Trade unions charge that the Employees Provident Fund (EPF) has incurred a loss of Rs1000 million investing in the stock market, and through two transactions that took place recently.
Inter Company Employees Union Secretary, Janaka Adikara said that the EPF has a fund amounting to Rs one trillion at present and has seen increased investing in the stock market, from five per cent of this sum (Rs50 billion) last year, to seven per cent (Rs75 billion) in 2011.
“Our main concern is that due to the influence of certain high ranking persons, the EPF is buying shares in underperforming companies that belong to friends and relatives, and is making heavy losses. But their friends are making millions by way of profits every day thanks to the EPF funds that have been invested. For example a share of Grain Elevators Company (GEC) was trading at Rs75 and it was artificially brought up to Rs238 for a short period recently. When the GEC shares were at a peak, the EPF bought five million shares of GEC at Rs238 a share. After few days share prices dropped to Rs98. The loss is Rs700 million from that transaction alone,” Adikara charged.
“In another transaction, a share of Laugfs Gas Company was trading at Rs38 for two months and the prices went up to Rs48 on October 10 around 11 am. The EPF then bought Rs1800 million worth of shares and on the same day, at around 2.30 pm the price of Laugfs shares dropped to Rs40. So the loss for a single day was Rs300 million,” he added.
He says that similar losses have been incurred after purchase of shares in Browns and The Finance Company, and adds the EPF fund is in danger of being drowned in losses due to these imprudent investments.
When contacted, the superintendent of the EPF, Rupa Deerasinghe said that share prices fluctuating in a short run is usual, and explained that the EPF is making long term investments in shares in good companies after evaluating their performance. “It is wrong to say that EPF investments in shares have made losses because we are a long term investor in shares. A well qualified panel of investment advisors recommends purchasing shares, and nobody takes individual decisions. They carefully analyze the strengths and growth potentials of companies and recommend purchasing of shares. The decision of our team is subject to questioning by the Monetary Board as well.”
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