Not a single instance of wrongdoing in forensic audits by Gov Cabraal

Ajith Nivard Cabraal, former governor of the Central Bank of Sri Lanka, in Mumbai, India, on Thursday, Feb. 21, 2013. Photographer: Dhiraj Singh/Bloomberg via Getty Images

The Auditor General was not given the assignment to carry out the Forensic Audits, a recently released statement from the Central Bank said.

“But instead, two dubious Accountancy firms from India who were under a serious cloud in India were entrusted the task at a huge fee,” it added.

“After doing the audit, Forensic Auditors have categorically stated that they will not take responsibility for the reports, possibly to escape liability.”

Although the BDO India Report on the Issue of Bonds, says Rs.10.4 billion has been incurred as a hypothetical loss on issue of Bonds by the direct placement method (based on a hypothetical ‘base price’ පාදක මිල), it fails to say that the hypothetical profit during the same period (on the same hypothetical base price basis) is a massive Rs.28.0 billion. 

The Report also deliberately fails to state that the entirety of the hypothetical ‘loss’ of Rs.10.4 billion as above, was reflected as a corresponding profit in the books of the EPF, NSB, BOC and People’s Bank. 

The Report by KPMG India on the EPF Portfolio Management has stated that a hypothetical loss of Rs.9.2 billion has occurred in relation to the investments made by the EPF during the time of Governor Cabraal.

However, as at 31st December 2014, the unrealised loss in the case of the 15 stocks referred to by them was only Rs.3.3 billion, whereas losses of Rs.5.9 billion on those stocks had accumulated during the period of subsequent Governors, Mahendran and Coomaraswamy. 

In addition, what the Forensic Auditors did not deliberately state was that by 31st December 2014, the unrealised profit in respect of the balance share portfolio of the EPF was a staggering Rs.17.6 billion.

Therefore, if there is an attempt to attribute the loss of Rs.3.3 billion in unrealised losses in the EPF portfolio on 31st December 2014 to Governor Cabraal, then, in the same manner, the unrealised PROFIT of Rs.17.6 billion should be attributed to Governor Cabraal. 

It is also noted from the EPF Annual Reports, that the EPF has derived incomes of Rs.14.6 billion in the 4 years 2011 to 2014, which too, the Forensic Auditors have conveniently ignored. 

Both Indian Reports have given a list of relatives of Governor Cabraal as being persons on the Boards of Banks and Financial Institutions. These have been picked up by local politicians and media to blacken Governor Cabraal’s name by suggesting innuendo that some wrongdoing or misdemeanor had taken place.

It must also be stated that all such persons have held those positions on their own right due to their qualifications and experience,and all served on those respective Boards after Governor Cabraal left office as well.

In any event, both Forensic Auditors have not been able to specify a single instance of any wrongdoing or an occurrence of financial loss whatsoever, that has occured as a result of any such relationship.

PRESS RELEASE – Media Secretary, Governor Ajith Nivard Cabraal (Central Bank) 

(Updated)