the year 2013 for the tered by the Skills devel- (Ministry of Youth private and Govt. Institu- opment Fund. The Com- Affairs & Skills Devel- tions. mittee also wanted the opment) CAO/AO to pay attention on carrying out training programmes for the In- formal Sector too. 2. It was observed that the 2. The CAO/AO was di- meetings of the Board of rected to take action to Directors had not been summon Board Meetings held monthly. regularly. 3. The Committee was in- 3. It was stated that action formed that there had would be taken to table been no records on the the Annual Reports in presentation of the Annual Parliament from this Reports in Parliament by year. the Skills Development Fund. 4. It was observed that there 4. The CAO/AO was di- had been a balance of Rs. rected to submit a report 207,659/- in the Accounts on the above balances to Receivable and Rs. the Committee as well as 180,533/- in the Accounts the audit. Payable for more than 3 years. 5. It was observed that the 5. The CAO/AO agreed to Fund had paid dividends pay attention on this is- only to one shareholder , sue. where they had not taken action to pay dividends to the Treasury. 6. The Committee noted that 6. It was stated that the au- in the absence of the Inter- dit unit of the Company nal Audit Unit in the is now functioning Fund, the line Ministry properly. had not taken any action to carry out the audit functions of the Skills Devel- Contd... opment Fund. 122 REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

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7. Approval of the Board of 7. The CAO was directed Directors had not been ob- to prepare a Corporate tained for the Corporate Plan as per the guide Plan prepared for the period lines. 2013 – 2015.

Paranthan Chemicals 1. It was questioned whether 1. It was stated that by now Ltd. the management has any imported Chlorine is plans to re-establish the released to the market March 04th, 2013 Paranthan Factory which and the proposal of re- was closed down due to the establishing of the facto- disturbances from the ter- ry was being considered, (Ministry of State Re- rorist activities. but they were in a diffi- sources & Enterprise culty in obtaining salt, Development) the main raw material for the production of Caus- tic Soda, since the Salt- ern which supplied salt to the former factory is now under a separate Ministry.

The CAO/AO was directed that if the Paranthan Chemicals Company is looking for an investor for the re- establishment of the Paranthan Factory, to select the investor according to the Govt. policies. 2. It was enquired as to why 2. It was stated that due to a the refilling of chlorine had chlorine leakage oc- been outsourced to a private curred in the Kalutara re- party incurring a large filling unit in April amount of money. 2012, there had been unrest among the people in that area, and as such they had to do so in order to supply chlorine continuously to the Wa- ter Board.

Contd...

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3. Treasury approval had not 3. It was stated that although been obtained for granting they had written to the donation of Rs. 800,000/- Treasury requesting ap- to the Sports and Welfare proval, the Treasury had Society of the Company. approved only upto a limit of Rs. 300,000/- only. The Committee wanted the CAO/AO to adopt a methodology on granting donations and as to how the expenses should be made in future.

4. The Committee enquired 4. It was stated that after the about the investment of last COPE meeting, they money in private banks had taken action to invest without obtaining Treas- money in the state banks, ury approval. except for one fixed deposit in the Hatton Na- tional Bank. The Com- mittee was of the opinion, that if the company has any advantage of invest- ing money in private banks , they need to obtain approval from the relevant authorities, and wanted the Paranthan Chemicals to have a better co-ordination with the state banks.

5. It was noted that although 5. It was mentioned that the 18% of the purchasing normal practice had been cost for chlorine had been to pay this commission to paid to the relevant sup- the Agent, but at present plier‟s agent in Sri Lanka, they were discussing with the aforesaid agent had the agents to see whether not provided a significant they could reduce the pur- service to the Paranthan chase price. Chemicals.

Contd...

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Date/ Name of the In- Major Issues & Problems Comments & Decisions of stitution & Ministry Identified the COPE 6. A query was raised with 6. It was revealed that the regard to the issuing of accredited Laboratories of the quality certificate for that particular country the chlorine that is being where the chlorine is im- imported to the country. ported issue the quality certificates. The Commit- tee was of the view that there should be some institution in Sri Lanka to test the quality of imported chlorine, wanted the CAO/AO to look into this matter, and to submit a report at Ministry level on the testing of the quality of chlorine, to the Com- mittee.

Sir John Kotelawala 1. The Committee observed 1. It was stated that the Uni- Defence University that Officers and Soldiers versity had attached offic- of three Forces had been ers from all Three Forces March 05th, 2013 attached to the University to the academic staff as in addition to the ap- well as for providing se- proved cadre. curity for the University (Ministry of Defence which is located in a land and Urban Develop- of more than 50 acres. In ment) this context the Defence University is unable to be conducted only with the civil staff. The CAO was directed to get the necessary approval from Three Forces.

2. It was enquired about the 2. It was stated that the ac- unsettled advances of Rs. tion had been taken to 152,187,807/- as at 31st settle the advances except December 2012. the advance paid for the construction of the Medi- cal Faculty building which was being constructed. Contd...

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3. The grants received from 3. The AO stated that since the International Forces the US Embassy had not Education and Training responded for the enquir- Funds in the United States ies made by the Universi- of America from 2002 to ty regarding the value of 2007 had not been valued funds received, they had and brought to the ac- appointed an Evaluation counts. Board for this purpose and that Board had completed the respective evaluation.

4. A lecturer had served in 4. AO stated that legal ac- the University nearly for tion had already been tak- one year forwarding en against the lecturer forged higher educational who forwarded the forged certificates and drawn certificates, while taking salaries and allowances of necessary action to get the Rs. 544,484/-. qualifications confirmed by the respective institutions before making recruitments to prevent this kind of frauds in the future.

5. It was enquired as to why 5. It was stated that action action had not been taken had been taken to recover to recover the loan balanc- those balances. es totaling Rs. 175,194/- recoverable from 5 officers who retired and left the service.

6. The Committee drew the 6. The CAO/AO was di- attention on the payment rected to streamline the of Rs. 7,836,776/- on pho- process of payment to tocopies of bills in 09 avoid this kind of short- instances. comings in future.

126 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 Comments & Decisions of Institution & Ministry Identified the COPE National Dangerous 1. It was brought to the no- 1. The Auditor General Drugs Control Board tice of the Committee that pointed out the possibility the lack of resources in- of amending the existing March 05th, 2013 cluding the staff had been regulations to facilitate a major constraint to meet the Institution to get their the objectives of the insti- needs fulfilled. (Ministry of Defence tution and they had to & Urban Develop- terminate the services of ment) army personnel, those who had been rendering a commendable service to the institution, due to a query raised by the Audi- tor General on the re- recruitment of retired government servants.

2. The Committee noted that 2. The Committee wanted the accused those who the CAO to see whether it were remanded for minor was possible to have a offences were vulnerable system in which the ac- to get addicted or in- cused of the above nature volved with antisocial did not receive the com- activities, if they happen pany of the criminals dur- to be more close to the ing the period spent in criminals while their be- remand. ing in the remand.

3. It was discussed about the 3. It was stressed the im- existing law to restrict the portance of bringing in pharmacies in selling reforms to the existing harmful drugs to children. law to restrict the pharmacies in selling harmful drugs to children as in the present context, the pun- ishment for such an of- fence is limited only to fine.

Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. It was observed that an 4. It was stated that the Internal Audit Division relevant recruitments in had not been established in relation to an internal the institution. audit division could not be made as the SOR had not yet been approved and further stated that the internal auditing of the institution was cur- rently being done by the Internal Audit division in the Ministry. The CAO/ AO was directed to send those audit reports to the Auditor General. 5. It was enquired about the 5. As the AO stated that the continuous increasing of delays caused in receiv- deficit referring to the di- ing funds had resulted rective given at the previ- this situation where the ous meeting of the COPE. creditor‟s balance had to be carried forward increasing the expenditure in the following year, the Auditor General pointed out that the institution wouldn‟t have faced this problem if the accrued basis of accounting was followed. The Commit- tee wanted the CAO/AO to correct the 2012 accounts as stated above while getting the necessary assistance from the Auditor General. 6. The institution had no ac- 6. the Committee stressed cess to most of the interna- the importance of revis- tional schools for supervi- ing the relevant law to sion owing to the fact that clear the bottlenecks. these schools did not come under the purview of the Ministry of Education and there was a growing trend of international school students getting addicted to drugs. 128 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 Comments & Decisions of Institution & Ministry Identified the COPE

Rakna Arakshana 1. The Committee enquired 1. It was stated that the ex- Lanka Ltd. about the category of per- security personnel those sonnel who were recruited who have retired or le- March 05th, 2013 to the Company. gally resigned from the Sri Lanka Armed Forces and Police Service were (Ministry of Defence recruited and they were & Urban Develop- being paid a salary in ment) addition to their pension. 2. It was enquired whether the 2. It was stated that this Company, as a unit of matter has not yet been providing marine security, considered by the Com- has taken any action on the pany. threat caused to Sri Lanka Fishermen by the Indian Fishermen in the Northern Sea.

3. It was questioned about the 3. It was stated that being a matter pointed out at the private company, it was last Committee meeting that not required to obtain the Company has invested Treasury approval and funds without obtaining the Treasury approval. the problem had been regularized by obtaining the approval of the Board of Directors.

4. The financial position of the 4. The CAO/AO was di- Company was discussed. rected to send a copy of the Financial Statement to the Committee.

Lanka Logistics & 1. The Committee enquired as 1. It was stated that the Technologies Ltd. to why the bank over draft additional expenditure balance had increased by incurred out of the pro- March 05th, 2013 200% in comparison to that ject of relocating the in the previous year. Defence Ministry undertaken by the Company, (Ministry of Defence had made the account & Urban Develop- overdrawn since the ment) income related to the project was to be received by the following Contd... year. 129 PARLIAMENTARY SERIES NO.236

Date/ Name of the In- Major Issues & Problems Comments & Decisions of the stitution & Ministry Identified COPE 2. A trade debtor balance of 2. It was stated that these Rs.253,197/- had been outstanding amounts had outstanding for more than been mainly from the three two years. forces who had been the only customers of this company. The Committee wanted the CAO/AO to be concerned on the recovery of debts. 3. The treasury officials pointed out the importance of having a new business model for this company in order to survive as a going concern. 4. The Committee wanted the CAO/AO to prepare a new corporate plan and let the Committee be informed of its future plans once it was discussed in the Board. Milk Industries of 1. The Committee enquired 1. It was stated that the con- Lanka Company the reasons for the rapid sequence of not increasing (MILCO) Ltd. down turn in profits since the price of milk powder 2008/2009, which had as against the high produc- March 05th, 2013 turned into a loss of Rs. tion cost resulted due to 227 million in 2011/2012. the increase of fuel prices and the increase of pur- (Ministry of Livestock chasing price of fresh milk & Rural Community from Rs. 28/- to Rs. 50/- Development) had caused this situation. The officials from the Treasury stated that increasing of the purchasing price of fresh milk upto Rs. 50/- could not have any effect on the loss, as the Treasury had set off the difference between the new purchasing price and the old price by paying about Rs. 190 million to the company where there was only Rs. 34 million to Contd... be settled further. 130 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 Comments & Decisions of Institution & Ministry Identified the COPE

2. It was also observed that 2. The CAO/AO was di- the Company had been only rected to submit a de- at a breakeven by January tailed report on the loss 2013, even after the adjust- together with an expla- ment of prices. nation as to how the Treasury payment was set off against the losses.

3. The Committee discussed 3. It was stated that the on the loss of Rs. 59 million collected fresh milk incurred due to discarding during the concerned of milk which was not fit to period of time, had sur- the human consumption. passed the affordable production capacity as the Company had been in a policy of not reject- ing a single litre of milk in order to safeguard the local farmer. It was further stated that it had been planned to refur- bish the three factories in Ambewela, Digana and Polonnaruwa to meet the capacity requirement during peak seasons. 4. The Committee noted the 4. The CAO was directed large potential existing in to send a detailed report the North for the dairy in- on its future plans relat- dustry, worried about the ed to grazing lands. absence of a coherent planning in the Ministry to develop the industry in the area through international aid and the assistance of the Govt., specially on the areas such as grazing grounds which had been a common grievance of the farmers in the North.

Contd...

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5. It was enquired about the 5. As it was stated that an recently imported 2500 animal costs only about cattle incurring US $ Rs. 300,000/- and that the 850,000 for each. cost of US $ 850,000 was the entire cost incurred on each cattle with the cost on related infrastructure, the Committee directed the CAO/AO to send a detailed report on the breakdown of this inclusive cost. 6. The Committee wanted the CAO/AO to furnish a performance report related to the last three quarters of 2012 and emphasized the need of a coherent planning and commitment of the Government in order to achieve the vision of the company.

Lady Lochore Loan 1. The Committee observed 1. It was stated that the Fund Fund that from the inception, the had not prepared any An- Annual Reports had not nual Report from the in- March 06th, 2013 been tabled in Parliament. ception, but as per the Cabinet decision, the 2011 Annual Report was (Ministry of Finance prepared and submitted to & Planning) the Cabinet for approval. 2. It was enquired whether 2. It was stated that this po- the Internal Auditor‟s post sition had become vacant had been filled. only recently, and at present the most senior officer had been acting in this post, and that action would be taken to fill the post early. The Commit- tee was of the opinion, that if there were suitable officers with required qualifications within the staff, the Fund could fill Contd... the post internally. 132 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 Comments & Decisions of Institution & Ministry Identified the COPE

3. There was a delay in Pre- 3. It was stated that the senting Financial State- 2012 accounts had been ments to the Audit. prepared, and action would be taken to furnish them to the audit by 31st March, 2013.

4. It was observed that the 4. It was stated that this non-performing loan bal- amount consists of the ance as at 31.12.2012 had Capital loan amount of been Rs. 59,247,997/- and Rs. 9 million and the bal- of that Rs. 51,587,786/- had remained for more ance had been the accu- than 10 years. mulated interest from the year 1984. It was further revealed that when the debtors had been transferred, interdicted, etc.

that particular institution

had not taken action to deduct the installments from the salaries as agreed.

The Committee was of the opinion that due to

the lapses in the mecha-

nism adopted to recover the loan installments, such an amount had been accumulated, and officials entrusted with this task should take the re-

sponsibility and the

CAO/AO was directed to send a list of those persons who had obtained loans and to take action to write off whatever that cannot be recovered after

obtaining relevant ap-

Contd... proval from the Treasury.

133 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. It was questioned about the 5. It was mentioned that Non-Recovery of Loan Bal- this officer had obtained ance of Rs. 22,835/- due this loan around 20 years from a Staff Member. back, and as he is now in his old age, the Fund had taken action to write off this amount after obtaining approval from the Board of Directors. 6. The Committee observed 6. It was stated that they that a sum of Rs. had made those persons 10,860,978/- had been over aware , but due to vari- recovered from the employ- ous reasons those per- ees of the Public Institu- sons had not come to tions, but action had not collect the money. The been taken to identify those Committee was of the employees and refund the opinion, that if the pre- money. scribed period had lapsed, those amounts could be credited to the revenue of the Fund. The CAO/AO was also directed to take action to adopt a better methodology in recovering the loans granted to employees of the public institutions. Sri Lanka Savings 1. The Committee enquired 1. It was stated that Cases Bank Ltd. about the recovery of loans have been filed against granted by the Pramuka PSDB borrowers and the th March 06 , 2013 Savings & Development bank has already recov- Bank. ered 93 mn in 2011 and (Ministry of Finance Rs. 77 mn. in 2012. & Planning) 2. The current position of the 2. It was mentioned that settlement of repayment of according to the Repay- capital plus interest for the ment Scheme, capital has original shareholders was to be settled initially and queried. the interest subsequently. It was also stated that shareholders had not so far demanded any interest as the bank was settling such liabilities as Contd... per the scheme. 134 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 Comments & Decisions of Institution & Ministry Identified the COPE 3. It was questioned about the 3. It was stated that the future plans and whether bank cannot be popular- the bank has any plans to be ized without having popularized in order to im- branches and therefore prove in savings. it was going to set up a new branch in Mannar in March 2013 and two other branches in Matara & Anuradhapura before the end of April 2013.

National Insurance 1. It was enquired whether the 1. The CAO/AO stated that Trust Fund presentation of Annual approval had already Reports had been timely been obtained for the March 06th, 2013 done. 2010 Annual Report and would be presented in Parliament very early (Ministry of Finance and the 2011 Annual & Planning ) Report would be tabled in Parliament within 02 months. It was further stated that the accounts pertaining to the year 2012 had not yet been finalized and the back- log would be cleared within the next 04 months. 2. The Committee noted that 2. It was stated that these while 49 vacancies were 09 positions indicated as existing in the Fund 09 po- excessive had been out- sitions were in excess. side the Cadre.

3. It was questioned as to why 3. It was revealed that the the post of General Manag- Chairman had been as- er (Chief Executive Officer) signed to perform the had been vacant since the duties of the Chief Ex- very inception of the Fund. ecutive Officer and Board of Directors had vested all the administrative powers in the office of the Chairman. Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 4. It was questioned as to 4. It was mentioned that the why 74 officers had approval of the Management been recruited on con- Services Department and the tract basis. Salaries & Cadre Commis- sion had already been obtained and those officers on contract basis would be absorbed into the permanent Cadre. The CAO/AO was directed to make it a point to obtain the treasury approval before making any appointment. 5. It was observed that a 5. It was informed that initially, loan of Rs.527 million the NITF had been in agree- granted to the Galadari ment with the hotel to pur- Lanka Hotel Company chase shares for the value of Limited by the Strike, the loan; when a share was Riote, Civil Commotion valued by the Chief Valuer and Terrorism Fund, and a private valuer as for remained without being Rs. 15/- other share holders recovered over a long were not in agreement with period of time. that valuation and as such the NITF had agreed to get back money from the management of the hotel for which they too agreed.

6. It was questioned as to 6. It was stated that the discus- why action had not sions had been held before been taken to recover the BOC which was the fund the loan of manager and the Institution Rs.111,525,369/- grant- had agreed to pay the whole ed to Ceylinco Compa- amount of the loan by 2014. ny. 7. It was queried about the 7. It was stated that this project current position of the commenced in 2011 and the electronic card system to contract had also been be used by the Agrahara awarded and that although it beneficiaries. had been planned to issue these cards to all 6,50,000 public servants , the project had not been implemented as expected due to the delay in gathering required infor- Contd... mation. 136 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 Comments & Decisions of the Institution & Ministry Identified COPE 8. It was noted that the Ad- 8. It was stated that the draft ministration Manual manual had been prepared which should be prepared and the Board of Directors in terms of the PED/12 had decided to discuss with Circular had not been the top management and to prepared even after 6 get the approval and in years of the inception of addition to that it had been the Fund. planned to prepare a Work Procedure Manual also.

9. The Committee ques- 9. It was stated that for an tioned as to why an ex- each permanent female penditure amounting to servant 02 sarees and for Rs.952,500/- had been each female servant on incurred on the purchase contract basis 01 saree had of uniform materials, been issued. Although which had become a there had been a misunder- fruitless expenditure. standing with regard to the specification according to the CAO what have been provided with, was in better quality than the ordered specifications. 10. It was questioned as to 10. It was stated that 2013 what action had been budget had allocated mon- taken to strengthen the ey to NITF to cover crop Farmers Insurance insurance part and the Scheme. Farmers Insurance Scheme is still at the discussion level as there is a problem to be solved. 11. It was observed that the 11 It was stated that though NITF had made its contri- the NITF had made its con- bution till 2008 to num- tribution only in 2008 and ber of re-insurance agen- 2009, the Fund had been cies but no income had unable to make any claim been earned by the Fund and after that the NITF had from 2004 to 2008. not contributed to any re- insurance agencies. The Committee was not satisfied with the manner in which the officers answered and directed to send a report on re- insurance to the Committee Contd... within 3 weeks. 137 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 12. It was enquired about the 12. It was stated that for this Insurance Cover for Par- Insurance Cover only liamentarians. 10,000,000/- is granted and the Fund has requested to increase the present amount which is not sufficient at all. State Pharmaceuticals 1. The Committee observed 1. It was stated that earlier Corporation that the procedure adopt- the SPC used to surcharge ed by the SPC to recover only for the remaining March 06th, 2013 the value of the drugs stock of drugs, but they when poor quality drugs have now introduced a been supplied, was not system to surcharge the (Ministry of Health) adequate enough. entire batch of drugs with an additional 25% surcharge, so that the supplier would be more vigilant when supplying drugs in future. 2. It was queried about the 2. It was stated that if a prod- Black Listing Policy. uct or a batch failure is reported for 05 consecu- tive instances, the supplier be black listed for 03 years, and if they need to get re-registered the supplier needs to show the correctness of the drug/ drugs to the SPC. It was further revealed that at present the supplier is black listed only for that particular drug/drugs and that a new procedure had been proposed, and it had been referred to the Legal Section, where it says if the supplier fail to supply the product as per the required quality for 03 instances within 02 years, the supplier would be black listed for 05 years, and the re-registration would be done on explain- Contd... ing their correctness to the 138 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 Comments & Decisions of the Institution & Ministry Identified COPE Recall Committee of the SPC. The CAO/AO was directed to submit a report on the black listing procedure including the institutes that had been black listed due to quality failure, and the institutions that had not been black listed by supplying quality failure drugs, and the reasons for not black listing those institutions. The Committee also pointed out that the SPC should take action to publish the black listed institutions at least in their official web-site to make the general public aware.

3. It was enquired the cur- 3. It was stated that the final rent position on the draft Bill had been submit- amendments to the Drug ted to the Legal Drafts- Policy. man‟s Dept.

4. There had been a dis- 4. The CAO/AO agreed to crepancy with regard to look into this matter and the profit/loss of the submit a report to the Com- Nugegoda Osu Sala Out- mittee. let, when compared with the Auditor General‟s report and the report submitted by the SPC. 5. It was questioned wheth- 5. It was stated that the price er the SPC had taken control policy had not yet action to introduce a been introduced after the price control policy on termination of the earlier drugs. price control policy in 2002, but the SPC had decided to mark the prices until this policy is introduced, and at present they are at discussion level with the Ministry of Trade & Contd... Commerce in this regard.

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6. It was enquired as to why 6. It was stated that due to the profit had been de- the delay in reimburse- clined substantially in the ment of funds from the year 2012. Treasury, the SPC had to obtain overdraft facilities, and as a result the SPC had to pay overdraft interest to the Bank. As it was brought to the notice of the Committee that a discussion had been fixed to be held with the Treasury and other relevant authorities regarding the Budgetary Provisions on a future date, the Committee wanted the CAO/AO to submit a report on the outcome of this meeting to the Com- mittee. 7. It was questioned about 7. It was explained that the purchasing procedures. there were various types of tender boards, appointed by the Ministry, SPC and Cabinet, but large amount of pharmaceutical items are purchased on the recommendations of the tender boards appointed by the SPC.

8. It was observed that alt- 8. It was stated that these hough the Medical Sup- drugs had been ordered plies Division had applied for the private sector, and for 36,000 packs of Pro- when the purchases were mothasine Oral 500 mg., made it was revealed that the Dy. General Manager some of them were of ( Sales ) had recommended poor quality. The CAO/ to purchase 70,000 vials AO further added that out of which 17,947 vials they had now adopted valued at Rs. 864,866/- several measures to re- were confirmed to be of duce purchasing of poor substandard quality. quality drugs to the coun- Contd... try. 140 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 Comments & Decisions of Institution & Ministry Identified the COPE

9. It was enquired as to why 9. The CAO stated that the the drugs that had been pur- Indian Manufacturing chased from India had been Companies manufacture sold at a higher price in Sri drugs for Sri Lankan Lanka when compared to market in the British the Indian Market prices. Pharmaceutical Stand- ards and US Pharmaceu- tical Standards which were of high quality, whereas drugs for Indian market are manufac- tured under Indian Phar- maceutical standards, and as such, the prices in Sri Lankan market are higher than the Indian market prices.

10. It was observed that due to 10. It was mentioned that the delay in testing the sam- due to inadequacy of ples at the prescribed time laboratory facilities and period, out of the 1750 units also to overcome the of Chlorpromazine tablets drug shortages in the valued at Rs. 924,000/-, market, the SPC had 1435 units valued at Rs. released the drugs to the 757,680/- of poor quality market as soon as they tablets had been issued to received the drugs, and the patients. thereafter only the testing procedure had been commenced.

11. It was observed that out of 11. It was stated that due to Rs. 450 million released on an oversight a list of a Cabinet decision to pur- essential lifesaving chase essential lifesaving items had not been in- drugs, 16 essential items cluded in the earlier list, had not been purchased, but with the permission while six items of drugs of the Secretary, Minis- which had not been listed as try of Health those items essential items valued at Rs. had also been included, 30,871,760/- had been pur- which were also essen- chased. tial lifesaving drugs.

Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 12. It was noted that by the 12. It was stated that the time it was confirmed that SPC had taken action to there were broken glasses in recover the value of the 2,900,000 units of Cefurox- injections from the sup- ime Sodium Injections val- plier. ued at Rs. 102,181,043/-, 2,852,409 units had already been issued to patients.

13. It was observed that no levy 13. The CAO/AO was di- had been paid to the Treas- rected to look into this ury in the year 2012 by the issue. SPC. 14. The Committee also wanted the CAO/AO to pay attention on the following matters.

(i) A procedure to be adopted with regard to the expired drugs on disposal and claiming,

(ii) To enhance the storage facilities,

(iii) To prepare a management information system.

Lakdiva Engineering 1. It was discussed regarding 1. The CAO/AO stated Co. Pvt. Ltd. the directive given at the that the Company Reg- last COPE meeting to istrar had informed the March 07th, 2013 merge this company with inability of amalgamat- SLTB. ing this company with a (Ministry of statutory Board as this Transport) institution had been established under the Company‟s Act.

Contd... 142 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 Comments & Decisions of the Institution & Ministry Identified COPE

2. It was pointed out by the 2. It was stated that liquidating treasury officials that the company either by pay- attention should be fo- ing compensation to the em- cused on the matters ployees or absorbing them such as current pricing into the SLTB cadre was the system, existing staff solution as it possessed no inefficiency, working assets and further mentioned capital and the cash flaw that even the occupied land in order to revive this was vested with the SLTB. company. 3. It was discussed about 3. The Committee wanted the the court case being CAO/AO to discuss this heard in connection with matter with the Hon. Minis- the recovery of Rs.21 ter as they needed to be fi- million from the private nalized soon if any liquida- security firm in lieu of tion would be implemented. the assets lost during their service period. 4. It was brought to the 4. The Committee pointed out notice of the Committee that the approval of the that they had had discus- shareholders must be ob- sions with a Chinese tained before implementing company for a joint ven- such a decision. ture and was optimistic that the current unfavourable position of the Company might be turned around with this new strategy. 5. The Committee expressed its dissatisfaction about the performance of the institution and wanted the CAO/AO to discuss with the Hon. Minis- ter to take a decision about the future of the Institution. Distance Learning 1. The Committee noted 1. The CAO/AO was directed Centre that the Annual Report, to table them following the Action Plan and the Cor- proper procedure for pre- March 07th, 2013 porate Plan had not been senting such reports to the (Ministry of Public tabled. Parliament. Administration and Home Affairs)

Contd... 143 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2. It was enquired as to why 2. It was stated that they had an over draft had been gone for O.D. facility obtained in spite of the with the intimation of availability of deposits earning an interest income more than Rs. 46.3 mil- on the short term invest- lion. ments like fixed deposits. 3. The Committee observed a 3. It was stated that the significant decrease of main reason for the de- revenue of the Centre from crease in revenue was the the year 2010 to 2012 reduction in the number which had led to a loss of of training programmes Rs. 875,000/- in 2012. held during this period due to lack of funds. It was also stated they did not receive enough training programmes as many of the public institutions had restrictions on their budget for training programmes. However, an attempt was being made to get funds from institutions such as WHO, Red Cross, etc. 4. A signifcant variances had 4. It was stated that they been observed between the reviewed the budget every budgeted and actual in- month, and take correc- come and expenditure, for tive action, having ana- the years 2011 and 2012. lyzed the variances. How- ever, it was further stated that the factors that had led to the declining revenue were beyond their control. 5. The Committee enquired 5. It was stated that the bulk about the outstanding debt- of the outstanding had or balance amounting to been due from the Minis- Rs. 3,887,699/- out of try of Education and they which Rs. 892,024/- had had been following up on been in existence for more these debtor balances reg- than 5 years. ularly. It was also mentioned the unrecoverable amounts would be written off on proper approval.

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Co-operative Whole- 1. The Committee noted that 2. The CAO/AO stated that sale Establishment the Procurement Plan had they were in the process not been prepared for 2011 of preparing the Procure- th March 07 , 2013 -2013. ment Plan for the period.

(Ministry of Co- operative & Internal Trade) 2. It was pointed out that 17 2. It was stated that as the audit queries still remain Audit Department had unanswered and the institu- newly been established, tion had taken considerably all the queries would be a longer period to answer answered within 02 the audit queries. weeks.

3. It was enquired as to why 3. It was stated that as the only 2 Audit & Manage- Treasury Director who ment Committee meetings chaired the committee had been held in 2012. meetings, had retired and no one had been appointed in his place, they had been unable to hold the meetings regularly. The Committee was of the view that if the institution can run on a profitable basis any problem would not be arisen even if the committee meetings are held without a treasury representative.

4. It was observed that action 4. It was stated that this had not been taken to re- was an issue with regard cover the arrears of rent to an old arrears due income amounting to from Lanka Sathosa and Rs.124,661,893/- from 198 discussions had already institutions and individuals. been held with the particular institution and they had been recovering the arrears for last one and a half years.

Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. It was queried as to why 5. It was stated that this inci- action had not been taken dent had taken place in to identify and recover 2004 when the Sathosa the loss from the respon- was closed down and by sible persons involved in now all the machinery the purchase of 11 con- which had been there, had veyor machines for been auctioned as scraps. Rs.5,095,455/- which The CAO/AO was di- were presently missing. rected to report on this issue to the Audit. 6. It was questioned as to 6. The CAO/AO stated that what action had been the total accounts in the taken to reconcile 50 ac- previous years had to be count balances as per the re-done and agreed to 16th and the 20th direc- attend to the matter as tives at the previous early as possible. COPE meeting held on 13.10.2011. 7. SATHOSA had spent an 7. It was stated that the amount of Rs.2,516,999/- amount of Rs.2 million is to provide security to the an incorrect figure and the private residence of the service of two security Chairman. officers of SATHOSA had been obtained to provide security to the residence of the Chairman on the approval of the Board of Directors since the beginning of the SATHO- SA Security Service. The Committee directed to submit a report to the Committee on this, in order to indicate how this process had taken place.

8. It was pointed out that 8. It was mentioned when 140 rice processing ma- these paddy hulling machines valued at chines which were sup- Rs.14,501,998/- had re- posed to be distributed mained idle. among the small farmers were imported in 2005, and they were not in usable condition. It was fur- Contd... ther stated that

146 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 Comments & Decisions of the Institution & Ministry Identified COPE although a tender had been called for the sale of these machines, as reasonable bid had not been received the machine had been kept with them.

9. It was observed that a 9. It was stated that this stock stock of coconut valued at of coconut was imported Rs.677, 160/- (6156 US from Kerala at the price of Dollars) imported from Rs.50-60 per nut, to bring Kerala had been de- down the local coconut stroyed without being price, on the instructions of issued to the market. the ministry and that when the consignment reached the harbour, the price had gone down. It was further added that at the Food Se- curity Council meeting it was decided not to release the consignment assuming that there would be pest infected coconuts and also the payment had not been made as they did not place the order and that they had to bear only the destroying charges. The Committee directed to see that such things would not take place in future.

