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Sri Lanka’s top listed firms ‘moderately’ transparent, anti-graft disclosure weak: TISL

ECONOMYNEXT – Sri Lanka’s top 50 listed companies were moderately transparent in corporate reporting, with John Keells Holdings leading the pack, but were poor in disclosing anti-corruption programs, the local chapter of a global watchdog said.

Transparency International Sri Lanka said the top publicly traded companies scored an average of 6.73 out of 10 in its first Transparency in Corporate Reporting (TRAC) report.

“The purpose of conducting this review is to really understand the way in which the largest corporate entities in the country are accountable to their stakeholders,” Asoka Obeyesekere Executive Director Transparency International Sri Lanka said.

“It also acknowledges the fact that they play a key role in improving the corporate governance in the country and reporting.

“The average score has been 6.73 out of 10 which illustrates that the top 50 listed entity in Sri Lanka is moderately transparent,” said Obeyesekere.

The top three most transparent companies were assessed to be John Keells Holdings, Seylan Bank with
Hemas Holdings, National Development Bank and People’s Leasing & Finance in third place with the same score.

All companies were at the very least ‘partially transparent’, with the lowest score being 4.33.

The report assessed the 2018/2019 annual report and any other publicly disclosed documents to score the companies across three areas.

They were assessed on, Reporting on Anti-Corruption Programmes, Organisational Transparency and Domestic Financial Reporting.

Transparency international had used the methodology to conduct TRAC reports worldwide since 2008.

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The companies were the least transparent in ‘reporting on anti-corruption programmes’, with an average overall score of 27 percent.

Teejay Lanka was assessed to be the most transparent in the area scoring 69 percent while John Keells Holdings (65 percent) and Seylan Bank (62 percent) came in second and third places.

Companies had significant organisational transparency, with an average score of 86 percent while 31 companies were fully transparent in domestic financial reporting, with the average score across all 50 companies being 92 percent.

The report noted that a low score does not indicate wrongdoing, nor a high score proves strong disclosure.

TISL said it is beyond the capacity of the report to just the levels of within companies.

The report only focuses on public reporting by companies on anti-corruption policies and procedures and other disclosures on company holdings and key financial data, which TISL said is vital to ensure good governance and mitigation of corruption.

“A low score does not mean there has been any wrongdoing, but rather illustrates an opportunity for improvement in disclosure practices,” the report said.

“Likewise, a high score illustrates strong disclosure systems, but this may not reflect operational and implementation success…

“This report seeks to provide a basis upon which a broader discussion can commence on normalizing transparency in corporate reporting”.

One of the most important outcomes of the review is to ensure that senior management incorporates and strengthens already existing anti-corruption practices in their companies and makes this information publicly available, TISL. (Colombo/June19/2020)