Govt. caught with fingers in the sugar jar
By Shamindra Ferdinando
The parliamentary Opposition, having plunged into disarray, due to its unpardonable sins of the recent past, shadowed by a string of humiliating electoral debacles, starting with the local government poll of 2018, followed by the 2019 presidential and 2020 general elections, has received a massive adrenaline boost by way of the huge sugar duty scam. It has brought down to earth, once again the high-riding Sri Lanka Podujana Peramuna (SLPP) government, at the worst possible time, with the country reeling economically, due to the continuing Covid-19 pandemic.
The alleged fraud has dealt a severe blow to the SLPP that enjoys a near two-thirds majority in Parliament.
The accusations, as regards the sugar scam, received credence in the wake of the all-party Committee on Public Finance (COPF) declaring, in no uncertain terms, that the government suffered a colossal loss of revenue. The COPF made the declaration on Feb 25, 2021. This was consequent to the COPF calling for a comprehensive report on January 5, 2021, on the alleged sugar duty scam, from the Finance Ministry. The Finance Ministry report was received in the second week of March 2021 (‘Massive revenue loss: Eyebrows raised over inordinate delay in responding to House query,’ with strap line ‘SLPP members say sugar deal black mark on govt’-The Island, March 4, 2021)
Chairman of the COPF, Anura Priyadarshana Yapa, didn’t mince his words when he publicly acknowledged the staggering loss of revenue. State Minister Vidura Wickremanayake and Nalin Fernando, MP, both members of the SLPP, and members of the COPF, had no qualms in declaring, at the Committee meeting, on Feb 25, 2021, the alleged sugar duty scam was nothing but a black mark on the government.
The JVP, that exposed the scam, in Dec 2020, spearheaded a withering attack on the government. JVP leader Anura Kumara Dissanayake, on Dec 12, 2020, named all those who had been allegedly involved in the corrupt deal. Obviously, the SLPP never expected the sugar controversy to take such a nasty turn. Both the JVP and the main Opposition party, the Samagi Jana Balavegaya (SJB), exploited the situation to the hilt. The COPF, chaired by Kurunegala District lawmaker Yapa, threw its weight behind the accusations.
Defending the indefensible!
Last Friday, former JVP National List MP Sunil Handunnetti, on behalf of the Marxist party, filed a fundamental rights application against the sugar duty scam. The exposure of the unprecedented sugar duty scam turned the tables on the government. Under pressure, the government, a few hours after the JVP moved the Supreme Court, hastily called a media briefing, at the Finance Ministry, to explain the controversial sugar duty reduction. The responsibility of countering the accusations fell on Finance Secretary S.R. Attygalle. Defending the indefensible is quite a difficult task.
The previous yahapalana government perpetrated the Treasury bond scams, during the tenure of Attygalle’s predecessor, Dr. R.H.S. Samaratunga.
Attygalle received the appointment as the Secretary to the Treasury and Ministry of Finance, effective 19th November, 2019. Attygalle’s was one of the first appointments made in the wake of Gotabaya Rajapaksa’s victory at the presidential election. Before the latest appointment, Attygalle served as the Deputy Governor of the Central Bank of Sri Lanka (CBSL). Attygalle also held the position of Assistant Governor of the CBSL and had been released to the Ministry of Finance to serve as the Deputy Secretary to the Treasury. It is pertinent to mention that Attygalle received the appointment, as the Secretary to the Treasury and the Ministry of Finance, of the 52-day government (31st October, 2018 to 18th December, 2018) declared illegal by the Supreme Court. That appointment was made in the wake of a constitutional coup. The then President Maithripala Sirisena’s political project failed. Subsequently, Dr. Samaratunga was re-appointed.
In spite of the fact the COPF, being headed by an SLPPer, and it being packed with ruling party members, the government obviously didn’t receive the anticipated protection. The SLPP parliamentary group appeared to have failed to recognize the threat. It proved that it is no longer a case of ‘right or wrong my party’ line of thinking. Having turned a blind eye to the rapidly developing scenario, the SLPP ignored the Finance Commission, calling for a report on the alleged sugar tax scam, from the Finance Ministry. The SLPP parliamentary group disregarded government lawmaker Yapa’s declaration, on Feb 25, 2021, that the report was yet to be submitted. The writer, on March 3, 2021, sought an explanation from lawmaker Yapa as regards the inordinate delay in the Finance Ministry’s response. The former minister explained the report was expected in the following week. The MP was of the view that in spite of the delay, the Finance Ministry would definitely respond.