10. It was noted that the evi- 10. It was stated that they were dence relating to the bal- confronted with the prob- ances of accounts of lem of unavailability of Rs.5,482,050,935/-had necessary documents and not been submitted for with great difficulties 2011 audit. final accounts had been prepared and action would be taken to avoid such shortcomings in future. Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 11. The Committee ob- 11. The CAO/AO stated that served that an official there had been an outstand- quarters which was in a ing loan since 2004, which dilapidated condition had been continuously pay- and had been restricted ing in installment basis and due to non settlement now the matter has been of loan amounting to settled. Rs.75,231,724/- due for the HNB. 12. The Committee en- 12. The CAO/AO stated that quired as to what action they had planned to imple- had been taken to in- ment some major projects crease the profit of the under which they had had Institution. discussions to start a city hotel with 200 rooms in the property situated at Rajagi- riya and had spoken to a Malasian Party and another Indian Party to start a five star hotel in the 6 ½ acre property situated at D.R.Wijewardene Mawa- tha, Colombo-10. The Committee directed to discuss with the Treasury through the Secretary to the Ministry with regard to this business plan. State Trading (Co-op) 1. The Committee en- 1. The CAO/AO, referring to Wholesale Company quired into the current the directive given at the Ltd. status of the Company last COPE meeting to amal- which had not been gamate this company with March 07th, 2013 operating since 2010. the Co-operative Wholesale Establishment (CWE) stated that they could not carry (Ministry of Co- out the amalgamation due operatives and Internal to the unavailability of nec- Trade) essary provisions in the respective Acts, and requested a directive from the Committee to wind up the Company. The Committee recommended winding up of the Company provided that any amalgamation was Contd... not possible. 148 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 Comments & Decisions of the Institution & Ministry Identified COPE

2. Having observed that the 2. It was stated that they did Company had incurred not want to let this staff of losses amounting to Rs. five employees idle and 3 million and Rs. 6 mil- that their service was made lion respectively in 2011 use at times by the ministry and 2012 besides its opin relation to certain activi- erations had been ties such as exporting rice stopped in 2010, en- etc. The Committee was of quired into the nature of the view that it was the work which the current Company which would staff of the company ultimately be responsible involved with. for their duties as they had still been under this company.

3. It was noted that this 3. The Committee wanted company was not a going the CAO/AO to take im- concern at the moment. mediate action to proceed with the most realistic alternative discussed at the meeting and also directed to report to the Committee on the action taken.

It was commented that this situation was extremely serious and the Directors can be personally liable due to this situation, and, therefore, advised to take immediate measures to close down this company, otherwise the Treasury will have to fund for restarting the company. It was agreed to submit a Cabinet paper in consultation with Treasury to proceed with complete winding up with concurrence of all Part- ners / Directors concerned.

The CAO/AO was advised to inform the progress to Contd... the Treasury, the Audit and the Committee.

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4. Having observed that the 4. It was stated that the sug- directive issued by the Sec- gestion of the company in retary on 17 December this regard is to liquidat- 2012, to liquidate the coming rather than amalgam- pany and absorb the exist- ating. ing employees to the cadre of CWE as new recruits and to settle the outstanding with regard to liabilities with People‟s Bank taken on Treasury indemnity, with the intervention of the General Treasury, it was questioned as to why the company has failed to take action accordingly.

Provident Fund for 1. The Committee questioned 1. It was stated that out of Buddhist and Pali as to why the Buddhist & 17 universities only two Pali University had come Universities namely the March 07th, 2013 under a different fund and Buddhist & Pali Univer- whether they had any plan sity and the to amend the Act. Buddkasravaka Bhikshu (Ministry of Higher University are directly Education) governed by the Ministry and have been established under two separate Acts and two separate provident funds have also been established. It was further revealed that a special Committee had been appointed to explore the possibility to amend certain clauses in the Act. The CAO/AO was directed to instruct the special Committee, also to discuss the matters in order to bring the Univer- sity under UGC. Contd...

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2. It was queried as to why 2. It was stated that the the investment income amount paid to the benefi- which was Rs.8 mn. had ciaries had become higher come down to Rs.5 mn. in than the investments and 2011. the fund had not developed as expected . 3. It was enquired as to why 3. It was mentioned that there the number of foreign stu- had been a small downfall dents had gradually gone in the number of foreign down. students enrolled in the University due to the following reasons:

(i) Other institutions established to provide education for foreign students.

(ii) Inadequate hostel facilities Universities Provident 1. It was enquired as to why a 1. It was stated that this Fund & Universities Medical Insurance Scheme scheme had been included Pension Fund had not been established in the 2013 Action Plan upto date as planned in the and already preliminary March 07th, 2013 Action Plan prepared for discussions had been held 2011/2012. in this regard. Action would be taken to imple- (Ministry of Higher ment the Medical Scheme Education) by the year 2014. 2. It was observed that the 2. It was stated that earlier unidentified balance of UPF contributions had contributions as at been calculated by each 31.12.2012 had been Rs. university, and after the 6,843,877/-. amalgamation, there had been various shortcomings in the ledger accounts submitted by the universities, and as such they had a problem of identification. Hence the UGC had decided to appoint a committee to solve the problem. The CAO/AO was directed to take action to finalize this issue before they are summoned for the next COPE Contd... meeting. 151 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3. It was observed that the 3. The Chairman, UGC academic allowances had agreed to submit a Cabi- been considered along with net paper to obtain cov- the salaries when calculat- ering approval. ing the contributions to the UPF and enquired the current position. 4. The current position on the 4. It was stated that the preparation of the Ordi- Commission had already nance in terms of the Uni- prepared the draft Ordi- versity Act No. 16. was nance and had submitted enquired. to the Legal Draftsman‟s Dept. in May 2012, and that within two months time they could finalize the Ordinance.

5. The Committee noted that 5. It was mentioned that in contrary to the Cabinet they had already submit- decision of 24.03.1999, the ted a Cabinet Paper, and Fund had credited 08% the Cabinet had issued from the salaries of the em- instructions to the two ployees to the Pension Secretaries of the Minis- Fund, and enquired whether try of Finance and High- the Commission had taken er Education to discuss action to rectify the matter. and submit a proposal to the Cabinet as to how this could be regularized.

Eastern University of 1. It was discussed about the 1. The Committee was of Sri Lanka courses conducted by the the opinion that the Uni- University. versity should now take March 07th, 2013 action to produce more employable graduates, and see that the univer- (Ministry of Higher sity expands the concept Education) of the degree courses. The Committee wanted the CAO/AO to prepare an assessment plan and see whether the standards had been successful after the completion of Contd... such degree courses.

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 2. It was observed that 2. It was stated that at first medical equipment to instance the Procurement the value of Rs. 13 mil- Committee had turned lion had been procured down the request, but after for the year 2012 with- explaining the urgency of out following the proper the medical equipment by procurement procedure; the Dean of the Faculty of Following discrepancies Health Care and Sciences, were observed. the Procurement Committee decided to award the tender. (i) Out of the 03 bids, Further it was informed that two bids were forged, they were not aware that and one bidder had been there were 02 bidders in a garment accessories identical telephone numbers supplier, and addresses. The Dean of the Faculty informed the (ii) Two bidders were Committee that his respon- seemed to have been one sibility was only to select person in view of the the quality equipment, and identical in telephone he was not aware of the numbers and addresses, price variation. The Chair- man, UGC stated that it had (iii) Prices of the equip- been the responsibility of ment had been higher the Bursar to look into the than the prevailing inter- above matters, and by now national market prices. the former Bursar had been interdicted for some fraudulent acts done by him.

The Committee was of the view that the University had to go for criminal investigations, and to take disciplinary action against those officials who had been involved in this issue.

3. It was enquired as to 3. It was stated that due to why replies to the audit lack of information there queries had not been had been a delay in submit- furnished. ting replies to 01 audit query in the year 2010, and that 2010 - 01 query action would be taken to 2011 - 05 queries send replies to all audit queries that were in arrears Contd... within a month time. 153 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 4. It was enquired whether 4. It was stated that as per the action had been taken recommendations on the against the persons who Committee appointed to were involved in irregu- investigate on to the irregularities that had taken larities, the management place over the years. had issued charge sheets against 03 officials, and the inquiries are still being carried out. 5. It was observed that with- 5. It was stated that 03 offic- out considering the ne- ers were involved in this cessity, the university had transaction and the Presi- purchased 155 computer dential Investigation Unit licence keys at a cost of is conducting investiga- Rs. 5,186,455/- and there- tions, and an internal in- after those licence keys quiry had also been com- had been exchanged for menced. 15 personal computers and UPSS valued at Rs. 1,399,000/- causing a loss of Rs. 3,791,455/- to the University. 6. It was enquired as to why 6. It was mentioned that the PABX System equip- Presidential Investigations ment purchased at a cost Unit had informed the uni- of Rs. 3.4 million without versity not to install the following the procure- equipment until the inves- ment procedure had been tigations are over. idling, without being used for the intended purposes. 7. It was noted that the uni- 7. It was stated that as per the versity had awarded the total estimate of Rs. contract of cutting and 150,000/- given by the removing of 27 valuable Timber Corporation, this trees to a private contrac- contract had been awarded tor for Rs. 70,000/- with- to this contractor, where out the approval of the Rs. 70,000/- had been ob- Vice Chancellor, where tained. With regard to the the university would have balance Rs. 80,000/- the earned Rs. 500,000/- had university had issued they been sold by them. charge sheets against 03 officials involved, and would take action to deduct the balance amount from Contd... their salaries.

154 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 Comments & Decisions of the Institution & Ministry Identified COPE 8. It was observed that the 8. It was revealed that action university had not taken had been taken to recover action to recover a sum of the dues wherever possi- Rs. 70,407,561/- from 57 ble, but since some of the- lecturers who had se were very old cases and breached agreements. due to relevant documents, they had been unable to recover the money. It was stated that due to the shortcomings on the earlier agreements, they were unable to deduct the money from the lecturers E.P.F. and E.T.F. funds, but at present the university had amended the agreements accordingly. The CAO/AO was directed to submit a list of those lecturers with the due amounts. Botanical Garden 1. The Committee discussed 1. It was stated that in ac- Trust Fund about the future plans of cordance with the ten year the Fund. plan of the Government it March 08th, 2013 has been proposed to set up 10 Botanical Gardens by the year 2016 and they (Ministry of Botanical hope to set up 5 Botanical Gardens & Public Gardens covering 5 eco- Recreation) logical zones initially including North & East. The CAO/AO was directed to send a report to the Com- mittee within 2 months on this matter. 2. It was enquired as to why 2. Meetings could not be only one meeting of Trust regularly held since the Board had been held in Secretary to the Ministry each year of 2011 and of Economic Development 2012. under which the Fund had been maintained previous- ly, was unable to attend the meetings due to his busy nature of work. But by now they had planned Contd... to hold meetings regularly. 155 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 3. It was enquired as to why 3. It was stated that whenever the Dept. of Botanical they are in need of some Gardens under the Minis- financial allocation they try cannot run the man- happen to wait for treasury agement of all the Botani- funds unless they have a cal Gardens rather than separate Fund. The Com- having a separate Fund. mittee was of the view that the Treasury should also pay attention to implement a new financial management system suitable for the modern environment rather than having a consolidated fund which is the old colonial practice. 4. It was enquired whether 4. The CAO/AO stated that a the Corporate Plan had Corporate Plan for the been prepared. Dept. of Botanical Gardens for the period 2010-2016 had been prepared and the Committee directed to prepare a separate Corpo- rate Plan for them as there are different objectives & functions pertaining to the Fund. 5. It was questioned as to 5. It was stated that on the why action had not been request of them the NERD taken as per the directive had appointed a Committee No.9 given at the previ- look into this matter and it ous COPE meeting held had submitted a report recon 17.08.2010 regarding ommending a new system the installation of electri- instead of the electrically cally operated gate. operated gate which had been out of order. In the mean time just after the Fund was brought under the Ministry of Economic Development, it had been decided to construct a new complex with souvenir shops, ticket counters and the facilities specially for disabled persons and that Contd... with the approval of the

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE Cabinet of Ministers the construction of the new complex had now been completed.

6. It was observed that 6. It was stated that decision although an amount of had been taken by a Depart- Rs.1,000,000/- had been mental Tender Board and given to the Chief Engi- they had frequently remind- neer of the Department ed the Building Department, of Buildings of Kandy Kandy of this matter. The the two water tanks in Committee was of the view Peradeniya Botanical that there was a practical Garden had not been problem between the activi- constructed so far. ties of the Fund and the Ministry since the tender had been granted by the Departmental Tender Board and the money had been allocated by the Fund and directed the CAO/AO to send a report to the COPE with regard to these administrative problems.

Lanka Phospate Ltd. 1. The Committee en- 1. It was stated that it had been quired the reasons for difficult to trace the docu- th March 08 , 2013 receiving a qualified mentary evidence in relation audit opinion in the to certain debtor balances (Ministry of State Re- years 2006/07, 2007/08, and that a decision had been sources & Enterprise 2008/09 and 2011/12 on taken by the Board of direc- Development) the ground of non pro- tors to write off the unrecov- visioning for bad debt- erable balances out of the ors and improper total of Rs.7 million. The maintenance of the Committee, having directed ledger of trade debtors the CAO/AO to submit the while the accounts for copies of the audit reports to 2009/10 and 2010/11 the Auditor General, also had been given an un- wanted a report on the stand qualified opinion. of the company with regard to the qualified audit opinion given on the accounts mentioned above. Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE

2. The Committee observed 2. The CAO/AO stated that that the production of the they had to purchase more company had increased raw materials incurring a only by 25% in 2012 as heavy expenditure during against the 140% increase this period since the produc- in expenditure. tion capacity of the newly purchased grinding machine had been two times greater than those of the older machines. However, they had to limit the production owing to the decrease in sales of fertilizer during this period as a result of the poor weather conditions prevailed.

3. The Committee discussed 3. The CAO/AO stated that in detail with regard to the they had to make those pay- purchase of the new grind- ments as per the agreement ing machine with a pro- and accordingly, Rs.31 mil- duction capacity of around lion had been paid including 72,000 tones, for Rs.56 the clearance charges by the million and came to know time it had been brought to that it had not been in the port. Further, out of the operation for the entire installation charges of Rs. period lapsed upto the 22 million, Rs.15 million date of the committee had to be settled. According meeting except for one to the CAO/AO, the ma- test run which produced chine had not been utilized around 50 tones. Never- as those technical faults had theless, the company had to be rectified before it was settled Rs. 46 million to completely handed over by the supplier company irre- the supplier. spective of the technical faults of the machine. Moreover, the supplier company had filed a case against the Lanka Phos- phate Ltd. preventing it taking over the performance bond valued at Contd... Rs.5.6 million.

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE 4. The Committee directed the CAO/AO to furnish a detailed report to the Commit- tee within one month on the entire process of purchasing the new machine including the following details.

(i) Feasibility study report together with the reasons for purchasing a new machine

(ii) Board decision in respect of purchasing a new machine

(iii) Details regarding the purchase of spare parts worth of Rs.71 million for the older machines (Para 08)

(iv) Names of the members of the Technical Evaluation Committee (TEC) and the tender board

(v) Report of the Technical Evaluation Committee

(vi) Present stand of the TEC regarding this machine.

vii) Breakdown of the cost of Rs. 56 million incurred on purchasing the new machine

(viii) Current status of the machine

The Auditor General was also directed to audit the entire procurement process with regard to this new grinding machine. Contd...

159 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. The Committee enquired 5. It was stated that it was into renovations made by on the instructions of the the company in the mater- Ministry that they had nity wards of the Noch- got certain additional chiyagama and Eppawala work done by the same hospitals for which the contractor and further contractor had been paid mentioned that the com- exceeding the tendered pany had reimbursed the limit. additional expenses. He also stated that the contractor had completed his work before the specified time. 6. The Committee, having 6. The CAO was directed focused its attention on to hold separate inquiries several issues with regard into those matters and to the interdiction of the submit a report to the Deputy Finance Manager Committee. Further, the and the allegations made Committee stated that the by the Chairman of the Executive Director could Company and the Execu- also furnish a report of tive Director on each other. his own with regard to the matters discussed at the meeting.

National Water Sup- 1. The Committee questioned 1. The CAO/AO agreed to ply & Drainage Board on the non-tabled 2010 table the 2010 Annual Annual report and the de- report in Parliament and March 11th, 2013 lay in replying to the Audi- also to submit the replies tor General on the queries to the Auditor General (Ministry of Water raised on the 2011 draft within a week. Supply & Drainage) accounts.

2. The Committee observed 2. The CAO/AO having that the decision taken to briefed the Committee on promote the Engineering the battle between the Assistants to the Grade of two unions of engineers Engineer had not been and engineering assis- made as per a proper tants stated that the two Scheme of Recruitment unions had been in- approved by the Manage- formed to submit a report ment Services Dept. before 22nd of March, 2013 on the issues related to their professions to be submitted to the Man- agement Services Dept. Contd... for consideration. 160 REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

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3. The Committee noted that- 3. It was recommended to the state institutions such increase that as well at as hospitals had been ex- least to recover the cost . empted from the recently increased tariff on water bills.

4. The Committee pointed out 4. It was stressed the im- that the absence of a cost portance of implement- accounting system in the ing it at least in relation institution was a serious to the major schemes. lapse.

5. It was brought to the notice 5. Those figures needed to of the Committee that a be reconciled while tak- number of contradictory ing action to improve the data had been observed coordination between among the information those two divisions. It separately collected from was also noted the im- the commercial and the portance of having an finance divisions. Addl. General Manager for supervision.

6. It was discussed on the 6. The Committee recom- difficulties faced by the mended that the number management in relation to of professionally quali- the appointment of ac- fied accountants in the countants due to the influ- institution should be ence of the unions who increased. demanded to retain a 50% composition of accountants for promotional staff.

7. The Committee observed 7. The Committee wanted that the chlorine chemical the CAO/AO to look into purchased by the Board the matter. from the Paranthan Chemi- cals Ltd. was tested by neither of the institutions before using.

161 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE Agricultural & Agrar- 1. The Committee observed 1. The CAO/AO was directed ian Insurance Board that no representative of to take early action to regu- a licensed Commercial larize it soon. March 11th, 2013 Bank had been appointed (Ministry of Finance to the Director Board as & Planning) per the Act. 2. The Committee enquired 2. The CAO/AO stated that regarding the recovery of this amount could not be Rs.3.5 million released to reimbursed yet since nei- the Agrarian Fair at the ther of the two new minis- time this institution had tries was willing to take the been under the Ministry responsibility of the trans- of Agriculture and Agrar- action and agreed to take ian Services which had action to write off the later been split into two amount on proper approval. ministries. 3. It was enquired as to why 3. It was stated that the dis- action had not been taken cussions which they had to reimburse the salaries with the relevant ministries amounting to on this matter had not yet Rs.1,908,815/- paid to 4 brought a favourable result. employees released to other institutions. 4. The Committee discussed 4. It was stated that they were on the future plans on working on a new pension restructuring this institu- scheme with a higher pre- tion which was not a go- mium and further stated ing concern at the mo- that if the existing members ment due to the non via- were reluctant to join with bility of the existing pen- this new scheme, it had sion scheme. been decided either to form another scheme with an affordable premium or to refund their total contribution with a reasonable interest. 5. It was brought to the no- 5. It was emphasized that the tice of the Committee schemes had been prepared that only about 1230 at that time to pay the pen- farmers in the Anuradha- sions to other eligible farm- pura & Polonnaruwa ers as well. However, it had districts had been paid not been able to continue as with the pension in 2012 the Ministry had also faced Contd... besides there were thou- with a problem of its own sands of farmers liquidity. The Committee 162 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 Comments & Decisions of Institution & Ministry Identified the COPE through out the country expressed its dissatisfac- who were eligible to tion, and wanted the receive the pension. CAO/AO to take immediate action to pay the pen- sions to other eligible farmers as well. 6. The Committee noted 6. The CAO/AO was di- that the recoverable rected to send details to amount of loans and loan the Committee on those advances due from inter- loans with the present dicted employees and position. from those who vacated posts had been Rs.1,694,045/-.

7. The Committee observed 7. It was stated that they had that the miscellaneous found it difficult to trace advances and fuel ad- the relevant documents of vances amounting to certain advances which Rs.530,798/- had not had been older than 10 been settled even as at years and further stated the end of the year 2012. that it would be produced to the board for a decision. 8. The Auditor General, 8. The CAO/AO was di- referring to a matter ob- rected to look into the served at the auditing, matter as such corrections pointed out that the cer- could not be accepted in tain corrections made on auditing. the documents related to indemnity payments had not been authenticated by the relevant officers.

9. The CAO/AO and the 9. The Committee wanted officials of the treasury the CAO/AO to formulate informed the Committee a new strategy to restruc- that they had already ture this institution and drafted several schemes stressed the importance of for approval of the Cabi- getting the consultancy of net to launch a viable expertise before the im- scheme at least with a plementation of a new capital input from the pension scheme and the treasury. dearth of actuaries in the country was noted as a Contd... matter of great concern.

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10. The Committee enquired 10. The Committee wanted into an allegation against the CAO/AO to look into an ex-General Manager of the matter and send a the institution about draw- report to the Committee. ing salaries without reporting to duty. State Pharmaceuticals 1. It was enquired as to why 1. It was stated that alt- Manufacturing Corpo- the profit of the SPMC had hough the production had ration declined in the year 2012. been increased the revenue had been decreased st March 21 , 2013 due to the overheads being increased rapidly. (Ministry of Health)

2. It was observed that the 2. It was mentioned that the drugs ordered by the Med- SPMC did not have the ical Supplies Division had capacity to produce the not been supplied by the total requirement and that SPMC. the SPMC could only provide around 20% of the total requirement of the MSD. 3. The current position on the 3. It was revealed that due preparation of the Drug to various reasons there Regulatory Act. was ques- had been a delay in the tioned. preparation of the New Drug Regulatory Act, but now it was at the final stage, and would be presented the Act in Parlia- ment within three months time. The CAO was directed to expedite it. 4. It was questioned with 4. It was stated that the regard to the 40 vacancies SPMC had recruited 20 in the staff cadre. trainees, and were absorbed to the permanent cadre during the last 03 months, and at present the rest of the vacancies were being filled. 5. It was enquired whether as 5. It was stated that the agreed at the last COPE SPMC had purchased 02 meeting held on new machines in the year Contd... 14.09.2011, the SPMC had 2011, but could not

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE purchased new machin- purchase in the year 2012, ery to increase the capac- due to a problem with re- ity of the production. gard to the specifications and under the JICA project, which would be implemented in due course new machines would be purchased. 6. It was queried the current 6. It was stated that this issue position with regard to would be rectified in due the recovery of PAYE course. tax from the employees of the SPMC. 7. It was enquired whether 7. It was stated that the the SPMC had obtained SPMC had already written approval from the Dept. to the Dept. of Manage- of Management Services ment Services seeking ap- to increase the subsist- proval for same. Since the ence allowance. current rates were not adequate to meet the expenses, the Committee was also of the opinion that these rates should be increased. 8. It was observed that the 8. It was stated that in future SPMC had obtained the the SPMC would obtain services of private law- the assistance of the Attor- yers without the approval ney General for legal mat- of the Attorney General. ters. 9. It was noted that proper 9. It was stated that since action had not been taken those drugs could not be in respect of quality used for re-production, failed drugs to the value SPMC had written to the of Rs. 2,970,753/- during Board of Directors seeking the manufacturing period approval to destroy them. from 2008 to 2011. 10. The Committee wanted to carry out awareness programmes to promote the SPMC brand name among the general public, and also to strengthen the staff in marketing activities. The CAO/AO was also directed Contd... to co-ordinate with the

165 PARLIAMENTARY SERIES NO.236

Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Ministry Identified COPE Universities for training staff on marketing aspects, and developing personnel at the university level in the pharmaceutical side. Securities & 1. It was discussed with 1. The Committee was of the Exchange Commission regard to the foreign In- opinion that the SEC of Sri Lanka vestment Companies and should take action to en- enquired what action had hance the confidence in March 21st, 2013 been taken to build up the the system to achieve the confidence in the system. targets and the CAO/AO (Ministry of Finance agreed to do so. He further & Planning) stated that during the year 2012 the foreign investment too had been around US $ 40 million and in the first 2 1/2 months of the year 2013, it has been increased upto US $ 04 billion. He was further directed to submit a report on the initiatives taken to enhance the confidence of the investors. 2. It was enquired whether 2. It was stated that they had the SEC had taken action prepared it in a draft form to amend the Act as incorporating all necessary agreed at the last COPE elements, and within 03 meeting held on months time action could 07.08.2012. be taken to submit the amended Act to the Legal Draftsman‟s Dept. The Committee was dissatis- fied on the delay and wanted the CAO/AO to submit the draft Act to the Committee by following week. 3. It was discussed with 3. The SEC had developed regard to the market ma- the internal guidelines to nipulation and the action be followed. According to taken against the market the CAO/AO, the action offenders enquired taken with regard to the whether as per the last matters referred to the Contd... directive of the COPE, Investigations Committee

166 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 Comments & Decisions of Institution & Ministry Identified the COPE the SEC had taken action to would be publicized in revise the criteria as a mat- the Web site after the ter of priority, until the Act final investigations. The is passed in Parliament. Committee wanted the CAO/AO to see whether they could take further action against the offenders. 4. The Committee observed 4. The CAO/AO was di- that the existing procedure rected to adopt a simple to make a complaint to the system, where even a SEC, was very long. small scale investor would be able to make complaints easily. 5. The current position on the 5. It was stated that they National Savings Bank had had several consulta- share transaction matter tions with the Attorney was enquired. General in this regard and awaiting for his opinion. The Committee directed the CAO/AO to submit the final report referred to the Attorney General to the COPE Secretariat, and see that the SEC send reminders to the Attorney General‟s Dept. every week, stating that they had been questioned by the COPE on this issue. 6. It was enquired whether 6. It was mentioned that there had been any new since the market being cases after the resignation stabilized there had been of the former Chairman. less number of incidents reported and there was only one case reported and at present it is under investigation. 7. Several shortcomings were 7. The CAO/AO was di- observed in the Corporate rected to furnish a copy Plan. of the Corporate Plan after including the modi- fications to the Commit- tee.

167

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

Appendix B

Issues discussed at the Meetings of the Sub Committee I of the Committee on Public Enterprises.

Composition of the Sub Committee I of the Committee on Public Enterprises.

1. Hon. A.D.Susil Premajayantha (Chairman) 2. Hon. (Mrs) Pavithra Devi Wanniarachchi 3. Hon. (Dr.) Rajitha Senarathna 4. Hon. Chandrasiri Gajadeera 5. Hon. T.B.Ekanayake 6. Hon. Mahinda Amaraweera 7. Hon. Lakshman Kiriella 8.Hon. Ravi Karunanayake 9. Hon. Dayasiri Jayasekara 10.Hon. Sujeewa Senasinghe

169

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

Date/Name of the In- Major Issues & Problems Comments & Decisions of stitution & Ministry Identified the COPE

June 22, 2012 1. The Annual Reports for 1. The AO stated that the the years 2009 and 2010 2009 and 2010 Annual Institute of Indigenous had not been tabled in Par- Reports had been submit- Medicine liament. ted to the Ministry.

Ministry of Higher Education 2. The additional money 2. The institute had taken amounting to Rs. 4.5 mil- action to invest those mon- lion had been retained in eys in short term deposits two current accounts. as per the advice of the Auditor General.

3. Rs. 664,820 out of 3. The CAO/AO stated that Rs.712,812 received from the institute utilized it for WHO for research work the medical exhibition on remain idle , even by the instructions of the Board end of the year 2011 and of Management. The that amount had been CAO/AO was directed to transferred to the medical submit the approval to the Exhibitions Account. Audit.

4. Action had not been taken 4. The institute had complet- to conduct a physical veri- ed the Board of Survey by fication of stocks. March 2012. The CAO/ AO was directed to submit a copy of the report to the Audit.

5. The Committee noted that 5. The Committee directed the details of the payments the CAO/AO to submit a of Bursaries and Mahapola detailed report to the Com- had not been submitted as mittee within a month. instructed.

6. The institute had paid Rs. 6. The Committee directed

496,250 to private lawyers the CAO/AO to obtain the in the year 2009 for a court advice from the Attorney Contd… case. General on this issue.

171 PARLIAMENTARY SERIES NO. 236

Date/Name of the In- Major Issues & Problems Comments & Decisions of stitution & Ministry Identified the COPE 7. The Committee noted that the 7. The CAO/AO stated that cost per student in 2011 had the depreciation also had been Rs.298,000 and when been included to this compared with other Univer- amount, and also the cost sities this amount had been at depends on the No. of a high level. students. The CAO/AO was directed to take action to curtail un- necessary expenses.

8. Goods and Services valued at 8. The CAO/AO admitted Rs. 2,230,889 had been ob- and stated that although tained by the institute, with- such shortcomings had out following the procure- been occurred earlier, ment guidelines. action had been taken to surrender this kind of happenings.

June 22,2012 1. Sum of Rs. 73,209,309 has to 1. The CAO/AO stated that be recovered on breach of Rs. 40.5 million had al- Agreements and Bonds by ready been recovered, Open University of 31.12.2011. and action had been Sri Lanka taken to file cases against the recent defaulters.

Ministry of Higher 2. The approval of the Treasury 2. The University had al- Education had not been obtained for the ready written to the

investments amounting to Rs. Treasury seeking approv-

241,007,499. al for the investments.

3. Action had not been taken to 3. The AO explained the fill the 241 vacancies in the difficulties they had to academic and non-academic undergo in filling those staff. vacancies and with the approval of the CAO they would fill the non- academic vacancies.

4. The Committee enquired the 4. The CAO/AO stated that current position of the pay- the matter had been re- ment of language Proficiency ferred to the Cabinet Sub Committee by the Cabi- Allowance. net, and agreed to submit

Contd… the current position within three weeks‟ time.

172 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 Comments & Decisions of Institution & Minis- Identified the COPE try 5. Assets valued at 5. The CAO/AO stated that Rs.2,348,752,669 received by a committee would be the University from the Dis- appointed to finalize the tance Education Moderniza- matter on the recommen- tion Project in the years 2004 dations of the Council. to 2010 had not been brought into accounts in the years of receipts, out of which assets valued at Rs. 2,255,300,751 had been brought into accounts in the year 2011, and those assets had not been physically verified.

6. The Committee observed that 6. The Council had decided the balances of 178 funds as to deposit all that money at 31.12.2011 had been Rs. in one account and to 137,369,462. have separate ledger accounts.

7. Ad hoc sub-imprests had 7. The CAO/AO was di- been issued contrary to the rected to write to the Financial Regulations 371 Treasury and get the im- (2). prests limits increased.

8. The Committee observed that 8. The CAO/AO stated that out of a sum of Rs. 6,772,854 although the University received from the UGC for had utilized Rs. 5.81 mil- the development of IT, only a lion, this amount had sum of Rs. 1,235,944 had been credited to the main been spent upto 31.12.2011. capital account erroneously and action would be taken to rectify the error.

9 There had been considerable 9 The CAO stated that this variances between the budg- has been due to price fluc- eted and the actual income tuation and in the year and expenditure in every 2012 budgeting would be year . done correctly having collected all the necessary information from every Departments.

173 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE June 22,2012 1 The internal audit had not 1. The situation has been been carried out from the streamlined. year 2011 to 15 June, 2012. Postgraduate Institute of English 2 From the provisions made 2. The CAO/AO stated that for recurrent and capital ex- in the year 2010 the PGIE penditure for the 2011, 35% had planed to recruit 02 Ministry of Higher and 23% respectively had Computer Operators and a Education been saved. Book Keeper, but as the PGIE did not get those staff, and those provision had been saved.

July 10,2012 1 There had been 223 vacan- 1. A cadre of 652 positions cies in the cadre. had been approved and they were in the process National Institute of of preparing SOR to be Education submitted to the Dept. of Management Services for approval. Ministry of Education 2 The Debtor Balances being 2. The Committee was of written off without the Treas- the opinion that the NIE ury Approval should have obtained the Treasury approval before writing off the debtor balances.

3 Teachers Guides and Sylla- 3. The Committee directed buses remaining in the Stores the CAO/AO to conduct a without being distributed Board of Survey, and to among the Schools. take action to dispose all outdated books after obtaining the approval of the Board of Directors.

