What has the National Savings Bank (NSB) told its 16.7 million depositors about the worst crisis that it is facing? Zero! Its website proudly says that the NSB is the first triple A rated Sri Lankan bank and that “Every 7 out of 10 Sri Lankans Bank with Us” but there hasn’t been any statement neither from the bank, the Ministry of Finance or the Central Bank on current issues.
Rating agency, Fitch which runs to the newspapers with statements on various ratings has been absolutely silent on whether the ratings of both the NSB and The Finance Co (TFC-the other culprit) would be reviewed.
This week’s poll by the Business Times saw the public vent their frustration on a single issue; governance, accountability and transparency. In every sense, the passing-the-buck game continues whether it be the government, the private sector or the regulators – the Securities and Exchange Commission (SEC) and the Central Bank (CB) – and also the Colombo Stock Exchange (CSE). However in fairness to the SEC, its chairman Tilak Karunaratne has been speaking to the media explaining the SEC role, etc. It would have been better, however if the SEC had issued, even a short statement about the state of play relating to the investigation to restore confidence in the market. The CB however has failed in its duty over the settlement risk (the NSB defaulting payment) in publicly demanding the NSB to pay up or take action. This unfortunately is the continuing saga of Sri Lanka, a country that has huge potential to rise from the ashes at the end of the war, but will continue to be kept down owing to these fundamental issues.
Questions, questions, questions! This is what the public is asking: Why was the NSB permitted to buy a stock at a huge premium? Why wasn’t it cancelled by the regulator soon after the NSB refused to pay the seller? Why hasn’t the Government and the two regulators (as of Friday noon, May 18) issued statements to the public about the safety of their investments assuring the market (to restore confidence and credibility? Isn’t this an obligation to millions of depositors (who had to independently call branch managers and verify the status of the bank while some withdrew their money)? Is the Chairman and directors of the NSB ‘fit and proper’ persons? What about the issues that Pradeepa Kariyawasam had when he chaired Sri Lanka Insurance? Were these issues taken into consideration to declare him “fit and proper”?
There has been a lot of lying, cheating and deceit in the sordid transaction. Taprobane Securities, the buying and selling broker, said in a newspaper advertisement on Friday that after it received the consent of the NSB, it had got the consent of the sellers (Dinal Wijemanne and Raynor Silva, among others) to do a reverse transaction through the market. “... since NSB (our buying client) had expressed the view that it would wish to reverse the recent transaction, we have obtained the consent of our selling clients to reverse the transaction…,” the statement said.
This implies that the NSB has, at least a week, ago, expressed its willingness to sell back the stock. , while this week, Kariyawasam has twice told unions that deal was clean and implied there was no intention to sell back the stock. He also told the unions that “only the President can remove him”, more than a week after Treasury Secretary Dr P.B. Jayasundera had told officials that Kariyawasam should step down over the sordid affair.
Unfortunately the heady days when important personalities resign on issues like this are gone. The only noted instance in recent years of an official quitting on a principle of good governance is former SEC Chairperson Indrani Sugathadasa, whose stock rose many notches after she refused to bow to the whims and fancies of insider traders and manipulators.
After the crash of the finance companies, on the heels of Sakvithi and Golden Key, the CB stepped in to restore some confidence. That confidence is once again under question with the latest NSB fiasco and lack of explanation to the public who has a right to know. The TFC-NSB, as we said, earlier has raised many issues which are yet to be answered. Someone should be doing this. The buck must stop somewhere!
Storm in a teabag
The tea industry is divided over proposals by the Tea Exporters Association to increase import of tea for bagging and blending purposes.
Those in favour (TEA) say that Sri Lanka can reach revenues of US$5 billion from a current$1.5 billion, and export volumes can up to 450 million kg from 320 million kg now.
Those against – workers, plantations companies and top single origin brands – say such a move would ruin the industry by the import of inferior, cheaper teas and endanger Sri Lanka’s position as the proud owner of the “Pure Ceylon Tea” brand that sells at a premium.
The tourism industry is facing a similar situation: promoting numbers instead of quality, high-spending travellers. Mass tourism takes a large slice of our resources, leaves a bigger carbon footprint and would (when Sri Lanka reaches the magical 2.5 million tourists’ figure in 2016) trigger inflation with food demand from locals and foreigners.
Those opposing the proposal have a much more valid case on the simple premise that tea is not only a beverage but a way of life, a culture, a product (Ceylon Tea) that is better known than the country itself. There are many other issues all of which we dealt with in our editorial on April 29 titled “Cheap teas: Killing ‘me’ softly”. We said, “Ceylon Tea is known as the best tea in the world. Allowing cheap, uncontrollable tea imports for re-export as multi-origin tea for short-term economic gains will not only fritter away painstaking decades of building the Ceylon Tea brand (first by the British followed by innovative Sri Lankans) but also destroy a lifestyle, a heritage and an integral part of society. In the national interest, that shouldn’t be allowed to happen.”
The tea imports’ proposal is not a new debate. It began in the 1980s, was revived 10 years later and grew in 2002 when the Sunday Times reported on several attempts to get it on the table on the grounds that Sri Lanka is losing out to others in being an international tea hub.
Remember, the plantations – over the years under British rule, state control and now private hands – have looked after and cared for the workers in which management and workers resemble one big family. The well-known phrase in the plantations – from WOMB to TOMB – reflects how plantations look after the worker from birth to death, unlike exporters/traders sitting in comfortable offices – far removed from the fields and the biting cold at 4-5 am in the morning when planters have to wake up for muster.
They don’t have time to play golf or socialize in coffee shops or five-star hotels while stand-alone companies which own plantations, create a brand and also take care of the marketing have a gigantic task in ensuring undiluted, and unadulterated Ceylon Tea which enjoys a premium abroad. Don’t kill the goose that laid the golden egg.