May 21, Colombo: The Employees' Provident Fund Department of Sri Lanka's Central Bank today rejected the allegations of fraud involving the retirement fund ,Employees' Provident Fund (EPF) made by an opposition legislator in the parliament recently.
The MP has reportedly alleged that the EPF has made fraudulent transactions in the stock market and has made several statements of similar nature in the past.
The EPF issuing a statement said Monday that there appears to be a "clear and mischievous motive" to tarnish the reputation of the country's largest retirement fund and to destabilize the economy through such a strategy.
The EPF asserted that t no fraudulent stock market transaction has ever been made by the EPF and that all transactions have been carried out with "utmost care, diligence and professionalism."
Explaining the fund's strategy, the EPF Department said the EPF invests around 93 per cent of its funds in government securities, and around 6 per cent in the stock market and the investments in the stock market are made with a long term focus to generate profit and enhance the Fund's capital base over the longer term.
The EPF maintains its equity portfolio as a pool of investments in diverse sectors and the Fund's performance depends on the performance of different companies and the market values of the shares of companies within the portfolio at different times, depending on global, economic, political, financial, sector-specific and company-specific, factors.
A team of professional and well qualified staff assess and recommend the investment strategies of the Fund and a high level Investment Committee approved the recommended investments which are finally ratified by the Monetary Board, the EPF Department explained.
The policy has resulted substantial gains in the EPF earning 2.5 billion rupees as capital gains and dividends in 2011 and nearly 1.6 billion rupees so far in 2012, the Fund administrator pointed out.
The EPF said as a result of its prudent investments and sound management, it has been able to declare an impressive rate of return of 12.5 percent in 2010 and 11.5 percent in 2011.
Considering the performance of the EPF over the years which has recorded a huge unrealized capital gain of 19 billion rupees in 2010 and early 2011, the EPF Department said the opposition parliamentarian is now "attempting to viciously attack the EPF with malicious statements," taking advantage of the temporary bearish environment of the stock market where every investor is experiencing losses.
The EPF Department assured that there is clearly no risk of the EPF incurring any real loss during the current bearish phase of the stock market.
The Department urged its stakeholders not to be misled by this "type of vituperative and politically motivated negative propaganda."