4 Inquiry had not been carried 4. The CAO/AO stated that out in terms of Financial the Inquiry had been con- Regulations on the Misplace- ducted and with the ap- ment of a Video Camera and proval of the Board of Digital Camera Directors the value of Rs. 95,000/- had been written off. The Committee di- Contd… rected the CAO/AO to submit a copy of the approval to the audit. 174 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 Comments & Decisions of Institution & Ministry Identified the COPE 5 The publication „Adyapana 5. The CAO/AO stated that Kalamana‟ printed by the the books remaining after NIE for the benefit of the sales would be distributed officers engaged in the among teachers free of schools management sector charge. valued at Rs. 783046/-had

been remained in the stores

6 Delay in issuing of results of 6. The CAO stated that the the examinations conducted delay was due to the diffi- by the NIE in 2010 was ques- culty in obtaining services tioned. of teachers on low rate paid for evaluation of answer scripts and the approval of the salaries and cadre commission had been sought for an increase. July 10,2012 1 Despite the direction given at 1. The CAO stated that the previous COPE meeting, there was no space to lo- action had not been taken to cate the Press Council in Sri Lanka Press shift the Press Council to the the information Dept. Council Information Dept. building building and now it had and also observed that incur- been located in a new ring Rs. 108,000/- as rental place and hope to locate Ministry of Mass Me- for an office which is manned the Press Council in a dia & Information by a staff of 14 members was Govt. building very soon. very uneconomical.

2 The complaints against the 2. CAO stated that out of 62

distorted news being pub- such complaints as at

lished in News papers was July 10, 2012, 50 have

questioned. been investigated in to.

He further stated that the

Press council has been

empowered to deal with

these complaints and re-

port to the Supreme

Court.

3 The Committee considered 3. The CAO informed the the possibility of taking ac- Committee that the Cabi- tion against the journalists net approval had been who write news items harm- obtained to develop the Contd… ful to the general public due Rupavahini Training Insti- tute as the Journalist Training Institute to train the journalists. 175 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE to the press freedom and to The Chairman informed set up a Govt. Institute to the CAO/AO to take ac- train journalists to enhance tion to regularize the Acts the standard and the quality pertaining to the media, of the journalism. and to establish the independent training institute, prior to the next COPE meeting.

July 10,2012 1 When questioned , the CAO 1. The Committee directed stated that they had prepared the CAO/AO to prepare the Corporate Plan for 2012 the Corporate Plan and the Tower Hall Theatre to 2016, and the Committee Action Plan and submit Foundation emphasized the need of prep- both to the Committee aration of Action plan and the after obtaining the ap- budget based on the Corpo- proval of the Board of Ministry of Culture rate plan. Directors within 02 and the Art months‟ time.

2 Annual Reports for the years 2. The CAO/AO was di- 2008, 2009 and 2010 had not rected to take action to been submitted to the Parlia- submit the 03 Annual ment. Reports to the Cabinet within a month‟s time for approval and to table them in Parliament early.

3 Despite the direction given 3. The CAO stated that the by the previous COPE meet- defending officer had ing the preliminary inquiries been given a deadline and had not been finalized up to the Committee directed date against the interdicted the CAO/AO to inform Accountant and half pay the defending office that amounting to Rs. 103,795 for the COPE had directed the year 2010 and Rs. them if they could not 190,868 for the year 2011 finalize the inquiry within had been paid to her. the given period , the defending officer would be removed and a new officer would be appointed, and the payment of half pay to the interdicted Ac- countant would also be withheld

Contd…

176 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 Comments & Decisions of Institution & Ministry Identified the COPE 4 The full salary had been paid 4 The Committee directed to the former Director of Fi- the CAO/AO to conclude nance who had been sent on the inquiry within six compulsory leave with effect month. from 24.03.2011, as the disciplinary action had been delayed.

5 A bus belonging to the insti- 5 The CAO/AO was di- tute had been hired for the rected to recover at least purposes of external parties, the expenditure by hiring instead of using for the pro- the bus. motion of stage crafts and the income so received had been Rs. 141,750, where the maintenance expenditure had been Rs. 955,047.

6 The ad hoc sub-imprest to- 6 The Committee was of taling to Rs. 890,000 and Rs. the opinion, that the Foun- 497,000 in the years 2010 dation should obtain the and 2011 respectively, had Ministry approval for mat- been granted to officers ex- ters in urgent and essential ceeding the advance limit of nature. Rs. 20,000 specified in the FR 371(2)(a).

7 A balance of more than ex- 7 The CAO/AO was di- ceeding Rs. 9 million re- rected to invest the money mained in the current ac- in a fixed deposit with the count. approval of the Ministry of Finance.

8 The Foundation had paid a 8 The CAO having accepted surcharge of Rs. 251,447 on that there had been such account of the delay in remit- lapses in the past under- tance of contributions to the took to avoid from such ETF for the years 2000 to lapses in the future. 2008.

The CAO/AO agreed to 9 The Board of Survey for the 9 year 2010 had not been con- carry out the Board of ducted. Surveys for 2010 and 2011 early. He also stated that Contd… the delay was due to lack of staff.

177 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Minis- Identified the COPE try 10 Several programmes included 10 It was directed to involve in the 2010 Action Plan had directly with the objec- not been completed. tives of the Foundation and should give priority to complete these programmes. July 17,2012 1. The Corporate Plan for 2010 1. The Council had pre- – 2014 had not been prepared pared a fresh Corporate in terms of the PED/12 Cir- plan for the period 2012- National Youth Ser- cular. 2017. vices Council 2. The Council had not imple- 2. The CAO stated that cer-

mented the programmes in- tain programmes had cluded in the Action Plan, been changed in order to Ministry of Youth and certain programmes not be compatible with the Affairs and Skills included in the Action Plan new concept of “The Sri Development had been implemented. lanka Youth”. But the

Committee stressed the

fact that certain essential

programmes had not been

implemented.

3. The Committee observed that 3. Action would be taken to

there had been 421 vacancies fill the vacancies.

in the cadre.

4. The Auditor General had 4. The Committee having

disclaimed the accounts for taken a serious note on

2008 to 2010. this directed the CAO/

AO to pay special atten-

tion on this.

5. Annual reports for the years 5. The Committee directed

2009 and 2010 had not been the CAO/AO to take ear-

tabled in Parliament. ly action to table both

reports in Parliament

early.

6. Buildings Valued at Rs. 88.2 6. The CAO/AO was di-

million had been constructed rected to submit a pro-

on lands not belonging to the posal requesting the own-

Council and the total ex- ership of these lands to

penditure incurred on the the District Co- Contd… construction lands without coordinating Committee title deeds as at 31.12.2011 meeting. had been Rs. 190.7 million. 178 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 Comments & Decisions of Institution & Ministry Identified the COPE 6. The Committee enquired 6. The CAO/AO was di- about the Progress on the rected to submit a report Payments of Rs. 4,012,148 on this matter to the made to the NISCO Committee.

7. Certain purchases at the val- 7. CAO stated that this has ue of Rs.4,619,162/- been done due to urgen- ,2,943,251/- and 4,924,500 in cy of requirements and the year 2009,2010 and 2011 now the situation has respectively had been done been streamlined and without calling for open quo- such things will not be tation. occurred.

8. The list of names of the re- 8. The CAO/AO agreed to cipients of 950 carrom boards submit same to the purchased for Rs. 1,370,250 Committee. had not been furnished even by 30th June, 2012.

9. Rs. 33.4 million and 52.39 9. The Committee took a million spent exceeding the serious note on unrealis- allocated amounts in the tic estimates.

Youth Sports Festival in

2009 and 2011 respectively.

10 Out of 170 trainees only 08 10 CAO was directed to had obtained licences after inform the respective the training given by the Minister regarding the Training School of the loss incurred due to that type of fruitless pro- Eraminiyaya, at the cost of jects. Rs. 8,350,118/-

11 Rs. 17,691,863 had been 11 The Committee was of spent for a three day residen- the view that the pro- tial training under the Pioneer gramme was not effec- Youth Programme for 3160 tive in terms of the expenditure incurred, the youth . CAO/AO was directed to submit a report on this programme to the Committee.

179 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE July 17,2012 1 The Internal Audit Reports 1. The CAO/AO agreed to and Plans had not been for- submit same as soon as warded to the Auditor Gen- they recruit an Internal Sri Lanka Institute of eral. Auditor for the SLIDA. Development Admin- istration 2 It was observed that out of 2. An Internal Committee Rs. 8,620,447/- given by the had been appointed to International Labour Organi- look into these transac- Ministry of Public zation to conduct awareness tions and the Committee Administration and programmes to the public directed the CAO/AO to Home Affairs officers. A sum of Rs. submit a report on this 4,794,300/- had been brought matter within a month forward without required time. payments being done.

3 A sum of Rs. 6,763,712/- 3. The Committee was not had been paid to the perma- satisfied on the manner nent and the contract employ- that this payment had ees for conducting lectures been made, wanted the and related activities. CAO/AO to do a further study on this matter.

4 The Committee observed that 4. The CAO was directed to some of the lecturers had see whether there is any obtained more than Rs. 20 possibility of obtaining lakhs per month in addition the royalty from such con- to the salary by conducting sultants. lectures and the royalty had not been paid as per the Govt. regulations.

5 A large amount of money had 5. Directed to put these mon- been kept in current account ey in seven day call de- without having any financial posits. benefit.

180 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 Comments & Decisions of Institution & Ministry Identified the COPE

1 The Corporate Plan for 2010 1. The CAO/AO agreed to July 20, 2012 – 2015 had not been prepared revise the Corporate Plan in terms of the PED/12 Cir- as per the circular instruc- cular. tions. Postgraduate Institute of Archaeology 2 The Budget had not been 2. The CAO/AO was di- prepared as per the PED/12 rected to pay attention on Circular. this issue in future. Ministry of Higher Education 3 The Audit and Management 3. The Committee directed Committee had met only the CAO/AO to hold at once in the year 2012. least 4 meetings in an year.

July 20, 2012 1 Annual Report for the year 1. The CAO/AO was di- 2010 had not been submitted rected to take action to to the Parliament. table the 2010 Annual University of Colom- Report in Parliament ear- bo - School of Com- ly. puting 2 The Board of Survey for the 2. The CAO/AO stated that years 2009,2010 and 2011 action would be taken to Ministry of Higher had not been carried out. complete the Board of Education Survey early.

3 There was a sum receivable 3. CAO stated that legal from academics and non- action has been taken academics amounting to against some of them and Rs.15,178,886/- owing to some have agreed to pay breach of agreements. the due amounts in installments.

4 The school had invested a 4. The CAO/AO stated that sum of Rs. 347,897,889 with- the Institute had written to out obtaining the Treasury the Treasury, and up to approval. the year 2004, the School had obtained the approval in writing, but since then Contd… there had been no response from the Treasury.

181 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 1 The Annual Reports for 2009 1. The CAO/AO was di- July 20, 2012 and 2010 had not been tabled rected to take early action in Parliament. to table the 2009, 2010 and 2011 Annual reports. University of Visual and Performing Arts 2 The Procurement plan for 2. The AO informed the 2011 and 2012 had not been Committee that the delay prepared. was due to the shortages Ministry of Higher of human resources, since Education this University had been established in the year 2005, the Procurement Plans are under preparation.

3 Delay of lectures in Tamil 3. The CAO stated that some medium was questioned. lecturers deliver lectures in Tamil and the Tamil Language is also taught as a subject.

4 Out of the provisions made in 4. The CAO stated these order to construct two hostels constructions would be in Dehiwala and Rajagiriya completed in another one amounting to Rs.205 million year. and 193 million respectively only Rs. 31 million and 21 million had been spent up to 31.05.2012 which was equal ant to 15% of the construction.

5 Only one meeting of the Au- 5. The CAO/AO was di- dit and Management Com- rected to take action to mittee had been held in the hold these meetings as year 2012. prescribed in the Treasury circulars.

6 There had been 62 vacancies 6. The Committee directed and 08 excess staff in the to include the positions of post of Academic Asst. excess staff as contract basis in the cadre according to the requirement of the University.

182 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 Comments & Decisions of Institution & Ministry Identified the COPE July 26, 2012 1 The Audit & Management 1. The CAO/AO accepted Committee had not been ap- the delay in appointing the pointed for the year 2010,as Audit Committee. He Institute of Policy per the PED/12 Circular and also stated that action Studies although 04 Audit & Man- would be taken to inform agement Committee Meet- the Govt. Audit Branch, ings had been held in 2011, from the next meeting of Ministry of Finance the Govt. Audit Section had the Audit Committee. and Planning not been informed of such meetings.

2 Resources of the Institute, 2. It was reveled that action Organizational Structure, had been taken to revise SWOT Analysis, Operating the Corporate Plan includ- results of 03 preceding years, ing these items as per the Action Plan had not been directives of the COPE. included in the Corporate Plan prepared for the period 2007 – 2012 and 2009 – 2014 as per the PED/12 Circular.

3 The Institute does not have 3. The Committee directed an approved cadre, and 53 the CAO/AO to consider employees had been recruited the provisions of the Act on contract basis. to recruit staff on permanent basis.

4 The approval of the Secretary 4. The Committee directed to the Treasury and the Dept. the CAO/AO to obtain of Public Enterprises had not approval of the Treasury been obtained for the proce- in writing. dure for the Management of Human Resources.

5 Rs. 13,214,520/- for the 5. The Committee empha- Building fund had been re- sized that all foreign funds ceived directly by the Insti- should channel through tute from the Netherlands the Dept. of External Re- Embassy, despite the require- sources of the Treasury, ment that all foreign grants and directed the CAO/AO should be channeled through to get the written consent the Dept. of External Re- of the Treasury for the sources. aforesaid funds, and adhere to the State Accounts Circulars in future.

183 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE August 14, 2012 1 The Council had held only 1. The CAO/AO stated that one meeting up to June 2012 the Council had decided and it was also observed that to amend the Act in order National Human Re- this was due to the difficul- to revise the composition sources Development ties faced by the Secretaries of the members . Council of Ministries being members of the Council to attend the council meetings. Ministry of Youth Affairs and Skills De- 2 Rs. 247,579/- had been spent 2. The Committee was of velopment out of the provision of Rs. the view that such a sur- 250,000/- made for Formula- vey should have been tion of a National Policy on assigned to the Universi- the Human Resource of Sri ties since they have re- Lanka and such a Policy had quired resources. not been formulated by the officer concerned.

3 Out of the provision of 3. The AO stated that the Rs.1,800,000 for Conducting officer who had undertak- Island Wide Talent Surveys en the assignment had Rs. 176,700 had been in- prepared a draft and had curred, and the survey had submitted to the former been abandoned half way. Chairman of the Council for recommendation.

4 Although the council planed 4. The Committee directed to train 87,856 students who the CAO/AO to submit a failed in all four subjects in report on this matter very the GCE(AL) Examination, early. only 9737 had been trained and out of the total expendi- The Committee having ture of Rs. 5,601,870/- Rs. discussed of the short- 5,066,419/- had been spent comings/weaknesses of on publicity. the Council, directed the CAO/AO to appoint a committee to look into the proposals to be included in the Act to be amended, and to review the performance of the Council. The CAO/AO was also directed to submit a report with their recommendations within three months.

184 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 Comments & Decisions of Institution & Ministry Identified the COPE August 14, 2012 1 Annual Reports for years 1. The CAO agreed to table 2004 to 2010 had not been all the Annual Reports in tabled in Parliament. arrears, in Parliament Official Languages within one month. Commission 2 Action had not been taken to 2. The Committee observed submit the Corporate Plan, that the Commission had Ministry of National the Action Plan and the not submitted the reports Languages and Social Budget to the Treasury and as directed by the previ- Integration the Auditor General. ous COPE meeting, and the officers including the Chairman of the Council had not come prepared for the days meeting, directed the CAO to take action to table all the Annual Re- ports in arrears within one month and the Chairman and the officials of the Commission to come before the next meeting well prepared.

August 14, 2012 1 Only one Audit & Manage- 1. The Committee directed ment Committee meeting had the CAO to hold the Audit been held up to July 2012. & Management Commit- Sri Lanka Bureau of tee meetings as scheduled. Foreign Employment 2 Legal action had not been 2. The CAO/AO stated that taken against the bank for the matter had been re- Ministry of Foreign encashing two cheques ferred to the Attorney Employment Promo- amounting to Rs. 800,000, General, and disciplinary tion and Welfare carrying forged signatures. action had been taken against the officials responsible for the fraudulent activity.

3 Rs. 2,264,660, paid by the 3. The CAO/AO stated that Bureau with regard to 62 air the matter had beenhand- tickets to the travel agents, ed over to the Presidential had not been claimed by the Investigations Unit, and Bureau. that they had referred it to the AttorneyGeneral.

Contd…

185 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4 A sum of Rs. 859,402,808 4. The CAO/AO was di- belonging to the emigrants rected to ensure that this had been utilized for the money be invested in activities of the Bureau. separate bank accounts, without depositing together with the funds of the Bureau.

August 14, 2012 1 Rs.2,525,020 & Rs. 1. The Commission had 1,967,207 in the year 2009 earned some money and Rs. 3,540,743 & Rs. through the sale of books Tertiary and Voca- 4,537,729 in 2010 had been and documents, and this tional Education retained in the current ac- money had been deposited Commission counts. in the bank, so that they could use them as a re- volving fund to reprint Ministry of Youth the books and documents. Affairs and Skills De- The Committee was of the velopment opinion that the Commis- sion should have invested these moneys in 07 day call deposits.

2 Rs. 1,198,600, Rs. 64,000 2. The Commission carries and Rs. 1,366,000 had been out the research along spent for research activities with the University of in the years 2009,2010 and Vocational Training , and 2011 respectively, the objec- the research papers are tives in accordance with the published in the website. Act had not been achieved.

August 16, 2012 1 Rs. 1,217,252 had been over 1. The Committee directed spent under 04 items , while to furnish a copy of the the Capital Provisions of Rs. Procurement Plan to the National Institute of 719,500 budgeted for 01 audit. Library and Infor- items had not been spent. mation Science 2 The Corporate plan for the 2. The CAO/AO agreed to period 2012 – 2016 had not revise the Corporate Plan Ministry of Higher been prepared in accordance accordingly and submit to Education to the PED/12 Circular, and the Committee. also had not attended to the remarks made at the last Contd… COPE meeting.

186 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 Non-Achievement of Prima- 3. Although the Cabinet had ry Objectives - Training of decided to recognize this Teacher Librarians training as a qualification for promotions, the Minis- try of Education had not included this in the Teach- er Services Minute and as such the teachers have been reluctant to follow this course. TheCAO/AO also stated that as there would be several requests from other services, if the CAO/AO feels that the service minutes of those services also need to revise the teacher Services Minutes will also be amended with them. The Committee was of the view that the Ministry needs to discuss with the Trade Unions before amending the Teacher Services Minute, as it could crop up many other problems .

4 The following activities as 4. The CAO/AO brought to planned for implementation the notice of the Commit- in the year 2010 had not been tee that out of the above completed. 06 projects, 04 of them  NILIS Symposium had been completed, and  Implementation of 03 other 02 projects are being small scale Projects, implemented at present.  Distribution of brochures for publicity  Preparation of E-journals  Implementation of Dis- tant Education programmes  Implementation of Co- operation Programme Contd… scheduled with Sri Lanka Library Associa- tion 187 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5 70 percent of the total lecture 5. The CAO/AO stated that hours of the Institute had out of the 03 full time been covered as the visiting lecturers, one lecturer is lecturers. abroad, and as such they have to depend on the visiting lecturers.

August 16, 2012 1 There had been a large num- 1. The Committee was of the ber of vacancies in the aca- opinion, that since the demic staff. NIBM is an independent, National Institute of self-funded institution, It Business Management should be able to make the Dept. of Management Services aware of their Ministry of Youth necessity and obtain ap- Affairs and Skills De- proval to revise the salary velopment scales of the academics . Considering the fact that the Cabinet had granted the university status to the NIBM, in the name of „National School of Busi- ness Administration, the Committee wanted the NIBM to adopt a methodology to increase the salary scales of the academics, with the assistance of the Treasury and the Ministry.

2 The 03 vacancies in the gov- 2. The CAO/AO stated that erning council had not been since the following insti- observed. tutions from which these three members are to be appointed are not in operation, appointments had not been done Sri Lanka Independent Advisory Council, National Devel- opment Bank, Commer- cial Banks Association He further stated that action had been taken to Contd… amend the Act. The Com- mittee directed the CAO/ AO to expedite the matter. 188 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 The Institute had invested Rs. 3. The CAO/AO stated that 90 million in a state bank those monies had been without the approval of the invested with the approval Treasury. of the Cabinet to be used for the constructions of the Galle and Kurunegala branches. The Committee directed the CAO/AO to furnish those documents to the audit.

4 The Committee discussed the 4. The CAO/AO was di- establishment of the National rected to submit a detailed School of Business Manage- report on this project to ment. the Committee, with the original plan, and the re- scheduled plan, indicating as to how the NIBM is planning to fund the project.

August 16, 2012 1 The following allowances 1. The CAO/AO stated that and advances had not been two trainers who got the settled. book allowance of Rs. Postgraduate Institute Book allowances paid for 02 186,756 , had gone abroad of Medicine trainers - Rs. 186,756 without submitting the Advance given to the library original receipts, but Rs. of the Institute situated at 52,794, and Rs. 2000,684 Ministry of Higher thePremises of the University had been settled by way education of Peradeniya - Rs. 52,794 of credit notes. Advance given to the library of the PGIM - Rs. 200,684

2 68 items of goods valued at 2. The CAO/AO stated that Rs. 424,346 had been idling these goods had been pur- in the stores. chased for some purpose, and since they are not in use now, action would be taken to carry out a verification and dispose same.

Contd…

189 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3 Rs. 403,000 had been paid as 3. The AO agreed to rectify lecture fees from the project the matter. funds in contrary to the letter issued by the Director of the Institute.

4 Rs. 404,400 had been paid as 4. The CAO/AO was directed staff allowances out of the to obtain the Treasury ap- Norwegian Funds without proval. obtaining Treasury approval.

5 The Head Office of the 5. The CAO/AO stated that PGIM had been constructed action would be taken to on a land belonging to the transfer the land in the Ministry of Health at a cost name of the PGIM. of Rs. 84.1 million without getting the ownership of the land transferred in the name of the PGIM.

6 The Committee was con- 6. The Committee wanted the cerned whether the PGIM CAO/AO to discuss this could establish a Postgradu- issue with the Ministry of ate Unit of their own. Health, and see what could be done in this regard.

August 16, 2012 1 The Budget had not been 1. The CAO/AO stated that prepared in the respective the University had pre- format and there had been pared the budget in the University of Kelaniya significant variances be- format issued by the UGC tween the Budgeted and the and the difference between actual expenditure. the budgeted and the actual Ministry of Higher expenditure had been due education to unexpected payments. The Committee directed the CAO/AO to prepare a revised budget accordingly.

2 Only 02 Audit & Manage- 2. The CAO/AO was directed ment Committee meetings to take action to hold the had been held up to July other two meetings as 2012. scheduled.

Contd…

190 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 The non- refundable library 3. The CAO/AO having ac- deposits amounting to Rs. cepted the lapse, agreed to 10,603,837 had been shown take action to rectify the as refundable deposits. accounting error.

4 Research allowances totaling 4. The Committee was of the to Rs. 53,619,991 had been opinion that as this pay- added to the salaries of 434 ment had been done in lecturers, in contrary to the contrary to the Treasury Management Services Circu- Circular, directed the lar No. 45 of April 2011. CAO/AO to discuss with the Treasury, and get the Circular amended accordingly.

5 13 lecturers had breached the 5. The CAO/AO stated that agreements and bonds out of the 13 lecturers, 06 amounting to Rs. 28,468,021. of them were in the process of paying the dues in installments, and legal action had already been initiated against 03 others and that other 04 lecturers would also be dealt with legally.

6 The income received from 6. The CAO/AO having ac- foreign students of the medi- cepted agreed to rectify cal faculty, Ragama amount- the accounts. ing to Rs. 24,121,762, Rs. 26,299,657, Rs. 32,159,505 in 2009,2010 & 2011 respectively had not been credited to the income and expenditure account.

7 Rs. 115 million had been 7. The CAO/AO stated that retained in the Current Ac- the University had decid- count without being deposited to invest those money ed in short term investments. in short term investment schemes.

191 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE August 21, 2012 1 2010 and 2011 Annual Re- 1. The AO stated that the ports had not been tabled in 2010 Annual Report had Buddhist and Pali Parliament. been submitted to the University of Sri Ministry and the 2011 Lanka Annual Report had been sent for translation. Ministry of Higher education 2 The Committee having ob- 2. The Committee was of the served that as per the Act, it opinion that the CAO/AO had been compulsory to give should ascertain whether, hostel facilities to all lay and it was essential to give clergy students. hostel facilities to lay students, and if not the Act be amended accordingly, and take action to enroll more lay and clergy students to the University.

3 The number of foreign stu- 3. The CAO/AO stated that dents applied had been de- since there had been insti- creased. tutes where the foreign students could follow the courses free of charge with hostel facilities, the number of students enrolled in this university had been at a lower level, and up to then in the year 2012 only 38 applications had been received from foreign students. The Committee wanted the CAO/AO to see whether they could take any remedial action in this regard

4 The Following shortcomings 4 The Committee was not were observed and the Com- satisfied with the manner mittee arrived at a conclusion the attendances are rec- that these shortcomings had orded and wanted the created administerial prob- CAO/AO to maintain a lems to the University. Lec- system to prove the lectur- turers not marking the arrival ers attendance and departure as per the Es- tablishment Code of the Uni- Contd… versities Leave records not being maintained,

192 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 Comments & Decisions of Institution & Ministry Identified the COPE 5 Rs. 2,986,806 had been paid 5. The Committee wanted as research allowances for 25 the CAO/AO to submit lecturers in contrary to the the letter of consent re- Management Services Circu- ceived from the Treasury lar No. 45 of April, 2011. to the Committee, and the method in which the re- . search allowances were paid to the lecturers.

6 The lecturers within the uni- 6. It is not appropriate to versity had been appointed to appoint a person within the Evaluation Committee the University for an eval- with regard to the promotions uation committee to con- of the Asst. Professors/ sider a person to a promo- Professors. tion and it is the responsibility of the respective university to request the UGC to appoint an independent person, who is not serving in the university. The CAO/AO agreed to act as pointed out by the Committee when appointing members to the Evaluation Committee in future.

7 The Committee observed that 7. The Treasury Representa- a sum of Rs. 18 – 40 million tive informed that the had been remaining in the university could utilize current account. this amount for their recurrent expenditure, and when the university is in need of any capital provision, the Treasury could take action to release the capital provision. The CAO/AO agreed to act accordingly.

Contd…

193 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 8 The University had paid a 8. The CAO/AO was di- sum of Rs. 374,600 as sala- rected to obtain approval ries and allowances for the from the Treasury for permanent employees of the same external examination division without the approval of the Treasury August 21, 2012 1 The Action Plan had not been 1. The CAO/AO was di- prepared in terms of the rected to prepare the Ac- Institute of Human PED/12 Circular, and the tion Plan based on the Resources Advance- responsibilities assigned to Corporate Plan and sub- ment each officer had not been mit to the Committee. indicated. Ministry of Higher Education 2 Annual Reports for the years 2. The Committee directed 2009 and 2010 had not been the CAO/AO to present tabled. the 2011 Annual Report also along with the 2009 and 2010 in Parliament before the end of Decem- ber 2012.

3 There had been a balance of 3. The AO stated that this Rs. 200,166/- which had not balance had been brought been identified in the sundry forward for over a period advance accounts older than of 12 years and there had 5 years. been no evidence to identify the balances, and the Institute had requested the UGC to write off this amount and at present miscellaneous advances are being settled without any delay.

4 The institute had incurred 4. The CAO/AO agreed to various expenditure out of obtain approval from the the money collected from the Treasury through the Uni- applicants in contrary to the versity Grants Commis- PED/95 of 14.06.1994. sion.

August 21, 2012 1 The Committee observed that 1. The Committee stressed out of the 07 items of the the need of strengthening Institute of Technolo- Internal Audit Programme, of internal audit unit of gy only 02 items had been ex- the institute. Ministry of Higher amined.

194 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 Comments & Decisions of Institution & Ministry Identified the COPE 2 12 audit queries for the years 2. The Auditor General 2010/2011 had not been re- pointed out that up to now plied. such replies had not been received by the audit. The Committee wanted the CAO/AO to look into this matter.

3 The Institute had not done the 3. The AO stated that they reconciliation of the general had rectified it in the 2011 reserve account and the capi- accounts. tal grant spent account as per the directive of the COPE.

4 The Capital Grants received 4. The CAO/AO stated that from the Treasury, there had due to the delay in com- been a considerable amount mencing the construction of savings for the past several work of the buildings at years. Diyagama, there had been Year Savings of capital a saving in the Capital 2008 40% grants. 2009 48% 2011 36% 5 A simulator and a computer 5. The Committee wanted belonging to the Ministry of the CAO/AO to carry out Port Development & Marine an investigation as per the had taken over by the Insti- Financial Regulations, for tute without obtaining the the loss incurred by fire, ownership. These two ma- and submit to the audit chines had been serviced by and the Treasury. The the Soft Logic Company, and CAO/AO agreed to sub- just two days after the two mit same. machines had been destroyed by the fire, and the loss had not been recovered from the Company.

6 The Committee observed that 6. The CAO/AO was di- there had been a sum of Rs. rected to take action to 30 million in the Current invest this money in seven Account. day call deposit schemes.

August 21, 2012 1 Out of the 22 items of the 1. The AO agreed to carry

University of Moratu- internal audit programme for out the work in arrears. wa 2012, only 07 items had been examined. Ministry of Higher Education (Contd…) 195 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2 There had been a large num- 2. The AO stated that the ber of vacancies in the Uni- necessary action would be versity, which reflects 37% taken to fill those vacan- of the academic staff and cies. 15% of the non-academic staff.

3 The Uni consultancy Service 3. The Committee was of the had been established in con- view that since this com- trary to the University Act pany had been set up in No. 16 and the Public Fi- contrary to the University nance Circular No. 380, and Act, the University had to even without the Cabinet obtain the concurrence of approval. the Cabinet. The Chair- man, UGC agreed to submit a Cabinet Memoran- dum through the Ministry of Higher Education in this regard.

4 Rs. 32,325,793 and Rs. 4. Legal action had been 16,231,808 had not been re- taken against some offic- covered from 25 and 06 offi- ers and , the whereabouts cials respectively, who had of some officers had not breached agreements and been able to trace. bonds. 5 The University had paid al- 5. The Chief Internal Audi- lowances amounting to Rs. tor of the UGC informed 3,762,408 and Rs. 264,624 the Committee that the out of the income received UGC had issued a circular from the postgraduate and on the procedure as to short term courses to the offi- how the payments should cials without obtaining Treas- be made to the consult- ury approval in the year ants. The Committee di- 2010. rected, the CAO/AO to get the circular amended by the UGC, and obtain Treasury approval. The Chairman, UGC agreed to take necessary action to rectify the matter.

September 19, 2012 1 Out of the 08 Board Mem- 1. The CAO/AO stated that bers, 02 members had not by now 02 members had J.R.Jayawardene Cul- been appointed and the meet- been nominated, and ac- tural Centre ings of the Board of Control tion would be taken to Presidential Secretari- had not been held from Sep- hold the meetings of the tember 2008. Board of Control. 196 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 Comments & Decisions of Institution & Ministry Identified the COPE The Committee wanted the CAO/AO to submit a report to the Committee after holding the 1st meeting of the Board of Con- trol. 2 Annual Reports from the year 2. The CAO agreed to table 2002 had not been tabled in the Annual Reports up to Parliament. 2011 in Parliament within a period of three months. 3 Rs. 5 million had been in- 3. The Committee was of the vested in a Subsidiary Com- view that the Centre pany without the Cabinet should have obtained the approval. Cabinet approval before the establishment of this company. The Committee directed the CAO/AO to submit a detailed report of this company with necessary information about the manner in which the Rs. 5 million had been spent and the estimated value of the goods remaining at present, to the Committee and to the audit as well, within one month . 4 Rs. 9.7 million had been 4. The CAO/AO was di- invested in Pramuka Bank rected to discuss with the which was liquidated. Treasury, Ministry of Fi- nance and the Central Bank and take a decision regarding this investment of Rs. 9.7 million. 5 Future work plan of the 5. The Committee directed J.R.Jayawardene Centre. the CAO/AO to submit a detailed report on the renovation of the building, including the estimated cost and the expected income after the completion of the renovation. The Committee also wanted Contd… the CAO/AO to carry out the functions in an efficient manner. 197 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 6 The lands and buildings of 6. Considering that the title the J.R.Jayawardene Centre- deed of the land was not had not been valued separate- in the custody of the Cen- ly. tre, the Committee directed the CAO/AO to apply for a copy of the deed immediately.

