SEC’s proposed whistle-blower policy to award ‘bounty’ to corporate staff spilling beans

By Duruthu Edirimuni Chandrasekera


Amid a growing number of scams and corporate swindling in listed firms, Sri Lanka’s securities watchdog is to make it mandatory for listed firms to have a whistle-blower policy for their employees and directors in a bid to take would-be perpetrators to task, officials said. “This is popular in many developed nations and provides an opportunity for employees to report any misdoings and misconduct within their company. We want to introduce it in the new laws (Act),” a Securities and Exchange Commission (SEC) official told the Business Times this week. He said those who alert the authorities will be rewarded with a ‘bounty’. “We wanted to make the extent of trouble attractive for the staff member and in terms of this gleaned some best practices from other jurisdictions.

So we came up with a bounty for those who ‘shout-out’,” he said. He said that the US has been encouraging at a national level both the incidence of whistle-blowing and the protections and incentives that are open to whistle-blowers over a long period. He said that India has also adopted this policy through the Whistle-Blowers Protection Act, 2011, an Act of the Parliament of India which provides a mechanism to investigate alleged corruption and misuse of power by public servants and also protect anyone who exposes alleged wrongdoing in government bodies, projects and offices. The wrongdoing might take the form of fraud, corruption or mismanagement. The Act will also ensure punishment for false or idle complaints.

The whistle-blower policy provides a guided process for any employee to make a written or verbal complaint on any familiarity or suspect of illegal or unethical employment or business practices exercised by a colleague in any capacity in their company. According to the official, a whistle-blower policy allows the SEC to minimise the harm to investors, better preserve the integrity of the capital markets, and promptly hold accountable those responsible for dishonest conduct. The employee is assured of confidentiality and anonymity and the employer’s onus is to take necessary safeguards to protect whistle-blowers from victimisation according to the proposed provisions in the new Act. The official said that while checks would also be required against any misuse of this facility, the move to come forth with discriminating information won’t be taken lightly; hence original information by a whistle-blower qualifies for a ‘bounty’.

www.sundaytimes.lk

15% interest finally for senior citizens

By Bandula Sirimanna

Here is good news for senior citizens. The Government has finally – after hemming and hawing over a November 2016 budget proposal offering a 15 per cent interest on deposits – agreed to its implementation. There is also an added bonus. The proposal will cover both finance companies and commercial banks; will apply to anyone above 55 years (earlier it was 60 years) and up to a maximum of Rs. 1.5 million (earlier Rs. 1 million). The Business Times has been repeatedly highlighting the need for the government to implement this proposal.

This was confirmed by Treasury Secretary R.H.S Samaratunge who told the paper that a circular will be issued before the end of the month to the Central Bank (CB) to issue a directive to finance companies (and commercial banks) to implement the proposal. He said clear guidelines would be issued to minimise any confusion. In the absence of clear instructions, commercial banks have been, this year, renewing deposits of senior citizens’ accounts that were placed at 15 per cent interest under earlier budget proposals.
The letter of instructions has been prepared and it will be sent to the CB before the end of this month, Dr. Samaratunge said. Thereafter the CB will need to issue a circular to the banking and finance sector with the date of implementation.

www.sundaytimes.lk

Entrust owes Rs. 9 bln to clients

By Duruthu Edirimuni Chandrasekera

The liabilities in the bond market by Entrust Securities, a primary market dealer under-fire since early this year, is at Rs. 9 billion and not Rs. 5 billion as earlier estimated, latest data revealed. Informed sources told the Business Times that Entrust has some Rs. 5.3 billion that it owes to just three institutions – and the two on top of the list are the Central Bank (CB) and the Ceylon Electricity Board (CEB). “Entrust owes Rs. 2.2 billion to CB and Rs. 1.8 billion to CEB,” a source told the Business Times adding that Arpico came in at the third slot on Entrust’s list of liabilities with Rs. 1.3 billion.

All others are hovering around Rs. 500 million each and all together total around Rs. 9 billion. The CB took over the crisis-hit firm in January after it was revealed that liabilities far exceeded assets. Shamir Mendis, a former director at Delmege Group, has sued Entrust for Rs. 100 million in the High Court. “There are others who are also planning this,” a source close to Mr. Mendis told the Business Times.”We will find out the exact position in a few months time,” he added.

www.sundaytimes.lk

Vehicle import duties dominate Govt’s tax drive

The Government has set a target of Rs. 886 billion revenue from taxes with the biggest contribution expected from vehicle import duties amounting to Rs. 280 billion. The Government is also expecting Rs. 125 billion via import tax followed by Rs. 95 billion from port and airport development levy (PAL), Rs. 85 billion from excise duties, Rs. 75 billion from VAT, Rs. 65 billion from special commodity levy (SCL) and Rs. 54 billion from import Cess levy.

The Finance Ministry has prepared letters, circulars, guidelines, revenue bills, and amendments to the Finance Act and Inland Revenue Act to implement 2016 budget proposals soon, Treasury Secretary R.H.S. Samaratunge told the Sunday Times.

Necessary amendment bills relating to the implementation of VAT and NBT revisions are being prepared although the enactment of revenue bills and the issuing of guidelines and circulars to relevant ministries and institutions had been delayed due to unavoidable reasons, he added.

VAT has been increased to 15 percent from 8-12.5 percent from May 2 but water, electricity and medicinal drugs are exempted from the increase. The NBT will remain at 2 percent, he said adding: “In Sri Lanka it is difficult to implement tax increases but easy to implement tax cuts.”

www.sundaytimes.lk

Lifting of fish export ban: EC miffed over early announcement

The European Commission (EC) has objected to Thursday’s early announcement by the Fisheries Ministry in Sri Lanka that the ban on Lankan fisheries product exports to Europe has been lifted by the European Union.

Taking up the matter through diplomatic channels in Brussels, the Directorate-General for Maritime Affairs and Fisheries (DG MARE) has sought clarification on how the announcement was made by the ministry in advance before the decision was formally announced.

The Fisheries Ministry in an official communiqué on Thursday said that the EU had informed the ministry that it had lift the ban with effect from April 21. The statement said a special media briefing would be held on the same date where Minister Mahinda Amaraweera would be explaining about the benefits of lifting the ban.

However soon after the media queries were made from the ministry whether the ban had been lifted another statement followed. It said the EU was due to take a decision regarding the lifting of the ban on April 21 and the Minister would be briefing the media about the decision.

A third media release by the ministry followed thereafter blaming the media for publishing ‘baseless reports’.The Sunday Times learns the Prime Minister’s office had taken up the matter with the Fisheries Ministry.

The European Commission spokesperson in apparent reaction to the Fisheries Ministry’s move to make the advance announcement refrained from making mention of the recommendation to lift the ban. Subsequently a press release was issued.

Fish exports to EU countries from Sri Lanka is set to begin by July with approval from the European Council — the Cabinet of the 28 member-state Ministers — now pending, officials said.

This week’s European Commission Decision on Sri Lanka recommending the lifting of the ban on fish exports is likely to be taken up within the next two to three months by the European Council.

www.sundaytimes.lk