Time stands still for Lankan laws
View(s):Unsurprisingly Sri Lankan authorities, in particular, the Central Bank (CB) and the Inland Revenue Department (IRD), have maintained a deafening silence over the recent exposure of secret overseas bank accounts held by Sri Lankans.
The same thing happened in an earlier Sunday Times (July 1, 2012) dated story which exclusively revealed that a number of Sri Lankan individuals, companies or the Sri Lankan government had over $85 million in secret Swiss accounts in 2011. There was no investigation on that report though the opposition raised many queries.
The latest exposure by the International Consortium of Investigative Journalists (ICIJ) has revealed the names of Sri Lankans holding offshore accounts without disclosure. The list of Sri Lankan names has been doing the rounds on the web and other networks.
Funneling ill-gotten cash through dummy accounts and a tedious process, of not leaving any paper trail behind has been an ages-old trait by influential Sri Lankans who have accumulated wealth through devious means. Some of that money has returned as investments to Sri Lanka and was seen through ‘foreign’ purchases in the Colombo stock market.
The average and ordinary Sri Lankan, as a Business Times (BT) poll reveals this week, is dismayed over the inability of the authorities to stop this siphoning out of cash illegally and urging the CB and the IRD to take action against the alleged offenders.
On the flip side, some Sri Lankans – the BT poll shows – are also opening bank accounts abroad in tax havens and other sources because they are unsure about the safety and security of their deposits in local banks. Ever since the Government began dipping into state banks and funds like the Employees Provident Fund (EPF) and Employees Trust Fund (ETF), through the CB, to either ‘borrow’ cash for urgent needs or invest in commercial banks in a bid to control them, there have been doubts in the minds of the public as to the sanctity and protection of their funds.
The same concern arose when the National Savings Bank (NSB) invested Rs. 390 million depositors’ (hard earned) cash in the crisis-hit The Finance Co (TFC) without batting an eyelid in a politically-charged transaction. The corrupt deal was reversed after a media outcry forcing the NSB chairman Pradeepa Kariyawasam to resign.
A few weeks back, Kariyawasam’s replacement, Sunil Sirisena was forced to quit over a Treasury directive to fast-track a foreign loan or $1 billion bond issue.
For these reasons and many others (including more state scrutiny of personal accounts), Sri Lankans are feeling insecure and worried that ‘big brother (Government agencies)’ is watching over even ordinary citizens and their bank accounts. Still that doesn’t give anyone the right to siphon black money or undeclared cash if they are breaking the laws and the authorities must act against law breakers. Unfortunately Sri Lankans laws are only applied to those who are not influential or powerfully connected. The case of parliamentarian Duminda Silva and the patronage he gets from the Government which included two armed forces commanders happily guiding this murder suspect down a flight of stairs as a Sunday Times picture showed last week, illustrates this point.
Raising an interesting point, Kajanga Kulatunga, a BT columnist, says there is a need for global investment products to be available for high net-worth Sri Lankans. “The country currently has no transparent wealth management products for investors of any type. If the authorities move to liberalise foreign exchange control, thus allowing a choice in global asset allocation to the average investor, they remove the legitimate reason for tax havens,” he says.
That to some extent appears to be happening with the CB considering plans to provide a no-questions-asked amnesty to Sri Lankans holding overseas accounts so long as they invest a minimum US$5 million in the country. Now whether this proposed new regulation is to protect some highfliers or powerfully connected people is not clear or, for that matter, one may never know. This is like the case of police DIG Vas Gunawardene, accused of many murders. The law caught up with him, finally, because and only because the slain businessman had powerful connections to the political hierarchy, more powerful (it appears) than Gunawardene himsel.
On a connected issue of law enforcement, the larger mass of the stock investing public is questioning the inability of the Securities and Exchange Commission (SEC) to take action against many alleged stock market offenders. “It’s the small fry that gets fried. The big guys get away because of their connections,” lamented one investor.
There have been a number of serious stock market violations including insider trading and front running. Some of the offenders have just got a ‘ticking off’ or a ‘don’t do it again’ warning just like being punished after a childhood prank. These are serious issues and calls for more punitive action.
Across Sri Lanka, questions and concerns have been raised over and over again over the lack of political will to enforce the laws against big-time offenders, murderers and rapists.
Time, it appears, stands still for the laws of Sri Lanka, at least in the case of a few powerfully connected people.
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