7 The approval of the Procure- 7. The CAO/AO accepted ment Committee and the the weakness and stated TEC had not been obtained that although earlier such for the additional work done irregularities had oc- in constructions amounting to curred, at present the Cen- Rs. 2,874,164. tre follows the tender guidelines before making any payment.

8 The house rent for the official 8. The CAO/AO was di- quarters of Secretary General rected to estimate it as per of the Centre had not been the provision of the Es- recovered from June 1993 to tablishment Code, and to 31st December, 2011. obtain the Board decision regarding this matter.

September 19, 2012 1 The progress of action taken 1. The due amount from the against the former Chairman former Chairman had National Institute of for Violating Rules and Reg- been around Rs. 893,000/- Language Education ulations. out of which Rs. 668,000/ and Training - was the insurance claim paid by the Institute for Ministry of Technolo- the vehicle accident, and gy and Research the balance had been some office items taken away at the time he left the office. The former Chairman had been informed to pay the dues, and the matter had been referred to the Attorney General for further action. The CAO/AO further stated that the former Chair- man had not returned his official vehicle at the time of the accident, although Contd… his services had been terminated.

198

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 Comments & Decisions of Institution & Ministry Identified the COPE 2 The Committee observed the 2. The CAO/AO stated that following shortcomings in all the staff had been the recruitment procedure. made permanent except Delay in obtaining approval for few, where their edu- for the scheme of recruit- cational certificates had ments, been referred to the Min- Differences between the istry of Education for ver- qualifications of officers who ification. had recruited, and the approved scheme of recruitment, Majority of staff had not been made permanent.

September 19, 2012 1 The Foundation had failed to 1. The CAO/AO stated that recover a sum of Rs. 283,989 the matter had been re- Sri Lanka Foundation paid as allowances and fuel ferred to the Attorney bills to a Director who had General for further action. Presidential Secretari- worked on contract basis and at gone overseas on personal leave from 3.06.2005 to 21.08.2005, and subsequently resigned from the post in December 2005, without giving one month prior notice even.

2 The fuel allowance of Rs. 2. The CAO/AO stated that 487,360 had been paid to an they had written to the officer attached to the Sri Treasury seeking advice Lanka Television Training regarding this matter. Institute appointed as an As- sistant Director in the Sri Lanka Foundation, who was not entitled to an official vehicle.

3 The agreements had not been 3. The CAO/AO stated that signed for 08 contracts in the when there had been ur- financial value of Rs. gent repairs and mainte- 5,679,918 in terms of the nance the contracts had Govt. Procurement Guide- been awarded to the regis- lines. tered suppliers, but at present the Foundation has taken action to enter into agreements before awarding any contract. 199 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE September 21, 2012 1 The Procurement Plans for 1. The AO agreed to prepare . the years 2008 – 2012 had the Procurement Plan for South Eastern Univer- not been prepared. the year 2013. sity Ministry of Higher 2 There had been unanswered 2. The CAO/AO agreed to Education . audit queries in the years submit replies to all the 2010 and 2011. audit queries in arrears within two weeks‟ time.

3 The university had violated 3. The AO stated that they . the University Act, by giving had stopped this practice promotions and allowing from 2011 , and follow some lecturers to continue in the correct procedures the services who had not thereafter. completed their postgraduate degree within 08 years.

4 There had been vacancies in 4. The CAO/AO was di- . the drivers cadre. rected to write to the Dept. of Management Services and get the cadre increased, or see whether they could get the services of drivers on „on call basis‟ with daily wages.

5 The University had paid a 5. The AO stated that this . sum of Rs. 620,694 for 04 practice had been stopped Deans to travel from their by now. residences to the office without obtaining the UGC approval.

6 Rs. 16,866,550 had been 6. The Committee directed . paid to a consultancy services the CAO/AO to submit a for the preparation of the detailed report on the fol- Master Plan of the university, lowing with regard to the where no report had been preparation of the Master obtained by the University Plan. upto 31.07.2011. The plans and proposals done by the previous company and the level of work carried out by them on the preparation of the Master Plan.

200 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 Comments & Decisions of Institution & Ministry Identified the COPE September 21, 2012 1 There had been excess staff 1. The AO stated that the of 04 in the academic cadre excess staff of the college Swami Vipulananda and 02 vacancies in the non- had been absorbed to the Institute of Aesthetic academic grades. cadre of the institute when Studies it was converted and there was no excess cadre at Ministry of Higher present. With regard to Education the two vacancies in the non-academic cadre, the CAO/AO informed the Committee that action would be taken to fill those vacancies

2 The Committee observed the 2. The Committee directed following frauds/ the CAO/AO to submit a misappropriation of funds in detailed report regarding the Institute. the frauds and misappro- Fourteen Cheques worth Rs. priation of funds, and also 3,622,315 carry instruction of to report on the progress „Account Payee Only‟ writ- of the investigations. ten in favour of various suppliers had been encashed fraudulently at a private bank in Baticaloa. Some of the cheques issued had not been crossed as “Account Payee” in terms of the UGC Circular No. 4/2006. Misappropriation of Rs. 4.5 million being committed in purchasing teaching equipment, at a high price than the normal market price, fraudulently manipulating the tender documents. Irregular payment of Rs. 450,000 being committed by purchasing some musical instruments using forged invoices. Bunk beds being purchased for Rs. 1,230,000 on forged invoices. Contd…

201 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Over payment of Rs. 450,000 being committed by purchasing of 50 Wooden Boxes, at a higher price than the prevailing market rate.

When the price of a sq. feet of a floor carpet had been Rs. 60/-, the Institute had purchased a floor carpet at the rate of Rs. 480/- per sq. ft., and a total of Rs. 898,728 had been paid.

When the market price of a sculpture wheel had been Rs. 10,000, 50 Nos. of Sculpture wheels at a price of Rs. 21,500 each had been purchased for Rs. 1,075,000, where a sum of Rs. 575,000 had been overpaid. September 21, 2012 1 The Committee observed that 1. The CAO/AO agreed to the University had prepared revise the Action Plan as University of Jaffna an Action Plan for the period directed by the Commit- 2012 – 2016, whereas the tee. Ministry of Higher Action Plan should be pre- Education pared for that particular year only.

2 The internal Audit pro- 2. The CAO/AO stated that gramme for Vavuniya Facul- the University of Jaffna ty of the University of Jaffna had recruited an Internal for the years 2010, 2011 and Auditor recently, and 2012 had not been prepared. agreed to prepare the programmes as required. 3 The outstanding balance of 3. The Chairman, UGC in- Recovery of Compensation formed the Committee, from the Lecturers as at April that recently the manage- 2012 had been Rs. ment had amended the 96,198,775. Bond Agreement including a clause stating that „ with the consent of the particular person, the university could recover the Contd… dues from his/her Provi- dent Fund‟. 202 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 Comments & Decisions of Institution & Ministry Identified the COPE

4. The advances made to vari- 4. The CAO/AO was di- ous parties for different pur- rected to submit a report poses amounting to Rs. to the Committee indi- 207,497,561 had not been cating the institutions/ recovered . persons with a breakdown of the outstanding amounts within a month time.

5. The trade receivables and the 5. The AO stated that the trade payables outstanding action had been taken to for more than 5 years had recover the balance been Rs. 504,237 and Rs. amounts from the sup- 2,562,402 respectively. pliers.

6. The specific funds amounting 6. The Committee directed to Rs. 29,493,089 had been the CAO/AO to obtain invested in fixed deposits approval from the without being utilized for the Treasury, before the purposes for which the mon- money is utilized. ey had been granted.

7. Rs. 1,000,576 and Rs. 7. Considering the expla- 2,506,648 had been paid as nation given, the Com- hiring charges respectively in mittee directed the the years 2010 and 2011 de- CAO/AO to write to the spite 04 buses had been re- Treasury explaining ceived by the University. their difficulties, and get the drivers cadre increased.

8. There had been delays in 8. The AO brought to the releasing results of the exam- notice of the Committee inations conducted by the that to prevent such de- faculties during the years lays, a new methodolo- 2010 and 2011 contrary to gy had been adopted . the circular instructions of the UGC.

Contd…

203 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 9. The Registrar of the Univer- 9. The AO stated that ac- sity of Jaffna had issued a tion would be taken to letter in contrary to FR 138, withdraw this statement. on a decision taken by the University Council requesting the Bursar that all payments authorized by university authorities empowered to do so, should be honoured without hindrances or queries‟. The Chief Internal Au- ditor of the UGC informed that this request needs to be withdrawn, since the bursar is the custodian of funds, who is empowered to certify the payment vouchers.

10 12 finger print scanners had 10 The Committee wanted been purchased for Rs. the Vice Chancellor, as 779,520/- and the machines an example, to use this are not being used to record machine to record her the arrivals and departures of attendance, and report the university staff. back to the Committee the progress after one month time. 11 Considering the Recruitment 11 The Committee directed and Appointment of subject the CAO/AO to submit matter experts and subject a report to the Commit- matter reviewers for BBM tee on this matter. (On line) Degree Programme The Committee noted that there had been no proper mechanism to monitor the on line degree programmes and no proper recruitment procedure as well. 12 Rs. 225,919,873 million had 12 The CAO/AO was di- been invested in a current rected to submit a report account without being used to the Committee on the for intended purposes . breakdown of the above amount, indicating the source of the money had been received and the purpose for receiving.

204 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 Comments & Decisions of Institution & Ministry Identified the COPE September 21, 2012 1 There had been 111 vacan- 1. Directed to submit a pro- cies in the academic grades posal to overcome the and 41 excess staff in the issue of the academic staff Lecturers ( probation ) posi- vacancies to the Commit- Uva Wellassa Univer- tion. tee within a month. sity 2 There had been savings in the 2. The CAO/AO stated that ( Ministry of Higher provisions received for re- since the Uva Wellassa Education ) search activities University was a new Uni. Year Savings as % of conducting of research Budgeted provision projects had been at a 2009 75% lower level and when the 2010 50% University gets more sen- 2011 62% ior staff they would be able to utilize the estimated amounts of funds for research.

October 04, 2012 1 The Procurement Plans up to 1. Directed to the CAO/AO the year 2012 had not been to submit a copy of same prepared. The CAO/AO stat- to the audit. SL Institute of Ad- ed that at present the Institute vanced Technological had prepared the Procure- Education ment Plan.

( Ministry of Higher 2 There had been credit balanc- 2. The Committee wanted Education ) es over 5 years amounting the CAO/AO to make an Rs.7,872,590 which had not attempt to discuss with been settled by the Institu- those Institutions and tions. come to a conclusion.

3 The deficit of the Institution 3. The Committee wanted had been increased annually. the CAO/AO to consider this at a higher management level and adopt a methodology to at least come up to the breakeven standard.

205 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE October 04, 2012 1 Research allowances amounting to Rs.48,488,274 had University of Colom- been paid to 497 lectur- bo ers without obtaining the

( Ministry of Higher approval of a research Education) committee.

2 The officials of over 60 year 2. The Committee directed of age are working in the the CAO/AO to obtain University without a Cabinet the Cabinet approval if approval. the University needs their services.

October 04, 2012 1 The Corporate Plan had not 1. The CAO/AO agreed to been prepared in terms of the revise the Corporate Rajarata University of PED/12 Circular. Perfor- Plan. Sri Lanka mance of 03 preceding years and the targets for the 05 ( Ministry of Higher ensuing years had not been Education) indicated.

2 There had been 102 vacan- 2. The CAO/AO stated that cies in the academic grades. they had a problem of recruiting staff due to the location of the Uni. The Committee wanted the CAO to introduce an incentive scheme to retain the academic staff.

3 Rs.16,036,164 had been paid 3. Directed the CAO/AO to for consultancy services follow the procedures. without obtaining approval from the Dept. of Manage- ment Services. October 04, 2012 1 23 academic and 117 non 1. The CAO/AO stated that academic vacancies to be they were undergoing University of Ruhuna filed. difficulties in recruiting academics to the Engi- ( Ministry of Higher neering & Medical Facul- Education ) ties on the prevailing salary scales. Contd…

206 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 Comments & Decisions of Institution & Ministry Identified the COPE 2 06 projects amounting to Rs. 2 Directed the CAO to adopt 2,484,878 had remained a mechanism where they dormant as at the end of Au- could recover the funds, if gust 2012. the researches abandoned the research projects.

3 Identified following short- 3 The University had to re comings in the construction tender this project to com- of the Eliyakande Boys hos- plete the defects, as such tel. the former contractor had not attend to rectify. i. The construction work had not been completed within one year as per the agreement and had paid Rs. 60,761,673. ii .The defects had not been rectified. iii. Only 1/3 of the hostel is occupied.

October 05, 2012 1 The buildings worth Rs.61.6 1 Directed the CAO/AO to million had been constructed submit a detailed report National Apprentice in 08 lands belonging to the regarding those lands. and Industrial Train- external parties and enquired ing Authority the action taken to acquire those lands.

Rs. 29 million had been set- Directed the CAO/AO to ( Ministry of Youth 2 2 tled out of the debtor balance submit a report with an Affairs & Skills De- Rs. 33.7 million as at age analysis of the out- velopment ) 31.12.2011. standing amount to the

Committee.

3 Rs. 40,696,390/- had been 3 Directed the CAO/AO to idling in the current account. take action to deposit the money in 07day call deposit scheme. October 05, 2012 1 The Committee discussed the 1 Wanted the CAO to dis- current position of transfor- cuss this issue with the Selacine Television mation of this institute to a Hon. Minister, and submit Institute limited liability company. a Cabinet paper with a feasibility report , giving ( Ministry of Mass reference to the earlier Media & Information) Cabinet decision to recon- sider of establishing this institute as a separate enti- Contd… ty.

207 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2 The Committee observed that 2. The CAO/AO stated that receivable amounting to Rs. 2.5 million had been Rs.9,027,363/- had not been identified and a Commit- identified tee had been appointed to look into the balance.

October 05, 2012 1 Considering the financial 1. Directed to take measures performance of the Universi- to control the deficit University of Voca- ty the Committee observed tional Technology deficit had increased when compared to the years 2009 ( Ministry of Youth and 2010. Affairs & Skills De- Deficit velopment) 2011 (6,844,277 ) 2010 (2,938,042) 2009 ( 5,264,826)

October 05, 2012 1 Without entering into an 1. Directed the CAO/AO to agreement or bond 03 offic- submit a report including Vocational Training ers who had gone overseas on the officers responsible for not obtaining a bond Authority study leave with salaries had or entering to an agree- not reported for work and ( Ministry of Youth ment and authorizing action had not been taken to Affairs & Skills De- leave with pay to the recover the spent sum of Committee. velopment) Rs.8,164,703/- by the Au-

thority.

2 The Vehicle had been hired 2. As per the provisions of

on Rs. 40,000/ - monthly rent the Establishment Code basis period from sept.2008– only half pay should be Dec.2010 and a sum of Rs. paid at the time of inter-

1.119 million had been de- diction the Committee directed the CAO/AO to posited to the bank account of the officer who used the follow the correct proce- vehicle and also it had been dures. revealed that the beneficiary and the owner of the vehicle had been the same person.

Although he had been interdicted, he was being paid the full salary from 02.06.2011 with the former Chairman‟s written recommendation. Contd… 208

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3 Foreign project funds 3. Directed the CAO/AO to amounting to submit a schedule with Rs.119,633,370/- had been details. ( area on which the land situated, date on incurred for the construction which the land had been of 26 buildings, on lands not transferred to the Authori- belonging to the Authority ty, amount estimated to be without obtaining title deeds. spent to obtain the title deeds, and the amount spent so far, and the difficulty came across in the process of getting the

ownership transferred).

4 There had been 55 instances 4. The Committee having employees had been recruit- considered seriously the ed and promoted in contrary informal activities of the

to the Management Services former Chairman and directed the CAO/AO to Circular. submit a detailed report on the above 55 instances.

5 02 consultants had been re- 5. The CAO/AO stated that cruited without obtaining the the former Chairman had approval from the Dept. of given these appointments. Management Services and The Committee directed paid a monthly allowance of the CAO to stop payment Rs. 150,000/- per person. with immediate effect and if need to get the services of the consultants to follow the proper procedures/ circular instructions. October 09, 2012 1 12 items of assets costing Rs.14,248,641/- had not been Buddhasravaka Bhik- revalued and brought into the ku University of Sri accounts. The CAO/ AO state Lanka d around 75% of the above ( Ministry of Higher had been done and the bal- Education) ance would be completed early.

209

PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE October 09, 2012 1 Discussed the student registration. Postgraduate Institute of Pali & Buddhist Studies

( Ministry of Higher Education)

October 09, 2012 1 The Internal Audit unit had 1 Directed the CAO/AO to & November 06,2012 issued 13 reports in the year discuss with the officials of 2011, the University had not the Auditor General‟s University of Perad- used them for the purposes of Dept., and take action to eniya internal control and admin- reply to all audit queries ( Ministry of Higher istration of the University. before the 06.11.2012. Education) 2 The amount had been in- 2 Directed the CAO/AO to creased to Rs. 195 Mn from prepare a standard bond for the lecturers who had all Universities and if nec- breached the agreements. essary to get the advice from the Attorney General.

3 The Corporate Plan for the 3 Directed the CAO/AO to period of 2012 –2016 had not include the SWOT analysis been prepared in terms of the as instructed and furnish the PED/12 circular. Corporate Plan to the Com- mittee.

October 09, 2012 1 The books worth of Rs.82,853,801/- and 04 types Wayamba University of fixed assets worth of Rs. of Sri Lanka 1,037,450,869/- had been

( Ministry of Higher excluded from the annual Education) board of survey.

2 The University had not ob- 2 Directed the AO to obtain tained the approval of the the approval of the line Ministerial Procurement Ministry, and to adopt a

Committee, when the value methodology to carry out

of the construction had been the constructions within the Contd… exceeded by Rs. 5 million stipulated legal frame work for the construction of a wall in the future. around the sports ground in the Kuliyapitiya premises.

210 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 Discounts amounting to Rs. 3. Directed the CAO/AO to 410,536 had not been re- submit a detailed report ceived when purchasing lion the purchase of these brary books. books.

4 A payment of Rs.4,130,770 4. Directed the CAO/AO to could not be made to the sup- appoint a Committee with plier for the purchase of li- the approval of the Coun- brary books due to not ob- cil and to get their instruc- taining approval of the Pro- tions as to how this pay- curement Committee ment could be made.

October 10, 2012 & 1 Annual reports for the years 1. Directed to table all three November 06, 2012 2009,2010 & 2011 had not reports in Parliament prior been tabled in Parliament. to the end of December University of Saba- 2007 and 2008 Annual Re- 2012. ragamuwa ports had been tabled in the year 2011. ( Ministry of Higher Education) 2 The Procurement Plan for the 2. Directed the CAO/AO to year 2012 had not been pre- look into this matter. pared.

3 Discussed the Irregular pay- 3. The AO agreed to recover ment of Rs.139,000 to the the money from those University Employees under responsible officers and their personal names and the inform the Committee in Committee observed that the due course. issuing of warning letters against theses officials would not be sufficient, this had been a cash fraud.

4 After paying a mobilization 4. The CAO/AO stated that advance of Rs. 2,256,981 to a the Uni. had decided to contractor, the contract take legal action with the agreement had been can- consultation of the Attor- celled due to the abandon- ney General. ment of the construction work, but the University had not taken adequate action to recover the unsettled mobilization advance amounting to Rs.1,179,637 from the contractor.

211

PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE October 10, 2012 1 Doctorate had been awarded 1. Directed the CAO/AO to to a foreigner by the Hema submit a report to the University of Sri Jay- Ellawala foundation in con- Committee on the action awardenapura trary to the approved proce- taken against those re- dures and the provisions of sponsible officers and ( Ministry of Higher the University Act. schedule of the honorary Education) degrees awarded by the Uni. for the last 05 years.

2 University had not obtained 2. Directed the CAO/AO to the concurrence of the UGC obtain the approval from as per the Universities Act the UGC. for 07 self financing courses.

3 The Academics had not 3. Directed the CAO/AO to signed the arrival and depar- adopt a methodology to ture and also not followed the verify the arrival and de- specified procedure in obtain- parture of the academics ing leave as per the Establish- and their leave records. ment Code of the UGC.

4 Rs. 10,690,115 to be settled 4. Directed the CAO/AO to in the advance account by the submit a breakup of the end of the year 2011.The outstanding amount with CAO/AO stated that out of the age analysis to the Rs. 10Mn, Rs. 3 Mn had been Committee also directed settled and there had been no the CAO/AO to adopt a evidence to prove the rest of methodology by assigning the outstanding amount. a responsible officer to recover these advances.

5 Computer Information Sys- tem which had been established incurring Rs. 4,003,580 and US $ 28,101 in the year 2010 had not been utilized. The CAO/AO stated that this project had been abandoned half way.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE November 06,2012 1 The Electronic Barrier Ma- 1. The Committee observed chine purchased for the vehi- that the Authority neither Sugathadasa National cle park in the year 2009 at a had taken action to hold Sports Complex Au- cost of Rs.4,912,403/- were an internal inquiry nor thority not available some facilities. had made a complaint to The CAO/AO stated that due the police, directed the ( Ministry of Sports ) to 2 accidents , the agent had CAO to send a detailed issued a report stating that the report on this issue to the machine is in working condi- Committee. tion but it does not perform the original standard.

2 Sports Hotel leased out for a 2. The CAO agreed to sub- 3 year period at a monthly mit a report having made rental of Rs. 760,000/- had an investigation. been cancelled by the Secre- tary, Ministry of Sports in December 2010 and thereafter it had been managed by the Authority. Minimum loss of Rs. 2,158,230/- had been incurred in the year 2011.

3 Discussed about the outstand- 3. The CAO/AO stated that ing debtor balance of Rs. 25 this amount had been Mn from the Sri Lanka brought forward from the Cricket Board. year 2006 and Authority had held several discussions with the Cricket Board officials, but there had been no response , the Authority had decided to take legal action against the Sri Lanka Cricket. November 06, 2012 1. Laboratory and other equip- 1. Directed the CAO/AO to ment valued at see whether those items Sri Lanka Institute of Rs.71,135,242/- remained are needed by the other Fundamental Studies idle in the laboratories for research institutes in the more than 20 years. The country before they are ( Ministry of Technol- CAO/AO stated that accord- being disposed. Also ogy & Research) ing to the valuation report the directed the Treasury to value of the equipment had co-ordinate with the In- been Rs.83 million and action stitute in this regard. would be taken to dispose of Contd… them by auction.

213 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2 Discussed about the testing 2. Wanted the CAO to see of water for Cadmium and whether the Ministry of Fluoride by several institu- Technology and Research tions could adopt one system to be used by all those institutions. 3 New building of the Institute 3. Wanted the CAO/AO to had been awarded to the appoint a Technical Of- Dept. of Buildings, without ficer from the Institute to obtaining the approval of the supervise the construc- Cabinet appointed Procure- tion work in order to ment Committee. avoid sub contracting.

November 07, 2012 1 (i) Rs. 5,052,238 had been 1. (i)The CAO/AO stated spent for the renovation of a that action had taken to Saumymoorthy Thon- building for the Head Office recover 25% of the ex- daman Memmorial which the foundation had penditure. Foundation taken in rent for two years, but the Foundation had occu- ( Ministry of Live pied the building only for a Stock & Rural Com- short period of time. munity Development ) (ii) Rs. 3,227,524 had been (ii) The CAO/AO stated incurred for repairs in anoth- that the Foundation had er building obtained on rent been occupying the build- basis in 2008. ing and the repairs also had been done subject to the condition that the owner would not increase the rent of Rs.175,000/- per month for another 08 years.

2 The meetings of the Board of 2. The Committee directed Directors had not been held the CAO to hold the meet- for the last 02 years. ings of the Board of Di- rectors and forward the Board Minutes to the Committee.

November 07, 2012 1 Enquired about the steps had 1. It was brought to the no- been taken to develop and tice, due to lack of funds, Galle Heritage Foun- conserve the Galle Fort. the Galle Fort handed dation over to the UDA for refor- ( Ministry of National mation. Heritage)

214 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 Comments & Decisions of Institution & Ministry Identified the COPE November 07,2012 1 Enquired whether there 1. The CAO stated that the would be any possibility of institute would have to Institute of Biochem- increasing the intake of stu- increase the staff to ac- istry, Molecular Biol- dents for the courses con- commodate more stu- ogy & Biotechnology ducted by the Institute. dents. ( Ministry of Higher Education ) November 20, 2012 1 Discussed of having a Re- 1. The Committee wanted search Centre with modern the CAO/AO to submit a Postgraduate Institute facilities covering all the proposal to the Hon. Min- of Agriculture Universities/Postgraduate ister of External Affairs Institutes. explaining their necessity. ( Ministry of Higher Education ) 2 Two entities had been estab- 2. The CAO/AO stated that lished and two lecturers and a by an error they had es- Coordinator had been recruit- tablished these centers ed and paid Rs. 2,857,220 as and by now they had been allowances in contrary to the closed down. University Act No.16 of 1978.

3 Fixed assets totaling to Rs. 3. The CAO/AO having ac- 1,415,374 related to 04 pro- cepted the shortcoming, jects had not been transferred informed the Committee to the relevant Institute in that the Institute did not terms of the SL Agricultural have a fixed assets regis- Research Policy Council ter at that time, but before Agreement. the end of this year they would take action to complete this task. November 20, 2012 1 73 computers had been pur- 1. Directed the CAO/AO to chased at Rs. 6,482,745 in 5 prepare a Procurement Postgraduate Institute occasions in contrary to the Plan and ensure that the of Science Procurement Procedures. purchases were done accordingly. ( Ministry of Higher 2 Holiday wages amounting 2. Directed to take action to Education) Rs. 125,083 had been paid to regularize the matter. an Electrical Engineer without obtaining the approval as per the University Establish- Contd… ment Code.

3 A Programme Coordinator had been paid Rs. 4,913,086 without issuing a formal appointment letter as per the Uni. Establishment Code. 215 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4 Outstanding balance of the 4. Directed the CAO/AO to gratuity fund amounting to see that those balance be Rs. 2,812,975 had been cred- invested in a separate ac- ited to the General Deposit count. The CAO/AO Account. agreed to invest them in the fixed deposit Account.

November 20, 2012 1 Scholarship beneficiaries 1. The CAO/AO stated that should complete the Degree legal action had been tak- National Center for in Master of Philosophy en against 08 beneficiaries Advanced Studies in within a period 3 to 5 years, who had violated the Humanities and So- 22 and 21 beneficiaries in the agreement. cial Sciences years 2005 and 2006 respectively had not completed the degree within the prescribed ( Ministry of Higher period. Education) December 05, 2012 1 The Budget and the Action 1. Directed the CAO to look Plan had also not been pre- into this matter. SL Institute of Local pared in line with the Corpo- Governance rate Plan

( Ministry of Local 2 Both Local Authorities and Government & Pro- Provincial Councils need to vincial Councils) be developed as per the Act, but an adequate attention had not been paid for the development of HR in the Provin- cial Councils by the institute.

December 05, 2012 1 70 members in the staff were 1. The CAO/AO stated that paid gratuity and enquired the amount had been in- Information & Com- how gratuity paid if the insti- vested in the Sampath munication Technolo- tution was closed down. Fur- Bank but not disclosed in gy Agency of SL ther enquired where had the the accounts. provision of Rs. 25 million Further stated that there ( Ministry of Telecom- for that purpose been invest- were a lot of accounting munication & Infor- ed. errors, a decision had mation Technology) been taken by the Board of Directors to recruit a Chief Finance Officer.

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

Appendix C

Issues discussed at the Meetings of the Sub Committee II of the Committee on Public Enterprises.

Composition of the Sub Committee II of the Committee on Public Enterprises.

1. Hon. Karu Jayasuriya (Chairman) 2. Hon. A.P.Jagath Pushpakumara 3. Hon. S.M.Chandrasena 4. Hon. (Dr.) Mervin Silva 5. Hon. Sarana Gunawardene 6. Hon. Weerakumara Dissanayake 7. Hon. (Al-Haj) A.H.M.Azwer 8. Hon. Sajith Premadasa 9. Hon. Sunil Handunnetti 10.Hon. Namal Rajapaksha

217

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 Comments & Decisions of Institution & Ministry Identified the COPE 1 The Annual Reports for the 1. It was agreed to take ac- years 2006, 2007, 2009 & tion to table the 2009 and July 05th 2012 2010 had not been tabled in 2010 Annual Reports in Parliament. Parliament within 02 Coconut Cultivation months time and to table Board 2006 & 2007 Annual Re- ports within two weeks time. (Ministry of Coconut 2 There had been 406 vacan- 2. It was stated that the ac- Development & Ja- cies in the cadre of the CCB. tion would be taken to natha Estate Develop- seek the approval for the ment ) SOR to fill all the vacancies. 3 The Committee wanted to 3. The CAO/AO stated that know the current status of the the coconut nurseries had coconut cultivation in the already been established Northern and Eastern Prov- through the project funded inces. by the JAICA and the seedlings had been distributed several times with the aim of developing the cultivation in the region. 4 A loss of Rs. 1.7 million had 4. The Committee directed been incurred in the year the CAO/AO to submit a 2008 by the Egg Production report on this matter to the Unit of the Mahayaya Model Committee. Coconut Garden.

July 05th 2012 1 Both Corporate Plan and the 1. The Committee directed Action Plan of the Council the CAO/AO to prepare Land Survey Council contain number of shortcom- the Corporate Plan and the ings. Action Plan as directed (Ministry of Lands and to submit it to the & Land Develop- Committee ment ) 2 The Annual Reports for the 2. The CAO/AO was di- years 2008 and 2009 had not rected to take action to been presented in Parliament table the outstanding re- when the 2010 was present- ports and also to see that ed. the 2011 Annual Report also be presented in Par- liament before the com- Contd.. mencement of the Budget.

219 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3 The Committee questioned 3. As the Committee was of as to how the Council was the opinion that the Coun- carrying out the duties with- cil should recruit a secre- out having a permanent Sec- tary on permanent basis to retary. have an efficient service to the Council. the CAO/ AO agreed to obtain approval from the Dept. of Management Services to that effect. July 05th 2012 1 The annual report for 2011 1. The Committee directed had not been tabled in Parlia- the CAO/AO to take ac- Colombo Commercial ment. tion to table the Annual Fertilizer Co. Ltd. Report for the year 2011 in Parliament before Au- (Ministry Agrarian gust 2012. Services & Wildlife) 2 A total amount of Rs. 2.The Committee directed 36,368,221 had been due the CAO/AO to submit a from 67 debtors for over 5 list of those debtors to the years. Committee with the amounts due from each debtor. 3 The Company had taken over 3.The Auditor General draft facilities contrary to the pointed out that if they Financial Regulations 387 have invested money in a and paid a sum of Rs. fixed deposit they can 8,833,269 as interest. obtain LC’s against that deposit from the respective Bank. The Committee wanted the CAO/AO to negotiate this matter with the bank and come to the best alternative. 4 The Committee observed an 4. The CAO/AO was di- unidentified credit balance of rected to submit a report Rs. 498,000 in a bank ac- on this matter to the Com- count relating to the years mittee within two months. 2007, 2008 & 2009.

Contd..

