The Sunday Leader

Corruption Claims Hover Over Lankaputhra Appointment

by Nirmala Kannangara

The credibility of the ‘Good Governance’ administration that pledged to act on those who are involved in bribery or corruption is now fast diminishing as the government has failed to take action against those who are involved in corrupt activities. It is now understood that the corrupt are well protected by the government and are even in the process of securing high posts in the government despite having concrete evidence against them over their involvement in corruption.

The highly confidential plan within the government to re-instate the former Chairman Lankaputhra Development Bank (LDB) who was removed early this month as per the opinion given by the Attorney General has raised concern amongst the banking sector.

Lasantha Goonewardena was appointed as Chairman LDB soon after the fall of the former regime seeking to take action against those who have failed to pay the loans obtained during the previous regime.

However instead of addressing the issues created by his predecessors, Goonewardena allegedly got involved in scams by granting loan facilities for government supporters.

By doing so, Goonewardena has not only showed that he is not fit and proper to hold a high post in a bank but also made the LDB in an eye of a storm which made the Monetary Board of the Central Bank of Sri Lanka to seek Attorney General’s opinion in regard to Goonewardena’s appointment.


Loans granted to party supporters

“Goonewardena although criticised his predecessors decisions to give loans on the request of the then politicians, he too committed the same mistake by granting loans to party supporters by overruling bank regulations openly. Although this had been brought to the notice of the government which appointed Goonewardena, it is questionable why he was allowed to engage in corruption without any hindrance until the Attorney General gave an opinion in terms of Section 47(2) of the Banking Act early this month. Even the Committee on Public Enterprise (COPE) took up this matter on March 23, 2016 at the Committee Room 5 of Sri Lanka Parliament, but  action was not taken by the government to remove him until the Attorney General’s opinion was carried out.

This shows the double standard of the government although they criticised the former regime for not taking action against those who were involved in corrupt activities,” LDB sources told The Sunday Leader.

When irregularities taking place at LDB was highlighted, Director of Bank Supervision in a letter dated March 24, 2016 (Ref: 02/ 19/ 318/ 0073/004) wrote to the General Manager, LDB that Lasantha Goonewardena cannot serve as Chairman LDB under the provisions of Section 42(2) read with Section 76(H) of the Banking Act No: 30 of 1988 as amended due to following reasons.

“(i) According to findings of the Special Examination of LDB conducted by this department, Mr. Goonewardena has failed to comply with section 3(5) (ix) of the Banking Act Direction No: 12 of 2007 on Corporate Governance for Licensed Specialised Banks.

“(ii) Despite supervisory concerns raised at the meeting held on May 12, 2015 with Mr. Goonewardena and you on maintaining confidentiality of information. Mr. Goonewardena has failed and / or been negligent to maintain the duty of confidentiality in his capacity as the Chairman LDBin violation of Section 77 of the Banking Act”.

Since LDB failed to implement the order, the Attorney General’s opinion was sought by the Monetary Board and upon receiving the Attorney General’s opinion, Secretary Monitory Board requested the Treasury Secretary to appoint an Acting Chairman to the LDB subject to the compliance with the fit and proper criteria in terms of the banking Act.

In a letter dated September two, 2016 by Secretary Monetary Board, H.A. Karunaratne to Dr. R.H.S. Samaratunge Secretary, Ministry of Finance requested the Treasury Secretary who has the authority to appoint/ remove a Chairman to nominate a suitable person as Acting Chairman to LDB, until a determination is made by the Monetary Board on the appeal made by Chairman LDB Lasantha Goonewardena.

Hence, Secretary Monetary Board, H.A. Karunaratne in a letter dated September two, 2016 to the Company Secretary LDB stated that Goonewardena cannot hold office of Chairman LDB and to inform this to the Board of Directors and directed the Company Secretary to comply with his directives. The letter states as thus, “ Company Secretary, Lankaputhra Development Bank Ltd, No: 80, Nawala Road, Nugegoda. Dear Sir, The Monetary Board of the Central Bank of Sri Lanka hereby directs you to bring to the immediate notice of the Board of Directors of the LDB, that as per the opinion given by the Attorney General in terms of Section 42(7) of the Banking Act, Mr. Lasantha Goonewradena cannot hold office of Chairman LDB from the date he was notified by LDB of the determination made by Director Bank Supervision Department dated March 24, 2016. Accordingly, you are directed to ensure compliance with the above. Yours faithfully, H.A. Karunaratne, Secretary, Monetary Board”.


