Urgent need to revive SEC probes
View(s):Finance Minister Ravi Karunanayake hit all around the wicket, in cricket parlance, on Thursday providing a host of concessions, handouts and relief in the budget to Sri Lanka’s long suffering masses.
He announced a reduction in prices for LPG gas, chillie, Maldive fish, dried fish, green gram, bread, wheat flour, milk powder, sugar, bus and school van fares and kerosene among others.
Taxes were increased for a new category called the ‘super-rich’, liquor manufacturers, casinos and mansion owners to meet some of this expenditure.
Increased taxes on the products of companies listed in the stock market – alcohol and manufacturing among others – saw a sharp fall in the indexes in early trades at the Colombo Stock Exchange on Friday.
Government expenditure has been estimated at Rs. 2.1 trillion, revenue at Rs. 1.6 trillion while the budget deficit has been estimated at Rs.499 billion, according to statistics given by the Finance Minister.
What is refreshing is that all these figures were clearly given in the budget speech this time – like in the good old days of former Ronnie de Mel’s budgets – unlike former President Mahinda Rajapaksa’s practice as finance minister to list it as annexures which was not easily accessible to the public. The move is a sign of the transparency and governance structures being followed, as promised, by the new Government.
It was indeed a revolutionary budget, not only in the range of items that were reduced and the tax increases on the rich, so much so that the Finance Minister was likened to a modern day Robin Hood, but also the fact that the budget process will see many changes.
For example, this is the third time in a single budget that the figures have been altered. When the 2015 budget was presented by then President and Finance Minister Mahinda Rajapaksa last October, the expenditure and revenue figures were altered during the budget debate from the presentation of the Appropriation Bill stage.
The new regime’s budget is an amendment or adjustment of Rajapaksa’s budget contrary to being an ‘interim’ budget or a vote on account to meet just three months of spending. It deals with expenditure and revenue for the whole calendar year with amended expenditure, revenue and deficit numbers. The next question is will there be another budget amendment when a new government is elected in June.
The budget also dealt with a nagging issue; the stock market and the many unsavoury deals that were allegedly swept under the carpet by the Securities and Exchange Commission (SEC) before Thilak Karunaratne took over on Wednesday as the new chairperson. There were many transactions investigated during the tenure of Indrani Sugathadasa and Karunaratne (returning for a second stint) as SEC head. Both officials were then forced out due to pressure from powerful business interests. Former Sri Lanka Insurance Corporation CEO and former Sri Lanka Tourism chairman Nalaka Godahewa was brought to this crucial, regulatory role. During Godahewa’s tenure, the SEC took the position that there was no evidence to proceed with these investigations.
However the Finance Minister on Thursday said the massive transaction involving National Savings Bank and The Finance Company which was traced to insider dealing would be probed. None of the culprits in that deal has been brought to book. “Our government will ensure that the perpetrators of this unholy share deal also will be brought to face the judicial process,” Karunanayake said.
Former NSB Chairman Pradeepa Kariyawasam, husband of recently retired Chief Justice Shirani Bandaranayake, was forced to resign over the deal but there are suggestions that he approved the deal owing to pressure from political higher-ups.
Past investigations into these murky deals in the stock market are expected to be revived by the SEC chairman who is also seen putting together the mechanism to get cracking with these probes and complete them as soon as possible.
A little known fact is that Godahewa, who resigned after initially being reluctant to do so, was part of an election planning committee that included parliamentarian Namal Rajapaksa, businessmen Nimal Perera and Dilith Jayaweera formed in mid-2014 to prepare for the presidential elections. Despite his involvement in a political committee, the former SEC chairman was quoted in newspapers insisting that he is a not a political appointee to the post.
While the new SEC chairman has the onerous task of dusting the old files of the investigation, expectations are high that the perpetrators of these white collar crimes would be dealt with swiftly and some progress seen before the next election in June.Talking of perpetrators, the new Central Bank Governor is also discussing with the Attorney General as to whether action can be taken against those implicated in the Golden Key fiasco and its aftermath. The need for punitive action against individuals and recovery of all assets stems from the desperation of depositors who are still waiting for the ‘light in the tunnel’ to be returned their full dues, after many years of suffering.
There is growing expectations that the Government, its ministers and the different regulatory authorities – in particular the Central Bank and the SEC – would deliver the goods as speedily as possible.
Just like the 100-day programme, the authorities also need to show progress on various corrupt activities with expectations running high from the people. Progress on the SEC probes would provide positive signals to ‘real’ foreign investors who have been concerned about good governance and accountability issues.