220 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 Comments & Decisions of Institution & Ministry Identified the COPE 5 The construction of the store 5. The CAO/AO stated that a in Hambantota District, for land in Hambantota had which Rs. 253,173 had been been identified and that spent in 2007 for the prepara- action would be taken to tion of plans, had not been commence the construc- commenced even by 2012. tion work once all legal matters are finalized. 6 Three fertilizer mixers valued 6. The CAO/AO stated that . at Rs. 3,750,000 had been one of the machines lying idle since the year which had already been 2008. corroded would be disposed after getting the treasury approval and also stated that they had stopped the production of mixed fertilizer consequent to the commencement of the distribution of direct fertilizer. July 09th 2012 1 The Committee queried as to 1. The CAO/AO agreed to . why the shortcomings point- consider the weaknesses/ ed out by the Internal Audit shortcomings pointed out Hector Kobbekaduwa had not been taken into con- by the Internal Audit in Agrerian Research & sideration by the Institute. future. Training Institute

(Ministry of Agriculture) 2 The Committee observed that 2. The CAO/AO agreed to . there had been 44 vacancies take early action to fill the to be filled. vacancies. 3 The Committee observed that 3. The CAO/AO stated that . the amount to be recovered two of the defaulters had from Scholarship Debtors come for a settlement ex- had increased from Rs.11.46 cept the cases pending million to Rs.12.9 million. before the courts and at present the institution obtains a property of the scholars as a guarantee from those who go on scholarships.

Contd..

221 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4 28 air conditioners had been 4. The Committee was of purchased incurring Rs. the view that there had 1,509,206/- without follow- been no transparency in ing the proper tender proce- this transaction, and want- dures. ed the CAO/AO to see that the Institute follow the tender procedures when making purchases in the future. 5 The Committee also having 5. Directed the CAO/AO to observed that 03 laptops had see that the tender guide- been purchased in 2011, at a lines are followed in the cost of Rs. 237,000/- without future following the tender procedures,. 6 The Annual Reports for the 6. The Committee directed year 2011 had not been ta- the CAO/AO to take ac- bled in Parliament. tion to table the report before the commencement of the budget. 7 The Board of Survey on li- 7. The CAO/AO stated that brary books valued at Rs. action would be taken to 11,668,360/- had not been carry out the 2011 Board carried out for the year 2011. of Survey early. 8 The repairs to the vehicles 8. The Committee informed had been assigned to the that the Head of the Dept. same garage, without follow- has the authority to spend ing the procurement guide- funds only in an emergen- lines. cy, and the Institution should follow the accepted tender procedures at the other times. 1 The Committee having ob- 1 The CAO was informed July 09th 2012 served the inordinate delay of the necessacity of sub- occurred in the presentation mitting annual reports as National Aquatic Re- of annual reports for the well as annual accounts at sources Research & years 2008, 2009,2010 and the prescribed period of Development Agency 2011 , and the delay in time. presentation of annual ac- (Ministry of Fisheries counts for 2011 to the Audit. & Aquatic Re- sources )

Contd..

222 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 Comments & Decisions of Institution & Ministry Identified the COPE 2 A fresh Corporate Plan for 2. The Committee directed 2012-2016 had been to submit same to the prepared. Committee as well as to the Auditor General. 3 The Committee questioned 3. The AO stated that a . on a construction of a boat Committee had been ap- for the use of research pur- pointed under the chair- poses, exceeding the estimat- manship of a former Addl. ed cost by Rs.4,733,693/- Secretary to look into the which was not in usable con- procedure of the construc- dition. tion of this boat and the Committee directed to submit a copy of this report to the Committee. 4 An advance of Rs. 3,279,233 4. The CAO stated that as (83%) had been granted in they had not received re- April 2011, for the purchase quired funds from the of two 200HP, 4 Stroke en- treasury they could not gines valued at Rs. 4.49 mil- initiate large scale pro- lions and these engines had jects and as such they not been received even by were thinking of selling May 2012. these engines to the SL Navy.The Committee was of the opinion that the Agency should have done a feasibility study before spending such a huge amount of money on these purchases 5 The Fixed Assets Register 5. The Committee directed had not been updated which the CAO/AO to take ac- incudes assets valued at Rs. tion to update the Fixed 1,106 million, in terms of the Assets Register manually Treasury Circular and the too parallel to the soft- Financial Regulations. ware and to submit a complete report on the Fixed Assets, by Septem- ber 2012.

Contd.. 223 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 6 The Committee observed 6. The AO stated that these that a stock of discarded rails rails had been purchased valued at Rs. 1,360,800 had to construct a pillar in the been idling in the Regional Kalpitiya Research Cen- Research Centre at Kalpitiya. tre, and expect to complete the construction before the end of this year. The Committee also expressed its opinion that they had purchased these items without a proper plan and thereby a large scale wastage occurred. 7 Without calling for tenders 7. It was agreed that the the security services of the Agency would negotiate Agency had been procured with the Ceylon Fishery directly from the Ceylon Harbours Corporation or Fishery Harbours Corpora- call for fresh tenders to tion and paid Rs. 2,613,496, select the security service Rs. 4,418,684 and Rs. supplier for the year 2013. 5,346,112 in the years 2009, 2010 and 2011 respectively. July 09th 2012 1 The Committee questioned 1 The Committee directed about the presentation of An- the CAO/AO to take early Udarata Development nual Reports for the year action to table these re- Authority 2010/2011. ports in Parliament.

(Ministry of Economic Development ) 2 The Committee queried about 2 The CAO/AO stated that the Construction of the Am- since the documents per- buluwawa – Ganetenna taining to the aforesaid Road. construction had been misplaced, it was decided to handover the matter to the Commission to Inves- tigate Bribery or Corrup- tion, and that they could come to a decision within a month’s time.

Contd.. 224 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 A report had not been sub- 3. Directed the CAO/AO to mitted as per the directive of furnish a fresh report to the COPE meeting, regarding the Committee within a the current position of the week. Soap Production Project – Hanguranketha – Haku- ruthale. 4 The Committee was of the 4. The CAO was directed to opinion, that there were 5 appoint a Committee to institutions that are to be scrutinize all deficiencies/ amalgamated by September weaknesses in those insti- 2012. tutions as per the COPE Report, and take action wherever necessary, and submit a detailed report to the Committee within a month time. July 09th 2012 1 The Auditor General brought 1 The CAO/AO agreed to to the notice of the Commit- review the accounts for National Institute of tee that since there had been 2012 as pointed out by the Fisheries & Nautical a number of deficiencies in Committee and submit to Engineering the accounts submitted by the audit. Institution, a disclaimer of (Ministry of Youth opinion had been expressed Affairs & Skills De- by the Audit for several velopment ) years. 2 The Committee observed 2 The Committee wanted that there had been 102 va- the CAO/AO to submit a cancies and 12 excess staff in copy of the approved ca- the cadre. dre to the audit and the CAO/AO pointed out the difficulties to recruit qualified personnel for management level positions on the present salary scales. 3 The Corporate Plan had not 3 The Committee wanted been prepared in terms of the the CAO/AO to prepare PED/12 Circular. the Corporate Plan covering a period of 5 years, and to update it annually.

Contd..

225 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4 Only one officer had been 4 The CAO/AO stated that deployed in the Internal Au- the internal audit func- dit Unit, and the important tions are carried out by observations made by the the Head Office, accord- Internal Audit had not been ing to the resources avail- made use of for the better able, and that action management of the Institu- would be taken to recruit tion. staff for the Internal Audit in the year 2013. 5 The Committee observed that 5 Such shortcomings had the Institute had not taken occurred at the time of action to ; transferring this institution to the Ministry of Youth i.settle 07 dormant assets Affairs and Skills Devel- amounting to Rs. 7,752,204/- opment, and agreed to and 04 dormant liabilities rectify these issues, before amounting to Rs. 1,168,298/- the end of 2012. remaining over a number of years,

ii.dispose 07 unusable motor vehicles. July 09th 2012 1 The Institute had not got the 1. The Committee directed Scheme of Recruitment and the CAO/AO to keep the Palmyrah Develop- Promotion approved by the treasury informed of this ment Board Salaries and Carder Commis- matter. sion. ( The Auditor General (Ministry Traditional pointed out that certain ap- Industries & Small pointments had been made Enterprise Develop- without considering the re- ment) quired qualifications.)

2 The Committee wanted to 2 The Committee, express- know the current position of ing its dissatisfaction for the construction of the not being able to foresee Karainagar Industrial Com- the issue at the beginning, plex where the building was directed to submit a report in a bad condition at the mo- to the Committee having ment and also the respective discussed the matter with land is not vested in the Pal- the board. myrah Development Board.

Contd..

226 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 The Committee noted that a 3 The CAO/AO was di- sum of Rs.1,220,000, recov- rected to initiate action to erable from the tenants of the recover the arrears. sublet Colombo office building, had been written off without proper approval. 4 The Committee, observed 4 The Committee directed that there were ten items in the CAO/AO to regularize the accounts aggregating to the matter early. Rs.98,855,051 which had not been satisfactorily vouched due to the non availability of the fixed assets register. 5 The Committee observed that 5 The Committee wanted all the sales centres except the CAO to pay serious one in the years 2010 and attention on the loss mak- 2011 had been running at ing sales centres and loss. farms and further suggested to make policy changes such as bringing in the private sector investors into the industry. 6 It was revealed that the oper- 6 The Committee directed ations at the centre built at to send a performance Cheddikulam at a cost of Rs. report on this centre to the 434,843 in 2007, had not Committee within a been started till 31st May month. 2012. 7 The sublet portion of the 7 The Committee, having building owned by the PDB expressed its dissatisfac- at Galle Road, Colombo 04 , tion on the transaction, of which the expenses for the directed the CAO/AO to electricity as well as the wa- regularize the matter and ter had to be borne by the send a report to the Com- Board due to the unavailabil- mittee within a month. ity of a provision in the agreement to recover them. 8 The arrears of the contribu- 8 The CAO/AO was dition for the EPF amounting to rected to take immediate Rs. 2,866,660, had not been action to regularize the remitted to EPF. matter.

227 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

July 24th 2012 1 It was observed that as per 1 These appointments had the Act, the Board of Direc- to be made by the National Institute of tors should comprise 15 Hon.Minister, and agreed Plantation Manage- members, but only 13 mem- to inform him according- ment bers had been appointed, and ly. the 02 members representing (Ministry of Planta- the Trade Unions had not tion Industries ) been appointed yet.

2 The 2010 and the 2011 An- 2 The CAO/AO stated that nual Reports had not been action would be taken to tabled in Parliament. table the 2010 and 2011 Annual Reports early.

3 The Committee enquired as 3 The CAO/AO explained to why there had been 04 that since the Salary vacancies and 10 excess staff Scales applicable to cer- in the cadre. tain positions had been at lower level, it had been difficult to recruit staff for these positions. The Com- mittee suggested the CAO/AO to see whether they could revise the salary scales, to attract the persons who are interested.

4 The total income of the Insti- 4 The CAO/AO was di- tute in the year 2011, when rected to pay attention on compared to 2010 had been this issue. decreased, and also the profit of 2010, had become a deficit in the year 2011.

228 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 Comments & Decisions of Institution & Ministry Identified the COPE

July 24th 2012 1 According to the Act, the 1. It was stated that these Director Board should com- appointments had to be Tea Research Insti- prise 11 members, but 02 made by the Hon. Minis- tute members representing the ter, and agreed to inform of Sri Lanka Trade Unions had not been him of the appointments. appointed yet. (Ministry of Planta- tion Industries )

2 The Corporate Plan prepared 2. The CAO/AO stated that . for the period 2008 – 2012 the Institute had analyzed had not been reviewed and the earlier Corporate Plan, updated annually. and already a draft fresh Corporate Plan for the period 2013 – 2017 had been prepared.

3 The Committee questioned 3. The CAO stated that ac- about the presentation of An- tion would be taken to nual Reports. table the 2010 Annual Report in Parliament very early.

4 There had been 215 vacan- 4 The CAO/AO stated that . cies and 15 excess staff in the the Institute had taken cadre. action to recruit the staff as per the availability of provisions. 5 It was observed that there 5 The CAO/AO stated that . had been a difference of Rs. since the assets had been 99,303,166/- between the very old, evidence relating ledger balance of the fixed to those assets could not assets and, the balances ap- be found and a request pearing in the schedules fur- had been made to the Val- nished to the audit with the uation Dept. to re-value financial statements and the those assets. The Commit- existence of fixed assets val- tee was of the opinion that ued at Rs, 823,889,400/- some additional provi- could not be established as sions be requested from the Register of Fixed Assets the Treasury to carry out had not been updated. the valuations and clear the accounts.

Contd..

229 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

6 The total provision for gratui- 6 This had occurred due to ty amounted to Rs. inadequate release of 110,941,480/- had not been funds from the Treasury, invested separately. but however action had been taken to deposit around Rs. 33 million separately in favour of gratuity provision, and also to increase this amount annually. 7 Six machines valued at Rs. 7 The Institute had decided 4,142,173/- had been import- to write off the value, and ed by the Institute in 1982 to had written to the Treas- test the suitability of the tea ury through the Ministry processing in Sri Lanka, and for approval. remain idle since then due to non-suitability of machines for the purpose. 8 The Committee observed that 8 The Committee wanted the Institute had obtained a the CAO/AO to pay atten- profit of Rs. 2.4 million in tion to this issue. the year 2010, whereas it had become a deficit of Rs. 26.8 million in the year 2011. July 24th 2012 1 According to the Act the 1 Directed the CAO/AO if Board should consist of he does not wish to ap- Tea Small Holdings 13members, but only 09 point these members ac- Development Authori- members had been appointed, tion be taken to amend the ty where a representative of the Act accordingly and the Tea Research Institute, 02 CAO agreed to inform the Trade Union Representatives Hon. Minister of these (Ministry of Planta- and a Representative of the vacancies. tion Industries ) Lanka Planters Association had not been appointed.

2 The 2010 and 2011 Annual 2 The CAO/AO stated that Reports had not been tabled action would be taken to in Parliament. table the 2010/2011 An- nual Reports in Parlia- ment early.

Contd..

230 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 Comments & Decisions of Institution & Ministry Identified the COPE

3 There had been 46 vacancies 3. With regard to the Execu- and 47 excess staff. tive Grade vacancies, the CAO/AO stated that since there is a Supreme Court case going on, the Attor- ney General had advised the Authority not to recruit staff grade officer until the court case is con- cluded.

4 The Committee enquired the 4. The CAO/AO stated that . current position of the Out- this matter had been re- standing amount of Rs. 5.5 ferred to the Attorney million due from the Tea General, and the matter is Factories for the Purchase of being investigated by the Colour Separation Machines . Attorney General to take legal action against those concerned parties

5 The Committee questioned 5. The CAO/AO stated that . about the Recovery of Rs. Attorney General had 9,873,192 due from the Tea advised them that since Small Holdings Development these societies are coming Societies on the Vehicles under the Authority, to provided on hire purchase negotiate and see whether basis. they could recover the dues, without taking any legal action.

6 The Tea Nursery at Thispane 6. The CAO/AO stated that . had incurred losses amount- this situation occurred due ing to Rs. 725,541/- and Rs. to the bad weather condi- 64,054/- during the years tions prevailing at that 2010 and 2011 respectively, time and also stated that and the No. of dead plants in the Authority had a prob- nurseries at Thispane, Han- lem of obtaining suitable tane and Rahathungoda had soil for the tea nurseries in increased at the rate of 21, 27 that area. & 30 percent respectively.

Contd..

231 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

7 The deficit of the year 2011 7 The CAO/AO stated that had been increased by Rs. since the Authority did 54.12 million as compared to not receive funds from the the preceding year. Treasury to pay subsidies, the Authority had withdrawn a deposit of around Fifty Million Rupees, and that may be the reason for the increase of the deficit in 2011 and agreed to look into this matter and submit a report to the Committee. 8 The Committee enquired as 8 The CAO/AO agreed to to why the Govt. grants of submit a report after scru- Rs. 130.27 million received tinizing the matter. for the development of tea small holdings had been brought forward continuously without being utilized since the year 2006.

July 24th 2012 1 The activities and objectives 1. The CAO/Ao agreed to appearing in the Gazette No- revise the Corporate Plan Sri Lanka Cashew tification had not been in- as pointed out by the Corporation cluded in the Corporate Plan Committee. prepared for the period 2012 – 2014. (Ministry Minor Ex- port Crop Promo- tion ) 2 The Committee queried 2 The AO stated that the about the presentation of An- action would be taken to nual Reports. table the 2010/2011 An- nual Reports early.

3 Except the estates of 3 The CAO/AO was di- Medagamuwa and Puttalam rected to pay attention to where the Processing Centers this issue. had been established, with regard to all the other estates the Corporation does not have the legal ownership.

Contd.. 232 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 Comments & Decisions of Institution & Ministry Identified the COPE

4 Out of the extent of 40.8 hec- 4 Directed the CAO/AO to tares of the Mirijjawila Es- see that money spent for tate, an extent of 36.7 hec- development activities be tares had been acquired by shown in the Balance the UDA and Sri Lanka Ports Sheet separately. The Authority in the year 2011, CAO/AO agreed to rectify and since the Corporation has the accounts. no legal ownership of those lands, there would be a risk in getting compensation for the development work done on those lands.

5 The Committee observed that 5 Directed the CAO/AO to the assets which did not exist take action to remove physically had been shown in those amounts from the the Accounts as the assets of accounts, after obtaining the Kondachchi Estate the Treasury approval. amounting to Rs. 46,515,043 ( excluding land).

July 24th 2012 1 The Committee questioned 1 The CAO/AO stated that whether the LRC had updat- due to various difficulties, Land Reform Com- ed the Land Register of the there had been a delay in mission lands which had been taken updating the Register, but over by the LRC. the LRC would take action to update the Register (Presidential Secre- before the end of the year tariat) 2012, and the data would also be computerized.

2 The Committee observed that 2 The CAO/AO stated that the Performance of 2011 had the action would be taken not been reported to audit to to correct the shortcom- compare it with the Action ings as pointed out by the Plan for the year 2011. Committee.

Contd..

233 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

3 There had been 222 excess 3 It was stated that the new staff and 63 vacancies in the cadre had been approved cadre. by the Salaries and Cadre Commission , and the permission had been given to absorb the excess staff to the new cadre. The Scheme of Recruitment had been sent to the Dept. of Management Services for approval, and the recruitment would be done accordingly. 4 The Committee enquired the 4 The CAO/AO stated that current position of the fraud this fraud had taken place relating to the installation of in the year 2007, and the Computer Programme when inquired from the costing Rs.3.1 million. Commission to Investi- gate Bribery or Corrup- tion, they were told that still the investigations were being carried out, and would inform the LRC once the investigations were over. 5 The Committee enquired the 5 The CAO/AO stated that current position on the debtor every possible steps had balance of Rs. 2,159,932,946. been taken to recover from the private institutions, and already legal action had been taken against 14 such institutions. 6 The Committee observed that 6 The CAO/AO stated that the money received out of as discussed with the Au- sale of lands had been taken ditor General, action as income, and a proper ac- would be taken to rectify counting system with regard these accounting errors. to the this had not been followed. The Auditor General pointed out that if these accounting errors are not corrected, they could not express a favorable opinion on the accounts of the LRC. Contd.. 234 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 Comments & Decisions of Institution & Ministry Identified the COPE 7 The Committee enquired 7 The Committee directed whether the LRC had been the CAO/AO to take early registered for the payment of action to get registered, Value Added Tax. since the payment of VAT is a revenue to the Govt. August 06th 2012 1 2010 and 2011 Annual Re- 1 The Committee directed ports had not been tabled in the CAO/AO to see that Parliament. both reports are tabled in Condominium Man- Parliament before the end agement Authority of the year.

(Ministry of Con- struction , Engineer- ing Services, Housing & Common Amini- ties ) 2 In the Corporate Plan pre- 2 The CAO/AO was di- pared for the period 2012 – rected to take action to 2016, the strategies to update the Corporate Plan achieve the objectives had as pointed out by the not been included and also Committee the Action Plan for 2012 had not been prepared based on the Corporate Plan.

3 As per the Act, the Director 3 The CAO agreed to in- Board should comprise of 09 form the Hon. Minister of ex-officio members and 06 this situation. members appointed by the Minister, but the membership from the year 2010 up to date had been 09 ex-officio members and 02 members appointed by the Hon. Minister.

4 An amount of Rs.500,00/-had 4 The CAO/AO brought to been paid to the Lanka La- the notice of the Commit- bour Congress without the tee that this payment had approval of the Board of Di- been made when this In- rectors. stitution was under the name of Common Ameni- ties Board Contd..

235 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5 A sum of Rs. 42 million had 5 By now the Serpentine been received for 03 projects Housing Scheme project scheduled to be implemented and the Public Awareness by the Condominium Man- Programme had been agement Authority before the completed. end of 2011, and the projects had not been completed even by 30.06.2012.

August 06th 2012 1 The Corporate Plan prepared 1 The Committee wanted for the period 2011 – 2015 the CAO/AO to take ac- had not been prepared in tion to revise the Corpo- Institute of Construc- terms of the PED/12 Circular. rate Plan accordingly. tion Training & De- velopment

(Ministry of Con- struction , Engineer- ing Services, Housing & Common Amini- ties ) 2 The Action Plan had not been 2 The Committee wanted prepared based on the Corpo- the CAO/AO to rectify all rate Plan, and the following these shortcomings as statements had not been ta- pointed out by the Com- bled at the Board Meetings as mittee, and see that the per the PED/12 Circular, Para NVQ programme also 4.2.2. included in the Corporate Plan and the Action Plan. *Monthly Perfor- mance Statement in financial and physical terms,

*Operating State- ment for the month.

*Cash Flow State- ment for the month

*Liquidity position

and borrowings

Contd..

236 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 The Committee questioned 3 The CAO/AO was di- . on the recovery of balances rected to take action to due from National Equipment carry out a suitable evalu- & Machinery Organization ation on machinery and (NEMO), Centre for House equipment, and to rectify Planinning & Building the accounts accordingly, (CHPB), and other sundry before the end of this debtors amounting to Rs. year. 114.5 million, Rs. 4.1 million and Rs. 2.5 million respectively.

4 The Committee enquired the 4 The Committee directed . current position of the De- the CAO/AO to discuss posits Amounting to Rs. with the Treasury Repre- 1,722,563/- made with the sentative and take appro- External Institutions. priate action to write off the doubtful amounts.

5 The Committee questioned 5 Directed the CAO/AO to . on the Recovery of VAT take action to write-off Receivables amounting to Rs. this amount with the ap- 1,128,270/ proval of the Treasury. 6 The Committee observed that 6 It was pointed out that a sum of Rs. 8,731,909/- ad- this amount should not vanced to procure goods and have been shown as ad- services was remaining un- vance, and directed to settled for a period exceeding take action to rectify the 05 years. accounts.

7 The Committee observed that 7 The Committee was of the value of stocks of the the opinion that if the re- ICTAD had been Rs. 194 valuation had been carried million which represents 29 out yearly, such a problem percent of the total assets and would not have occurred, 85 percent of the current as- and also informed the sets, and enquired as to why CAO/AO to take action to such a huge stock had been differentiate the training maintained. equipment from the main stocks.

Contd..

237 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 8 There had been vacancies in 8 The CAO/AO stated that the Executive, Subordinate as the salary scales are not and Minor Grades totaling to compatible with the high- 89, and out of the 07 top er qualifications required, management level positions, they had been unable to 06 positions are under acting recruit staff for the higher basis. positions.

9 The Committee questioned 9 The CAO/AO stated that about the presentation of the preparation of the 2011 Annual Report. 2011 Annual Report had been completed, and would take action to table it in Parliament early.

August 06th 2012 1 The CAO explained, the cur- 1. The Committee directed . rent situation of JEDB which to re-examine the JEDB Janatha Estate Devel- is operating without even an and CAO agreed to table opment Board accountant has been identi- the outstanding annual fied by the Ministry as one of reports and answers to the (Ministry State Re- the most inefficient institu- unreplied audit queries sources & Enterprise tions coming under its pur- before the next date of Development) view. summoning.

1 There had been vacancies as 1 The CAO/AO stated that well as excess staff in the the excess staff had been staff cadre. in the labour grades, and they had not recruited any August 13th 2012 staff for the minor grades recently and with regard Mahaweli Authority to the vacancies in the of Sri Lanka other grades, he stated that the preparation of Scheme of Recruitments (Ministry of Irrigation would be completed in 02 & Water Resources months’ time, and hope to Management ) fill the vacancies before the end of the year.

2 The Annual Reports for the 2 The Committee directed years 2009 and 2010 had not the CAO/AO to take ac- been tabled in Parliament. tion to table the 2009 and 2010 Annual Reports in Parliament before the Contd.. commencement of the Budget for 2013.

238 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 Rs. 7,239,096/- received 3 The Authority had decid- . from the sale of vehicles had ed to invest all the savings been kept in a bank account in the Treasury, and that without transferring it to the the vehicles be purchased, Consolidated Fund. obtaining provisions from the Treasury. The Com- mittee informed the CAO/ AO that in terms of the Treasury Circular, the Authority could obtain vehicles on lease purchase scheme.

4 The Committee enquired 4 The CAO/AO stated that whether action had been tak- since these were very old en to auction the spare parts out dated spare parts, the purchased at the cost of Rs. Authority had decided to 1,376,096/- prior to the year dispose them and the 2006. Committee directed the CAO/AO to appoint a Committee, and then take action to write off, this amount after following the proper procedures.

5 The Committee observed that 5 The Committee directed unclassified assets amounting the CAO/AO to take ac- to Rs. 60,968 million as at tion to clear the accounts 31.12.2011 had been shown early. in the Balance Sheet.

6 The Committee enquired as 6 The CAO/AO stated that to why the accounts had not all the accounts had been been prepared and audited in prepared and submitted to the Mahaweli Engineering the auditors, since they Services (Pvt) Ltd. from the had to wind up these com- year 2007, and the Mahaweli panies. The Committee Livestock Enterprises (Ltd.) directed the CAO/AO to from the year 2010. complete the auditing and take necessary action to wind up these companies before the end of Decem- ber 2012.

Contd. 239 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 7 Out of the provision of Rs. 7 The Committee directed 2,280 million allocated for the CAO/AO to submit a the Moragahakanda- Ka- report to the Committee luganga Project in 2011, only on this matter. Rs. 1,236 million equivalent to 54% had been spent.

8 The Committee noted that the 8 The Committee directed Authority had spent only Rs. the CAO/AO to submit a 6,705 million as capital ex- report to the Committee penditure in the year 2011, on this matter. and 45% had been saved out of the total amount.

August 13th 2012 1. The Committee queried 1. The CAO/AO was di- about the presentation of An- rected that the 2011 An- Sri Lanka State Plan- nual Reports. nual report be tabled in tations Corporation Parliament before the end of 2012.

(Ministry State Re- sources & Enterprise Development ) 2. There had been vacancies 2. The Corporation had as well as excess staff in the submitted the cadre pro- cadre. posals to the Dept. of Management Services for approval. 3. The difference between the 3. Directed the CAO/AO Financial Statement and the to furnish a report on this Ledger Accounts had been matter to the Committee Rs. 1,544,191. with copy to the Auditor General. 4. The suspense account bal- 4. The Committee di- ance of Rs. 129,371,049 and rected the CAO/AO to Rs. 103,048 for the years submit a report on these 2010 and 2011 respectively balances within three had been written off through months’ time to the Com- journal entries without ob- mittee. taining the Treasury approval.

Contd..

240 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 Comments & Decisions of Institution & Ministry Identified the COPE 5 The Committee observed the 5. The CAO/AO having stat- . following shortcomings in ed that due to various the final accounts of the Cor- shortcomings these errors poration . were occurred and agreed i.Bank balance amounting to to enlighten the commit- Rs.23,495,165/- (fixed depos- tee on their accounting it and general deposit) had procedures explaining the not been taken into the final reasons for above ac- accounts. counting errors, within three months’ time. ii.Difference of Rs. 34,198,283 shown in the figures in the Profit and Loss Account and the ledger account.

iii.Erroneous Trade Debtor Balance of Rs. 32,221,140

6 There had been a debit bal- 6 Directed the CAO/AO to ance of Rs. 38,533,429 in the discuss this issue with the Financial Statements of the BOI, and take action to Perth Estate owned by BOI, clarify this position. where such a balance had not been disclosed in the final accounts of the BOI.

7 The Corporation had ob- 7 Since there had been a tained advances from Bro- deficit of around Rs. 10 – kers, without coming in to 15 million, the Corpora- agreement of any specific tion had to obtain advanc- interest rate, and paid an in- es from the brokers, on terest of Rs. 15,937,120 and the interest rates which Rs. 16,587,181 in the years they decide on. 2010 and 2011 respectively.

8 The Committee questioned 8 This fraud had taken place . about the financial loss of Rs. one and half years ago, 7,814,578 that had occurred this fraud was being in- at the Kelabokka Estate due vestigated by the Criminal to some irregularities in sale Investigations Department of 20,379 kg. of tea. as well as the Attorney General’s Dept.

241 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

August 13th 2012 1 It was observed that out of 1 The CAO/ AO was di- the 14 members of the Board, rected to take action to Tea Shakthi Fund only 12 members had been appoint 02 members or to appointed . amend the act according- (Ministry of Planta- ly. tion Industries )

2 The Committee observed that 2 The CAO/ AO stated that there had been 31 and 110 they are in the process of vacancies in the Tea Shakthi calling for applications to Fund and in the 13 tea facto- fill the vacancies in the ries respectively. Tea Shakthi Fund and awaiting the approval for the cadre in the factories.

3 Rs. 25.439 million had been 3 An analysis had been receivable from sundry debt- carried out, and these bal- ors and Rs. 15.09 million had ances had been due to been payable to sundry credi- accounting errors and tors. action would be taken to present these balances before the Audit & management committee.

4 The Committee enquired as 4 The CAO/AO stated that to why action had not been the above amount had taken to rectify the unidenti- been reduced upto Rs. fied current account balance 634,376 by 2011, and of Rs. 13.66 million as at would take action to recti- December 2010. fy the balance in future.

5 The Committee also observed 5 The Committee directed that there had been a receiv- the CAO/AO take action able amount of Rs. 19.9 mil- to write off this amount , lion in connection with a obtaining the Treasury stock of tea exported to Rus- approval. sia in 2002.

Contd..

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

Date/Nameof the In- Major Issues & Problems Comments & Decisions of stitution & Ministry Identified the COPE 6 A bank overdraft of Rs. 9.70 6 It was stated that this had million had been shown in been an accounting error the accounts of the Fund, but and the Committee was of such an overdraft had not the view that indicating been shown in the Bank such incorrect balances Statements. would cause various irregularities, and directed the CAO/AO to complete the reconciliation and submit a report to the Committee within three months time.

7 The Committee observed 7 The CAO/AO stated that a that a sum of Rs. 1.55 mil- suitable officer was not lion had been spent for the available to maintain the purchase of a computer soft- software system, and now ware system, where the sys- the interviews had been tem had not been used for held to recruit an officer the preparation of consoli- to the computer section. dated accounts.

8. The Corporate Plan prepared 8 The Committee directed for the period 2010 – 2014 the CAO/AO to prepare a was not in terms of the fresh Corporate Plan in- PED/12 Circular, and it had cluding the targets to be not been reviewed and up- achieved and to submit it dated annually. to the Committee early.

9 The Annual Reports from 9 The CAO/AO agreed to the year 2006 had not been table all the unpresented tabled in Parliament. reports before December 2012. 10 The Committee enquired the 10 The CAO/AO stated that current status of Rs. 1.22 while the legal action was million cash fraud that had in progress the 02 offic- taken place in the Kotmalee ers responsible were dead. Tea Factory. The Committee directed the CAO/AO to take necessary steps to write off the balance, obtaining necessary approval.

Contd..

243 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE October 1st 2012 1 The Annual Reports from the 1 The CAO/AO was di- year 2008 had not been ta- rected to see that the An- bled in Parliament. nual Reports for the years Coconut Development 2008, 2009 and 2010 are Authority tabled in Parliament before the commencement ( Ministry of Coconut of the Budget. Development & Janatha Estate Development) 2 The Committee observed that 2 The CAO/AO agreed to the Authority had not pre- prepare a Corporate Plan pared a Corporate Plan as per early as pointed out by the the present needs of the new Committee. Ministry.

