By Lynn Ockersz
As the peaceful may recollect,
Yasser Arafat of PLO fame,
Who, for his AK-47,
An olive branch exchanged,
Knew the cementing power of Love,
For, he was at a Bethlehem mid-night mass,
To celebrate the Advent of the Christ Child.
House watchdog committees ascertain culpability of FM, Monetary Board
By Shamindra Ferdinando
The Committee on Public Finance (COPF), inquiring into financial meltdown recently, called several former and serving officials to ascertain their culpability as well as that of the institutions they served for the developing crisis.
Among them were former Governors of the Central Bank Prof. W.D. Lakshman (Dec 2019- Sept 2021), and Ajith Nivard Cabraal (Sept 2021-March 2022), Secretary to the President Dr. P.B. Jayasundera (Nov 2019-Dec 2021) and Treasury Secretary S.R. Attygalle (Nov 2019-April 2022), Sanjeeva Jayawardena P.C. (received appointment as a member of the Monetary Board in Feb 2020) and Dr. Ranee Jayamaha (the retired CB Deputy Governor received appointment to the Monetary Board in June 2020). It would be pertinent to mention that Attygalle earlier served a short stint as the Treasury Secretary (Ministry of Finance) between Oct. 31, 2018 and Dec. 18, 2018 during the constitutional coup staged by ex-President Maithripala Sirisena.
The term of office of an appointed member of the Monetary Board is six years and in the event of vacation of office by the appointed member, another person shall be appointed in his or her place to hold the office during the unexpired part of the term of office.
The COPF meeting took place on June 08. Dissident SLPP lawmaker Anura Priyadarshana Yapa chaired the meeting. CBSL Governor Dr. Nandalal Weerasinghe and Finance Secretary Mahinda Siriwardana, too, were present.
Attygalle didn’t mince his words when he squarely blamed the then Prime Minister Mahinda Rajapaksa, who also served as the Finance Minister (Nov 2019 to July 2021) for the controversial fiscal policy that had ruined the country. Attygalle declared that the government implemented the first Cabinet paper, dated Dec 04, 2019 presented by Premier Mahinda Rajapaksa.
The former Treasury Secretary, who also served in the Monetary Board till April this year, challenged the widely held view that abolition of a range of taxes, in line with Mahinda Rajapaksa’s fiscal policies, triggered the crisis. Attygalle asserted that the import restrictions, especially the ban on the importation of vehicles imposed at the onset of the Covid-19 eruption, and the economic contraction, resulted in the meltdown.
The COPF should seek an explanation from Attygalle, himself a former top Central Banker, having last served there as Deputy Governor, regarding the failure on the part of the Finance Ministry and the Monetary Board to review the decision to abolish taxes soon after the Covid-19 eruption. The Finance Ministry banned vehicle imports in March 2020 as part of the overall measures to manage the weak foreign currency reserves. Therefore, the Finance Ministry and the Monetary Board cannot absolve themselves of the blame for failing to take remedial measures.
The COPF specifically asked whether the Finance Ministry and the Monetary Board officials sought to advise the political leadership of the ground realities against taking such decisions. It emerged that they did nothing. The COPF proceedings revealed that in spite of a rapidly deteriorating financial situation, the Finance Ministry and Monetary Board mandarins failed to take remedial measures. The SLPP members in the COPF, too, should not forget that the change of tax policies had been in line with their 2019 presidential election manifesto ‘Vistas of Prosperity and Splendour’.
A disastrous manifesto
The SLPP made the following proposals:
a- Income tax on productive enterprises will be reduced from 28 to 18 percent.
