Trade unions have called on President Mahinda Rajapaksa to carry out an independent inquiry into the billions of rupees lost by the Employees Provident Fund (EPF) after investing in the Colombo Stock Exchange (CSE).
The Inter Company Employees Union (ICEU) said the government had swindled away billions of rupees in EPF funds by investing in stocks in a fraudulent manner.
ICEU Head Wasantha Samarasinghe said that some officials were trying to dissolve the EPF by investing monies in stocks belonging to companies affiliated to them.
He observed that while 5 percent of EPF monies were earlier invested in the stock market, it has been increased to 8 percent in the last few months.
“Statistics have revealed that in 2008, the EPF had invested Rs. 30 billion in the stock market and earned returns amounting to only Rs. 0.17 billion,” he charged.
“The prices of certain stocks are inflated and once the EPF purchases them the prices fall,” he added.
Speaking of three specific investments of EPF monies in the stock market, Samarasinghe said the EPF had brought stocks for Rs. 4 billion and lost Rs. 1 billion.
He explained that in one instance the EPF had purchased 10 percent of Laugfs shares that were Rs. 38 each for Rs. 48 on the 10th. The monies invested were Rs.1.8 billion and by the end of trading, the stocks have fallen to Rs. 40.
Following this transaction, Laugfs had purchased 100,000 shares of its own company for Rs. 40 each.
“There is a clear irregularity in this transaction and the monies have been invested following advice from the authorities. Who gave the advice to invest in bad stock?” Samarasinghe questioned.
He said that similar incidents have taken place in the purchase of stocks by EPF from Grain Elevators and Browns.
In the case of Grain Elevators, five million stocks that were purchased at Rs. 238 each has now fallen to Rs. 100 a share.
“These are workers’ monies and the government has invested Rs. 20 billion in the stock market in the past few months,” Samarasinghe said.
Apart from an inquiry into the investments, the ICEU has called on the authorities to appoint trade union representatives to the EPF board and to consult trade unions when investing the fund’s monies.
The current value of the EPF stands at Rs. 1,050 billion.
Meanwhile, Labor Minister Gamini Lokuge said the Central Bank of Sri Lanka is administering the EPF since its inception in 1959.
“Our institution ensures that the workers are paid their dues from the fund,” he said.
However, Lokuge said that EPF monies had been invested in the stock market by successive governments and that the market constantly fluctuated.
“Share prices increase and decline, it cannot be controlled,” he added.
Nevertheless, the Minister said that there was no problem with regard to the EPF and the monies due to the workers since the Central Bank was responsible for the Fund.
“The decisions are made by the Central Bank’s Monetary Board and the workers are paid a 12.5 percent interest,” Lokuge said.
http://www.thesundayleader.lk/2011/10/30/epf-loses-billions-in-the-stock-market/