3 Of the interest free loan 3 Since they had not settled amounting to Rs. 2,000,000/- the dues, this has been given to a private company referred to the Attorney by the Authority in 2006, a General to take legal ac- sum of Rs. 1,450,000/- had tion against this company. not been recovered yet.

4 The Committee questioned 4 Already a case is being about an officer who had heard in the high courts, misappropriated a sum of Rs. and an investigation is 1,580,992/- ( including the being handled by the CID interest). simultaneously.

5 Action had not been taken to 5 The Committee directed recover a sum of Rs. the CAO/AO to take ac- 57,715,037/- and Rs. 16 mil- tion to write off this lion interest receivable from amount with the necessary BCC Lanka Ltd. given in the approval if there would be years 2002 and 2004. a problem of obtaining this money.

6 The Committee queried as to 6 The Committee directed why 18 vehicles had been the CAO/AO to submit a purchased utilizing the mon- detailed report on this eys of the Coconut Oil Price issue, and furnish the ap- Stabilization Fund in the proval of the Treasury to years 2000, 2008, and 2009 the Committee as well as in contrary to the objectives the audit. of the Fund.

Contd..

244 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 Comments & Decisions of Institution & Ministry Identified the COPE 7 The Committee observed that 7 The CAO/AO stated that research equipment to the the value of Rs. 4.5 mil- value of Rs. 4.5 million had lion consists of all other been idling. accessories available in the laboratory, and stressed the fact that these equipment are being used from time to time when the necessity arises. October 1st 2012 1 The Annual reports for the 1 Directed the CAO/AO to years 2010 & 2011 had not take early action to table been tabled in Parliament. them before the com- Coconut Research mencement of the Budget. Board

( Ministry of Coconut Development & Ja- natha Estate Develop- ment)

2 The Corporate Plan for the 2 The CAO/AO stated that a period 2013 – 2017 had not new Corporate Plan for been prepared. the period 2013 – 2017 had been prepared and the Committee wanted the CAO/AO to submit a copy of the new Corporate Plan to the audit.

3 The Institution had been una- 3 The CAO/AO stated that ble to recover Rs.16.4 million the legal action had been due from 08 scholarship taken against the 08 offic- holders who breached the ers and further stated that, agreements. they could not trace the whereabouts of certain officers and, the guaran- tors. The Committee directed the CAO/AO to write the progress of each case to the Treasury for necessary action.

Contd.. 245 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4 The Coconut Research Board 4 The CAO/AO stated that had been able to introduce the unavailability of suita- only one variety of coconut ble lands for the planting known as “ Kapruwana” for of seeds had been a major the period from 2001 to issue faced by the Board 2010, although Rs. 72.31 and further stated that a million had been spent on land from Northern Prov- researches for the introduc- ince is ideal for the pur- tion of new varieties of coco- pose. The Committee in- nuts. formed the CAO/AO to request the Hon Minister of Coconut Development to discuss this issue with the Hon. Minister of Eco- nomic Development and also to see whether they could get a land from the Northern area.

October 1st 2012 1 19 projects in the Action Plan 1 The Committee wanted with the financial value of the CAO/AO to ensure Rs. 14,003,900/- had not that in future before im- Hadabima Authority been implemented and out of plementing any project, of Sri Lanka purchases to be made as per the ownership of the re- the Procurement Plan before spective land or the prop- 15.03.2011 amounting to Rs. erty should be vested with ( Ministry of Agricul- 18,070,000/- relating to 06 the Authority. ture) projects, only purchases to the value of Rs. 8,571,143/- had been made. 2 The Committee questioned 2 The Annual Reports upto about the presentation of An- 2010 had been tabled in nual Reports in Parliament. Parliament and the 2011 Annual Report had been forwarded to the Ministry. 3 The Committee observed that 3 The CAOAO stated that due to over stating of values due to some accounting of different items/goods, the error, the stocks had been profit had been overstated by overstated in the final a sum of Rs. 7,354,165/-. accounts, but by now the Authority had rectified the accounts.

Contd..

246 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 Comments & Decisions of Institution & Ministry Identified the COPE 4 The Authority had construct- 4 It was stated that since the ed a stores complex and a Hadabimba Authority and sales centre spending Rs. the Dept. Of Agriculture 972,279/- and Rs. 2,053,675/- was under the same Min- respectively in the lands istry, action had not been owned to the Dept. of Agri- taken to acquire the said culture and Dept. of Agrarian land and by then this land Services, but action had not had been taken over by been taken to acquire these the Ministry of Economic lands as per the directive of Development, and had the COPE meeting. requested them to pay back the cost of the buildings, and thereafter action would be taken to transfer the ownership of those buildings to the Ministry of Economic Develop- ment.

5 The Committee questioned as 5 The CAO/AO stated that to what action had been taken by now the Youth Ser- against the officers concerned vices officer of the Divi- with regard to the sale of 14 sional Secretariat, cows at Rs. 160,000/- with- Ududumbara had been out proper assessment. interdicted, and the Of- ficer who was involved in this fraud in the Hadambi- ma Authority had been issued a warning letter, and the Committee wanted the CAO to pay attention to this matter.

6 The Committee enquired as 6 The CAO/AO stated that to why VAT amounting to by an error it had so hap- Rs. 212,615/- had been paid pened, and agreed to carry to the supplier, without being out the work without such remitted to the Commissioner shortcomings in future. General of Inland Revenue, as per the VAT (Amendment) Act No. 14.

Contd.. 247 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 7 After spending Rs. 7 This farm had been estab- 9,198,746/- for the establish- lished to train the children ment of the Mahailuppallama of the farmers, but due to Farm, it had been closed various reasons those chil- down in May 2012. dren were not interested in the training, and due to the drought prevailed at that period, the Manage- ment decided to close it down . October 1st 2012 1 Although the Board should 1 The CAO having stated consist of 14 members, only that the relevant ministries 12 members had been ap- had already been in- Sri Lanka Council for pointed by now. formed to send their nom- Agricultural Research inations, agreed to take Policy immediate action to appoint the two members.

( Ministry of Agricul- ture) 2 The 2010 and 2011 Annual 2 The CAO was directed to Reports had not been tabled take action to table both in Parliament. Reports in Parliament early, and ensure in future that the Annual Reports are presented in Parlia- ment within the first six months of the following year. 3 The Committee noted that 3 All the outstanding bal- out of the Un-settled amount ances with the relevant of Rs. 1,344,205, only Rs. agreement had been re- 510,664 had been recovered ferred to the Attorney by 31.08.2012 General for further action. 4 The Committee noted that 4 In the year 2011, they although Rs. 18.722 million selected 28 persons to had been estimated for for- send for Ph.D and M.Sc. eign scholarships in 2010, out to India, but since the of the 22 scholarships, only Council did not receive 09 scholarships had been adequate provisions, they awarded spending Rs. 8.746, could not send anyone in and also new scholarships the year 2012. had not been awarded during 2011 and 2012.

248 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 Comments & Decisions of Institution & Ministry Identified the COPE October 1st 2012 1 The Annual reports for the 1. Directed the CAO/AO years 2006, 2007 & 2008 had to take early action to not been tabled in Parliament. table all the outstanding Sri Lanka National Annual Reports including Freedom From Hun- that of 2011. ger Campaign Board

( Ministry of Ministry of Agriculture) 2 The Committee questioned 2. The Committee di- . about the unavailability of rected the CAO/AO to evidence to prove the balance appoint a Committee to of Rs. 2,227,860 found in 23 see whether they could ledger accounts. find any evidence regarding these balances and to write off the amount with the approval of the Treas- ury, if unable to trace any evidence.

3 The two drying machines and 3. The said project had to the furnaces valued at be discontinued as suffi- Rs.5,490,385 utilized in the cient quantity of lime Black Lemon Project imple- could not be found and mented in the Monaragala action had been taken to District, had been idling at reutilize those machines the moment as the project for the dehydration of a had been discontinued in the variety of plantain for year 2012 . export.

4 The Committee enquired as 4. The preparation of the to why two rice powder pro- title deeds was then under jects and two farms had been the final stage and was started, spending Rs. 29.54 optimistic that they would million in two buildings, con- be able to submit the structed on a 33 acre land in deeds to the Committee the year 2011 without obtain- within two months time ing its legal ownership. and the Committee wanted the CAO/AO to expedite the process.

Contd..

249 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5 The Committee enquired 5 The Committee noted that about the ambiguity with spending money on this regard to the ownership of project without the board the land in Kilinochchi in approval had been a seri- which a farm with an extent ous lapse and directed the of 100 acres had already been CAO/AO to obtain the established spending covering approval from Rs.11,025,243 without the the Board of Directors and approval of the Board of Di- report to the Committee. rectors.

October 2nd 2012 1 Only 04 Meetings of the 1 The committee stressed Board of Directors had been the need of holding board held upto September 2012. meetings at least once a National Aquaculture month. Development Authori- ty

( Ministry of Fisheries & Aquatic Resources Development) 2 39 staff grade vacancies had 2 The Committee was of the existed in the approved cadre opinion that since the Di- including Director post. rector (Finance) position was essential, steps had to be taken to obtain the approval to fill this vacancy even on contract basis.

3 The Committee questioned 3 The Committee informed about the Annual Reports. the CAO/AO to see that the accounts of that particular year be submitted to the audit by 28th February of the following year, with source documents, enabling the Auditor General to submit the audit report in time to the Authority.

Contd.. 250 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 Comments & Decisions of Institution & Ministry Identified the COPE 4 Out of Rs. 11,094,329/- in- 4 The Committee wanted . curred for the establishment the CAO/AO to see of 25 fish seeds breeding whether such loans could units in 2006, the amount to be provided through Co- be recovered by July 2012 operative Banks that had had been Rs. 4,284,351/-. been established to grant loans for this type of projects, so that it would be easy to collect the installments through those banks. October 2nd 2012 1 The Corporate Plan for the 1. Directed the CAO/AO period 2010 – 2014 had not to revise it and submit to been prepared in accordance the Committee. Rubber Research with the PED/12 Circular. Board

( Ministry of Planta- tion Industries) 2 The Committee observed a 2. The Committee di- total of 132 vacancies in the rected the CAO/AO to staff grade and the other give more attention on grades. this matter and to take action to fill the vacancies. 3 It was observed that an 3. The CAO/AO was di- amount of Rs. 2,414,128, was rected to appoint a com- outstanding for more than 4 mittee to investigate into years. these balances and take action to write off the unrecoverable balances with the approval of the Treasury.

4 It was pointed out that a loss 4. The Committee di- of Rs. 1,318,842 had been rected the CAO/AO to incurred by the institute by submit a report indicating offering the contract for up- the current status on this rooting and evacuating 1134 matter to the Committee rubber trees in the Nivitigala as well as the audit within forest. a month time.

Contd..

251 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE

5 Assigning of the same person 5 The CAO/AO stated that with the task of both purchas- the Board had not been ing and stores management able to recruit an officer had been against the practice for the stores even though of good governance. the post had been adver- tised twice, and agreed to rectify the matter early.

6 It was noted that a debtor 6 The CAO/AO was di- balance of Rs. 3,904,237 out rected to appoint a Com- of Rs. 31,584,837 had been mittee to review the remaining for more than 10 amount and take approval years. from the Treasury to write off the balances that cannot be recovered

7 The latex worth of Rs. 7 The Committee wanted 41,070,218 had been sold by the CAO/AO to send a the Kuruwita Sub Office in clarification to the audit the year 2011 without calling explaining the matter quotations.

October 3rd 2012 1 08 members of the Board of 1 As the Board should con- Directors did not possess the tain not only the profes- qualifications stipulated in sionals but also the repre- Consumer Affairs the Act. sentatives from the other Authority categories of the society, the Committee directed the CAO/AO to discus ( Ministry of Co- with the Hon Minister and operatives & Internal take early action to amend Trade) the Act.

2 Contrary to the Treasury 2 Directed the CAO/AO to instructions the payments of adhere to the procedures/ transport and fuel allowances guidelines and obtain cov- had been made to five offic- ering approval from the ers who were not entitled for Treasury. If not the Com- such allowances. mittee directed the CAO to surcharge the payments from the respective officers.

Contd..

252 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 The Committee having ob- 3 Directed the CAO/AO to served that there had been see that the Authority balances of Rs. 4,691,520/- invest those money in 07 and Rs. 10,132,963/- for the day call deposits. years 2010 and 2011 respectively in the current accounts,.

October 3rd 2012 1 An excessive number of 1. The CAO/AO stated that appointments had been made those appointments had to the Director Board exceed- been made considering National Livestock ing the limit of 7 stipulated in the need for having exper- Development Board the Act. tise in the Board of Direc- tors and further stated that it was expected to amend ( Ministry of Live- the Act accordingly. stock & Rural Com- munity Development) 2 The Committee questioned 2 The Committee directed about the Annual reports the CAO/AO to ensure which had not been tabled in that, in future, the Annual Parliament so far. Report for the particular year is tabled in Parlia- ment within 150 days of the closure of that financial year.

3 16 out of the 31 farms had 3 It was stated that the loss- incurred a loss of Rs. es incurred due to the 63,785,976, and the infor- drop of prices of Coconuts mation with regard to the and chicken and Com- Kandakaduwa farm had not menting on the question been furnished to audit. raised with regard to the Kandakaduwa farm, the CAO/AO stated that this farm had been handed over to the Ministry of Defence through the LRC as it had been situated within the war zone.

Contd..

253 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4 The Committee observed that 4 As the AO stated that a in addition to the dishonored court case had been filed cheques worth of Rs. 2 mil- to recover the total out- lion, issued by a private com- standing, the Committee pany, in lieu of the unre- directed the CAO/AO to turned load of maize handed submit the MOU signed over to them for drying, there with this company to the had been another Rs. 11 mil- Committee with a copy to lion to be recovered. the Auditor General.

5 The NLDB had obtained a 5 It was agreed to write to bank overdraft amounting to the Secretary to the Treas- Rs. 21,812,323 in the year ury seeking approval for 2011 without receiving ap- that purpose. proval.

6 The NLDB had donated Rs. 6 It was directed to ensure 3,144,990 and Rs. 1,505,803 that the Treasury guide- respectively in the years 2010 lines are not violated. and 2011 without obtaining the Cabinet approval.

1 The Committee observed the 1 Directed the CAO/AO to October 3rd 2012 . following shortcomings with make the Hon. Minister regard to the Composition of aware of the position and the Board of Directors take action to amend the Sugarcane Research i.Although the Director Act or appoint the mem- Institute Board should comprise of 07 bers as per the prevailing members, only six members Act. had been appointed. ii.03 members who possess ( Ministry of Minor qualifications in the research Export Crop Promo- field had not been appointed. tion)

2 The presentation of Annual 2 The Committee directed Reports for 2010/2011 was to expedite the presenta- questioned. tion of relevant reports.

Contd..

254 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 Comments & Decisions of Institution & Ministry Identified the COPE 3 After spending Rs. 8.61 mil- 3 As it was stated that al- lion for the development of ready an application had the lands belonging to the been made, and within Mahaweli Authority, action another three months’ had not been taken to obtain time, the Institute would the legal ownership. be able to obtain the legal ownership of this land the Committee directed the CAO/AO to see that the matter is finalized early.

4 There had been an outstand- 4 As it was stated that there ing amount of Rs. 1,745,300/ is no such ministry exist- - to be recovered from the ing now, they have a Ministry of Supplementary problem of recovering the Crops Development aforesaid amount, the Committee directed the CAO/AO to take action to write off this amount after obtaining the Treasury approval.

5 The Institute had utilized an 5 The CAO/AO stated that additional amount of Rs. 6.4 when they wrote to the million exceeding the ap- Treasury requesting cov- proved amount of Rs. 6.5 ering approval, the Treas- million for the purchase of ury had informed them motor vehicles in the year that the Treasury was 2010, without obtaining the unable to give covering Treasury approval. approval, and instructed them not to repeat the same mistake.

255 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 1 The Committee enquired as 1 The CAO/AO stated that October 5th 2012 to why the action had not yet although the liquidation been taken to wind up these process had got delayed Vegetable Develop- three institutions which had since the Hon. Minister ment Board not been functioning for sev- wanted to see whether it eral years. was possible to amalgam- Fruit Development ate these three institutions Board into one entity, the Treas- ury had not been in agree- Pulse & Grain Re- ment with the suggestion. search & Production Authority

( Ministry of Agicul- ture)

1 The Committee enquired 1 The CAO/AO was di- October 5th 2012 about the Annual Reports for rected to take action to 2010 & 2011 which had not table the 2011 Annual been tabled in Parliament. report at least by March Paddy Marketing 2013. Board

( Ministry of Co- operatives & Internal Trade)

2 Neither a proper corporate 2 The Committee wanted to plan nor an action plan was prepare them effecting in existence. from the year 2013 while adhering to the treasury circulars.

3 The Committee pointed out 3 Directed the CAO/AO to the importance of having a take prompt action to have computerized data base sys- the system for which the tem for the institution provision had already been allocated by the treasury.

Contd..

256 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 Comments & Decisions of Institution & Ministry Identified the COPE 4 The Committee enquired the 4 The Committee directed reason for not taking action to clear the balance sheets with regard a debtor balance by writing off the unre- of Rs.534 million due from coverable amounts obtain- 101 debtors, found to be ing the proper approval. outstanding for more than 05 years and

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Appendix D

Issues discussed at the Meetings of the Sub Committee III of the Committee on Public Enterprises.

Composition of the Sub Committee III of the Committee on Public Enterprises.

1. Hon. Lasantha Alagiyawanna (Chairman) 2. Hon. Arjuna Ranatunga 3. Hon. M.T. Hasen Ali 4. Hon. A. Vinayagamoorthy 5. Hon. (Ven.) Athuraliye Rathana Thero 6. Hon. Seeniththamby Yoheswaran 7. Hon. Eran Wickramaratne 8. Hon. (Prof.) Rajiva Wijesinha 9. Hon. E. Saravanapavan 10. Hon. (Mrs.) Rosy Senanayake

259

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Sri Lanka Accounting 1. The main objective which is 1. Directed the Treasury to & Auditing Standards reviewing the Financial formulate a strategy to Monitoring Board Statements of the Public En- strengthen the institution terprises, were only 200 Fi- and also to re-summon the August 09th , 2012 nancial Statements per year institution within a month. out of 1200. (Ministry of Finance 2. An Internal Audit division 2. It was informed that ac- & Planning) had not been established in tion had been taken to the Board. establish an Internal Audit Division by outsourcing its functions. 3. Certain institutions did not 3. Discussed the importance furnish their financial state- of amending the Act in ments to be monitored by the order to give more powers Board. to the board. 4. It was observed that cheques 4. Directed to adhere to the were issued exceeding the Financial Regulations. value of cash balance.

5. Transformation of the post of 5. The Committee directed Director General and the two to furnish the recommen- posts of Senior Technical dation given by the Sala- Mangers into contract basis, ries & Carder Commis- having doubled the salaries sion to the Committee, in applicable to the above posts this regard. in the permanent carder.

Public Utilities Com- 1. Audit & Management Com- 1. As the first Audit & Man- mission of Sri Lanka. mittee meetings had not been agement Committee meet- held for the years 2010 and ings had been held in August 09th, 2012 2011. 2012, the Committee directed the officer who is (Ministry of Finance in charge of the Govern- & Planning) ment Audit be invited to participate in the committee as an observer. 2. The Commission had not 2. It was said that the Com- acted according to the Man- mission was empowered agement Services Circular to appoint staff and to No. 39 of 26.05.2009, on the decide remunerations as matters pertaining to recruit- per the Section 12 of the Contd... ments

261 PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE and the salaries of the staff PUCSL Act No. 35. The had been paid contrary to the Committee directed the direction given by the previ- Treasury to appoint a ous meeting of the Commit- committee to review the tee on Public A Enterprises. circulars and to obtain approval from the Treas- ury for any revision of salaries done by the Com- mission. 3. The Committee observed that 3. The Committee was in- the telephones of all divisions formed that the Commis- of the Commission had not sion had already intro- been interconnected to one duced and implemented a telephone system in terms of new telephone recording the Public Finance Circular system. No. 424. 4. As the amendments to the Sri 4. As per the current Act, the Lanka Electricity Act No. 20 Govt. equity should be of 2009 had not been passed there to issue licenses, but yet, the Commission had not all these 06 power plants been able to issue licenses to had been in operation 06 companies generating prior to the current Act electricity exceeding the ca- and the amended Act had pacity of 25 Mega Watts. been submitted to the Cabinet by now. 5. The Committee questioned 5. It was stated that this about the Norechcholai Pow- breakdown had been due er Plant which had been out to a technical defect, and of order. the Commission had already requested a detailed report from Electricity Board regarding the same. Social Security Board 1. The enrollment of contribu- 1. It was stated that there tors in the Board had not had been six pension August 09th , 2012 shown a satisfactory level schemes at the beginning and 439,000 members only but five of them had to be had been enrolled in the terminated due to lack of Surekuma Pension Scheme. provisions and various other reasons. (Ministry of Finance 2. The 65% of the members had 2. The Committee directed & Planning) been inactive at the moment to carry out an analysis of due to the nonpayment of the all members specifying monthly installments. their positions and submit Contd... a report and also to take necessary action. 262

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Date/ Name of the Major Issues & Problems Comments & Decisions of the Institution & Minis- Identified COPE try 3. The board had already spent 3. As the case had been hand- US $ 127,424 for the new ed over to the Internal Au- computer programme, which dit Section of the Treasury, had to be implemented under for further investigation, 07 modules, but certain mod- the Committee directed to ules were not up to the stand- submit the report to the ard and the tender had been Committee. awarded to M/s. Advant Technologies Incorporation in Bangalore for US $ 169,280. 4. It was observed that a signifi- 4. The Committee was of the cant amount of unidentified opinion that this money balances had been accumulat- ought to be credited to the ed due to various mistakes respective contributors and committed by the contribu- directed to furnish a full tors in entering the ID No., report to the Committee as Deposits slip No. etc. well as the Auditor Gen- eral. 5. An investment had been 5. The Committee directed to made by the board in a pri- make the investment in a vate company. State Bank.

Wijaya Kumara- 1. Annual Reports for the years 1. Directed to table them in tunge Memorial 2010 and 2011 had not been Parliament early. Hospital Board. tabled. 2. The Committee noted that 2. The Committee directed to August 09th, 2012 Audit & Management Com- hold future meetings regu- mittee Meetings had not been larly and also informed the (Ministry of Health) held by the Hospital. Treasury Representative of the Director Board to chair the meetings. 3. Internal Audit of the Hospital 3. The direction of the Com- is performed under the guid- mittee was to create a post ance of the Ministry as no of Internal Auditor in the Internal Auditor in the Hospi- cadre of the hospital and tal. obtain the approval from the Salaries and Cadre Commission for same.

Contd...

263

PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. A decrease in the number of 4. The CAO stated that as eye surgeries performed in per the advise given by a year 2012 compared to previ- team of professionals that ous year was observed. performing a excessive number of operations per day would hygienically affect the conditions of the operating theatre and the number of operations carried out per day had therefore been reduced. The Committee directed to include these activities in their Corporate Plan. 5. The Committee enquired 5. It was informed that the about a sum of Rs. 133,080, recovery was a 25% of the recoverable from a nurse, for value of two scissors. The the damages caused on two Committee directed to fine surgical scissors. take a Board decision to charge a less value from the person concerned as it might have been an unin- tentional lapse.

Gem & Jewellery Re- 1. The Board of Directors Meet- 1. It was agreed to hold the search & Training ings had been held only four Board of Directors Meet- Institute. times per year in 2010 and ings monthly when the 2011 instead of holding head office will be estab- August 10th , 2012 monthly. lished in Colombo. 2. The financial position of 2. The Committee directed (Ministry of Environ- three preceding years and to amend both the Corpo- ment) targeted financial data of rate Plan and the Action three ensuing years had not Plan in terms of the been included in the Corpo- PED/12 Circular. rate Plan for the period 2012- 2016 in terms of the PED/12 Circular. 3. The Committee noted that 3. The direction of the Com- the Internal Audit Unit is not mittee was to appoint an functioning in the institute Internal Auditor as that position had already been approved by the Depart- Contd... ment of management Ser- vices.

264

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. There was only one Audit & 4. Directed to hold Audit & Management Committee Management Committee meeting held in the year meetings quarterly. 2012. 5. The actual carder of the insti- 5. The Committee directed tute had been only 44 out of to fill the vacancies in the approved cadre of 133. Gem and Jewelry Train- ing Institute once the funds are released from the Treasury. 6. The Committee enquired re- 6. It was pointed out that the garding Non-utilization of Institute should not have Geological Drilling Machine purchased drilling ma- purchased at Rs. 12.3 million. chines, when there were no drilling staff available and directed to submit a report within a month time. 7. The Committee observed that 7. The Committee directed out of the total amount of Rs. to submit a report includ- 2,300,000/-, only Rs. ing the current position of 900,000/- had been recovered the case filed in this con- from a Fraud Committed by nection. a Former Senior Manager. 8. It was observed that out of 8. Directed to take action to the Rs. 36 million, only Rs. 6 avoid similar situation in million had been incurred for the future and to submit a researches in the Moneragala future plan in regard to District. the utilization of funds on the related projects. Marine Environment 1. The Committee observed that 1. The Committee directed Protection Authority. one Board Member out of to take necessary action to three had not been nominated complete the nominations. August 10th 2012 by the Hon. Minister. 2. The Corporate Plan of the 2. It was directed to amend Authority for 2012 – 2016 the Corporate Plan in (Ministry of Environ- had not been prepared in terms of the PED/12 cir- ment) terms of the PED/12 circular. cular. 3. It was observed that the re- 3. The direction of the Com- sponsibilities had not been mittee was to rectify the entrusted to the officers in shortcomings in 2012 2011 Action Plan of the Au- Action Plan by including thority. the responsibilities of the Contd... officers. 265

PARLIAMENTARY SERIES NO. 236

Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. Annual Reports of the Au- 4. Directed to table Annual thority for the year 2009 and Reports of the years 2009- 2010 had not been tabled in 2010 in Parliament early. Parliament. 5. The Committee questioned 5. The Committee directed about the action taken by the to amend the regulations authority to increase the in- as to increase the income come. of the Authority.

6. The equipment in laboratory 6. The CAO stated that this of the Authority valued at was due to the non availa- Rs. 2,501,100/-, had been bility of qualified Lab idled for one year. Assistant. The committee directed to make recruitments without delay.

7. The Committee queried on 7. The CAO/AO stated, that imposing fines to the ships they had received fines which had acted in contrary from ships which had to the Marine Pollution Act. violated the Act, but as per the provisions of the Act, the Authority had to obtain the services of the Attorney General’s Dept. to appear for such cases.

The Committee wanted the CAO/AO to inform the Attorney General to appoint an official to appear on behalf of these court cases to avoid delays.

National Gem & Jew- 1. The Committee observed that 1. The Committee directed ellery Authority. one Board Member out of to take necessary action to five had not been nominated get the vacant positions August 10th, 2012 by the Hon. Minister. filled.

(Ministry of Environ- 2. The Annual Reports for the 2. The Committee directed ment) years 2009 and 2010 had not to table the 2009 and 2010 been tabled in Parliament. Annual Reports in Parlia- ment early. Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3. The Authority needs to pre- 3. The Committee directed pare a fresh Corporate Plan to send a report including targeting Rs. 01 billion in- the targets that had been come in the year 2016. planned to be included in the Corporate Plan from the year 2013, with in a month. 4. It was observed that the Inter- 4. The Committee directed nal Audit Plan and reports for to submit all the reports in the year 2012 had not been arrears to the Auditor presented to Auditor General. General and also submit a report to the Committee. 5. The Committee observed that 5. The Committee was in- out of the 272 approved cadre formed that the Organiza- of the Authority, 105 posi- tional Structure had been tions were vacant. approved, and within one month’s time, the Author- ity could commence the filling of the vacancies. 6. The Internal Auditor position 6. The Committee directed of the Authority had been in to take action to appoint a acting basis. permanent officer for this post. 7. The Committee questioned 7. The Committee directed regarding the two posts of to submit a report on the Gemologist remained vacant. cadre position, once the vacancies are filled. 8. The Committee discussed 8. It was explained that the regarding the current position Authority had decided to of establishment of the Scien- establish an international- tific Gemological Laboratory. ly recognized lab by now with the collaboration of the private sector, to issue certificate for gems through an internationally recognized Gemologist. 9. The Committee observed that 9. The Committee directed the value of the returned to remove these amounts cheques as at 31.12.2011 had from the accounts as bad been Rs. 314,554/- including debts with the approval of a balance of Rs. 103,552/- the Board of Directors. that remained outstanding from 3 to 5 years.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE National Transport 1. The Institute had not ob- 1. The Committee was in- Medical Institute. tained approval from the formed that the Organiza- General Treasury for the tional Chart and the SOR August 10th, 2012 Scheme of Recruitment and had been submitted to the the Organizational Chart as Department of Manage- directed by the previous ment Services and the COPE meeting held on Salaries and Cadre Com- 11/08/2010. mission in March 2011, but due to some amendments it had been returned. (Ministry of 2. There had been 21 vacancies 2. The Committee directed Transport) and 65 excess staff in the to prepare a new cadre cadre of the Institute. including the staff that would be necessary for the newly established branches and the branches to be established, and submit to the treasury for approval and to submit a report on the new carder proposals to the Commit- tee within a month time. 3. The Committee observed that 3. It was directed to prepare the targets expected to be fresh Corporate Plan and achieved during the years include targets expected 2012-2014 had not been in- to be achieved during the cluded to the Action Plan of respective years. the Institute. 4. The 2010 Annual Report of 4. The Committee pointed the Institute had not been out the importance of tabled in Parliament. presentation of Annual Reports in Parliament in time. 5. The Institute had invested Rs. 5. Directed to obtain the 36,775,490/- in a Govern- Treasury approval before ment bank in contrary to the making an investment. Finance Act No. 38 of 1971. 6. The Committee noted that 6. The Committee directed although a sum of Rs. to complete the inquiry 219,600/- had been recovered and submit the report to from the officers who had the Committee. been responsible for financial Contd... irregularities the inquiry had not been completed. 268

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 7. The Committee observed that 7. The Committee directed the expected target had not the CAO to summon both been achieved from the com- the Medical Institute and puter network established to the Motor traffic Dept. verify the fitness of a driver and discuss the shortcom- before issuing the driving ings of the computer net- licenses. work and submit a report to the Committee. 8. A loss of Rs. 7,934,451/- had 8. The CAO/AO stated that been incurred to the Institute, this loss had been incurred on the transactions between for providing medical the Sri Lanka Transport services and security ser- Board and the National vices for the Sri Lanka Transport Medical Institute. Transport Board by the Medical Institute. The Committee wanted the CAO to look into this and find a remedy. 9. The Committee observed that 9. The Committee directed a sum of Rs. 229,442/- had the CAO/AO to look into been spent by the Institute to these issues, before the repair a motor vehicle with- payments are made. out obtaining the approval of the Secretary to the Ministry, in terms of the Procurement Guidelines. Arthur C. Clarke 1. The Committee observed that 1. The CAO/AO stated that Centre for Modern the Procurement Plan had not they had prepared Pro- Technology. been prepared in terms of the curement Plan in the re- Govt. Procurement Guide- quired manner as advised October 11th, 2012 lines. by the Auditor General. The Committee directed the CAO to look into this matter and submit a report to the Committee. (Ministry of Technol- 2. 2. It was said that there was ogy & Research) The Committee noted that the a considerable difficulty actual cadre of the Center had in making appointments been 78 out of the approved due to the prevailing poor cadre of 176, and 75% of the salary scales. The Com- vacancies had been in the mittee directed to submit a professional grades. report indicating the difficulties that the Centre Contd... confronted with.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3. The Committee discussed 3. It was informed that the about the current position of Robot Technology Project the implementation of the is under implementation Robot Technology Project. at the time.