b- The Economic Service Charge (ESC) and Withholding Tax (WHT) will be scrapped;
c- A simple value added tax of eight percent will be introduced, replacing both the current VAT of 15 percent and the Nation Building Tax (NBT) of two percent;
d- PAYE tax will be scrapped and personal income tax will be subject to a ceiling of 15 percent;
e- A five-year moratorium will be granted on taxes payable by agriculturists and small and medium enterprises;
f- Various taxes that contribute to the inefficiency, irregularities, corruption and lack of transparency of the tax system will be abandoned. Instead a special tax will be introduced for different categories of goods and services;
g- Import tariff on goods competing with domestically produced substitutes will be raised;
h- A simple taxation system will be introduced to cover annual vehicle registrations and charges for relevant annual services, replacing the cumbersome systems that prevail now;
i- Various taxes imposed on religious institutions will be scrapped;
j- A zero VAT scheme will be adopted in the case of businesses providing services to Tourist hotels and tourists, if they purchase over 60% of the food, raw materials, cloths and other consumer items locally;
k- Service charges levied on telephones and Internet will be reduced by 50%;
l- Special promotional schemes will be implemented to encourage foreign investments;
m- A tax-free package will be introduced to promote investment in identified subject areas;
n- A clear and uncomplicated system of taxing will be in place with the use of internet facilities, special software and other technological services;
O- Information Technology (IT) services will be totally free from taxes (Zero Tax), considering said industry as a major force in the national manufacturing process;
p- All the Sri Lankans and Foreigners, who bring Foreign exchange to Sri Lanka through consultancy services, are exempt from income tax.”
Dr. Athulasiri Kumara Samarakoon, Soosaiappu Neavis Morais and Dr. Mahim Mendis in a FR petition filed in terms of Articles 17 and 126 of the Constitution listed the above-mentioned points, in that order, as one of the primary reasons for the current crisis. Among the respondents are Prof. W.D. Lakshman, Ajith Nivard Cabraal, Dr. P.B. Jaysundera and S.R. Atygalle.
All of them earlier appeared before the COPF where the incumbent Governor of the Central Bank Dr. Nandalal Weerasinghe emphasized that officials should never engage in politics and should recognize the difference between them and politicians. Dr. Weerasinghe asserted that officials were duty bound to inform politicians if the decisions taken by the latter were wrong. The outspoken CBSL Chief declared that politicians alone shouldn’t be held accountable for the consequences of such wrong decisions. What Dr. Weerasinghe obviously meant was those who served in key positions at that time, too, were responsible for the current crisis. Dr. Weerasinghe, who had been asked to succeed Ajith Nivard Cabraal, in March, after the former suddenly announced his retirement, told the COPF, the officials’ claim that they had been unaware of the economy was on a wrong path for two years leading to the meltdown was not acceptable. Dr. Weerasinghe also strongly questioned the claim that economic policies had been implemented only on decisions taken by the political leadership.
Lawmakers present participating in the proceedings declared that the political leadership and the officials ignored their concerns as regards the economy raised at different occasions.
CBSL Governor Dr. Nandalal Weerasinghe before COPE on May 25, 2022. Finance Secretary Mahinda Siriwardana is on Dr. Weerasinghe’s right.
The COPF proceedings should be studied along with revelations made by Dr. Weerasinghe before the COPF and the COPE (Committee on Public Enterprises) on May 24 and May 25, respectively as well as lawmaker Ali Sabry’s shocking declaration on May 02 as regards the origins of the crisis. President’s Counsel Sabry discussed the issue in his capacity as the Finance Minister after having led the government delegation for talks with the IMF.
Appearing before the COPF, Dr. Weerasinghe disclosed that those who had been responsible for preparing budget estimates over the years deliberately deceived even the Parliament by providing unrealistic and inaccurate revenue estimates. The CB Governor explained how such practices further weakened the economy as decisions and allocations were made on the basis of fraudulent estimates.
The whole process had been nothing but a farce. Lawmaker Sabry on May 02 in a live interview with Swarnawahini, and Dr. Weerasinghe on May 25, named those responsible for the current crisis that has ruined the economy with unemployment at an unprecedented high. Sabry alleged that the Secretary to the Treasury, Governor of the Central Bank, and senior economic advisors to the President, misled the Cabinet as regards the economic situation. The National List member revealed how they repeatedly assured that the situation was well under control, in spite of difficulties while expressing confidence that issues could be successfully dealt with.
By the time the Central Bank floated the rupee in March this year even without bothering to inform the Cabinet-of-Ministers of its decision, irreparable damage had already been caused, Sabry said.
The COPF and COPE proceedings and MP Sabry’s interview in which he questioned the role of the Finance Minister have revealed the pathetic situation as regards public finance.