Although the COPF received the report and was taken up for discussion the following week, Parliament conveniently refrained from issuing a media release on the latest Finance Commission meeting, chaired by lawmaker Yapa. By then, the SLPP realized the alleged sugar tax scam had caused irreparable damage and sought to take some remedial measures. However, Finance Secretary Attygalle’s lackluster response to the alleged scam clearly boomeranged. The JVP and the SJB compared the alleged sugar duty scam with the Treasury bond scams, perpetrated by the UNP, in Feb 2015 and March 2016. They alleged that the losses suffered by the government, as a result of the alleged sugar tax scam, far exceeded the Treasury bond scams. The government struggled to cope up with the allegations. Remedial measures seemed to be futile against the backdrop of the Finance Commission, headed by a senior government member squarely blaming the incumbent administration for the situation.
JVP leader Anura Dissanayake, in his Dec 12, 2020 speech, delivered in Parliament, explained how the alleged fraud took place. Those who watched the explosive speech, online, certainly expected the government to set the record straight. The government so far failed, both in and out of Parliament, to successfully dismiss the JVP allegations. The Treasury Secretary’s response to these accusations obviously worsened the situation.
The COPF, the Committee on Public Enterprises (COPE) and the Committee on Public Accounts (COPA), chaired by SLPP lawmakers, Anura Priyadarshana Yapa, Prof. Charitha Herath and Prof. Tissa Vitharana, have responded magnificently to the daunting task of tackling corruption. There hadn’t been a previous instance of the Finance Commission acting swiftly on allegations as regards such a major fraud. The Opposition, therefore, should recognize the pivotal importance of the role played by anti-corruption watchdogs.
How long will the SLPP let COPF
do its job?
The Island sought an explanation from COPF member, Dr. Harsha de Silva, MP (SJB), regarding the work undertaken by parliamentary watchdog bodies.
The Island: The SJB wanted you to head COPA, COPF and COPE. Many feared the government would place all three under its members to hide corrupt practices. Against that background, how do you see the work carried out by the three outfits? COPF acted courageously in respect of the sugar deal. COPE revealed many corrupt deals that had taken place since 2013. Do you think they are responding to the situation well?
MP Harsha de Silva:
I was nominated to head the COPF. That’s all. The Standing Orders specifically mention that the COPF must be headed by a member of the Opposition. But the government overruled it, using their majority. They appointed MP Anura Priyadarshana Yapa to head the COPF. As a person, he has earned my respect. In fact, he has been quite forthright thus far. It is he who requested the Ministry of Finance to prepare a report on the recent issue with respect to the reduction of the sugar duty. His objective was to determine if the duty reduction was actually passed on to consumers or not. Now the whole country is aware how, while the Treasury had to forego much needed revenue to the tune of Rs 15.9b, a bulk of that benefit ended up with one importer, in particular, and not with consumers, who should have been its beneficiaries. That is why I want the COPF to order a forensic audit to be conducted by the Auditor General. That way we will be able to determine exactly what happened. And then take it forward from there. But it is not about him as a person. It is how long the SLPP will let the COPF do its job. Its actual mandate is to keep an eye on public finance as a whole; revenue, expenditure and loans and debt, etc., of the government. A classic case is when I questioned the Ministry of Finance on their budget figures for 2020 at the COPF. Specifically the COPF is mandated to assess the suitability of assumptions made. There was a huge uproar and they said their estimates on growth and thus the resulting estimates of the budget deficit and debt were accurate. And they stuck to their figures. But we will soon see the real figures as they will have to be released soon. And we will see how they mislead the COPF and the country. So, there it is. The objective of the COPF is to create checks and balances in the nation’s economic management. That’s what a strong legislature is supposed to do. But what we have is a weak legislature where the government controls the COPF, in addition to the COPE and the COPA.”
