Anti-corruption group exposes major fraud at SLIC
State owned insurer Sri Lanka Insurance Corporation (SLIC) top management’s fraudulent practices are on the rise, costing the public and the government dearly at a time when the economy is struggling to gain steam and cash is hard to come by, officials of a Sri Lankan group campaigning against corruption said.
They noted that the top management of the corporation had swindled a vast sum of money running up to millions of rupees after the organization was handed back to the government on a Supreme Court order in 2009 annulling the multi - billion rupee privatization in 2003.
President of the Sri Lanka Insurance Corporation Employees Union R. S. Nandalal told the Business Times that SLIC’s management has entered into a re-insurance agreement with a bogus company called ‘Trans Asia Management Advisors FZC’ causing a loss of Rs.208 million to the corporation.
This payment has been paid by the corporation as two installments for the re-insuring of Ceylon Petroleum Corporation (CPC) property to re-insurance broker Suresh Balakrishnan of M.F Insurance whose licence was cancelled by the Indian authorities for re-insurance fraud.
He was engaged as a re-insurance broker of SLIC using the company name of Trans Asia Management Advisors FZC of United Arab Emirates (UAE), another bogus company. The Sri Lanka Auditor General’s investigation has proved these facts, he said.
The SLIC paid Rs 92 million as 2009/2010 re-insurance installment of Rs.92 billion and Rs.116 million as the installment of 2010/2011 to this broker and it has been revealed that this money had not been received by relevant re-insurance companies.
The CPC property had been reinsured to the tune of Rs.75.39 bil- lion.
General Secretary of the Public Services Trade Union Confederation, Saman Rathnapriya of the ‘Coalition against Corruption’ group told a media conference in Colombo this week that this matter has been brought to the notice of the Parliamentary Committee on Public Enterprises (COPE).
He demanded the government to take immediate action against perpetrators in accordance with the Parliamentary Act No 01 and 02 of 1982 which has provisions to recover the defrauded money from officials responsible for the fraud.
Highlighting another fraud, he revealed that the SLIC has paid Rs. 6.7 billion on the 31st December 2010 to the Harry Jayawardena-controlled Distilleries Company of Sri Lanka (DCSL) on behalf of its subsidiary Milford Holdings (Pvt.) Ltd., which the latter incurred to acquire SLIC from the government, as the insurer has made good profits through share transactions.
But the DCSL has sent a receipt to SLIC indicating that it has received only Rs. 5.71 billion and nobody knows what has happened to around Rs.1 billion.
He asked as to why the Finance Ministry Secretary Dr. P.B Jayasundera has failed to detect the missing money.
Even Mr. Jayawardena has not brought this matter before the authorities up to now because he had already got the money otherwise he will have to wait for five years under the court order.
The court ordered to reimburse the capital investment of Rs.6.7 billion in Treasury bonds redeemable in five years to the Milford Holdings (Pvt.) Ltd.
The SLIC has violated the Supreme Court order by paying the money directly to Mr. Jayawardena without reimbursing it in Treasury bonds, he said adding that they are consulting their lawyers to take legal action against SLIC and Finance Ministry authorities for contempt of court.