The MP has alleged that those who managed the national economy had prevented the country seeking IMF’s intervention well over a year back. Had President Gotabaya Rajapaksa and the Cabinet-of-Ministers received proper advice, Sri Lanka would not have been in the current predicament, Minister Sabry said.
Dr. Weerasinghe named those who refused to heed IMF warnings when he appeared before COPE on May 25. The role played by Mahinda Rajapaksa, Dr. P.B. Jayasundera and the Cabinet-of-Ministers were discussed during the proceedings with Finance Secretary Mahinda Siriwardana, too, helping to ascertain the environment in which the SLPP leadership operated.
Dr. Weerasinghe went to the extent of naming Dr. PBJ as the one who prevented the government seeking IMF’s intervention.
The Customs, Inland Revenue and the Excise Department responsible for revenue collection are run in a shoddy manner. In spite of the watchdog committees exposing glaring omissions and commissions by them that had caused revenue losses in billions of Rupees over the years, the political leadership hasn’t taken remedial measures. Committee reports paint an extremely bleak picture.
But what could be the most unforgivable sin is then Finance Minister Basil Rajapaksa joking about having himself used the illegal Havala/Undiyal system that completely shut down several billion dollars that should have legitimately come to Sri Lanka as in past years as remittances from our migratory workers, especially serving in West Asia. Even at the height of the COVID pandemic the country received about six to seven billion dollars from mainly those unappreciated poor Lankan workers slaving in those countries as mainly labourers and housemaids. Such money may not be enough to pay back the country’s USD 50 billion foreign debt. That money, however, would have ensured that the country had the few million dollars to clear a shipment of gas or other necessities, instead of having to beg all over the world.
Unfortunately, the Parliament seems incapable of taking corrective measures. The Parliament should explore the possibility of appointing, a smaller team, comprising members of COPE, COPF and the COPA (Committee on Public Accounts) to recommend remedial measures, including possible criminal prosecution of dual citizen Basil Rajapaksa for his many omissions and commissions, but especially for not applying the full weight of the law against those running the underground money transfer system, that has even robbed the education of our children.
Keeping the currency steady is the wish of any Finance Minister as otherwise in a country like Sri Lanka dependent on imports for many of its essentials, like milk food, wheat, etc., it would result in basics skyrocketing in price as experienced now and as former Finance Minister Ronnie de Mel also learnt it the hard way after allowing the rupee to devalue almost overnight by over 40 percent in the aftermath of opening up the economy to market forces after the victory of the UNP in 1977 with a staggering 4/5th majority in Parliament. It led to government workers staging a general strike demanding a Rs 10 wage increase, but was ruthlessly crushed by that regime.
A corrupt ministry
The Parliament needs to take tangible measures to restore public faith in the system. The Finance Ministry should be overhauled. Perhaps, the IMF, currently engaged in negotiations with the government, should look into the current system in place. The government can formulate an action plan on the basis of findings and recommendations made by the parliamentary watchdog committees. Perusal of proceedings of these committees reveals that the government hadn’t acted on their findings. The inordinate delay in taking action regarding the mysterious decision to reduce the duty on a kilo of white sugar from Rs 50 to 25 cents on Oct 13, 2020 without passing on its benefit to the people is a case in point as pointed out by the COPF Chairman Anura Priyadarshana Yapa, MP. It, however, cost the cash starved Treasury dearly in billions in lost revenue.
Mahinda Rajapaksa served as the Finance Minister at the time of the issuance of the relevant gazette notification. S.R. Attygalle had been the Finance Secretary. It would be pertinent to ask both MP Mahinda Rajapaksa and Attygalle who recommended the duty reduction.
Actually, the COPF should ask Attygalle to explain the circumstances leading to the issuance of that controversial gazette. As Dr. Weerasinghe pointed out recently the officials cannot absolve themselves of the responsibility for the highly questionable decisions taken by politicians.
