Make BOC great again!

Make BOC great again!

14 March 2019 09:58 am

The Bank of Ceylon (BOC), among state-run financial institutions, has always been a leading bank in Sri Lanka.

As much as the bank, the position of Chief Financial Officer is important. Currently Russel Fonseka serves as the Chief Financial Officer; his predecessor was Ashoka Rupasinghe, who possesses international level experience in the field. After he retired, Russel Fonseka was appointed as the Acting Chief Financial Officer, and later became Chief Financial Officer. BOC’s problems start with this appointment, after 2015.

Bank employees claim that all those who held the position before him were qualified professionals and possessed international banking experience, adding that they acted in a very transparent manner.

However, they have a completely different opinion about Russel Fonseka. Employees allege that although he, as the Chief Financial Officer, is a qualified accountant, he does not have any other experience beyond that.

Especially the way he behaves raises the question whether he has any idea about the gravity of his duties.

As the Chief Financial Officer of the bank, he is expected to act impartially, without holding any other position. He is bound to maintain financial disciplines, and handle all financial affairs. His position is not included in the scope of duties of the bank’s management.

This division has been made in order to avert any imbalances in financial affairs.

But Russel Fonseka is accused of not performing his duties reliably and not taking his responsibilities seriously.

This is a serious accusation leveled against the head of a foremost state bank which engages in handling the country’s financial system.

In addition to acting as the Chief Financial Officer, Russel Fernando is serving as Deputy General Manager of Corporate and Offshore Banking. He has also served as Deputy General Manager of Finance and Planning, Deputy General Manager of Investment, Treasury & Investment at Bank of Ceylon and Deputy Manager of Retail Banking. 

This is unlawful, as the Chief Financial Officer is not allowed to hold any other positions in the institution. This is the first accusation levelled against him.

Holding a position as a Deputy Manager apart from serving as Chief Financial Officer is tantamount to misusing his position. According to the bank’s structure, it is evident that Russel Fonseka is not able to evaluate the efficiency and progress of the institution’s loan section in an impartially, although it is one of his duties. It is said that the institution’s loan section is failing to control increasing inactive loans due to this situation. He is serving as the authority of the loan section and it is another important fact. The status quo is not only detrimental to the institution’s good governance, but is also against Central Bank’s regulations.

Bank employees point out that the BOC is facing a severe capital crisis due to this situation, and that Russel Fonseka must accept the responsibility. As the Chief Financial Officer, managing balance sheets and profit & loss accounts is one of his major responsibilities, and reportedly he is failing to fulfill it.

Purchasing services is also a responsibility of the Chief Financial Officer; although the BOC was ahead of other state and private banks before, its place has now declined to the fourth place.

Apart from holding aforementioned positions in the BOC, representing the boards of directors of several private institutions including Merchant Bank, Property Development Private Company, Lanka Security and Lanka Clear, is another accusation levelled against Russel Fonseka. It is also against regulations set by the Central Bank.

The administration of the BOC has declined due to his involvement with multiple institutions, and it was reported that he does not have time to at least meet the bank’s clients. He cannot oversee other institutions as the bank’s Chief Financial Officer while being a member of their boards of directors.

Many in the business community including Sri Lanka’s leading construction companies deal with the BOC; irrespective of how hard they attempt to obtain the service of the Chief Financial Officer, all meetings have been cancelled due to him being busy with affairs of board of directors of other institutions.

Reportedly, the President, Prime Minister, COPE, Central Bank Governor, Auditor General, General Manager of the BOC and trade unions have been informed of this situation.

How is this not a considerable problem to the managements of the BOC or the Central Bank?

Russel Fonseka reportedly receives the support of the bank’s highest management and a high-ranking official of the Treasury. It is said that this did not became a problem to the Central Bank because his Russel Fonseka’s wife Shanthi Fonseka is a high ranking official of the Central Bank, and she is serving as the Deputy Head of a unit which supervises banks.

Although we attempted to contact BOC’s internal audit officer to inquire about this situation, we were not able to contact him. We intend to publish the opinion of all responsible parties in future.

Essentially, the bank system is in crisis due to the irresponsible conduct of a person who holds one of the highest positions. If this is not investigated swiftly, saving the bank would be a difficult task.