A post-war pledge
Three days after the eradication of the LTTE, on the banks of the Nanthikadal lagoon, the then President Mahinda Rajapaksa assured that their priority would be to tackle waste and corruption. The promise was made at the parliamentary grounds, on May 22, 2009. President Mahinda Rajapaksa warned members of the government that the war against the LTTE would no longer serve as a shield, in face of public criticism. President Mahinda Rajapaksa acknowledged that the war wouldn’t be an excuse even for him. The Commander-in-Chief vowed that law enforcement agencies would now hunt for robber barons. Amidst the applause of the gathering, the President vowed that he would neutralize waste and corruption the way he crushed LTTE terrorism (President declares war on waste and corruption – The Sunday Island, May 24, 2009). Unfortunately, the situation has deteriorated to such an extent; the CBSL was robbed twice in 2015 and 2016. The frauds were perpetrated by no less a person than the Governor of the CBSL Arjuna Mahendran, a Singaporean, and a personal friend of the then Prime Minister Ranil Wickremesinghe. In spite of repeated assurances, the SLPP hadn’t been able to apprehend Mahendran, widely believed to be living in Singapore, perhaps not.
Those who had remained silent, at the time of the Treasury bond scams, now allege the sugar duty scam caused a much bigger revenue loss. Successive governments engaged in corruption with impunity. Mahendran’s successor, Dr. Indrajith Coomaraswamy, lucidly explained the status of Sri Lanka’s economy before the Presidential Commission of Inquiry (PCol) that probed irregularities at SriLankan Airlines, SriLankan Catering and Mihin Lanka. The statement couldn’t have been made at a better time for those who expected a genuine change in the political environment. Unfortunately, the media, pathetically, failed to provide sufficient coverage to, undoubtedly, the most important statement made by a respected public official, in the recent past, on any issue.
Dr. Coomaraswamy told the PCol that the country was facing a non-virtuous cycle of debt and it was a very fragile situation which could even lead to a debt crisis. “Of course, my colleagues, in the debt department, have plans and the capability to manage it. But it’s the duty of every citizen to act responsibly as regards the government policy,” he told the PCol. Dr. Coomaraswamy emphasized that people should elect MPs who were prudent enough to handle fiscal and monetary matters of the country. “I am not referring to any government, but it’s been the case ever since independence.”
Who abused Finance Ministry?
The CBSL made quite a startling revelation on Friday, July 26, 2019, before the Parliamentary Select Committee (PSC) probing the Easter Sunday attacks.
The CBSL team comprised the Governor of the Central Bank Indrajit Coomaraswamy, Director of Financial Intelligence Unit D.M. Rupasinghe, and Director of the Department of Supervision of Non-Bank Financial Institutions R.R. Jayaratne. Rupasinghe testified in-camera on a request made by Dr. Coomaraswamy.
Jayaratne and Dr. Coomaraswamy set the record straight as regards the Finance Act of 2017, after the then Power, Energy and Business Development Minister, Ravi Karunanayake, challenged CBSL condemnation of the Finance Act. Having stated that the Batticaloa Campus Limited and the Heera Foundation had received funds from Saudi Arabia on seven and 15 occasions, respectively, Jayaratne didn’t mince his words when he declared the new Act weakened the CBSL regulatory role, vis-a-vis illegal transactions.
The PSC probed M.L.A.M. Hizbullah over clandestine money transactions, amidst accusations that both Batticaloa Campus Limited and the Heera Foundation were involved with the National Thowheed Jamaat (NTJ), responsible for the Easter Sunday attacks. At the time of the Easter Sunday attacks, Hizbullah functioned as the Governor of the Eastern Province and he now serves the current Parliament as a UPFA National List member. Hizbullah moved to the East, in early January, 2019.
M.A. Sumanthiran, Chairman of the COPF, was present on the panel of lawmakers at the time the CBSL made the shocking revelation.
When Jayaratne explained as to how the Exchange Control Act, introduced by the UNP-led government, had impeded the CBSL and was weaker than the one previously in operation, Ravi Karunanayake, the one-time Finance Minister, had the audacity to challenge the CBSL.
Where does it say such transactions cannot be inquired into in terms of the new Act?
