ISSN: 1391 - 0531
Sunday, January 21, 2007
Vol. 41 - No 34
Financial Times  

Power to probe SriLankan, SLT

By Chathuri Dissanayake and Natasha Gunaratne

The Parliamentary Committee on Public Enterprises (COPE) is urging new rules to probe into any company where the government has a stake of 25% or more, a mandate it doesn’t have at the moment.

Although COPE Chairman, Wijedasa Rajapaksa – in an interview with The Sunday Times FT this week –made strictures against companies with a government stake, the committee doesn’t have any authority to scrutinise organisations like SLT, SriLankan Airlines or Shell Gas Lanka Ltd.COPE has also made recommendations to the Parliament for its proceedings to be open to the media.

The call for new powers comes in the wake of the controversy surrounding SriLankan Airlines and its new competitor Mihin Air.
Rajapakse, thrust into the limelight and who has widely spoken to the media after presenting a report to Parliament last week slamming the activities of public enterprises, said SriLankan is in a bad shape as Emirates Airlines has secured all its profitable routes and given the national carrier the unprofitable ones.

"That is public money. In an institution if there is an obvious malpractice and there is corruption, then the government will have a loss. How can this be compensated? Much more than the interference, when there is a scrutiny process (if COPE is provided the new powers) it is good for the company too," he said, explaining however that the government will not be making policy decisions in such cases but that it would provide some accountability.

His comments on SriLankan Airlines were made in the context of questions raised by COPE, from Treasury Secretary Dr P.B. Jayasundera as to the source of funding for Mihin Air which COPE found was unclear.

The proposal to analyse all companies that has a government stake of 25 percent and over was welcomed by the private sector.
Singer Chairman Hemaka Amarasuriya told The Sunday Times FT that he agreed with Rajapakse on the need to bring discipline into the public sector corporations. “After all, it is public money and public assets should be protected in whichever manner. Parliament is the best place to do it. Whether it’s 25 % or 50 % stake, it should be protected. If there is malfeasance, COPE is the institution to handle it.”

Former Chairman of the Federation of Chambers of Commerce & Industry of Sri Lanka (FCCISL), Patrick Amarasinghe also feels strongly that Rajapakse’s proposal to Parliament is well founded.

“I think there has to be accountability for the government. You can’t give people government money to do what they want to do. There has to be accountability and responsibility.”

Informed sources say that even though there are government nominees on the boards of companies like SriLankan Airlines, SLT or Shell, they are either inactive in the decision-making process or have little authority. In the case of SriLankan, an official committee that has reviewed the agreement with Emirates which ends next year has recommended that the local directors on the airline in which the government has a majority stake should have a bigger say in the operations and management, unlike now.

Rajapaksa believes that in the next two years SriLankan is unlikely to make a profit and could go bankrupt. “Aircraft have been leased out. They don't belong to SriLankan. That's why the government thought it would be good to have a national airline,” he said.

Parliamentarian John Amaratunga, a former COPE chairman who served for 10 years, told The Sunday Times FT that even though COPE has no authority to take punitive action against corrupt institutions and officials the committee is indeed effective.

He praised Rajapakse saying he was committed and doing a good job. "The Board of Directors and Chairman (of these companies) are on their toes because they know they are answerable. Once COPE takes it up and if COPE Chairman is strong, that's all that matters. It is quite a deterrent for these people.” he said.

Referring to the BOI agreement with the MDF factory, Merbok Lanka Ltd which this paper has reported at length on the extraordinary concessions given and the negative impact it had on the local rubber wood based industry, Rajapakse said that the BOI has once again acted absurdly. "Even massage parlours, karaoke clubs and Chinese restaurants are running under the BOI. It is an embarrassment to the country. There must be customs officers that can oversee their dealings. If you leave the BOI alone, you definitely cannot stop the corruption,” he suggested.

What happens to the COPE recommendations now? According to Rajapakse, the ultimate authority is vested in the Parliament to take decisions on the financial aspects of the country. COPE has the right to make recommendations to the Parliament. In addition to the recommendations, COPE is vested with vast powers even though that power has never been exercised by previous committees. Rajapakse said some matters have been referred to the Bribery commission and the Criminal Investigation Department (CID).

Rajapakse is suggesting that government institutions should prepare road maps for the next 50 years. "All the organizations should have plans. You must prepare a plan for 50 years, distribute it to the government organizations and accordingly, the plan can be adjusted." According to him, this planning will ensure the elimination of wastage and increased coordination among departments.

Amaratunga, who also drew a lot of media attention during his tenure as COPE chairman, said the main function of COPE is to look into the accounts and performance of government corporations and government institutions where the government is the major shareholder even though they cannot punish anyone. "The punishing part is to bring to light the issues and matters of concern," he said. "COPE has the right to prepare a report, interim or final for circulation amongst its members. After it is signed by all members, it will be transmitted to Parliament where the Secretary General provides the opportunity for COPE to present the report. Once done, any MP can ask to debate the matter.”

Asked whether recommendations made by COPE, during his tenure, were implemented, he said: “Some ministers through their secretaries took it very seriously and took corrective measures. But in some glaring corruption matters I exposed, I don't think they took any action. Some ministers even objected at that time and were critical as to why COPE would come up with these recommendations." Amaratunga added that it is a matter for each minister and the President to take action on these matters. "Some take it seriously and some don't."

According to the Amaratunga, if COPE is to perform more meaningful deeds, it needs to strengthen the hand of the Auditor General and give him more muscle. "We at that time recommended sufficient expertise to be made available to COPE so members could be educated and have financial and accounting exposure. We insisted this should happen. I think the United Nations Development Program (UNDP) took up the matter but withdrew due to a lack of resources."

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Copyright 2007 Wijeya Newspapers Ltd.Colombo. Sri Lanka.