The US-based global Chartered Financial Analyst (CFA) Institute is considering professional disciplinary sanctions against at least three of its Sri Lankan CFA charter holders whose names were allegedly mentioned in the Presidential Commission’s investigation into the controversial Central Bank (CB) Bonds transactions, a top CFA Sri Lanka society official revealed..
“This is the first occasion the Disciplinary Review Committee (DRC) of the CFA Institute has started such disciplinary-related observations against Sri Lankan members and it was a big drawback to our profession’s integrity,” he said. “CFA Sri Lanka aims to be a champion for ethical behaviour in investment markets and a respected source of knowledge in the global financial community. This unprecedented situation degrades the profession on a national level.”
He said the end goal of the CFA profession was to create an environment where investors’ interests come first, markets function at their best, and economies grow.
According to the CFA official, the DRC has started investigations, depending on publically-available information such as newspaper reports, against its 3 Sri Lankan charter holders, including the Central Bank Employee’s Provident Fund (EPF) former Chief Dealer B.H.I. Saman Kumara and Sri Lanka Insurance Corporation (SLIC) former Deputy General Manager – Investments Dhanuka Liyanagamage.
Based on the Bond Commission’s recent revelations, the CB has already interdicted Saman Kumara and two EPF Department Assistant Superintendents: Naveen Anuradha and T. Udayaseelan.
CB officials said they would soon conduct preliminary investigations against these three officers before launching a final inquiry against them.
Meanwhile, a top SLIC (Sri Lanka Insurance Corp) official confirmed that they have temporarily suspended their Investments Head Dhanuka Liyanagamage.
“There was an internal inquiry against Dhanuka Liyanagamage and, pending its final report, we have temporarily suspended his services,” he said.
The professional integrity of CFA members B.H.I. Saman Kumara and Dhanuka Liyanagamage were relentlessly attacked during the hearings of the recently-concluded Bond Commission.
However, a CFA Sri Lanka society official said that despite their interdiction by their respective employers, they were still “innocent until proven guilty”.
The forensic communication report presented before the Presidential Commission found several bond scandal-related communiqués between Perpetual Capital Holdings’ CEO Arjun Aloysius, and related parties, with bond dealers Saman Kumara and Dhanuka Liyanagamage.
The final report of the three-member Presidential Commission will be released end-December.
The DRC of the CFA institute is a committee which hears and decides disciplinary matters related to alleged violations of the Code and Standards and the Rules and Regulations of the CFA Programme to maintain the integrity of CFA Institute membership and the CFA designation.
According to the CFA website, the goals of CFA Institute disciplinary sanctions are to protect the investing public, maintain market integrity, and promote and reinforce public confidence in the investment profession, as embodied by their members and candidates who have committed themselves to the highest standards of professional ethics.
CFA sanction types are based on the Rules of Procedure for Professional Conduct and it includes: Private Reprimand, Censure, Suspension of Membership, Suspension of the Right to Use the CFA Designation, Revocation of Membership, Revocation of the Right to Use the CFA Designation, Summary Suspension, and Suspension from Participation in the CFA Programme and Prohibition from Participation in the CFA Programme.
The CFA curriculum includes ethical and professional standards; financial reporting and analysis; corporate finance; economics; quantitative methods; equity, fixed income, alternative investments; derivatives; portfolio management; and wealth planning. To earn the CFA Charter, candidates must sequentially pass three six-hour exams that are considered among the toughest in the profession. Currently, more than 120,000 investment professionals in 149 territories hold the CFA Charter; their salary scales are rated among the highest in the investment profession.
Meanwhile, critics said that Sri Lanka’s elite business culture mostly benefits high net-worth businesses, who have tax consultants, creative accountants, lawyers, and a highly-influential client base, with the political/social connections to comply with the array of Government regulations, such as Inland Revenue Act, Exchange Control Act, Customs Ordinance, Securities and Exchange Commission Act, Monetary Law Act and other outdated laws.
Therefore, following CFA’s initiative, they urged other relevant Sri Lankan professional bodies to maintain their integrity and credibility by punishing members who violate their terms of professional conduct and encouraging whistle-blowers to bring such violations to light. (ct)