Written by Lahiru Fernando
03 Oct, 2016 | 10:22 pm
The Sunday Times reports that HSBC Sri Lanka allegedly violated exchange control regulations by opening offshore current accounts through its branch in the Maldives, for domestic corporate sector clients who used the Government’s External Commercial Borrowing Scheme (ECBS).
According to The Sunday Times report, the ECBS was available from January 2013 to December 2015 and it allowed local companies to borrow outside Sri Lanka up to US$ 30 million or its equivalent value in any other foreign currency via various Sri Lanka-based banks.
The article further notes that HSBC Sri Lanka allegedly facilitated borrowings through the ECBS but, instead of setting up offshore loan accounts for clients had opened current accounts on their behalf.
According to Prof. Tissa Vitharana (Leader – Lanka Sama Samaja Party), if the money is invested abroad and a profit is earned from it, when that money is brought to Sri Lanka via the branch in the Maldives, a payment has to be made to the government.
“But in this case, the funds are brought straight into the individual’s account in Sri Lanka. This collapses all of the controls”, he added
The Sunday Times also reports that a number of senior managers at HSBC Sri Lanka had to leave the organisation over allegations of manipulating figures.
The article also notes that the practice of alleged manipulation of interest rates had been going on for at least six years without being flagged by operations, internal audit, finance, credit risk management or external auditors of the bank.
The multinational company has been in the spotlight over the past few years with numerous scandals being reported, most recently US authorities took steps to investigate allegations of currency manipulation as well as hiring practices.
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