Who benefited from the reduction of duty imposed on sugar? In fact, the parliamentary watchdog committees should undertake a comprehensive study. Perhaps, the Finance Ministry role in the Yugadanavi deal can be investigated. Sri Lanka finalized the Yugadanavi transaction with US based New Fortress Energy at midnight on Sept 17, 2021 against the backdrop of Basil Rajapaksa receiving the finance portfolio. The government also brought in retired controversial figure M.M.C. Ferdinando from Australia to assume the leadership at the CEB before making the final move. S.R. Attygalle played a critical role as the Secretary to the Finance Ministry. The SLPP had no qualms in going ahead with the agreement in spite of Vasudeva Nanayakkara, Wimal Weerawansa and Udaya Gammanpila challenging the transfer of 40 percent shares of the power station held by the Treasury among other concessions not fully revealed to the public.
The President’s Media Division (PMD) defended the agreement with the US energy firm. On the invitation of the then Presidential Spokesperson Kingsley Ratnayake, M.M.C. Ferdinando briefed the media of the usefulness of the US investment. It would be pertinent to mention that Ferdinando, who fled the country in the wake of Maithripala Sirisena’s triumph in 2015 returned from Australia after the change of government in Nov 2019. Ferdinando’s 2015, move should be examined against the backdrop of corruption accusations directed at him by civil society activists Rajith Keerthi Tennakoon and Attorney-at-Law Namal Rajapaksa. The lawyer lodged a complaint with the then anti-Corruption Committee Secretariat. There had also been a case in the Fort Magistrate Court regarding the import of coal for Lakvijaya coal-fired power plants at Norochcholai.
In spite of initial public interest, such major cases are often not pursued properly even by those initiating them possibly with ulterior motives. When The Island inquired, lawyer Namal Rajapaksa acknowledged not being aware of the developments of his own case. At the time of the Norochcholai project, Ferdinando had served as the Secretary to the Power Ministry. The unholy alliance between the Finance Ministry and monstrous institutions, such as the CEB, should be investigated and mechanism put in place to protect the public interest.
The controversy over President Gotabaya Rajapaksa’s alleged intervention on behalf of India’s Adani Group at PM Narendra Modi’s persistent request led to Ferdinando’s resignation recently. The disclosure made by Ferdinando at the COPE, his subsequent denial and a letter dated Nov 25, 2021 Ferdinando wrote to the then Treasury Secretary Attygalle exposing the horrific way business of the State is being conducted. Accountability and transparency seem to be the last thing in the minds of political leaders here.
Group formation and culture of Galle Face protesters
by Sena Thoradeniya
Galle Face Protesters (GFP) have brought the relationship between youth, politics and culture to the focus of cultural critics. Nobody has ventured into study this phenomenon in detail in the uprisings of 1971, 1988-89 and Eelam war, although fragmentary references were made into JVP’s post-1971 ‘Vimukthi Gee’ (of Nandana Marasinghe fame, assassinated by JVP/DJV; a stern warning for those upper class elements who pamper the GFP coining some adorable names such as ‘Aragalists’ and ‘Gotagamians’!) , Nanda Malini’s ‘Pawana’ and ‘Sathyaye Geethaya’ during JVP’s second insurrection and LTTE’s ‘Pongu Thamil Eluchchivila’ celebrations.
In this two-part article, we first discuss about formal and informal groups and characteristics of informal groups. In the second part we intend to discuss the culture of Galle Face Protesters arising as a blend of individual level variables of group members and group level variables.
Since saving space is more important, we, in this short piece, do not intend to define what is meant by youth, politics and especially culture. It is also not necessary to discuss the “political demands” of the GFP or what they understand by politics and how they interpret the current political situation, some are well known, some are in vague and undefined and others uncertain and concealed. The main focus of this article is on “Galle Face Culture”, which we do not believe that it will be sustained, developed or become a permanent feature in the cultural landscape of Sri Lanka, although we do not deny that some aspects of it can penetrate into the wider society. Some other arguments against this may arise, questioning our premise whether it is scientific to examine a culture among some loosely knitted individuals, not inhabiting a particular locality permanently. But some sort of a culture is discernible among groups of train travellers, parents who chaperon their children to school, students sitting next to each other in a classroom, devotees of Bacchus who habitually go to the same barroom, people living in one lane or adjoining apartments or different floors, etc. With the advent of Facebook, WhatsApp and other social media platforms another method of group formation receives our attention. Newspaper reports are in abundance of Facebook parties organised by people who have not met each other physically or engaged in face-to-face communication. It is common knowledge that the GF protest had originated with the work of some WhatsApp groups.
