Sri Lanka Employees Provident Fund’s (EPF) quality standard has been affected directly and indirectly due to failure in carrying out the investment approval and Treasury bond transaction process, informed sources observed.
EPF has also been greatly affected due to non-participation at bond auctions despite the availability of adequate moneys for investments in the Fund and repurchase of the same bonds under low yield rates from the secondary market.
Another reason for deterioration of funds in the EPF was the stock market investment of money in companies running at a loss without a proper study by the Employees‟ Provident Fund.
Accordingly, an impairment loss of Rs.1, 300 million and an actual loss of Rs.42.8 million had occurred by investing in 42 million shares and the Fund, an audit inspection divulged.
The EPF also had to incur an additional cost of Rs.316 million as a result of purchasing bonds from the secondary market instead of purchasing from the primary market.
Further, a loss of Rs.347 million had been incurred due to purchase of the same Treasury Bonds from the secondary market within a few days of sale of Bonds at the Secondary Market.
Therefore, it is apparent that the Fund has been mismanaged and it is clear that decisions required for selecting more productive and efficient sources of investment are necessary in the reinvestment of moneys.
Further, it is observed that the financial and administrative functions of the Fund could be performed efficiently by updating the Employees‟ Provident Fund Act in an appropriate manner.
It is essential to take steps to enter into transactions relating to the Fund with transparency and expedite implementing of recommendations given by the Presidential Commission on Bonds relating to the Employees‟ Provident Fund.
(LI)