Transparency and crooked deals

This week, a veteran watcher of the Sri Lankan oil industry exclaimed in disgust: “There are so many crooked deals in the country that you wonder whether there would EVER be a clean deal.”

The industry specialist, with a clean reputation and years of local and international experience, has been hitting on the doors of the government with various exposures of corrupt deals in the oil field, particularly on the NORPEC deal; alas without success.
He is now quitting his ‘government come clean” campaign and migrating to join his children abroad. “This country is doomed with rogues thriving. I am horrified with the kick backs and pity the younger generation and the lessons they are learning from our leaders,” he said sadly.

Corruption is certainly not new in Sri Lanka but the proportion to which it has reached now is frightening. You can get anything done if you want to sidestep the rules – get the right contacts in government. No one seems to care except for the occasional pronouncement of innocence from the government whenever a crooked deal is exposed. People are afraid to speak out and are now leaving the country.

A case in point is the latest deal involving the sale of shares of NTT of Japan in Sri Lanka Telecom to Maxi Communications of Malaysia and the controversy it has triggered.

Boastful assertions of transparency and accountability by the government have been thrown out of the window by a deal that is shrouded in secrecy. Obviously because the ‘fee’ is a stunning billion rupees and over with two people playing a key role in the deal being a top presidential advisor and a powerful stockbroker with connections to controversial marketer GoldQuest.

In last week’s stories in The Sunday Times, the paper raised many questions about the transaction and obtained few answers. We spoke last week of Telecomsel, Indonesia being shut out from the bidding process and some of the responses are hilarious if this was not a serious issue. (See story on Page 1 of The Sunday Times). There were still questions that remain unanswered and will probably, for a while given gaps between the often ‘promised’ transparency and the ‘actual’ transparency in state deals.

Two weeks ago when we reported that NTT had sold its shares to Maxis, SLT wrote to the Colombo Stock Exchange saying NTT had informed SLT that there has been no such deal. Last week when the paper said an official committee had finalized a shareholder agreement between the government and the new shareholder, Maxis, there was absolute silence. We wonder why.
In a strictly business sense, a Maxis takeover of the NTT stake which could be upped to 35 percent in due course to avoid triggering the mandatory offer provision – when a stake is 30 percent – will see a new dimension in the market.

It would be a battle of the two telecom giants from Malaysia. Malaysian businessman Ananda Krishnan, who has roots in Jaffna, is an ‘all or nothing’ player who will want absolute control of a company to run it efficiently and make money. His men are in and out of Colombo trying to wrap up the deal. He has no qualms about pulling the plug on an investment if absolute control is removed.

That was evident when his entertainment TV subsidiary Astro struck a deal with Indian state-run TV Doordarshan and where Astro had some control. When the government changed hands and the new administration wanted a bigger say in the joint venture, Astro literally pulled the plug under the operation – switching off transmission.

An industry specialist who has followed the fortunes of Maxis says that the company is a leader in mobile phones, TV viewership and radio and will give Dialog a good run for their money if it brings the full force of its operations to Sri Lanka.

While that’s the business side of the NTT saga that’s unfolding, it is extremely important for the authorities to come clean with the whole deal and what has transpired.

Even the shareholding agreement between NTT and the government in 1997 and subsequently 2002 is not known to the public. Consumer Rights campaigner Peter Jayasekera went to courts in 2003 and won an action against SLT for arbitrarily raising tariffs. In fact, he says the rates charged by telecom companies are a complete rip off. We’ll however leave that story and analysis for another day.

For the moment, the government has a duty to the public to come clean in this murky deal. That’s if they have nothing to hide!