Are economic crimes none of their business?

By Sanja De Silva Jayatilleka

Foreign Minister Ali Sabry, addressing the United Nations Human Rights Council (UNHRC) in Geneva last week said in no uncertain terms that any reference to ‘economic crimes’ was beyond the Human Rights Council’s mandate:

“It is observed that the UN Acting High Commissioner for Human Rights has tabled a report on Sri Lanka that makes extensive reference to economic crimes. Apart from the ambiguity of the term, it is a matter of concern that such a reference exceeds the mandate of the Office of the United Nations High Commissioner for Human Rights (OHCHR).”

To be fair, it is probably the new Foreign Minister’s first time at the Council. The Council has thus far been primarily concerned with matters such as the conduct of the armed forces during the last stages of Sri Lanka’s war with the LTTE.

The term ‘Economic Crimes’ was included in relation to Sri Lanka at the Council for the first time, and introduced in the report of the High Commissioner on the Human Rights Situation in Sri Lanka on the first day of the ongoing sessions. It was an unfamiliar allegation, and rightly so, up until now.

Equal Rights

The UNHRC Mandate which was challenged by Foreign Minister Sabry, was decided by the well-known United Nations General Assembly Resolution 60/251. The Preamble of the Resolution recalls in addition to the Universal Declaration of Human Rights, “the International Covenant on Economic, Social and Cultural Rights and other human rights instruments and reaffirms that all human rights are indivisible, interrelated, interdependent and mutually reinforcing.” It also states that they should be treated in an “equal manner”, “on the same footing” and “with the same emphasis”.

In the Operative paragraphs, UN Resolution 60/251 emphasizes the point further by stating that the Council is responsible for all human rights “without distinction of any kind“.

It was clearly established at the very inception of the Council that Economic, Social and Cultural Rights were human rights and it had the responsibility to review any violations of those rights with equal concern as that of other human rights. Sri Lanka is a state party to the International Covenant on Economic Social and Cultural Rights. The Covenant recognizes that:

“In accordance with the Universal Declaration of Human Rights, the ideal of free human beings enjoying freedom from fear and want can only be achieved if conditions are created whereby everyone may enjoy his economic, social and cultural rights, as well as his civil and political rights…”

I’d say the UNHRC and the OHCHR added two and two together and came up with an accurate four, in deciding that economic rights are definitely within their purview and indeed that they were obliged to review any violations of the said rights.

If it looks like a crime…

But has a violation of that right occurred? The bulk of the Sri Lankan public would give a resounding yes, never mind the technicalities. If things don’t improve, they are likely to do so louder and clearer in the form of an ‘Aragalaya’ before long. Regular repression and arrests of protesters have done little to discourage a people who have seen their livelihoods disappear together with their rice and vegetables due to government policies. No legalistic quibble will prevent a starving people from holding their leaders accountable for the povertization of the country (not to mention bankrupting its Central Bank) in the midst of regular warnings by economic experts.

The Sri Lankan state knew of its commitment internationally to ensure the welfare of the people and the upholding of all their human rights when it signed up to the Covenant on Economic, Social and Cultural Rights.

Article 11 of the Covenant starts with the recognition of the citizens’ economic rights, especially right to food:

“1. The States Parties to the present Covenant recognize the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions. The States Parties will take appropriate steps to ensure the realization of this right, recognizing to this effect the essential importance of international co-operation based on free consent.

2. The States Parties to the present Covenant, recognizing the fundamental right of everyone to be free from hunger, shall take, individually and through international co-operation, the measures, including specific programmes, which are needed:

(a) To improve methods of production, conservation and distribution of food by making full use of technical and scientific knowledge, by disseminating knowledge of the principles of nutrition and by developing or reforming agrarian systems in such a way as to achieve the most efficient development and utilization of natural resources;

(b) Taking into account the problems of both food-importing and food-exporting countries, to ensure an equitable distribution of world food supplies in relation to need.”

However, under the Gotabaya Rajapaksa presidency, production methods were not improved but destroyed. An extremely consequential decision such as the overnight and complete banning of chemical fertilizer in a country that had farmed with chemical fertilizer for decades, whose farmers had been encouraged to do so by successive governments, whose soil was long oriented for farming in that manner, surely counts as an economic crime especially when the effects of this and other policy decisions have resulted in malnutrition among a large segment of the children of the country while a large percentage of the adult population are unable to afford three meals a day.

