Financial Times

Duty to the public

There were many issues that drew public attention and public space this week. These include the passing away of former President Dingiri Banda Wijetunga, the furore over fuel prices and the Ceylon Petroleum Corporation (CPC)’s insistence that prices cannot be brought down, the continuing financial crisis in the US and the collapse of a dubious, so-called finance company.

Although Wijetunga was in the presidential seat for just a year -- with expectations as soon as he was appointed on the assassination of President Ranasinghe Premadasa that he would be a lame duck nominee -, that was not the way it worked. He exercised a lot of power and didn’t allow himself to be browbeaten by others. When the time for elections came, he stepped down and took off to the hills for a quiet and dignified life.

He was also the Minister of Finance and one wonders what his approach would have been if confronted with the topsy-turvy world of global fuel prices and demands today by the public to reduce prices. The JVP is now squarely blaming President Mahinda Rajapaksa, as Finance Minister, for not reducing prices even though world crude rates have come down.

The government has enforced a new cess on fuel sales. Was the hand of the disgraced former Treasury Secretary Dr P.B. Jayasundera behind this decision too? More on the controversial official later. The problem with reducing prices vis-a-vis world prices– which is in fact rising after sliding for weeks – is that the CPC has purchased a consignment of crude oil in July at high prices and the stocks still last and occupy the full capacity of the refinery. Thus unless these stocks subside, fresh stocks cannot be brought in.

By the time that happens, fuel prices will be back to the $110 per barrel levels. How fuel and commodity markets would react to the US financial crisis, the worst in some 50 years, remains to be seen. The US government has pumped a phenomenal $700 billion bailout package while investors including Warren Buffet, among the world’s richest men, are scrambling together to salvage crises-ridden Lehman Brothers among others. So far the US situation hasn’t hit Sri Lanka though an impact, later, cannot be ruled out.

The crash of a dubious finance company is not surprising given the way Sri Lankans ignore warnings time-and-time again, against confidence tricksters and then desperately turn to the authorities like in the present case where a ‘nice’ English teacher took the public for a ride, scampering away with a billion rupees worth of deposits.

The Central Bank (CB) has repeatedly warned the public against dodgy institutions and individuals which/who accept deposits at high interest rates, illegal under the law unless authorised by CB, and also urging the public to check the credibility of any deposit-accepting institution to make sure they are investing in a safe and secure institution. To press home the point, the Bank issued another warning on Thursday, following up with an advertisement on Friday naming these illegal finance companies. Steps are being now taken to strengthen the law to enable the Police to take action against such institutions and their fraudulent activities.

At least once in 2-3 years a bogus finance company crashes but still the public persists in investing in these high-risk schemes and later blame the authorities fror their own folly, giving credence to that ages-old saying, “a sucker is born every minute.”

Talking about fraud, public attention tomorrow will be focused on the resumption of the Lanka Marine Services Ltd (LMSL) privatization case where the state agencies like the Inspector General of Police, Attorney General and the Bribery Commission must explain what action has been taken based on the judgment overturning the LMSL privatisation.

Attention will centre on what the authorities have to say to Court on whether corruption charges could be brought not only against Dr Jayasundera but also John Keells Holdings (JKH) Chairman Susantha Ratnayake and other directors. The Court judgment clearly says JKH secured the LMSL through illegal means and it would be interesting to see what the police have to say in the submissions to Court.
Dr Jayasundera stepped down or rather his resignation was accepted by President Mahinda Rajapaksa mainly because of concern that his continuance in the job would be a violation of the Constitution, a point made strongly by Chief Justice Sarath N. Silva at the last hearing of this case. However Dr Jayasundera hasn’t disappeared from the scene altogether. He continues as SriLankan Airlines Chairman and, it is learnt, has been appointed as Special Advisor to the President on Finance, most likely to continue the budget preparations and oversee this process – over and above the new Treasury Secretary Sumith Abeysinghe. The appointment, however, is yet to be officially announced.

The question that needs to be asked is – can an advisor in the government be considered a public officer? Dr Jayasundera was forced to step down as he had violated the Constitution as a public officer. But now that he is an advisor – ironically similar to LMSL petitioner Vasudeva Nanayakkara who is a presidential advisor – will the rule governing public officers vis-à-vis the Constitution apply to him as an advisor? Most unlikely given the hundreds of government advisors who come from different strata of society and continue in their other activities while serving as a government advisor.

Yet … Dr Jayasundera has no moral right to continue in whatever office connected to the government. It’s like a slap in the face of the legislature and brings back our point in an editorial earlier headlined ‘Catch me if you can’ where the view was expressed that those implicated in the LMSL case are teasing the authorities just like, the disgraced Minister Mervyn Silva. Whatever reservations there are about the judgment, the decision of the highest court of the land must be respected, this paper has repeatedly stressed.

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