Audit Query

June 02, 2009 (LBO) – The auditors of Sri Lanka’s Seylan Bank have qualified its 2008 accounts over related party transactions and flagged overdue loans as the regulator looks for a strategic partner to bring in new capital. KPMG Ford, Rhodes, Thornton & Company said they could not confirm the completeness of the related party transactions of Seylan Bank, a part of the troubled Ceylinco group, in its financial statements for the year ended December 31, 2008.

The auditors also drew attention to 2.5 billion rupees of ‘Grameen’ loans which were in arrears, after the balance sheet date, for periods of three to five months. The bank said there were loans of 3.02 billion rupees under the scheme.

Disbursement and recoveries of the loans were made through related companies: Ceylinco Grameen Credit Co., Ceylinco Grameen Agricultural Credit Co., and Ceylinco Grameen Auto Mobile.

“Subsequent to the balance sheet date the bank has been recovering only100 million rupees a month, short of the repayment amounts due under original arrangements with the customers,” the accounts filed with stock exchange said.

Seylan Bank said group net profit for the year ending December 2008 fell 84 percent to 166 million rupees from jus