The Non-Bank Financial Institutions Supervision Department of the Central Bank is to go through a complete overhaul with a new institutional structure to regulate finance companies.
The Cabinet of Ministers this week approved a proposal to implement the recommendation of the Presidential Commission appointed to investigate, inspect and report on the alleged wrongdoings, irregularities and malpractices of the failed finance company, Edirisinghe Trust Investments Ltd (ETI).
President Gotabaya Rajapaksa this week sought the approval of the Cabinet of Ministers to implement the recommendation of the Commission chaired by retired Supreme Court Judge K.T. Chitrasiri while sharing the key findings of the Commission along with the report.
The Cabinet Co-Spokesperson Minister Keheliya Rambukwella yesterday told reporters that the Commission pointed at a range of alleged wrongdoings, irregularities and malpractices including irregularities within the Non-Bank Financial Institutions Supervision Department.
Therefore, the Commission has recommended the Ministry of Finance to completely reform the Non-Bank Financial Institutions Supervision Department of the Central Bank and to formulate a new institutional structure to regulate finance companies.
“The aforesaid Commission has pointed out that there have been several offences under the Company Law, Financial Cooperation Act, Money Laundering Act, Financial Information Reporting Act, legal framework for the transfer of lands to foreigners as well as the Penal Code,” Rambukwella said.
Hence, he said that the report would be forwarded to the Attorney General to pursue immediate legal action to execute the recommendations of the Commission report on alleged finance and property irregularities of ETI.
As Edirisinghe family-owned ETI ran into serious liquidity issues with a nearly US$ 200 million hole in its balance sheet, it was forced to dispose the shares of its subsidiary and sub-subsidiary companies as well as investment properties for US$ 75 million to a joint venture company between Singapore-based Blue Summit Group and its local partner Ben Holdings linked to investment banker Alex Lovell.
The CB claimed that it only played the facilitation role in the transaction in acting on behalf of the interest of the depositors, which enabled to settle down 35 percent of the deposit liabilities (including interest payments) to ETI’s existing deposit holders.
The Commission, which was appointed in January this year, submitted the report containing its observations and recommendations on October 6 to President Rajapaksa.