Jayaratne: In accordance with the 2017 Exchange Control Act, Section 30, action cannot be taken.
You prepared that Act. Why are you pretending as if you don’t know anything, about it? The CBSL amended it several times and sent it back.
Perhaps Jayaratne could have faced a ministerial onslaught if not for Dr. Coomaraswamy’s swift intervention. Had Dr. Coomaraswamy opted to remain silent, Jayaratne, probably would have had to suffer in silence, unable to talk back to a powerful Minister
No Sir. The Act actually was not drafted by us.
No Sir. It was done outside. We were actually very upset about it. We were not included. That was drafted without the CBSL being involved. We were asked to comment on it
JVP MP Dr. Nalinda Jayatissa: If the Batticaloa Campus last received money in 2017, Hizbullah was aware of the new Act being drafted.
It could have had happened.
Present Act does not at least interpret what it meant by wrong.
Unauthorized money transactions were taking place all over the country. Foreign currencies are kept illegally. Transactions do not come into the official banking system, not even one USD.
The exchange between Karunanayake and the CBSL erupted when lawmaker Ashu Marasinghe, sought a clarification as regards the difference in the current and the previous Exchange Control Acts.
Chief of the COPF Sumanthiran remained silent during the exchange between Karunanayake and the CBSL.
The circumstances in which the Finance Act had been introduced have been disputed by no less a person than the CBSL Governor. It would be pertinent to recall the advice given by Dr. Coomaraswamy to the electorate, in late 2018. Dr. Coomaraswamy issued the advice before President Maithripala Sirisena dissolved Parliament, at midnight, on Nov 09, 2018, following the sacking of Premier Ranil Wickremesinghe.
Examination of statements in Sinhala, Tamil and English, issued by the Communications Department of Parliament, pertaining to the COPE, the COPA and the COPF, since the last general election, would reveal a pathetic state of affairs as far as the national economy is concerned. The statements have revealed an extremely dangerous trend with ministries and various institutions responsible for ensuring checks and balances, undermining the national economy. Revelations pertaining to Customs are quite disturbing and the failure on the part of the COPE, the COPA and the COPF to inquire into serious allegations within a reasonable period. The failure, perhaps, deliberately facilitated fraud, corruption and irregularities over the years. Last week, Parliament revealed a shocking case of corruption involving Customs and Access International (Pvt) Ltd that had taken place in 2013.
An investigation, conducted by the COPA, has revealed that the government suffered a loss of Rs 60 mn due to irregularities involving the Customs and Access International (Pvt) Ltd in the Eastern Province Water Development Project. The COPA revealed at the Committee on Public Accounts held in Parliament recently that the government had to pay an additional amount of Rs. 62,499,656 due to irregularities in the importation of DI pipes and fittings for the Eastern Province Water Development Project, implemented in 2013, with the assistance of the Japan International Cooperation Agency (JAICA). Revelations during the COPA, the COPE and the COPF proceedings are only tip of an iceberg.
Growing foreign dependency and India’s USD 4 bn lifeline
By Shamindra Ferdinando
The Japanese embassy and UNICEF (United Nations Children’s Fund, previously known as United Nations International Children’s Emergency Fund), on 16 March, 2023, issued a joint statement that dealt with the impact the developing political-economic-social crisis is having on the poor in Sri Lanka.
The statement focused on the suffering of the children and measures taken by UNICEF, in consultation with the Governments of Japan and Sri Lanka, to provide relief to the needy.
However, what really captured public attention was the declaration made by the Japanese Ambassador, in Colombo, Mizukoshi Hideak, that with the latest contribution, amounting to USD 1.8 mn, the total Japanese financial assistance, provided through UNICEF alone, exceeded USD 3.8 mn, since the beginning of last year. That is definitely a significant package provided through a single UN agency, particularly against the backdrop of the unceremonious cancellation of the Japan- funded Light Rail Transit (LRT) project, in late Sept., 2020, by the Gotabaya Rajapaksa Government.
The directive, in this regard, was issued on 21 Sept., 2020, by Dr. P. B. Jayasundera, in his capacity as Secretary to the President, to the then Transport Secretary, Monti Ranatunga. That move ruined Sri Lanka’s relations with Japan.
