Quota saga-what happened to transparency?
Are we reviving memories of the garment quota saga that was exposed by this newspaper last year? There were many sour faces when The Sunday Times spoke of the corrupt deals that took place then in quotas issued by the Textile Quota Board (TQB). News is surfacing once again about alleged corruption in the distribution of quotas. Charges and counter-charges are flying in the face of ministers G.L. Peiris and Rohitha Bogollagama who are in charge of the subject of industry and garments.

It appears that Bogollagama, an industries minister of non-cabinet rank, has opened a can of worms through accusations of corrupt practice because his request to the TQB for quotas was turned down by officials.

Angry industrialists blame ministers for interfering in the quota process which is decided by the TQB board. But TQB officials are also being accused of taking administrative decisions they should not have made, without consulting the board which includes representatives of the industry.

The whole drama stinks and raises the all-important issue that the United National Party government has been plugging away while in opposition - transparency. That seems to be sadly forgotten not only in the quota saga but also in some other deals in which ministers have been reprimanded by Prime Minister Ranil Wickremesinghe.
The lack of transparency in tenders, contracts and simple government decisions has been further aggravated by conflicting roles of ministers and overlapping duties. The reality is that there are too many ministers with the UNP having to eat its words about promises of a small cabinet. The cabinet may be nowhere the size of the one appointed during the former People's Alliance regime but that's because appointments have been couched in UNP doublespeak.

There are project ministers and also a 'minister assisting'. Where on earth did these designations come from? Is it all for the sake of serving the people or serving oneself? According to the Information Department's "Guide to Ministries" booklet giving important addresses and contact numbers, there are 59 ministers and a similar number of ministries!

Overlapping of functions is a problem. The tussle in the subject of industries is growing with key personalities waiting for the return of the prime minister to settle the issue. Conflicts are emerging between President Chandrika Kumaratunga, ministers Karunasena Kodituwakku and Kabeer Hasheem; between S.B. Dissanayake and Ravi Karunanayake on imports, and many others. There are many ministers handling education so much so that it wouldn't be surprising if a new project minister is assigned to handle kindergarten affairs!

With duties not being properly assigned - particularly when ministers handle similar subjects - there are bound to be problems like the situation the two ministers were placed in earlier this year when Bogollagama claimed the BOI was under his control until Wickremesinghe stepped in and ordered it should be handled by Peiris.
Bogollagama by ordering TQB officials seems to have gone beyond his brief but the issues that he is raising - whether because of a personal agenda or not - need to be addressed properly.

Something is wrong if allegations keep surfacing in the granting of quotas. This wouldn't happen if the process is transparent. Is there a need for a new system? No, given the fact that quotas would vanish by 2005.

Then what are the safeguards that are needed? A UNP watchdog committee comprising possibly retired judges should be appointed to probe public complaints of interference by government ministers. Wickremesinghe needs to crack the whip and make sure ministers mind their own business.

On the quota saga, a government statement must be issued to set things right instead of leaving room for wild speculation that could discourage even foreign buyers.

Economic challenges ahead
By Merrill Cassell
Having travelled to more than 50 countries I have not seen a country as beautiful as Sri Lanka. In spite of the beauty of Sri Lanka, on another comparison, I have not seen a country deteriorate so visibly as Sri Lanka has. Sadly though, the long civil war has been the major contributor to the decay of the country.

Going back to the 1950's is going back to paradise. Then came the demise in the late 1950's and thereafter. The rapid nationalisation of the language and business of the country was the primary cultural and economic disaster.

Government took over the major portions of the private sector at a very rapid pace and those government industries were inefficient. Some stunning examples were that projects completed by government run corporations were taking 5-6 times longer than before (private sector era) and there was big cost overruns. Government just got too big.

Privatising the public sector was a very good move, but in some ways that privatisation was overdone, notably, the bus transportation in Colombo and other parts of the country. In those good old days, the bus service provided by the Ceylon Transport Board (CTB) was an example par excellence of a public good.
However, when that public good was denationalised, the Galle Road became crowded with thousands of small vehicles.

Cluttered traffic
In other words, 20-30 smaller vehicles plying the narrow stretch of Galle Road now replaced one double decker load. This is one of the major reasons now why the Galle Road is cluttered with traffic. Since there are no strict emission controls in the country, it is common to see vehicles spew black smoke that increases the intensity of the pollution. In the 1970s, the late James Grant (former Executive Director of UNICEF) published a book on the Physical Quality of Life Index (PQLI).
Basically, that statistical study attempted to take three social indicators: literacy, life expectancy and infant mortality and mold it into one static, the PQLI.
The PQLI attempted to see how the variables related to the per capita Gross National Product (GNP). For instance, in the period 1970-75 Kuwait had a per capita GNP of $13,787 and a PQLI of 75. On the other hand, Sri Lanka with an average GNP of only $179 had a PQLI of 82.

