Colombo (News1st) – Conflict of interest is something that we in this part of the world are very familiar with. With each successive Government that takes over the country, there are various appointments that are made to satisfy the party’s backers, close associates of the party and lest we forget the family members of politicians themselves.
It is a well-known secret that there are a handful of people in the country with fingers in multiple pies. The current administration of so-called “Good Governance” was elected by the people of this country to ensure that they never have to hear words like nepotism and conflict of interest which were a plague on this country during the tenure of the previous regime.
News1st reported earlier on the convoluted processes followed in private power purchasing of the CEB, in the construction of the Central Expressway, in the dealings of Sri Lankan Airlines and of course the Bond scam. It is in this backdrop that we hear of another interesting story that begs the question, is this really what we expected from this administration?
CONFLICT OF INTEREST?
The Deshaya newspaper reported that Jehan Amaratunga who is serving as a director of a State Bank and holds positions at several affiliated financial institutions has obtained a loan of Rs 10 billion from the state bank for his private business. According to the report, the loan is said to be the largest ever granted since the inception of the State Bank 65 years ago. The loan facility has been approved at multiple stages and had also received the approval of the bank’s board of directors and loans committee.
When the Deshaya newspaper had made inquiries from the Chairman of the State Bank, he had confirmed the granting of the loan adding that the loan had gone through the proper channels. The state bank chairman was also questioned on whether there was a conflict of interests, given the connections between the director and the group of companies that had been granted the loan, to which he had said that he could not respond.
Based on investigations by News 1st we can reveal that the loan was obtained by Walkers CML and the state bank is the People’s Bank. The common denominator between the two companies is Jehan Prasanna Amratunga. Amratunga is on the People’s bank board of directors and is also listed on the bank’s website as the Executive Deputy Chairman of MTD Walkers PLC which owns Walkers CML.
Chairman of the Large Scale Loan Board at People’s Bank, Dr Aminda Methsila noted that the Bank had already loaned about Rs 50 billion to this company as at 2014. Methsila noted that the company had successfully repaid these loans and as a result, the bank has approved a credit limit of Rs 50 billion for the company.
For comparison, according to the Financial Times, the revenue (TTM) of MTD Walkers PLC stood at Rs. 16.18 billion while the company’s net income was Rs. -2.24 billion.
Amaratunga currently serves as a Director of People’s Bank, a position he has held since 2010. The Chairman of the bank at the time of Jehan Amaratunge’s appointment was Gamini Senarath, the forer Chief of Staff of President Mahinda Rajapaksa.
CML Walkers has been awarded contracts for the construction of several Government projects including roads and bridges. Among the clients listed on their official website are the CEB, RDA, Mahaweli Authority, Water Board and the Japanese construction firm Taisei which is embroiled in a scandal of their own concerning the central expressway. Incidentally, CML walkers has also been contracted to construct a section of the Central Expressway Phase 2.
In such a backdrop a question arises how ethical is it for an individual who serves as a director of a state bank to obtain a Rs. 10 billion loan from the same bank in order to fund his private company.
Not too long ago when the present Government launched the Vision 2025, there were several Ministers who came forward to say that it is difficult for SMEs and startups to obtain loans for their businesses and highlighted this as one area that they wish to change. The question is when state banks grant such hefty loans in this manner, is it a surprise that SMEs and startups find it difficult to find funding?
Also, this particular report reminded me of the fate that befell the Lankaputhra Development bank which fell into ruin because of bad loans, some as high as Rs. 100 million, issued in violation of the bank’s normal procedures and because of political influence.
Sri Lanka’s state banks are caretakers of the hard earned money of the general public of this country. The caretaker’s duty should be to ensure that this money is managed in a proper way and the hard working people of this country receive their due benefits.