By Amrit Muttukumaru - Colombo Telegraph
Large-Scale corruption will continue to thrive so long as
professionals – particularly auditors and lawyers (i) are not held accountable
(ii) ‘named & shamed’ (iii) punished – for dereliction of duty and
wrongdoing. Can any large-scale corruption occur without the complicity of
professionals? Are not accountants and auditors the first line of defense
against corruption in all entities dealing with financial resources?
If only Srilankan was as sharp as their safety video!!!!
Based on the Prime Minister’s statement, the J.C. Weliamuna
Report into alleged corruption and abuse of power in Sri Lankan Airlines
confirms this malady.
The Report which confirms in shocking detail what the
discerning public has long suspected appears to have missed the wood for the
trees by neglecting to give due attention to the fact that the alleged
corruption and abuse of power by Chairman, Nishantha Wickramasinghe, Kapila
Chandrasena (CEO) and others took place under the watch of the airline’s long
standing auditors – Ernst & Young and its Board of Directors which included
Messrs. Susantha Ratnayake, Nihal Jayamanne PC, Sunil G Wijesinha, Sanath
Ukwatte and Manilal Fernando – many of them also in its Audit Committee – some
even as Chairmen!
Directors
As per Annual Reports, former Directors include:
Mr. Susantha Ratnayake – Chairman, Audit Committee
for some years. He is a former Chairman, Ceylon Chamber of Commerce and
incumbent Chairman, John Keells Holdings PLC – arguably the country’s leading
private sector entity. He is also Chairman, Ceylon Tobacco Company PLC.
Mr. Nihal Jayamanne PC – Chairman, Audit Committee
and its member for some years. He is a leading lawyer who is Chairman of the
Law Commission of Sri Lanka and the Company Law Advisory Commission. He is also
Chairman, Seylan Bank PLC.
Mr. Sunil G Wijesinha – Chairman, Audit Committee. He
was a Director when Dr P B Jayasundera was Chairman and continued for a period
when Mr. Nishantha Wickremasinghe succeeded him. He is a Chartered Engineer and
until recently was Chairman, NDB Bank. Previously he was Chairman, Employers’
Federation of Ceylon and Deputy Chairman, Sampath Bank PLC.
Mr. Sanath Ukwatte – Member, Audit Committee is a
leading hotelier. He is Chairman, Mount Lavinia Hotel Group
Mr. Manilal Fernando – a Director for some years is a
lawyer. He is a Director of Aitken Spence & Co. PLC and Ceylon Guardian
Investment Trust PLC (A member of the Carson Cumberbatch Group). These are
leading corporate entities in Sri Lanka,
What does this convey about the professionals concerned and
the private sector projected as the country’s ‘engine of growth’?
The Weliamuna Report while rightly recommending “criminal
investigations” into instances of alleged corruption which includes the entire
re-fleeting process with brand-new aircraft costing $2.3 billion and “noting
instances” where former Chairman Wickramasinghe and some others in top
management should be “prosecuted” is apparently silent on proposed punitive
action against the airline’s auditors and Board of Directors for any negligence
of fiduciary responsibility inimical to the public interest.
‘Mihin Lanka’
Since we are on the subject of airlines, was it not a Past
President of the ICASL and the OPA – Mr. Lakshman Watawala who was mainly
responsible for the alleged “within 24 hours” BOI approval of ‘Mihin Lanka‘ not
withstanding his reported admission to then COPE member Ravi Karunanayake (now
Minister of Finance) “under normal circumstances it would take six to eight
weeks at least”! (‘The Sunday Leader’ 10 December 2006).
The question is – will the government hold Mr. Watawala who
has responsibility for many accounting bodies accountable?
Ernst & Young
The case of the airline’s longstanding auditors – Ernst
& Young is intriguing.
Does not the question also arise why auditors are allowed to
hold office in the same entity for extended periods?
Ernst & Young (together with PwC) was faulted for
‘Professional Misconduct’ by (i) the Supreme Court (ii) the Attorney-General
(iii) Parliament’s COPE vis-à-vis the fraudulent privatization of the Sri Lanka
Insurance Corporation. The ‘Supreme Court’ (SC FR Application No: 158/2007) in
its landmark Judgment delivered on 4 June 2009, held the SLIC privatisation to
be “illegal and invalid ab initio” and had ordered the removal “forthwith” of
the auditors, Ernst & Young.
Although ICASL’s ‘Ethics’ Committee more than eight years
ago endorsed the findings of its Investigating ‘Panel’ that a prima-facie case
of ‘Professional Misconduct’ had been established against Ernst & Young and
PwC and all their Partners, the ICASL has still not concluded its purported investigation
of my ‘complaint’ of ‘professional misconduct’ made as far back as 8 August
2005. This appears to be of no interest to anyone!
It must be noted that (i) Dr. P.B. Jayasundera – former
Treasury Secretary and former Chairman of the airline was Senior Policy Advisor
to Ernst & Young (ii) The auditors of the private media controlled Press
Complaints Commission of Sri Lanka as per its website is Ernst & Young.
Any guesses who the auditors are of Transparency
International Sri Lanka of which Mr. J.C. Weliamuna is Chairman? As per its
website it is Ernst & Young!
To cap it all, the incumbent President of ICASL – Mr. Arjuna
Herath is a Partner of Ernst & Young.
Since it seems inappropriate to have the ICASL under the
Ministry of Trade and Commerce, it is suggested that it be brought under the
ambit of either the Ministry of Finance or Ministry of Policy Planning and
Economic Affairs.
Conclusion
On the subject of ‘complicity’ Wikipedia makes the following
observation:
“An individual is complicit in a crime if he is aware of its
occurrence and has the ability to report the crime, but fails to do so. As
such, the individual effectively allows criminals to carry out a crime despite
potentially being able to stop it from happening, either directly or by contacting
the authorities. The offender is a de facto accessory to the crime, rather than
an innocent bystander.”
In this instance we are referring to auditors and Board
Directors with fiduciary responsibility!
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