The late James Grant was always proud of the fact that Sri Lanka, with such limited resources was able to achieve the highest levels of literacy, life expectancy and the lowest levels of infant mortality.

This index, though it appears to be simple as it sounds, showed that Sri Lanka with limited resources was yet able to match the rest of the world with some very important key social indicators. Obviously, Sri Lanka had some superior development planning and practices. With the nation in turmoil (civil war), it will be very difficult to see tangible progress in the development of Sri Lanka.

It should be hoped that in the new millennium the parties concerned (government and others) would find an amicable solution to restore peace, tranquillity and prosperity to this once-upon-a-time, beautiful nation.

Peace in Sri Lanka and the end of the civil war will help government and all private citizens to get the country back to prosperity again. In tandem to reaching settlement of the civil war, Sri Lanka should also have to focus its attention to development programmes to benefit the population. Population growth and population densities pose serious threats to the living standards of Sri Lankans.
The transfer of resources for programmes to benefit mankind to those of the civil war has undercut the rise in the per capita GNP.

Big challenges
The Sri Lanka government no doubt has a big challenge ahead. After bringing peace and harmony (end of civil war) the government should enact measures (conducive to all parties) to avoid a resurgence of the disease (civil war).

Other primary policies would be growth and to avoid policies that impede growth. The government will have to continue to increase the quality of the labour force, enhance capital accumulation and slow population growth for its path to progress.
Sri Lanka already has an edge over many other developing countries because of its high literacy rates. With the devastation of the country, Sri Lanka will need a lot of aid. Sri Lanka would need loans and grants to further improve its labour force (technical training, apprenticeships, etc.), accumulate capital and increase the efficiencies and effectiveness of the production process.

Foreign aid alone cannot help Sri Lanka. The government must establish an economic climate that is favorable to capital accumulation (local and foreign entrepreneurs alike).

Then the government will have to rebuild the infrastructure, schools, roads, sanitary and water supply, power plants, cement factories, communication and transportation and other agricultural and scientific facilities and so on.

All this will have to be substituted with imports of much needed raw, semi-finished and finished materials of equipment and spare parts for all sectors of industry. Sri Lanka ought to upgrade the quality of its labour force so that more raw materials could be converted to finished products within the country for added job creation and economic prosperity.

Given a stable economic and political climate, a higher proportion of technical assistance will flow to Sri Lanka, bilaterally from industrialised countries and through the World Bank and United Nations Organisations. Donor countries have limited resources as they must also keep aside money for the many problems facing their own nations.

As there are so many problems in developing countries and limited donor money, developing countries must compete to receive aid. The degree of competition is such the recipient country must be able to substantiate that aid is used as intended and without waste of resources. The responsibility of donors is great. Donors have to ensure that their hard-earned money is put to best use.

In addition to promoting peace and stability, the government will need to give top priority to the rebuilding of its road network and communication network, as this infrastructure will greatly contribute to efficiency.

Among many other sectors, Sri Lanka would need a lot of town planning to ease traffic congestion and pollution and improve the cleanliness of its environment.
An underground subway system in Colombo would be an ideal public good but unfortunately that can be very expensive and may not be the highest priority, given limited resources.

Other lesser expensive ways would be for the government to provide transportation as a public good and use the price system to discourage parking in central parts of Colombo.

With its limited resources, economists in Sri Lanka will have to help the government in establishing its priorities. Sri Lanka would require top notch town planning, including a master plan for the whole country. It would be wise to seek the assistance of the United Nations Development Programme and the World Bank for a project of this magnitude.

You throw a seed anywhere in Sri Lanka and a tree will grow. With such a fertile climate and a literate population, it is only peaceful co-existence and good governance that will guarantee economic prosperity for Sri Lanka into the new millennium.

(The writer is a Sri Lankan and former Budget Director at the UN Children's Fund (UNICEF) in New York).

From log cabin to Bank House - N.U. Jayawardena
By Stanley P. Wickramaratne Ex-Central Banker, I948 - I984
During the Second World War (I939 - I945) and its aftermath Sri Lanka had to sustain a plethora of 'controls' which regulated the supply of foods and services and in general the free mobility of its citizens.