4. It was observed that Rs. 1.5 4. The Committee directed million allocated for the year to submit a report on this 2011 to purchase equipment matter to the Committee. for the laboratory had not been utilized by the Centre. 5. The Committee enquired 5. The direction of the Com- about the Incubator Project of mittee was to complete the Center which had not the Incubator Project of been completed yet. the Center soon. 6. The debtor balance of Rs. 6. The CAO was directed to 571,712 had been written off investigate into the matter. without obtaining the Treas- ury approval. 7. The following items of the 7. The Committee directed Center had been moving to take actions to dispose slowly since the year 2005. those items, if they could  Electronic Accessories - not be used. Rs. 4,612,816  Other Accessories - Rs. 138,466  Inventory Items - Rs. 680,123

National Engineering 1. It was revealed that out of the 1. The Committee was of the Research & Develop- approved cadre of 68 only 25 opinion that the Govern- ment Centre. engineers are remaining in ment has to take a policy the actual carder and NERD decision on this issue. October 11th, 2012 had happened to abandon some of the research projects due to lack of engineers. (Ministry of Technol- 2. The debtor balances of the 2. Directed to recover the ogy & Research) Center as at 31.12.2011 had dues as early as possible. been Rs. 6,135,360.

Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3. The Committee observed that 3. The Committee directed 14 researches conducted at the CAO/AO to submit a the cost of Rs. 1,974,883 had report with following de- been abandoned during the tails. last 5 years.  The date of commencement of each project,  The date of conclusion of each project,  The objective of each project and how far the objectives had been achieved.

4. The Committee observed that 4. It was directed to take out of the stock of nonmov- necessary action to make ing items in the stores, the use of these stocks in a value of stock for over 6 fruitful manner. years had been 28 percent of the total stock, amounting to Rs. 3,973,122. 5. The Committee noted that 5. It was reported that there there had been a balance of are 04 engineers to be provision for gift/award award at present. amounting to Rs. 1,083,995 as at 31.12.2011 as there were not suitable engineers to be awarded.

National Science & 1. The Committee observed the 1. The Committee directed Technology Commis- following shortcoming. to the CAO/AO to discuss sion. The Term of office of the with Hon. Minister and Board of Directors had termi- the relevant institutions, October 11th, 2012 nated on 31.12.2011, but no and take necessary action new Director Board had been immediately. appointed.

(Ministry of Technol- 2. The Annual Report of the 2. It was directed to table the ogy & Research) Commission for the year Annual Report of the year 2010 had not been tabled in 2010 without further de- Parliament. lay.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3. It was observed that an of- 3. The Committee directed ficer had been placed 08 in- the CAO to look into this crements ahead of her entitle- matter. ment in the respective salary scale.

4. The Committee observed that 4. The direction of the Com- the Commission had contrib- mittee was to take follow uted Rs. 1,159,800 in 2009 to up action in similar situa- the Non Alliance Movement tions in the future. Centre for training programmes, but follow up action had not been taken to ensure whether they had made any improvement in the field of Science in this country. National Science 1. The Committee observed that 1. The Committee directed Foundation. 02 lecturers had left from the CAO/AO to include a service after obtaining re- new clause to the agree- October 11th, 2012 search grants amounting to ment stating that, in case Rs. 586,160. of a similar failure, lecturers need to pay back the funds granted for such research projects.

(Ministry of Technol- 2. The Committee discussed in 2. It was directed to hold ogy & Research) detail about progress review progress review meetings meetings. at least once in every two months to discuss about the progress of the research projects. 3. The title deeds of the land 3. Directed to write to the valued at Rs. 370,000,000, Divisional Secretariat of where the NSF is situated had the area and take action to not been furnished to the obtain the deeds and all audit. the details in this regard.

4. The Committee questioned 4. It was informed that share about the share certificates on certificates to the value of the investments amounting to Rs. 82 million had been Rs. 112,000,000 in Nanco received by NSF. The Company. Committee directed the Contd... CAO to look into this matter.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. It was observed that the offic- 5. The direction of the Com- ers attached to the NSF had mittee was to adhere to been released to the line Min- the circular instructions, istry contrary to the circular and if they need to release guidelines. the officers on long term basis, to release them per- manently.

Sri Lanka Standards 1. The Institute had not submit- 1. The Committee directed Institute. ted replies for 05 audit que- to response for the audit ries to the Auditor General. queries that are in arrears. October 11th, 2012

(Ministry of Technol- 2. The Post of Director 2. CAO stated that these ogy & Research) (Administration) and the Di- vacancies were caused rector (Finance) had been due to the requirement of vacant from April 2006 and longer period of experi- January 2004 respectively. ence stipulated in the scheme of recruitment and the existing low salary scale.

3. The Committee enquired as 3. It was stated that since it to how 2,236,000 Kgs. of takes 28 days to check the cement imported from Paki- strength of the cement, stan had been released to the and due to the lack of Market which had the com- storing facilities in the pression power less than Port it had been released 42.5. to the Market. The Com- mittee directed to discuss with the Hon. Minister, on measures that could be taken when such instances occur in future. 4. The Committee discussed 4. It was directed to take with regard to the standards action to introduce a of the bottled drinking water standard for the bottles and the fruits imported to the that are being used for country. water and other mineral products and to make the consumers aware of SLS certified products/items through their web site.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE National Institute of 1. The Annual Report of the 1. The Committee directed Social Development. Institute for the year 2011 to table the Annual Report had not been tabled in Parlia- for the year 2011 in Par- October 12th, 2012 ment. liament early. 2. The Committee observed that 2. Directed to fill the vacan- (Ministry of Social out of the approved cadre of cies once the provisions Services) 58 in the academic grades, were released by the the actual had been only 24. Treasury.

3. Without making use of the 3. It was explained that the building constructed at the Institute could not be cost of Rs. 16 million at shifted to building at Thalawa, Anuradhapura to Thalawa as they had start- establish the Head Office, a ed various types of degree building in Colombo had programmes in collabora- been rented out for the head tion with the Colombo office of the Institute, on University, but the Build- which Rs. 12,432,000/- had ing at Thalawa had been been incurred as the rent in rented to the external par- the year 2010. ties as a training center.

National Secretariat 1. The internal audit functions 1. The Committee directed for Persons with Disa- of the Secretariat had not to take action to appoint bilities. been carried out in the year sufficient staff to continue 2011. the internal audit func- October 12th, 2012 tions in the Council. (Ministry of Social 2. The Committee observed that 2. Directed CAO/AO to see Services) some of the targets men- the possibility of obtain- tioned in the Corporate Plan ing district wise represen- prepared for the period 2011 tation to implement the – 2015 had not been targets of the Corporate achieved. Plan. 3. The Committee discussed on 3. It was directed to discuss the drafting of the Disabled with the Hon. Minister Rights Act and also imple- and take appropriate ac- mentation of the guidelines in tion on these issues. the United Nations Ordi- nance. 4. The Council had not been 4. The direction of the Com- maintaining a data base relat- mittee was to take action ing to the persons with disa- to maintain an updated bilities. data base with the information of the disabled Contd... persons.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. It was discussed about the 5. Directed to co-ordinate rehabilitation centers prevail- with the societies/ ing in the country. personnel interested in supporting such centers and obtain funds to improve the standards of the rehabilitation centers, and also to submit a detailed report to the Committee on same. 6. The Committee discussed 6. The Committee suggested about 25 special schools reg- the CAO/AO to see istered under the Ministry of whether they could regis- Education for the disabled ter the schools established persons all over the country, by private parties, and and around 2500 students also to take action to being educated by around make the teachers perma- 450 teachers. nent if they fulfill required qualifications and experience in the field by maintaining better co- ordination with the Minis- try of Education in this regard. 7. The Committee inquired 7. It was stated that there about the current position of had been a delay in con- the construction of access structing the access roads roads for disabled persons. at some of the institutions due to the inadequacy of provisions. The Commit- tee directed to send the Cabinet decision as well as the relevant circulars relevant to the construction of access roads for disabled persons to the Ministries, Departments and Provincial Councils. 8. The Committee pointed out 8. The direction of the Com- the need of providing higher mittee was to discuss on education for the disabled same with the Hon. Min- students such as blind, deaf, isters of Social Services Contd... dumb, etc. and Education, at the respective consultative Committee Meetings.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 9. The Committee observed that 9. The Committee Directed a sum of Rs. 3 million had the CAO/AO to see that been granted to settle the the Council maintains a expenses of Social Security separate Bank account for Fund from the funds received the Housing Aid Project, for payment of housing aid and ensure that these for the disabled persons, in funds are not used for any 2007. other purpose in future.

Airport & Aviation 1. The Committee enquired 1. The CAO/AO stated that Services (Sri Lanka) about the present status of the the said land had already Ltd. court case with regard to the been taken into the pos- land purchased for the holi- session of the company. October 12th, 2012 day resort in Kataragama. The Committee directed to furnish supportive documents to the Committee to prove that the land had legally been transferred as an asset of the AASL.

(Ministry of Civil Avi- 2. The AASL had paid both the 2. It was explained that the ation) final payment and the reten- payment had been made tion money amounting to Rs. on a bank guarantee and 8,754,977,334 to the contrac- AASL had compelled to tor before the completion of finalize the payment early the construction work of the as the due time period for passenger terminal. the utilization of the loan amount was to lapse on 01.12.2006. 3. The Committee discussed 3. The Committee directed about the construction of the to furnish the loan agree- Mattala International airport. ment signed in this regard between the Exim Bank of China and the AASL

4. The Committee enquired 4. It was reported that the about the staff to be deployed total requirement of 1225 in the Mattala International carder was expected to be airport. recruited stage wise in three steps.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE State Printing Corpo- 1. The Corporation had pre- 1. The CAO/AO stated that ration. pared the Annual Budget they prepared the Annual without taking into consider- Budget based on the order October 12th, 2012 ation the Procurement Plan. received for printing of school books. The Com- mittee directed the CAO/ AO to see whether the present Annual Budget was in order. (Ministry of Mass 2. Though the Corporation 2. The CAO/AO brought to Media and Infor- prints 1/3 of the books re- the notice of the Commit- mation) quired by the schools, it has tee that the Corporation the capacity of printing 60 – had earned a profit of Rs. 70 percent of the entire re- 164 million by printing quirement of the Education school books in 2012. The Ministry. Committee directed the CAO/AO to find a method to obtain the orders directly from the Ministry of Education without going through the normal tender procedure. 3. The Committee enquired 3. The CAO/AO stated that about the purchasing of pa- the Corporation had pur- pers which did not confirm chased papers on the certi- with the specifications. fication of the Sri Lanka Standards Institute.

4. The Committee questioned 4. The CAO/AO stated that about the Corporate Plan of the Corporation had re- the Corporation. vised the Corporate Plan for the period 2012 – 2016. The Committee directed to submit a copy of same to the Committee.

Telecommunications 1. There were 28 vacancies in 1. The Committee directed Regulatory Commis- the Commission out of the to obtain the approval sion of Sri Lanka. approved cadre of 57 in the from the Salaries and Ca- Executive level. dre Commission and fill October 12th, 2012 the vacancies without further delay. ( The Presidential Secretariat)

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2. The Annual Reports of the 2. Directed to table Every Commission for the years Annual Report gone into 2007-2011 had not been ta- arrears in Parliament be- bled in Parliament. fore the commencement of the Budget.

3. The Committee noted that 3. The CAO/AO stated that there had been Telecommuni- there were around 2000 cation business places operat- such places operated in ed without obtaining a li- Sri Lanka and in addition cense. there are around 50 im- porters for which Rs. 1000/- license fee is charged, but only about 50% had been registered. The Committee directed the CAO/AO to follow the under mentioned guidelines.

 To get the business venders to print in the bill, “TRC approved instrument”,  To make the general public aware of the situation,  Request the telephone companies to send messages regarding this to the customers,  Get the Sales outlets to display the “TRC approved instruments” in the outlet itself. 4. The Committee observed that 4. It was stated that, out of out of the debtor balance of the debtor balance of Rs. Rs. 1759 million, Rs. 272 300 million, Rs. 174 mil- million had remained out- lion had been due from standing for a period from 02 the Electro Tex Company to 19 years. and 50 million from the SLBC. The Committee directed to take action against the both institu- Contd... tions.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. The Committee discussed 5. The Committee directed with regard to the radio fre- to submit a report to the quencies available in Sri Committee containing the Lanka. number of radio stations, owners, the data on which the frequencies given to each station and Amount paid etc.

Sri Lanka Institute of 1. It was observed that out of 1. The Committee directed Textile & Apparel. the 12 members in the Board to appoint the balance 03 of Directors, only 09 mem- members to the Board of October 16th, 2012 bers had been appointed. Directors within the next three weeks. (Ministry of Industry 2. The Internal Audit Unit of 2. The direction of the Com- & Commerce) the institute had not been mittee was to submit in- functioning adequately. ternal audit queries with regard to the shortcomings of the Institute to the Auditor General for his consideration. 3. The Committee enquired 3. Directed the CAO/AO to about the consultancy ser- pay attention on the scien- vices and research facilities tific researches. provided by the Institute with regard to the apparel industry in Sri Lanka. 4. The Committee discussed on 4. It was stated that the man- the textile industry in Sri agement of the Institution Lanka in details. had paid attention to uplift the textile industry and were hoping to manufacture textiles at least for the usage of the local consumers and also the Com- mittee directed to prepare the Corporate Plan as per the present need of the country.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Southern Develop- 1. The Committee questioned 1. The CAO stated that the ment Authority. about not submitting a report Ministry had already ap- regarding the deficiencies/ pointed a Committee on October 16th, 2012 weaknesses in the Institutions the chairmanship of an to be amalgamated under the Addl. Secretary to carry “Divineguma” Department as out the instructions given directed by the previous at the earlier COPE meet- COPE meeting. ing. (Ministry of Economic 2. The Committee enquired the 2. It was stated that since Development) current position of the Au- this company were not in thority with regard to the existing, the Attorney outstanding royalty of Rs. General had advised to 36.4 million in connection take action against the with the agreement entered persons involved under into with a company in Aus- the Criminal Law and the tralia to operate a Television investigations had already Network. been completed and the report would be submitted to the Authority within two weeks. 3. The Authority had not taken 3. The Committee directed action to get reimbursed Rs. to take immediate action 6,694,450/- from the Ministry to get reimbursed Rs. of Nation Building paid to 6,694,450/- to the Author- the officers who were re- ity from the respective leased to that Ministry during ministry. the period 2002 – 2007.

Sri Lanka Ayurvedic 1. The Committee observed that 1. The Committee directed Drugs Corporation. there were 17 vacancies in to submit a report on the the staff grade positions out correct position of the October 16th, 2012 of the total number of vacan- approved staff cadre. cies of 51, and 08 excess staff in the Corporation.

(Ministry of Indige- 2. There was an unidentified 2. The Committee directed nous Medicine) debtor balance of the Corpo- to write off the above ration amounted to Rs. 4.7 amount, after obtaining million and which had not the Treasury approval. been recovered and brought forward for a long period of time.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 3. It was observed that 05 sales 3. Directed to submit a re- outlets of the Corporation out port on loss making sales of the 16 island wide had outlets, and the action been running at a loss. taken to uplift those outlets for the ensuing three years.

4. The Committee enquired the 4. It was stated that this current position of un- amount had been rectified. reconciled balance amount- The committee directed to ing to Rs. 896,233 in the submit a report on the Control Account. same to the audit. 5. There had been an unidenti- 5. The Committee directed fied amount of Rs. to look into the balances 30,102,056 in the trade debt- written off, and take ac- or balance of Rs. 61,171,600 tion to transfer the offi- of the Corporation and a con- cials responsible for such siderable amount of debts lapses, and give more had been for more than 05 attention on the collection years. of the debts. 6 The Committee discussed on 6. Directed to submit a re- the cultivation and the expan- port to the Committee on sion of the ayurvedic drugs in same. Sri Lanka.

.7. The Committee observed that 7. The CAO/AO stated that a stock of gold valued at Rs. it was being used for the 1,841,645 had been deposited preparation of ayurevedic in the bank since the year drugs. The Auditor Gen- 1976. eral pointed out that this stock of gold had not been moved for several years.

Geological Survey & 1. The Committee observed that 1. The Committee directed Mines Bureau. certain objectives indicated in to take early action to the Act had not clearly been revise the Act if the objec- October 16th, 2012 identified in preparing the tives specified therein are Corporate Plan of the Bureau. practically unachievable. (Ministry of Environ- ment)

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2. The Committee discussed 2. It was stated that the Bu- about the involvement of the reau had no direct in- Bureau in petroleum mining volvement in this matter and Gem Industry. but provide assistance. It was further stated that mapping has an important role to play in identifying Petroleum.

3. It was observed that 01 mem- 3. It was directed to look ber of the Board of Directors into the matter very early of the Bureau, out of 03, had and fill the vacancy. not been appointed.

4. The Committee was of the 4. Directed to revise the Ac- view that the responsibilities tion Plan as per the Guide of each officer had not clear- Lines of the Treasury. ly been identified in the Ac- tion Plan.

5. The Committee observed that 5. The direction of the Com- the Revaluation of Fixed As- mittee was to obtain the sets had not been completed service of the officers as directed by the previous having that knowledge, in Committee meeting held on the Bureau, to finalize the 23/09/2011. revaluation process.

6. It was also observed that 6. It was stated that a de- there had been debtor balanc- tailed report on debtor es over 5 years amounting to balances had been re- Rs.6,071,830/- and ferred to the Board of Rs.15,167,885/- recoverable Directors and it had been from the Government and the recommended to initiate Private Sector respectively as legal action. The Commit- at 31.12.2011. tee directed to submit a detailed report to the Committee.

7. The Committee discussed 7. According to the explana- about the seismic activities tions, the monitoring of monitored by the Bureau seismic activities in the presently. country was at a very developed level at that moment.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Sri Lanka Cement 1. The Committee observed that 1. The Committee directed Corporation. there had been a difference in the CAO/AO to prepare the Corporate Plan prepared the Action Plan based on October 16th, 2012 for the period 2011 – 2015 the Corporate Plan. and the Action Plans prepared for the years 2010, 2011 & 2012.

(Ministry of State Re- 2. The Committee enquired 2. The CAO/AO agreed to sources and Enter- about the delay in tabling the table the Annual Report prise Development) Annual Report of the Corpo- for 2010 in Parliament ration for year 2010 in Parlia- within a month time. ment.

3. The Corporation had to pay 3. The Committee directed US $ 300,000 to an American the CAO/AO to submit a Company with regard to a detailed report on this transaction took place in transaction with the cur- 1999 for importing some rent position to the Com- clinker which were not up to mittee. the required standard. A part of the payment had been settled by the Holceim Compa- ny, and the balance amount by the Treasury.

Industrial Technology 1. The Committee discussed 1. The CAO/AO stated that Institute. about the Corporate Plan and the Institute had already the Action Plan of the ITI. prepared the 2012 – 2016 November 12th , 2012 Corporate Plan. The Com- mittee directed the CAO/ (Ministry of Technol- AO to include the follow- ogy & Research) ing information in the Corporate Plan and submit to the Committee.

Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 1. The date on which the Director Board decision was taken to prepare the Corporate Plan for 2012 – 2016. 2. The names of officials in the Commit- tee appointed for the preparation of the Corporate Plan, 3. The action taken by the Committee appointed to prepare the Corporate Plan, 4. The date on which the Corporate Plan was submitted to the Board of Directors for approval, 5. The date on which the approval was granted to the Corpo- rate Plan by the Board of Directors.

2. The Committee observed that 2. The CAO/AO stated that out of the 63 vacancies pre- they have a problem in vailing in ITI, 20 vacancies recruiting personnel for are in the senior level. the scientist position on the prevailing salary scales.

3. The Committee noted that a 3. The CAO/AO stated that Financial Consultant had this recruitment was for been appointed from newly created section. 01.01.2009 without obtaining The Committee directed the Treasury approval and the CAO/AO to prepare paid allowances amounting to the cadre accordingly and Rs. 200,000/- during that obtain the Treasury ap- year. proval.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. The Committee enquired the 4. The CAO/AO stated that current position of the recov- the legal action had been ery of Rs. 4,247,554/- from taken in some of the cas- 13 officers who had breached es, but there are some the agreements. which cannot be traced. The Committee directed the CAO/AO to submit a detailed report including the following information.

1. The date on which each officer had gone overseas for studies/ training.

Conditions that had 2. been included in the

Agreement.

3. The action taken by the Institute to recover the dues.

The Committee also directed to submit a report of the shortcomings in the earlier agreements, and the action taken to remedy those shortcomings in future.

5. The Institute had written off 5. The CAO/AO stated that fixed assets and stocks of since there were around consumer goods amounting 100 items which had been to Rs. 20,824,486/- from the fully depreciated with the books without obtaining the approval of the line Min- Treasury approval. istry, those items were discarded. The Committee directed to submit a de- Contd... tailed explanation on this matter.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 6. The Committee queried about 6. The CAO/AO stated that following projects which had projects could not be com- not been implemented or menced in time due to the implemented half way. delays prevailing in releasing capital funds by Project /Amount the Treasury. The Com- Provisioned (Million) mittee directed to prepare a project forecast at the 1. Miscellaneous Pro. 2.0 beginning of the year, 2. No TG 08/25 0.5 before requesting funds 3. No. TG 09/32 2.0 from the Treasury. 4. No. TG 09/33 0.5 5. No. TG 09/31 5.0

Sri Lanka Inventors 1. The Committee observed the 1. It was stated that the basic Commission. objectives of the Commission responsibility of the Com- and the issuing of patent mission was to encourage November 12th, 2012 rights etc. the inventors and assist their inventions. The Pa- tent Rights were issued by the Office of the Intellec- tual Property and not by the Commission.

(Ministry of Technol- 2. The Committee noted that 2. The direction of the Com- ogy & Research) two funds established for mittee was to assist inven- assisting inventors had not tors by utilizing both been utilized since 2007. funds.

3. It was observed by the Com- 3. The Committee was in- mittee that an Internal Audit formed that the staff of Section had not been func- the ministry had been tioning in the Commission. covering the duties of the Internal Audit Section at present.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Sri Lanka Accredita- 1. The Committee discussed 1. It was explained that the tion Board for Con- about the objectives and the main objective of the in- formity Assessment. current performance of the stitution was to provide institution. accreditations to the la- November 12th, 2012 boratories, certification and the inspection bodies to facilitate and improve the quality assessment.

(Ministry of Technol- 2. The SLAB had granted ac- 2. The Committee directed ogy & Research) creditation to about 58 insti- to take action to introduce tutions and it was not manda- a new mechanism making tory for an institution to ob- all the institutions com- tain accreditation to continue pulsory to obtain accredi- with its business. tations from the SLAB.

National Building 1. The Committee observed that 1. The Committee directed Research Organiza- there had been discrepancies the CAO/AO to prepare tion. in the Corporate Plan, the the Budget, and the Ac- Action Plan and the Budget tion Plan based on the November 12th, 2012 relevant to the Organization. targets of the Corporate Plan of the Organization.

Ministry of Disaster 2. The Committee questioned 2. The CAO/AO stated that Management whether the NBRO had taken they had recognized 10 action to recognize the land- landslide risk districts and slide risk areas. the mapping of the landslide hazard zones had also been carried out. The CAO further stated that a clearance certificate had to be obtained from the NBRO prior to any construction in these 10 districts.

3. The Committee observed that 3. The Committee directed the Procurement Plan had not the CAO/AO to submit been prepared in accordance the Procurement Plan to with the National Budget the Auditor General. Circular No. 28 of Contd... 24.03.2006.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. There had been a delay in 4. The CAO/AO agreed to tabling the 2010 & 2011 An- table both Annual Reports nual Reports in Parliament. in Parliament early.

5. The Committee noted that the 5. The direction of the Com- Internal Audit Reports for the mittee was to take early 2nd and 3rd quarters of the action to furnish same. 2012 had not been submitted to the Auditor General. 6. It was observed that out of 6. The CAO/AO stated that the 73 vacancies in the staff the organization has a cadre, large number of vacan- problem in recruiting the cies had been in the Tech- professional staff for the nical grades, where their ser- prevailing salary scales. vices are essential for the performance of the Organiza- tion. 7. The Committee queried the 7. The CAO/AO stated that current situation of carrying awareness programmes of out of awareness programmes Tsunami Warnings are of Tsunami warnings in the being carried out continu- coastal areas of Eastern, ously by the Disaster Southern and Western Prov- Management Centre and inces. the Technical awareness of landslides and mapping are being done by the NBRO.

Civil Aviation Au- 1. The Authority had taken a 1. The CAO/AO stated that thority. building on rent and spent this building had been Rs. 972,573/- in the year taken on rent to establish November 12th, 2012 2010 to conduct courses, the European Union Spe- whereas the Authority had cial Project to carry out received only an income of training activities, and (Ministry of Civil Avi- Rs. 384,136/- by conducting after 03 years, once the ation) only one course of 03 months project was completed, duration. this building had been used to conduct pilot licence examination and in house training due to lack of space in the earlier of- Contd... fice building.

288

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2. The Committee noted that the 2. The Committee informed Authority had paid salaries, that the Authority has the allowances/incentives to the right to pay any allowanc- staff without obtaining Cabi- es to the staff by follow- net approval as well as the ing correct procedures and Treasury approval. directed the CAO to submit a report to the Com- mittee on this issue.

3. The Committee questioned 3. The CAO/AO stated that about the Enactment of Mon- after obtaining the Cabi- treal Convention. net approval, it had been forwarded to the Legal Draftsman. The Commit- tee directed CAO/AO to follow it up.

4. The Committee inquired as to 4. The CAO was directed to why the Inbound and the submit a report after in- Outbound Cargo had de- vestigating the matter. creased in the year 2011, when compared to the previous years.

5. The Committee observed that 5. The Committee directed an officer had been paid sala- the CAO/AO to submit a ries from the Ministry and the report to the Committee Authority at the same time. on this issue, and take action to recover the amount overpaid to this officer.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Rehabilitation of Per- 1. The Committee noted that 1. The Committee directed sons, Properties and goals, responsibilities, past to make necessary amend- Industries Authority. financial results and financial ments in the Corporate forecasts had not been clearly Plan of 2012-2016 and November 15th, 2012 indicated in the Corporate send a copy to the Auditor Plan of the Authority pre- General. pared for the period of 2012- 2016. (Ministry of Rehabili- 2. The Committee enquired 2. The CAO replied that tation & Prison Re- about not granting loans out applications had been forms) of the Rs. 60 million invested forwarded to the Bank for in the State Mortgage and Rs. 50 million, but no Investment Bank for the loans had been granted same purpose and a sum of and as such Rs. 50 million Rs. 50 million had been with- had been withdrawn as drawn and invested in anoth- per the agreement and the er scheme. cabinet decision. The Committee directed him to send a report with a copy of the Cabinet decision to the Committee. 3. The Committee observed that 3. The CAO/AO stated that an interest amounted to RS. Rs. 31 lakhs had been sent 30.72 million had not been back to the Rehabilitation received to the Authority for Authority for the years the amount of Rs. 128 mil- 2011 and 2012 and they lion invested in the National had come to an agreement Housing Development Au- with the NHDA to convert thority from the year 1990 to the balance amount to 1995 for granting loans. housing fund for granting loans. 4. The service of an external 4. The CAO/AO stated that lawyer had been obtained by Board decision had been the Authority paying Rs. taken to get the service of 224,600/- without the ap- that lawyer and agreed to proval of the Attorney Gen- avoid such situations in eral and he had gone abroad the future. without completing the task. 5. Although Rs. 25,000/- had 5. The CAO/AO stated that been allocated to be given to in order to provide assis- each displaced persons after tance for more beneficiar- getting married, the Authori- ies that had been done and ty had granted only half of grants had been requested Contd... that amount. from the Treasury to pay the balance.

290

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 6. The Authority had paid over- 6. The Committee was of the time considering the 1 hour view that it was a wrong of overtime as 1 ½ hours practice and directed the surpassing the provisions of CAO/AO to look into the the PA Circulars. matter immediately.

7. The Authority had to pay a 7. The Committee directed surcharge of Rs. 80,504/- as to make payments without the Contribution to the Em- delay in future. ployees Trust Fund had not been done in time.

Defence Service Com- 1. The annual reports of the 1. The Committee directed mand & Staff College. College for years 2010 and to present the annual re- 2011 had not been presented ports in Parliament with- November 15th, 2012 in Parliament. out further delay.

(Ministry of Defence 2. The Committee observed 2. The direction of the Com- & Urban Develop- some shortcomings in the mittee was to prepare the ment) Corporate Plan for years Corporate Plan for the 2011 – 2015 according to the period 2012-2016, making PED/12 Circular. necessary rectifications.

3. The Fixed Asset Register of 3. It was directed to prepare the Institution had not been the Register of Fixed As- prepared although the value set in accordance with the of fixed assets amounted correct format excluding nearly to Rs.489,179,923 /-. the shortcomings.

4. The Committee noted around 4. Directed to take suitable 40 vehicles received from Sri action to get all the vehi- Lanka Army, SL. Navy, SL cles transferred to the Col- Air Force and the Ministry of lege. Defence had not been legally transferred to the Institution. 5. The College had not main- 5. The Committee directed tained the ratio of 2:1, which to pay early attention to should exist between the Cur- rectify this position. rent Assets and the Current Contd... Liabilities.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 6. The Committee questioned 6. The CAO/AO stated that about the programmes con- officers of Sri Lanka Ar- ducted by the institution. my, Navy, Air Force and the Police, in a rank above the level of a Major between the age limit of 27- 35 years were eligible for the programmes conducted by the institution and they are selected out of a competitive examination held by each force. The Committee directed the CAO/AO to include the exact number of officers participate in the programme from each force, in the Corporate Plan.

Rana Viru Seva Au- 1. Audit & Management Com- 1. The Committee directed thority. mittee meetings of the Au- to conduct Audit & Man- thority had not been conduct- agement Committee meet- November 15th, 2012 ed quarterly. ings regularly.

(Ministry of Defence 2. The Committee observed that 2. The CAO/AO stated that & Urban Develop- the construction of a Textile since the initial plan had ment) Centre which was initiated in been expanded, the work the year 2007 for disabled could not be completed. war heroes in the Ibbaga- The Committee was of the muwa Ranaviru Village had view that this should be not been completed. utilized in a fruitful manner for the benefit of the war heroes in the said village. 3. The Committee noted that 3. The Committee directed although the construction of the CAO/AO to imple- Pre-school building in Ke- ment projects with clear kirawa Ranaviru Village had objectives having consid- been completed, the pre- ered the technical feasibil- school had not been com- ity in future. Contd... menced.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 4. The Committee enquired 4. The CAO/AO stated that a about the maintaining of da- separate section had been tabase on dead or handi- established for this pur- capped war heroes and their pose in 2010 and 60% of family members. work had already been completed. The Commit- tee directed to send the summary of the available database to the Auditor General.

5. The money amounted to Rs. 5. The CAO/AO stated that a 300,000 and Rs. 1,020,805 Board decision had been received for the Ranaviru taken to transfer the sum Commemoration Project re- of Rs. 3 million and the mained in fixed deposits and interest in the fixed depos- savings Accounts of the Au- it of the Savings Bank to thority since the year 2003. the account established for providing scholarships for the children of the war heroes and to cancel the account in Metropolitan Branch of the Bank of Ceylon and deposit that money in the current account to be used for the welfare of the war heroes. 6. The Committee noted that 09 6. The Committee directed lands with an extent of 65 the CAO/AO to prepare acres had not been distributed an action plan and expe- among the war heroes over a dite the process and also considerable period of time. to send the marking system adapted for distribution of lands among the beneficiaries to the Com- mittee.

Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 7. The Committee discussed the 7. The Committee directed methodology used for distri- the CAO/AO to send a bution of lands among the detailed report on this and three categories of still in ser- a request with the details vice, handicapped and the of identified lands of 55 dependents of dead war he- acres to the Secretary to roes. the Ministry of Lands for the preparation of survey plans with a copy to the Committee Secretariat and to expedite the process of distribution of lands among the beneficiaries.

8. There was a contradiction 8. A detailed report was between the figures of Auditor called for by the Commit- General and the Authority on tee within a month includ- the lands distributed among ing the actual details on the beneficiaries. the lands and houses distributed, financial assistance provided for construction or renovation of houses by the Authority and the Ministry separately from the year 2009 onwards.