In Organisation Behaviour (OB), groups are defined as consisting of people who interact frequently over a period of time and who share similar interests, attitudes and see themselves as a group. Although a universal definition of groups does not exist, students who read this article are requested to refer how sociologists and management and OB theorists had defined groups, group formation and characteristics of groups as it is outside our scope.
There are two types of groups: formal and informal groups. Although the Galle Face protest has passed more than 60 days to this day and some occupy the Galle Face Green turning it into a “village”, according to Group Dynamics (area of study that is concerned with the interactions and forces between group members in a social situation), we still define it as an informal group. This informal group was spontaneously composed of likeminded people, as a result of interactions through social media platforms, attractions and a common need: chasing out GR. There is no dispute that the protesters have come from different economic, social and cultural backgrounds, making it a heterogenous mix of individuals. One of the many attributes of group formation is propinquity or spatial or geographical proximity of individual who join groups. We argue now with the advent of social media platforms, proximity described by earlier theorists has taken a new dimension; technological proximity had taken precedence and had become more active, effective and faster than physical proximity. Friendship has outweighed economic, political or cultural needs and other issues of group formation.
Theoretically speaking, age, gender, marital status, personality characteristics, values, attitudes, emotions, perceptions, ability levels and learning, motivation are the individual level variables they have brought into this informal group. They had to adjust themselves to group level variables such as group behaviour, group standards, communication patterns, leadership styles, power and politics and also conflicts, all integral components of a group. Their culture is determined by the interplay of these two types of variables.
It also can be defined as an open group having free entry as well as free exit which allows more diverse individuals to shape standards, attitudes, values and behaviours of the rest. People are attracted to informal groups for satisfaction of their needs (in this situation their needs are numerous: personal needs such as gaining recognition, status and pride,) and to share a common goal, “GotaGoHome”, basically an emotional response of anger. Individuals who experience this emotion seek others who have the same emotion. That is one reason for Galle Face Protesters for not being able to produce their own political leaders. In the initial stages, we observed that this group inclined to become structured, establishing their external networks, norms or rules of conduct. Emergence of informal leaders and spokespersons which were numerous was a part of this structure. This structure, also can be described as a part of group development through mutual acceptance and open communication; some members volunteering to undertake certain roles and assigning of roles to others by informal leaders, showing some sort of a division of labour.
As the Galle Face group is a large informal group, a “mixed clique” in management jargon, we tend to observe the emergence of sub-groups and contending forces with some intriguing names, each calmouring for leadership arousing internal conflicts; goals becoming inconsistent and unachievable. Theoretically, the emergence of leaders who are acceptable to all and maintaining cohesiveness in a large informal group like Galle Face Green is unattainable and all leaders who emerge in an informal group are informal leaders, who are not formally recognised by all. Imbalances have already occurred. Some self-appointed leaders were chased out attaching the ignominious label “Left”. This leadership crisis was the reason behind it becoming an easy prey for organised political parties.
With the ascendance of Ranil Wickremesinghe, it lost its steam, compelling many to decamp. At present the so-called “village” has turned into an urban ghetto, which shapes its culture now; vagabonds occupy some tents and the communal kitchen has become a “dana shalawa” to many who search for food. Only future will tell us who were the real architects of the Galle Face protest, who benefited from it and who were taken for a ride!
(The writer in his long career had taught Management, Organisation Behaviour and Research Methodology to undergraduates, Senior Managers and Senior Officers of the Tri Forces, although his interests are different.)
By Lynn Ockersz
For the itchy master class,
Presiding over the imperiled isle,
Now running out of excuses,
The stony-faced armed men,
In khaki and camouflage,
Guarding its glittery high-rises,
Offer some sort of comfort,
That hanging-in there in power,
Until the crisis blows over,
Is the best of their options,
But out in the restive streets,
Frenzied anger is boiling over,
And the countdown seems on,
For the mounting face-off,
Between harried men and women,
Crying shrilly for Bread and fuel,
And spectral figures sporting Ak-47s,
To erupt in a bloody convulsion,
That could render the fabled Pearl,
A no-go zone of self- destruction.
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