These restrictions were departmentalised by the State and named Food Control, Textile Control, Rubber Control, Tea Control, Milk Food Control, Petrol Control, Poonac Control, Price Control and the still-kicking Import-Export and Exchange Control. With the grant of independence in I948, these control mechanisms gradually ceased to function except the last two mentioned.

Among the many public servants that headed some of these departments was N. U. Jayawardena at Exchange Control. He also served as Assistant Secretary to the Pochkanawala Banking Commission with Dr. B. B. Das Gupta on it. This was his stepping-stone to higher and responsible achievements in the public service as well as becoming a somewhat controversial visionary in the private sector. As Controller of Exchange he closely associated himself with Reserve Bank Adviser John Exter in the preparation of draft legislation for the setting up of the Central Bank of Ceylon.
The recent loss to our nation of Neville Ubesinghe Jayawardena at the ripe old age of ninety-four prompts the writer to enlighten the general public about N. U. Jayawardena, the man under whom the writer served during some exciting times as his Personal Assistant.

Young Jayawardena excelled in his studies at St. Aloysius College, Galle. After matriculation he joined the General Clerical Service and served in many departments including the Registrar General's Office and later as Head of the Department of Commodity Purchase. While in service he graduated in Economics and was appointed by the Public Service Commission in the mid-I940s to head the Department of Exchange Control. He possessed a charismatic personality and was a workaholic to the very extreme who extracted from his subordinates maximum work output irrespective of whether it was day or night, a weekend or a public holiday. Nevertheless, his late wife Margaret Jayawardena, cared for him with great compassion and understanding and blessed him with three lovely children - two sons - Lal and Nimal and daughter Neeliya.

Exchange restrictions
During the period I945 to July I950 exchange restrictions waxed and waned in keeping with the quantum of sterling accumulated in the United Kingdom during the Second World War.

So was the hiring and firing of the staff who manned the department of Exchange Control - with restrictions the staff multiplied and when controls were relaxed the staff contracted. By I950 when the Central Bank took over the administration of this once-temporary department of the Ministry of Finance, most of our sterling assets had been depleted by withdrawals made under the Bretton Woods agreement on the many annual pilgrimages the then-Minister of Finance, J. R. Jayewardene, undertook to London in the company of his competent Controller of Exchange, N. U. Jayawardena. One can now only guess that these withdrawals were in no way channelled towards any visible economic development of the country but largely utilised for servicing the import of consumer goods which the average citizen could have easily done without. N. U. Jayawardena also lent his services and invaluable advice to many Ministers of State who knew little of the state of the economy. He was also a constant invitee of the then-Minister for Transport Sir John Kotelawala and used to share a sumptuous morning breakfast of egg hoppers at the latter's spacious Kandawala residence. Sir John at that time was reported in the press to be negotiating for the purchase of some valuable property in Kent, England. This association was somewhat of a bad omen for N. U. Jayawardena as events proved later.

N. U. Jayawardena's assumption of office in I950 as the first Ceylonese Governor of the Central Bank of Ceylon (i.e. on the eve of Governor John Exter's return to his office at the Federal Reserve in Washington) was preceded with much behind-the-scenes activity by certain interested parties. Many aspirants eyed this coveted position while others in the public service canvassed against Jayawardena.
Among the numerous messages of congratulations Jayawardena received it was ironical to find some letters of expression of faith and good wishes from those very high personalities who openly canvassed against his nomination. It is now history that Jayawardena's term of office was short lived (1953) due to a combination of unfavourable circumstances but by no means to any incompetence on his part.

Costly dinner
The preamble was a dinner hosted by the then Prime Minister Sir John Kotelawala (1953-1956) in honour of the visiting Governor Cobbold of the Bank of England. This occasion led to the appointment of a Commission of Inquiry into the life and conduct of N. U. Jayawardena. Sir John's outburst at this dinner, "I say N. U. I hear that you have made money through dubious means", and Jayawardena's candid rejoinder, "Look Sir John, as Governor of the Central Bank, I can under the provisions of the Exchange Control Act ask you to reveal your assets abroad," elicited from N. W. Atukorale, Secretary to the Prime Minister, the statement, "I say N. U. you have cooked your goose."

