Involve all MPs in public finance control through watchdog committees

By Justin Keppetiyagama
Email:jdkgama02@g

On 11 September 2020, the Speaker announced names of MPs to serve on the two Oversight Committees of Parliament – the Committee on Public Enterprises (COPE) and the Committee on Public Accounts (COPA). Each committee has 22 members, with eight from the Opposition.

While the COPA exercises oversight in the financial performance of state Institutions, the COPE is required ensure the observance of financial discipline in public corporations and semi-governmental bodies in which the government has a financial stake. The accounts of these organisations are audited by the Auditor-General and form the basis of the investigations of these two committees. They have the power to summon the relevant officials and such other people they need to obtain evidence from and call for documents. They report to Parliament and the recommendations contained in their reports are deemed to be directives to the respective corporations or statutory boards for due compliance.

These two committees have the power to summon before them and question any person, call for and examine any paper, book, record or other documents and to have access to stores and property.

The duty of the Committee is to report to Parliament on accounts examined, budgets and estimates, financial procedures, performance and management of corporations and other government business undertakings.

Notable investigations by COPE & COPA

In 2007, the COPE revealed that the privatisation process of the Sri Lanka Insurance Corporation took place in the year 2003 was irregular. As a result of a case filed in the Supreme Court challenging the privatisation of Sri Lanka Insurance Corporation, on 4 June 2009, the Supreme Court of Sri Lanka annulled the sale of Sri Lanka Insurance Corporation.

In August 2012, The Ceylon Petroleum Corporation was summoned to appear before a committee for investigations regarding alleged imports of substandard fuel. Following the probes from the Criminal Investigation Department (CID) and the Bribery Commission, President Mahinda Rajapaksa instructed his ministers to appoint a new chairman when the present corrupt heads were removed and to reconstitute all such boards of management in state institutions.

The Central Bank bond issue: In 2016 October, the COPE revealed that the Governor of the Central Bank Arjuna Mahendra should be held responsible for the bond scam and legal action should be taken against him. However, President Maithripala Sirisena announced that he had appointed a Commission of Inquiry to further investigate the case.

On April 23, 2021, the COPA summoned the Inland Revenue Department for an inquiry regarding the inordinate delay in collecting taxes amounting to billions of rupees. The meeting was fixed in the wake of disclosure of major shortcomings in the overall revenue collection process. The COPA pointed out that out of Rs 107 Bn. due to the government, only Rs 224 Mn had been recovered so far, and immediate measures were required to collect taxes and fines. At the same meeting, the COPA, having questioned the correctness of a list containing tax defaulters furnished by the Inland Revenue Department, emphasised the need to rectify the shortcomings. The COPA also questioned the feasibility of recovering taxes in terms of the data provided by the ‘Legacy’ and ‘RAMIS’ computer systems. At another COPA meeting held late March, 2021, it was revealed that in addition to their failure to recover taxes amounting to Rs 2,670 mn due from casinos, the Inland Revenue received 6,878 dishonored cheques to the tune of Rs 2,451,465,383.

That particular meeting was also told that the amount of collectable taxes in terms of the ‘Default Taxes (Special Provisions) Act No 16 of 2010 (certified on Dec 07, 2010) amounted to a staggering Rs 144.5 bn. 

The COPA and the Consultative Committee on Ports and Shipping also took up on March 9 and 24 the highly contentious issue of the Customs officers taking a big share of fines imposed on tax defaulters, both public and private sector. The COPA pointed out that the Customs took advantage of the provision that 50 per cent of the fines imposed on defaulters were shared among those involved in a particular detection. The COPA has discussed two specific issues in this regard. It pointed out that the allocation of 50 per cent of a fine received from the Sri Lanka Ports Authority (SLPA) for defaulting in respect of gantry cranes to Customs officers was a major problem, and focused on taking necessary measures in this regard after having discussed the matter with relevant authorities, including the Treasury Secretary S. R. Attygalle.

A COPA sub-committee is inquiring into revenue losses suffered over the years as a result of releasing vehicles imported for special purposes as dual-purpose vehicles. 

On April 22 and 23 this year, the COPE called the Sri Lanka Football Federation and the National Film Corporation.

The COPA pointed out that out of a Rs 205 mn fine imposed on Lanka Coal Company (Pvt) Ltd., for defrauding taxes, Rs 102.5 mn (50 per cent of the total amount) had been distributed among Customs officers as rewards and Rs 41 mn for their welfare (20 per cent) thereby leaving the government with only Rs 61.5 mn. The COPA directed Treasury Secretary Attygalle to conduct a fresh inquiry into this and take tangible measures to prevent similar malpractices in the future.

The COPA investigations have also revealed a massive racket in the registration of ‘dual purpose’ vehicles. It revealed that as a result of corrupt elements since 2013 registering vehicles imported for special purposes as ‘dual purpose’ vehicles the Treasury lost taxes amounting to Rs 220 mn.

Besides, the Treasury has been also deprived of taxes amounting to Rs 1.300 mn at the rate of Rs 3 mn each on 443 special vans brought to the country during 2010-2019 period.

The COPA also stated that the Customs had allowed the import of 10 vans and 414 lorries as special purpose vehicles during the 2010-2014 period, and imposed Rs 1.5 mn duty on a super luxury car instead of Rs 56 mn.

It revealed the loss of revenue to the tune of Rs 6.1 bn during 2013-2016 period due to the Customs adopting wrong procedures in respect of large quantities of palm oil imports by two enterprises. The watchdog committee has instructed the Customs to expedite measures to recover the dues from those companies.

These notable investigations by COPE and COPA show how far our Members of Parliament can probe the managerial efficiency and financial discipline of the government, its ministries, departments, Provincial Councils and Local Government authorities. But Standing Orders of the Parliament only provide for the appointment of one COPA and one COPE only. Out on 225 MPS only 44 MPs are allowed to serve in these two committees.

My suggestion:

The number of committees should be increased to ensure the observance of financial discipline in all government ministries Public Corporations and other Semi-Governmental bodies in which the Government has a financial stake. All MPs should be given an opportunity to serve on these committees.