Speaking to ABC Australia, a UNICEF representative had said of Sri Lanka that “seven out of 10 families are cutting down their food intake to mitigate the crisis… Accordingly, those who were having three meals had decreased to two, while those who were eating two meals had declined it to one. “

UNICEF had further stated that “1.7 million children in Sri Lanka…are at risk of dying from malnutrition-related causes…While Sri Lanka has the second-highest rate of acute malnutrition among children under five-years in South Asia, at least 17% of children are suffering from chronic wasting, a disease that carries the highest risk of death.”

There’s a hole in the Budget

This sudden plunge wasn’t due to a great flood, a drought, a war, or freak accident like a meteor hitting us dead centre. We were a middle-income country, until several policy decisions, now internationally described as economic crimes, were perpetrated on the people. This is certainly no international conspiracy to discredit Sri Lanka. If only the allegation had no basis in fact! All we would have had to do then is summarily deal with the Office of the High Commissioner and the Council in the strongest terms and go back to our middle-income lives.

Lived experience currently dictates otherwise. A once thriving country is now avowedly bankrupt. One has only to review the Auditor General’s report on Public Debt control 2018-2022 to confirm that the government was in dereliction of its financial responsibilities in addition to other misdeeds, such as corruption.

For a while, the government didn’t even know how much they owed their international creditors, according to the international press. The Auditor General’s report tabulates several millions in hidden debts which were not properly recorded in the accounts of the Ministry of Finance. The Auditor General recommends that the “Central Bank of Sri Lanka should take steps to verify the accuracy of information on foreign debts other than international sovereign bonds contained in the reports obtained through the Commonwealth Debt Reporting and Management System …maintained by the Ministry of Finance.”

How big and deep is the hole we are in? Apparently, we have no way of knowing!

The Auditor General felt the need to include the following in his recommendations:

“Borrowings should be made within the maximum borrowing limits set under the Appropriation Act and the Active Liability Act (Reference: Paragraph 2.2.3) …”

“Adequate and necessary disclosures should be made in compliance with the Accounting Standards so that an accurate understanding of the overall debt liability of the Government can be obtained through the use of Financial Statements of the Government.”

“In obtaining commercial loans at higher interest rates from the foreign financial institutions or market by the government or on government guarantees, limiting of taking those loans only to projects which will generate income in future by investing those funds and decide to take those loans after carrying out a formal cost benefit analysis.”

The general public would be under the impression that this sort of basic advice would have been given in 1949, when the Central Bank was first established, not in the 21^st century to a middle-income country with no dearth of qualified accountants. Now in receipt of some assurance of IMF assistance, this system which operated in the dark, hurtling towards disaster, isn’t sure if it should reveal the details of its agreed programme for any kind of review.

Throwing more light on the state of financial mismanagement, the Auditor General had recommended that action should be taken to include “all information that should be contained in the budget, the economy and the financial position report to be presented to Parliament in terms of the Fiscal Management (Responsibility) Act, No.3 of 2003”.

What does this mean? That Parliament, which ought to bear responsibility for financial decisions, had less than complete information when they voted for the various decisions. It also recommends to the Finance Ministry that it identifies “the significant variations in certain information in the annual report of the Ministry of Finance and the public financial information contained in the Financial statements of the Government” and to correct them accordingly.

The primary Ministry responsible for handling the country’s finances had huge holes in its accounts but had no idea they were there, nor what they might be.Wagging his finger right in its face, the Auditor General admonishes the Ministry of Finance that realism should play a role in its estimates of Revenue and also its expenditure.

The Ministry seems to have bypassed parliament altogether when they realized their mistakes and made adjustments, without the approval of parliament, which was blissfully unaware that they would be held responsible for things they didn’t do. Thus perhaps, the recent chant of the people that all 225 should go! One hopes that the Auditor General’s recommendation that a mechanism be developed to obtain approval of Parliament when wrong figures previously presented are revised, has now been implemented.

Neither caring nor sharing

The OHCHR has naturally recommended that any international financial agreements should be evaluated for their impact on human rights. The IMF itself has insisted that corruption vulnerabilities should be minimized. Not a ringing endorsement of either the officials or the politicians involved. All in all, none of these paints a reassuring picture of a government which knows what it’s doing, or is apologetic for past mistakes. It just helped itself to a massive cabinet which is reportedly scheduled to expand amidst an unprecedented cash crunch.

The people of this country, especially its youth who have most to lose, either ran for the door or toughed it out at the Aragalaya and threw an administration out, armed only with desperation. There’s evidently more suffering to come, and the new President is determined that people shouldn’t protest about it. He has dusted off legislation that the state promised the UN will be subject to a moratorium, and is busily arresting protesters under the Prevention of Terrorism Act. Armed with a majority in parliament, the government is unlikely to change course. The people will be grateful that in Geneva, the UNHRC seems to care enough to hold the government responsible.