The writer, with the assistance of another colleague, had the most unpleasant task of finding a safe conduct for Jayawardena from his Governor's desk at the bank in the Times Building to his official residence in Colombo 7. While the entire media including, Rienzie Wijeratne, the Lake House photographer were anxiously waiting for his exit we managed to smuggle him through the back of the Times Building.
On the Commission's findings and his subsequent vacation of post of Governor, the writer vividly recalls calling on him at his official residence to take charge of his official belongings such as his brief case and umbrella. This was a heart-breaking encounter. In the presence of Margaret Jayawardena, the writer announced the purpose of the visit and in passing added that he was so sorry to see him in this position after having attained one of the highest positions in the land. Mrs. Jayawardena then burst into tears and hugged the writer. But N.U. Jayawardena, clad in his 'palaycut' sarong and bare-bodied, looked so calm and collected when he said: "My dear chap, you now say that to me but you wait and see, I shall return soon and hit the headlines again!"

In appeal under the SLFP regime, Jayawardena was exonerated from the findings of the Commission. One must add at this juncture that he had the confidence and support of our then representative at the United Nations, R.S.S. Gunawardena, who incidentally was best man at the wedding of S.W.R.D. Bandaranaike to Sirimavo Ratwatte.

It is pertinent to mention that Jayawardena's exit from the Central Bank in 1953 gave him some breathing space for soul searching and until such time the findings and his appeal against the findings of the Commission against him were over, he established some kind of rapport with the Gods by an act of self-abasement. Towards this end it was said he spent much time sweeping with a broom the large Buddhist temple premises in Moratuwa clad only in a loincloth (amude)!

Exonerated
After he was exonerated, he visited London and returned home with the Chairmanship of Vavassuer and Company in his pocket. This company dealt with the export of coconut products and fibre. He also established Colombo Agencies with many subsidiaries. Both these companies collapsed in a matter of a few years and NUJ's image in the private sector took a dive until such time Mercantile Credit Ltd emerged as a stable finance company with a chain of subsidiaries with immediate members of his family and in-laws on its directorate. A few years later with the co-operation of two prominent Buddhists - Walter Wimalachandra and optician Albert Edirisinghe - he set up the Sampath Bank. When the Sampath Bank, after much procrastination on the part of the Monetary Board of the Central Bank, was finally permitted to open its doors as an authorised dealer, the wisdom of authorising the establishment of a commercial bank with a religious stance agitated the public mind. Nevertheless, Sampath Bank with a limited but highly paid staff played a vibrant role in commercial banking at a time the other two indigenous banks - the Bank of Ceylon and the People's Bank - were facing insolvency. The People's Bank was soon turning into a "some People's Bank" while the Bank of Ceylon management caved into accommodate wheeler dealers in business by the grant of unlimited over-draft facilities purely on the threatening recommendation of corrupt politicians without any collateral whatsoever.

With the collapse of a number of finance companies in the late 1980s and early 1990s, Mercantile Credit had to enlarge its directorate with representatives from the People's Bank, Bank of Ceylon and the Central Bank with an injection of Rs. 750 million towards a rehabilitation programme. The writer was the recipient of the following short message from N.U. Jayawardena in a letter dated 30th January 1992:
'I have read your recent comments with great interest. You would have by now learnt that I have also severed my connection with Mercantile Credit Ltd. So have Nimal and other members of the family which I think is what the Governor wanted to achieve. "It may well be that he may have over reached himself in certain respects, but events will shortly tell."

Tripped over
As predicted, events did tell. The then Governor one fine day "tripped over" Neliya Perera's barbed wire fence in her Nuwara Eliya property thus having to face a charge of criminal trespass in our courts of law which culminated in his conviction and the loss of his civic rights. N.U. Jayawardena served on many committees set up by the Government of that day. He had a wide vision for a better Sri Lanka. He also served as Chairman of the Committee appointed by the state, called 'bureaucratic processes committee', to report on the hassle which the public experience in dealing with the bureaucracy. In fairness to him, one had to put his mind at rest when he confessed, "I could have served the country better if I continued as Governor of the Central Bank except that materially I would not have benefited."
I had to convey the following message to him in the mid 1990s:

"My dear Sir, ... What are the material benefits which would have benefited you? Are they in any way related to money? Then I would say - money can buy you an expensive dog but you cannot buy the wag of its tail. Be that as it may, I think one should seriously consider, as the years go by, of hanging up one's gloves and retiring without resigning from life. Even in the field of cricket many a veteran are known to have faltered at the crease under the strain of a long innings. It is said that "visionaries are possessed creatures, men and women in the thrall of belief so powerful that they ignore all else - even reason - to ensure that reality catches up with their dreams."

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