9. The Committee enquired 9. The Committee directed about the mechanism of the CAO/AO to have proper Authority in handling the in- records on them and send come earned by selling flags. the details for auditing.

Resettlement Authori- 1. The Committee observed that 1. The Committee directed ty there were number of short- to amend the Corporate comings in the Corporate Plan Plan including the extend- November 15th, 2012 of the Authority prepared for ed period of 3 years as per the year 2012-2013. the PED Circular 12. (Ministry of Resettle- ment)

Contd...

294

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2. The Committee enquired as 2. The CAO/AO stated that to why some higher positions earlier it was decided to had not been filled. abolish the Authority on 10.04.2012 and as such those vacancies had not been filled. The Commit- tee directed the CAO/AO to amend the cadre according to the current requirement and recruit personnel on contract basis or the secondment basis as the Authority had only been extended by three years.

3. The Committee observed that 3. The Committee directed Rs. 10121/- million had been to send monthly progress allocated for housing, liveli- reports to the Auditor hood activities and social General and to implement development of the Authority a mechanism for perfor- as per the proposed action mance appraisal of the plan for the year 2011, but officers. there was no evidence to prove that those activities had been actually done.

4. The Committee discussed the 4. The CAO/AO informed current progress of the settle- that an establishment of ment being done in Mulative model village for 150 and Silawature. families in Mulative had recently been implemented and would be completed by the end of March, 2013 and the displaced in Silawature were in tempo- rary accommodation. The Committee was of the view that they had a responsibility to provide dignified livelihood for them and directed to send a detailed report to the Contd... Committee regarding those settlements.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. The Committee enquired 5. The CAO/AO stated that about the displaced Muslim 5500 houses had already personnel in Puttalam. been built in Puttalam, but the Government policy was to settle them in their original villages and as such a committee had been appointed to provide lands in Jaffna for them. 6. The Committee stressed that 6. The CAO/AO was di- it was a basic requirement to rected to prepare a proper do an overall assessment of plan for post-settlement the needs of the affected activities and send a de- communities and co-ordinate tailed report on the pro- with other Institutions to gress of resettlement. avoid duplication of work related to resettlement.

National Crafts Coun- 1. The Corporate Plan of the 1. The CAO/AO stated that cil Council for the period 2011- the Corporate Plan for the 2014 had not been prepared. period 2012-2016 had November 16th, 2012 been prepared and submitted to the Audit.

(Ministry of Tradi- 2. The balance amount of the 2. The CAO/AO stated that tional Industries & financial allocation of it had been planned to Small Enterprises Rs.1,317,977/- for the con- finish the construction Development) struction project of Sigiriya before the end of 2013. Information Centre had been idling for seven years.

3. The Committee enquired as 3. The CAO/AO stated that to what steps had been taken actions had been taken to to further reduce the deficit reduce the deficit by re- which is comparatively better vising the Corporate Plan in 2011. according to the financial position in each year. The Committee directed not to revise the Corporate Plan but to include such things in the Action Plan.

296

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 Comments & Decisions of Institution & Ministry Identified the COPE National Design Cen- 1. The Committee queried as to 1. The Committee directed tre how far the Institution had to prepare accounts in followed the International accordance with new In- November 16th, 2012 Accounting Standards. ternational Accounting Standards.

(Ministry of Tradi- 2. The suspense account bal- 2. It was stated that the bal- tional Industries & ance of the Center amounting ance had been existing Small Enterprises to Rs. 456,382 had not been since 2001 due to ac- Development) identified and written off. counting errors and agreed to correct it in their accounts in the year 2012. 3. It was observed that only Rs. 3. The direction of the Com- 631,156/- out of the receiva- mittee was to take imme- ble amount of Rs. 4,018,738/- diate action to recover the had been recovered due to balance amount. non-availability of documents. 4. The Center had not main- 4. The CAO/AO stated that tained a Fixed Assets Regis- the Center had been main- ter for the fixed assets valued taining the Fixed Assets at Rs.23,419,612/- owned by Register from the begin- the institution and also no ning of the year 2012 and revaluation had been done. revaluation of Fixed As- sets had also been done. 5. The Committee queried about 5. It was stated that the debt- the inadequacy of evidence in or balance had already confirming the debtor bal- been corrected. The Com- ance amounting to mittee directed the CAO/ Rs.13,260,230/- and the cred- AO to obtain adequate itor balance amounting to evidence for the confirma- Rs.9,753,798/- tion of the other amounts.

Industrial Develop- 1. The Annual reports of the 1. The Committee directed ment Board. Board for the years 2010 and to table the respective 2011 had not been tabled in Annual reports without November 16th, 2012 parliament. further delay.

(Ministry of Tradi- tional Industries & Small Enterprise De- velopment)

Contd... 297

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2. The Audit & Management 2. The direction of the Com- Committee meetings of the mittee was to regularize Board had not been held ade- the holding of meetings. quately. 3. The Committee inquired as to 3. It was directed to dis- what action would be taken cuss this issue with rele- regarding 45 casual workers vant authorities to see with the implementation of whether any justice could the new cadre. be done for them. 4. The Committee questioned 4. The CAO/AO stated that about the current position of certain officers who were the inquiries made into the alleged to responsible for loss incurred on the sale of the loss had already re- the generator and also about tired from service and the the stock shortage of the 79 other accused officer who Hand Potter Wheels. had functioned in the Technical Evaluation Committee had been ex- onerated from all charges by the report of the Inves- tigating Officer and no evidence could be traced on the shortage of 79 hand potter wheels, as a certain number of Hand Potter Wheels in stock had been distributed among the Public by a consultant of the then Minister without the intervention of the IDB. The Committee stressed that the investigations should be continued against the officers stated to be retired as well and directed to hold an inquiry about shortage of the 79 Hand Potter Wheels. 5. IDB had paid a sum of Rs. 5. Directed .the CAO/AO 4.6 million to the Sri Lanka either to make the pur- Customs as an advance for chases or get back the purchasing of scrap materials advance payment. but such a purchase had not Contd... been done.

298

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 Comments & Decisions of Institution & Minis- Identified the COPE try 6. The Committee observed 6. The Committee directed that the Production Exhibi- to take steps to open this tion Centre constructed at Centre very early. the cost of Rs.1,412,100 had not been opened yet . 7. The Committee questioned 7. The Committee suggested about the unidentified de- to take these deposits as posits amounting to Rs. 3.1 sundry income, if there million accumulated in five was no way of identifying bank accounts. them. 8. The non-receipt of divi- 8. The direction of the Com- dends for the investment of mittee was to take neces- Rs. 5.3 million made in the sary action with the prop- Industrial Development er approval to write off Company Ltd. had not been the loss incurred on this disclosed in financial state- investment since the comments as per the SLAS No. pany had been defunct at 22 the moment. 9. The Committee discussed 9. The Committee directed about the industrial zones the CAO/AO to send a which had not been func- detailed report on the 18 tioning then and also en- Industrial zones belonging croached by outsiders. to the IDB.

10 A bus purchased at a cost of 10 A detailed report was Rs. 8,712,000 for the project called on this matter stat- of disseminating technology ing the names of the re- in 2009 had become unusa- sponsible officers. ble after running of only a few kilo meters. 11 The Committee discussed 11 The Committee directed about the methodology fol- to send a report to the lowed by the IDB in pur- Committee on this matter chasing and reselling the including the related is- scrap materials. sues.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Sri Lanka Handi- 1. The Committee inquired re- 1. The Committee stressed crafts Board garding the sale of the Bam- the requirement of get- balapitiya Showroom without ting a valuation report obtaining a valuation from a from the Chief Govern- November 16th, 2012 government valuer. ment Valuer and directed to fulfill that requirement. (Ministry of State Re- 2. The Committee observed an 2. It was stated that Rs. 3.1 sources & Enterprise arrears of audit fees amount- Million which had been Development) ing to Rs. 2,876,177 up to in arrears for nearly 13 2012. years had been settled. The Committee directed to finalize the payments.

3. It was observed that the in- 3. Directed to pay more stitution had paid surcharges attention in this regard in for the delayed payment of future and to adhere to EPF and Assessment Tax. the rules and regulations relevant to those payments. 4. The Committee questioned 4. The Committee directed about the 05 consultants re- the CAO to get necessary cruited on contract basis approval for such ap- without having proper appointment in future. proval.

Sri Lanka Convention 1. The Annual Reports of the 1. The Committee directed Bureau Bureau for the years 2010 to make arrangements to November 16th, 2012 and 2011 had not been pre- present the Annual Re- sented in Parliament. ports for 2010 and (Ministry of Economic 2011in Parliament with- Development) out further delay.

Contd...

300

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 Comments & Decisions of Institution & Ministry Identified the COPE 2. The Committee observed that 2. Directed to reformulate the performance indicators the Corporate Plan as per had not been included in the the PED/12 Circular. Corporate Plan as per the PED/12 Circular. 3. The Action Plan and the Pro- 3. The direction of the curement Plan of the Bureau Committee was to take had not been prepared in ac- necessary corrective cordance with the PED/12 measures. Circular. 4. The under mentioned expens- 4. The CAO/AO stated that es had been borne by the Bu- actions had not been tak- reau on behalf of the Sri en to recover these Lanka Tourism Development amounts from the Au- Authority. thority in view of the proposed amalgamation  Tourism Awards of the four institutions. A Rs.6,500,00/- separate report on these  Spice Festival expenses was called Rs.5,000,000/- within a month.  World Tourism Day Rs.1,500,000/-  Regional Events 4,500,000/- 5. The Committee queried about 5. Directed to submit a re- the amount of Rs. 3.5 million port with regard to this spent for the Negombo Mega expenditure to the Audit. Promotion Programme of which no information had been provided for audit.

6. The Committee observed that 6. The Committee directed although the Bureau had spent to follow a proper criteria Rs. 22.2, Rs. 25.3 and Rs. for this. 47.9 million in the years 2009, 2010 and 2011 respectively for marketing and promotional activities, the outcome of those activities had not properly been evaluated.

301

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Sri Lanka Institute of 1. The Committee observed that 1. Directed to submit the Printing. the final copy of the Corpo- final copy of the Corpo- rate Plan of the institute for rate Plan 2012-2016 to the November 19th , 2012 the period 2012-2016 had not Auditor General. been submitted to the Auditor General.

(Ministry of Youth 2. The Committee discussed on 2. The Committee empha- Affairs & Skills De- the objectives, activities of sized the need of adopting velopment) the institute and also the a proper mechanism to training courses conducted by identify the training needs the Institute. of the people engaged in printing Industry. 3. The preparation of accounts 3. The Committee also want- and bank reconciliation state- ed the CAO to plan a ments of the Institute had proper mechanism for been outsourced as there was monitoring the accounting no Accountant in the Insti- and auditing process and tute. report back to the Com- mittee and directed the Accountant of the Minis- try to provide necessary assistance till then. 4. The Committee observed that 4. The CAO/AO agreed to some instances where the make necessary adjust- salary points had been decid- ments when the SOR was ed in the institute contrary to approved. the Management Service Circular No. 30.

National Film Corpo- 1. The vacancy prevailing in the 1. The Committee directed ration. General Manager’s post in the CAO/AO to take nec- the Corporation. essary action to fill the November 19th, 2012 vacancies before the 01st of January, 2013, and (Ministry of Mass submit a report to the Media & Information) Committee.

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 the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2. The Committee discussed 2. The CAO/AO stated that about the following outstand- the Corporation had taken ing amounts. action to collect the dues wherever possible. The  Rs. 7,913,163 recoverable Committee directed the at the end of year 2011 CAO to appoint a Com- from 146 cinema halls mittee at Ministry level, closed down prior to 2001. and see what action could be taken to recover the  Rs. 133,069,516. recovera- dues and to submit a re- ble from 177 cinema halls port containing loan de- belonging to Boards as at tails of those 177 cinema 31.12.2011. halls.

3. The Committee questioned 3. The Corporation had ap- regarding the progress of pointed a Committee to collecting the arrears from look into the debtor bal- debtors. ance. The Committee directed the CAO/AO to discuss with the Hon. Minister and introduce a methodology on the recovery of outstanding dues and submit the same to the Committee.

4. The Committee discussed 4. The CAO/AO stated that about outstanding production the Corporation had now loans amounting to Rs. 75 amended the agreement lakhs which had been granted and now personal or a for 26 cinemas. property guarantee need for such loans.

Contd...

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. The files relating to the pur- 5. The CAO/AO stated that chase of DTS Sound equip- there had been a serious ment and Projectors valued at fraud relevant to this Rs. 17,362,634 had not been transaction and the Corpo- forwarded to the Auditor ration had to consult the General. Attorney General and as such the corporation had been unable to submit those documents to the audit. The Committee directed the CAO to carry out an investigation at ministry level and submit a report to the Committee including the persons involved and the action taken against them.

6. The Committee discussed the 6. The Committee directed actions taken to uplift the the CAO/AO to have dis- cinema industry in the North cussions with the UDA and East. officials, and request them to plan for mini theatres when they are designing new town plans in the country.

7. The Committee questioned 7. The CAO/AO stated that about the procedure adopted they have restricted im- by the Corporation when porting foreign films. The foreign films are imported to Committee wanted the the country. CAO/AO to include in the paper advertisement the above guidelines when the registrations are called in future.

Superior Courts Com- 1. The Committee observed that 1. The Committee directed plex Board of Man- two members of the director to take necessary action to agement. Board had not been appoint- fill the vacancies without ed. further delay. November 19th, 2012

( Ministry of Justice)

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 2. It was revealed that Rs. 42 2. The direction of the Com- million had to be spent only mittee was to discuss with on electricity out of Rs. 86 the authorities and the million received from the experts of the Ceylon treasury for recurrent ex- Electricity Board to look penditure of the Board. into the possibilities of bringing down the electricity consumption and to report to the Committee on the findings thereon.

3. It was observed that the allo- 3. A detailed report was cation of official residencies called in within one week to the staff had been made on the 10 official residen- without charging a rental. cies including the details about the present occu- pants and the expenditure incurred on maintenance.

Sri Lanka Judges In- 1. The Annual Reports of the 1. The direction of the Com- stitute. Institution for the years 2005- mittee was to table all the 2012 had not been tabled in outstanding Annual Re- November 19th, 2012 Parliament. ports in Parliament very soon.

(Ministry of Justice) 2. The Institute had paid some 2. It was directed to take the allowances to the officers approval of the Dept. of without obtaining the approv- Management services for al of the Department of Man- similar payments. agement Services.

3. The Committee discussed in 3. The Committee empha- detail about the vision, mis- sized the need for fast sion and objectives stipulated dissemination of infor- in the Act which should be mation and the research achieved by the Institute as activities and directed that the sole organization of the lower court judges providing training facilities to should also be provided the Judges in the country. with facilities so as to maintain interact with the international levels.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE National Research 1. The Committee questioned 1. The CAO/AO stated that Council. about obtaining the patent they need around US $ certificate for developing 60,000 – 75,000 to obtain December 07th, 2012 technology for research pro- the International Patent jects. Certificate, and that they (Ministry of Technol- had already held discus- ogy & Research) sions with the Treasury in this regard.

(Ministry of Technol- 2. The Committee discussed on 2. The Committee directed ogy & Research) the research studies. the CAO/AO to submit a detailed report on the research projects carried out by the Council for the last three years including the following information.

 The Research Projects carried out by the Coun- cil.  The Research Projects carried out with the collaboration of other institutes and  The names of those institutions.

3. It was observed that due to 3. The CAO/AO stated that the abandonment of the re- some of the projects had search projects by some of not been carried out or the Researchers, a long peri- completed due to various od had been taken to close reasons, but by now those the bank account or transfer money had been recov- the funds and equipment for ered. He further stated another project. that there are 111 such current accounts. The Committee directed the CAO/AO to submit a report on the above 111 bank accounts including the date of commencement of the account and other relevant information to the Committee.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE National Council for 1. The Annual Reports of the 1. The Committee directed Road Safety. Institute for the last years had to table all the outstanding not been presented in Parlia- Annual Reports in Parlia- December 07th, 2012 ment. ment within a period of six months.

( Ministry of 2. The Committee observed that 2. The CAO/AO agreed to Transport ) the Corporate Plan had not prepare the Corporate been prepared giving effect Plan very early. to achieve the objectives specified in the Act. 3. The Committee noted an in- 3. It was directed to attend to ordinate delay in paying of all the pending cases as compensation to the depend- early as possible. ents of the victims of motor accidents.

4. It was observed that no prop- 4. Directed to prepare a de- er procedure had been fol- tailed report with regard lowed by the Council to to the amounts received charge 1% out of the total from each insurance com- income on third party insur- pany since 2004 and to ance policy issued by each forward it to the Insurance insurance company, to the Board in order to ascertain fund of the council. that all the dues had been received by the Council.

5. The Committee inquired 5. It was stated that around about the statistics with re- 1250 of such accidents are gard to the fatal accidents reported to the institute recorded and the other related per year and it had been matters revealed out of those revealed that 80% out of accidents. that amount had been due to certain unsound medical situations of drivers and the Committee directed to obtain the details of accidents of the vehicles registered under the ON THE SPOT insurance scheme, as those details are not reported.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE Sustainable Energy 1. The Committee enquired 1. The AO stated that these Authority. about the loss of two vehicles two vehicles had been belonged to the Authority handed over to the Minis- December 07th, 2012 and the fixed assets register try as per their request, which had not been updated but there were no written properly. evidence.

(Ministry of Power & 2. The Committee observed that 2. As the Treasury and the Energy) the Rs. 58.26 million & Rs. Auditor General had not 84.40 million had been in- received any request or vested in Treasury Bills and report sent by the Authori- Fixed Deposits respectively ty in this regard, the Com- without the approval of the mittee directed the CAO/ Treasury. AO to carry out further investigation in this regard and report back to the Committee.

3. The Sustainable Energy 3. The CAO/AO stated that Guarantee Fund had not been the fund had already been shown in the balance sheet. established but the required regulations had not yet been formed. The Committee directed the CAO/AO to send a detailed report to the Com- mittee including on which provisions of the Act this had been established, the objectives, the balances, the functions and what actions had been taken so far to establish this fund.

4. The Capital grant had been 4. The CAO/AO stated that shown as income and ex- the Treasury approval had penditure when preparing been given to use the Cap- accounts. ital grants for Recurrent purposes. The Committee directed to rectify the errors had in accounting Contd... procedures.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. The Committee questioned 5. The CAO/AO stated that about distribution of Rs. those payments had been 3,135,202/- out of Rs. made after having the 7,334,354/- received for the Board approval. The Switch Area Project, among Committee directed the the officers as a professional CAO/AO to send a de- allowance in contrary to the tailed report on same. PED Circular No. 95, the CAO/AO.

Central Environmen- 1. Some of the objectives laid in 1. The CAO/AO was di- tal Authority the Corporate Plan prepared rected to prepare an ap- for the period of 2008 -2012 propriate Corporate Plan December 07th, 2012 had not been implemented. for the Institution or to make necessary amendments to the existing one and send a detailed report to the Committee Secre- tariat within a month.

(Ministry of Environ- 2. The Committee discussed 2. The Committee stressed ment) about the procedure followed the need for better use of regarding the Public Com- the environment officers plaints. attached to District offices and directed to coordinate the activities more efficiently and to do the follow-up. 3. The Committee queried about 3. The Committee directed the recovery of Rs. the AO to take action to 7,267,339/- from the Ministry solve this matter through of Power & Energy for a pro- the Secretary to the Minis- ject named Post-used Plastic try. Waste Management National Project. 4. An attendance allowance had 4. The Committee was of the been paid by the Authority view that this had been for the staff members without done in contrary to the the approval of the Treasury. Govt. Circulars and directed to take actions to Contd... regularize the matter.

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Date/ Name of the Major Issues & Problems Comments & Decisions of Institution & Ministry Identified the COPE 5. The Committee observed that 5. The Committee directed there was a lapse in monitor- to take actions against ing environmental pollution such Industries using the arising from the factories available provisions of the under the BOI. Act through the BOI and to send the list of those industries to the Commit- tee Secretariat.

6. The Committee queried about 6. The CAO/AO stated that the tender procedure of pur- there were some lapses chasing Air Quality Monitor- when submitting the ten- ing Machine System. der by that Company. The Committee directed to keep the money amounting to Rs. 120 million allocated for this in a De- posit Account with the approval of the Treasury to be used in the next year after streamlining the process.

Ceylon Ceramics Cor- 1. The Committee questioned 1. The CAO explained that poration. about the Ceramics Corpora- the Cabinet had decided to tion which is under the Com- restructure the Corpora- December 07th, 2012 petent Authority and not ap- tion within one year and pointing a Director Board as until then the Corporation per the Act. is functioning under the (Ministry of State Re- Competent Authority with sources and Enter- 25 staff members. The prise Development) Committee directed the CAO to send a comprehensive report regarding the restructuring programme.

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Appendix E

INDEX

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INDEX

A Agriculture & Agrarian Insurance Board……………………….. 162 Airport & Aviation Services (Sri Lanka) Ltd ………………….. 276

Arthur C. Clarke Centre…………………………………………. 269 Associated Newspapers Company Ltd………………………….. 42 Atomic Energy Authority……………………………………….. 39 B B.C.C.Lanka Ltd………………………………………………… 99 Bank of Ceylon…………………………………………………. 71 Board of Investment…………………………………………….. 52 Botanical Garden Trust Fund…………………………………… 155 Buddasravaka Bikkhu University……………………………….. 209

Buddhist & Pali University……………………………………… 192 C Central Engineering Consultancy Bureau………………………. 44 Central Environmental Authority……………………………….. 309 Centrul Cultural Fund…………………………………………… 116 Cey Nor Foundation Ltd………………………………………… 119

Ceylon Ceramics Corporation…………………………………... 310 Ceylon Electricity Board………………………………………... 59 Ceylon Fertilizer Company Ltd…………………………………. 101 Ceylon Petroleum Corporation………………………………….. 57 Ceylon Shipping Corporation…………………………………… 61 Chilaw Plantations Ltd………………………………………….. 113 Civil Aviation Authority………………………………………… 288 Coconut Cultivation Board……………………………………… 219 Coconut Development Authority……………………………….. 244

Coconut Research Board………………………………………... 245

Colombo Commercial Fertilizer Com. Ltd...... 220 Condominium Management Authority …………………………. 235

313 PARLIAMENTARY SERIES NO. 236

Consumer Affairs Authority…………………………………….. 252 Cooperative Wholesale Establishment………………………… 145 D

Defence Service Command & Staff College……………………. 291 Development Lotteries Board…………………………………… 87

Distance Learning Centre Ltd…………………………………… 143 E Eastern University………………………………………………. 152 Elkaduwa Plantations Ltd……………………………………….. 100 Employees’ Trust Fund Board………………………………….. 45 F Fruit Development Board……………………………………….. 256 G Galle Heritage Foundation………………………………………. 214 Gem & Jewellery Research & Training Institute ………………. 264 Geological Survey & Mines Bureau……………………………. 281 H Hadabima Authority…………………………………………….. 246 HDFC Bank……………………………………………………... 83

Hector Kobbekaduwa Agrarian Research & Training Institute… 221 Hingurana Sugar Industries Ltd…………………………………. 100 I Industrial Development Board………………………………….. 297 Industrial Technology Institute………………………………….. 283 Information & Communication Technology Agency…………… 216 Institute of Biochemistry Molecular Biology & Biotechnology... 215 Institute of Construction Training & Development …………….. 236

Institute of Fundamental Studies………………………………... 213 Institute of Human Resources Advancement…………………… 194 Institute of Indigenous Medicine ……………………………….. 171 Institute of Policy Studies……………………………………….. 183 Institute of Technology………………………………………….. 194

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Insurance Board of Sri Lanka…………………………………… 51 ITN & Lakhanda Radio…………………………………………. 84

J.R. Jayawardena Centre………………………………………… 196 Janatha Estate Development Board……………………………... 88

Janatha Estate Development Board……………………………... 238

Janatha Fertilizer Enterprise Ltd………………………………… 103 K Kahatagaha Graphite Lanka Ltd………………………………… 103 Kalubovitiyana Tea Factory Ltd………………………………… 107 Kantale Sugar Industries Ltd……………………………………. 110 Kurunegala Plantations Ltd……………………………………... 115 L Lady Lochore Loan Fund……………………………………….. 132 Lakdiva Engineering Co. Ltd…………………………………… 142 Land Reform Commission ……………………………………… 233

Land Survey Council …………………………………………… 219 Lanka Logistics Ltd……………………………………………... 129

Lanka Mineral Sands Ltd……………………………………….. 121

Lanka Phosphate Ltd……………………………………………. 157 Lanka Salusala Ltd……………………………………………… 111 Lanka Sathosa Ltd………………………………………………. 86

Local Loans Development Fund………………………………… 89

Mahapola Higher Education Trust Fund………………………... 92 Mahaweli Authority…………………………………………….. 238

Mantai Salt Ltd………………………………………………….. 104 Marine Environment Protection Authority ……………………... 265

Mihin Lanka Ltd………………………………………………… 79

MILCO Ltd……………………………………………………… 130

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National Apprt. & Industrial Training Authority……………….. 207

National Aquaculture Development Authority………………….. 250 National Aquatic Resources Research & Development Agency... 222

National Building Research Organization……………………… 287 National Centre for Advanced Studies…………………………. 216

National Council for Road Safety………………………………. 307 National Crafts Council…………………………………………. 296

National Dangerous Drugs Control Board……………………… 127

National Design Centre…………………………………………. 297

National Engineering Research & Development Centre……….. 270

National Enterprise Development Authority……………………. 91 National Film Corporation………………………………………. 302

National Gem & Jewellery Authority ………………………….. 266

National Housing Development Authority……………………… 74

National Human Resource Development Council………………. 184

National Institute of Business Management…………………….. 188

National Institute of Cooperative Development………………… 96 National Institute of Education…………………………………. 174

National Institute of Fisheries & Nautical Engineering………… 225 National Institute of Language Education & Training…………. 198

National Institute of Library & Information Science…………… 186 National Institute of Plantation Management…………………… 228 National Institute of Social Development ……………………… 274

National Insurance Trust Fund…………………………………. 135 National Livestock Development Board………………………... 253 National Lotteries Board……………………………………….. 46 National Paper Company Ltd…………………………………… 94 National Research Council……………………………………… 306 National Savings Bank…………………………………………. 40 316 REPORT FROM THE COMMITTEE ON PUBLIC ENTERPRISES OF THE PARLIAMENT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

National Science & Technology Commission…………………... 271

National Science Foundation……………………………………. 272

National Secretariat for Persons with Disabilities………………. 274

National Transport Medical Institute……………………………. 268

National Water Supply &Drainage Board ……………………… 160 National Youth Services Council……………………………….. 178

North Sea Ltd…………………………………………………… 105 O Official Languages Commission………………………………... 185 Open University…………………………………………………. 172 P Paddy Marketing Board…………………………………………. 256 Palmyra Development Board …………………………………… 226 Paranthan Chemicals Ltd………………………………………... 123

Post Grad. Institute of Pali & Buddhist…………………………. 210

Post Graduate Institute of Agriculture…………………………... 215 Post graduate Institute of Archeology…………………………... 181

Post graduate Institute of English……………………………….. 174 Post Graduate Institute of Science………………………………. 215 Postgraduate Institute of Medicine……………………………… 189 Provident Fund for Buddhist & Pali University………………… 150 Public Utilities Commission of SL ……………………………... 261 Pulses & Grain Research & Production Authority……………… 256 R

Rakna Arakshana Lanka Ltd……………………………………. 129

Ranaviru Seva Authority………………………………………... 292 Regional Development Bank……………………………………. 70 Rehabilitation of Persons, Properties & Industries Authority…... 290 Resettlement Authority………………………………………….. 294 Road Development Authority…………………………………… 61 Rubber Research Board…………………………………………. 251

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S Saumyamoorthi Thondaman memorial Foundation…………….. 214

Securities & Exchange Commission……………………………. 166 Selacine Rupavahini Institute…………………………………… 207

Sir John Kotalawala Defence University……………………….. 125

Skills Development Fund Ltd…………………………………… 122

Sri Lanka Accounting & Auditing Standards Monitoring Board 261 Sri Lanka Accreditation Board for Conformity Assessment……. 287 Sri Lanka Cashew Corporation …………………………………. 232 Sri Lanka Cement Corporation………………………………….. 283 Sri Lanka Convention Bureau…………………………………... 300

Sri Lanka Council for Agricultural Research Policy……………. 248 Sri Lanka Foreign Employment Bureau………………………… 185 Sri Lanka Foundation…………………………………………… 199 Sri Lanka Freedom from Hunger Campaign Board ……………. 249 Sri Lanka Handicrafts Board……………………………………. 300 Sri Lanka Institute of Advanced Tech. Education………………. 205 Sri Lanka Institute of Development Administration……………. 180 Sri Lanka Institute of Local Governance………………………... 216 Sri Lanka Institute of Printing…………………………………... 302 Sri Lanka Institute of Textile & Apparel………………………... 279 Sri Lanka Inventors Commission……………………………….. 286 Sri Lanka Judges Institute……………………………………….. 305 Sri Lanka Press Council………………………………………… 175 Sri Lanka Standards Institute……………………………………. 273 Sri Lanka State Plantation Corporation…………………………. 240 Social Security Board…………………………………………… 262 South Eastern University………………………………………... 200 Southern Development Authority……………………………….. 280 Sri Lanka Ayurvedic Drugs Corporation ……………………….. 280 Sri Lanka Broadcasting Corporation……………………………. 81

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Sri Lanka Export Credit Insurance Corporation………………… 91 Sri Lanka Land Reclamation & Development Corporation…….. 67 Sri Lanka Ports Authority………………………………………. 54 Sri Lanka Rubber Manufacturing Export Corporation Ltd……... 109 Sri Lanka Savings Bank Ltd……………………………………. 134 Sri Lanka Tourism Development Authority ……………………. 63 Sri Lanka Transport Board ……………………………………... 85

Sri Lankan Airlines Ltd…………………………………………. 112 State Engineering Corporation………………………………….. 75 State Pharmaceuticals Corporation……………………………… 138 State Pharmaceuticals Manufacturing Corporation…………….. 164 State Printing Corporation………………………………………. 277

State Timber Corporation……………………………………….. 39 State Trading (COOP) Wholesale Co. Ltd……………………… 148 STC General Trading Company Ltd……………………………. 111 Sugarcane Research Institute……………………………………. 254 Sugathadasa Sports Cpx. Authority……………………………... 213 Superior Courts Complex Board of Management………………. 304

Sustainable Energy Authority…………………………………… 308 Swamy Vipulananda Institute of Aesthetic Studies ……………. 201 T Tea Research Institute…………………………………………... 229 Tea Shakthi Fund……………………………………………….. 242 Tea Small Holdings Development Authority …………………... 230 Telecommunications Regulatory Commission of Sri Lanka……. 277 Tertiary & Vocational Education Commission…………………. 186 Thurusaviya Fund……………………………………………….. 206 Tower Hall Theater Foundation………………………………… 176

Udarata Development Authority………………………………... 224 Uni. of Sabaragamuwa…………………………………………. 211 Uni. of Sri Jayawardenapura………………………………….... 212 319 PARLIAMENTARY SERIES NO. 236

Uni. of Sri Jayawardenapura………………………………….... 212 Uni. of Peradeniya………………………………………………. 210

Uni. of Wayamba……………………………………………….. 210

Universities Pension Fund & Provident Fund…………………... 151 University of Colombo………………………………………….. 206 University of Colombo School of Computing………………….. 181 University of Jaffna ...... 202 University of kelaniya…………………………………………... 190 University of Moratuwa…………………………………………. 195 University of Rajarata…………………………………………… 206 University of Ruhuna……………………………………………. 206 University of Visual & Performing Arts………………………... 182 University of Vocational Technology…………………………... 208 Uva Wellassa University………………………………………... 205 V Vegetable Development Board………………………………….. 256 Vocational Training Authority………………………………….. 208 W Wijaya Kumaratunga Memorial Hospital Board ……………….. 263

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