Accused of Financial fraud

Goonewardena is accused of granting loans to some government supporters without following the bank regulations and also aiding and abetting a financial fraud at the LDB Wennappuwa branch. Having involved in all these irregularities, the government’s plan to re-instate him has raised serious concern amongst those who brought the ‘Good Governance’ administration into power. Sources who wished to remain anonymous said as to how Goonewardena had approved Micro Finance loans for the family members of government supporters without even considering whether the loans are obtained to start an enterprise or not.

“As a development bank we do not give consumer loans but only development loans. Soon after Goonewardena took office in 2015, we received applications from government supporters to obtain development loans. When such applications are received our trained officials make visits to the applicants proposed development site and after a careful evaluation decide whether the bank can approve the loan or not. When the applications of government supporters were received, for certain places, the trained staff was sent for inspection but in most cases, the Chairman and his Personal Assistant went on inspection by themselves and granted the loan approval. When our trained staff later visited these places, it was found out that such development projects have not come up but merely given as they are family members of party supporters,” sources alleged.

Sources further revealed that a vehicle loan was granted to another government supporter on the basis that he was going to use the vehicle to hire for foreigners. “After one month, the same person came asking for another Rs.1.2 million. When the officials inquired him why he was asking another loan he informed the bank that the vehicle has to be repaired. The officials then wanted him to tell where the vehicle was to send an officer to see whether it was a genuine case. Then came the PA to the Chairman who too is a stooge of the Chairman and wanted the officials to release the loan as the vehicle was under repair at a garage in Kandy. Knowing that the LDB officials were to go to Kandy to inspect the vehicle, the request was abandoned. Later he once again made the request claiming that he got the vehicle repaired and now want the money to pay the garage. Chairman Goonewardena immediately approved the payment, but the General Manager (GM) stood firm and said until the board approval is granted he will not release the money.  Since the GM became an obstacle to the Chairman in corruption, his service was terminated claiming his service was inefficient,” sources added.


Branches opened without CB approval

It is also learnt as to how Goonewardena had opened two LDB branches in Akuressa and Thambuttegama without the Central Bank approval although the Central Bank had repeatedly ordered to close down the two branches which is yet to be implemented.

Goonewardena was also accused for recruiting unqualified staff to the bank and placing them on higher grades. “Violating recruitment circular guidelines, Goonewardena recruited party supporters to the LDB who have submitted bogus certificates with the knowledge of the Chairman. He is also accused of aiding and abetting a fraud that hastaken place last year at the Wennappuwa branch. Although the Auditor General’s Department carried out the audit and wanted the Acting general Manager to take immediate action against the officers involved in mismanagement of funds and a fraud amounting to more than Rs.700, 000 due to the pressure mounted on him by the then General Manager the Wennappuwa Senior Manager and four others were transferred to other banks instead of terminating their services but their transfers were cancelled within 48 hours and sent them back to the same branch. There are many more irregularities that took place during Goonewardena’s tenure which has to be highlighted,” sources added.

However refuting allegations, Goonewardena said that he has made the recruitments and granted loans following proper procedure although the former General Manager and the Chief Legal Officer were trying to show that he is  a corrupt officer. “There is no necessity to have banking experience to work as a Bank Chairman as the Chairman need not interfere with banking procedure and is required only to administer the place. I have IT experience and 30 years in the business field. A person with such a vast experience will never violate any regulations but will stick to the rules. If the Central Bank says that I am not fit and proper to hold the post why couldn’t they take action against the former Chairmen during the Rajapaksa regime who had done so much damage to the LDB.

I have not violated the Central Bank (CB) procedure in opening Thambuttegama and Akuressa LDB branches as it was the CB in March 2015 that wanted us to open branches in rural areas. As a result we opened these two banks and when they wanted us to close down these branches we wrote to the Finance Minister seeking his intervention. If the Finance Minister orders us to closedown these two branches the LDB will close them,” Goonewardena said. In regard to the loans given to family members of government supporters, Goonewardena said that once the branch managers bring the approval letters for his signature, he had given approvals but rejected the claim that he had granted loans for those who have not started any self employment projects. “These loans are lesser than Rs.150, 000. Once our officers recommends and brings the letter of approval for my signature I have granted the approval but nothing had been done against the bank rules and regulations,” Goonewardena claimed.

2 Comments for “Corruption Claims Hover Over Lankaputhra Appointment”

  1. kudson

    same circus different clowns

  2. Priyantha

    The Minister who appointed this man is accountable for any losses at Lankaputhra due to new bad loans or contracts.

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