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EPF follows streamlined methodology in investing in CSE and Unit Trusts
By Bandula Sirimanna
The Employees Provident Fund (EPF) has been directed to follow a transparent and standardised methodology in making investments in Colombo Stock Exchange (CSE) and Unit Trusts following an evaluation made during a period of seven years from January 1 – 2010 to December 31 – 2016.
The criteria followed by the fund and operating procedures accepted by the fund when purchasing or selling unit trusts and which quotes were called from the public had been investigated during the evaluation, Labour Ministry sources revealed.
The establishment of accepted operating procedures for the sale or purchase of unit trusts for which bids are called by private limited companies and at the Colombo Stock Exchange has also been taken into consideration during this 7-year period, a senior official of the ministry told the Business Times.
The basic information pertaining to the buying and selling of shares of companies such as Ceylon Grain Elevators, Vallible One, Central Finance, Hotel Galadari, Hotel Lighthouse, Laughs Gas, Dimo, Browns, LOLC, Sri Lanka Capital Holdings and The Finance Co. had been vigorously scrutinised.
The aim was to find out as to whether the EPF had violated any law of the Colombo Stock Exchange or Securities and Exchange Commission when engaging in the transaction of shares, especially in the transactions related to buying and selling of shares of commercial banks, he said.
Capital losses or gains sustained as a result of those transactions and details of officers who issued orders for the purchase/sale of unit trusts and details of officers who carried out those transactions as well as the transaction values of the EPF during the seven period have been compiled.
These details are to be submitted to the Committee on Public Accounts for its consideration, he disclosed.
However with the introduction of new methodology all investments are now being made with the approval of an Investment Committee while the Monetary Board’s prior approvals were obtained for investments outside government securities.
The ministry’s Risk Management Department has been entrusted with the responsibility of overseeing the investment activities of EPF and formulates risk parameters for investments including revision of the investment and trading guideline, he added.
Some of the investments by the government’s two funds (EPF and ETF) during the former regime were made in companies that were not doing too well, raising questions from the then opposition.