Whoever advised the then President Gotabaya Rajapaksa to terminate the project, without consulting Japan, as head of the Cabinet-of-Ministers, he couldn’t absolve himself of the responsibility for the ruination of vital relationship with Tokyo. Had it not been the case, Japan, most probably, would have delivered a substantial assistance to Sri Lanka, at the onset of the ongoing unprecedented crisis.
Sri Lanka made a failed bid to secure as much as USD 3.5 bn loan from Japan, during the tenure of Sanjiv Gunasekara as Sri Lanka’s Ambassador in Tokyo. Gunasekara, a close associate of President Gotabaya Rajapaksa, resigned in the wake of the 09 May, 2022, violence, that gave a turbo boost to the campaign against his government.
Unlike Japan, India provided direct aid in various forms to Sri Lanka, struggling to cope up with what became an insurmountable crisis to overcome on our own. India has repeatedly declared that the continuing assistance is in line with Premier Narendra Modi’s much touted ‘Neighbourhood First’ policy. Sri Lanka received concessional credit facility, amounting to USD 1 bn, in March last year. In addition to that, by the second week of March this year, Sri Lanka received other lines of credit, worth over USD 3 bn. Therefore, the total Indian assistance is worth over USD 4 bn, a staggering amount as Sri Lanka’s debt before the Japanese and Indian interventions stood at over USD 53 bn. Indian intervention cannot be compared, under any circumstances, with assistance provided by any other country.
The Indian assistance is of immense importance as the International Monetary Fund (IMF), after much deliberation, promised USD 2.9 bn over a period of four years. The delay on the part of China to provide an assurance as regards debt-restructuring support, hindered the finalization of the tripartite agreement involving Sri Lanka, creditors and IMF. Finally, China gave that assurance, in writing, early this month.
The situation was so precarious, Sri Lanka couldn’t have even provided the free text books that have been given, annually, to the student population ,from the time of the JRJ regime. Those who had been at the helm of political power, over the past three decades, to varying degrees, ruined the economy, and, by 2021/2022, Sri Lanka was unable to provide even the basic requirements, like cooking gas, kerosene, petrol, etc., as even remittances from our expatriate workers, which in the past amounted to about seven billion dollars per year, dropped drastically due to the illegal underground banking system, hawala/undiyal, hijacking much of it from the normal banks. The government didn’t have the means to provide school text books for the 2023 academic year. In consultation with India, of the USD 1 bn concessional credit facility, over USD 10 mn was utilized by the State Printing Corporation, and private importers, to procure printing paper and other material from India. India met 45% (four mn students) of the total requirement. Indian High Commissioner Gopal Baglay visited the SPC, on 09 March, 2023, to dispatch a consignment of textbooks to schools. Education Minister Dr. Susil Premjayantha joined Baglay. The Indian High Commission statement, issued two days later,, was aptly titled ‘India’s support for text books investment in Sri Lanka’s future.’
The government and the Opposition should be ashamed of their failure to provide for the children’s need.
Perhaps, a Parliamentary Select Committee (PSC) should be appointed to examine the circumstances leading to Sri Lanka’s bankruptcy status. Decades of utterly irresponsible management of the economy, coupled with an explosive mixture of causes – waste, corruption and irregularities – caused the current crisis.
Political parties, represented in Parliament, are responsible for the continuing crisis, to varying degrees.
Controversy over ISBs
The Island discussed some of the issues at hand in last week’s midweek piece, headlined ‘All praise for Lanka’s saviours!
What Dr. Coomaraswamy didn’t say was that as the CB Governor, he was also directly responsible for the Yahapalana government borrowing a record USD 12.5 bn from the international bond market, at high interest rates, from private lenders, primarily in the West. So what did that government achieve with such huge borrowings? All that the Yahapalana regime achieved, with all that money, we cannot see, except to lay the foundation for the current debt crisis?
Our comment on the basis of recent claims that the Governor of the Central Bank, Dr. Coomaraswamy (2016-2019), only told one side of the truth, attracted responses from several parties, including the Central Bank.
Consequently, the writer discussed the borrowing of USD 12.5 bn, and related matters, and was told the following: First, it is important to point out that the Governor, Central Bank, has no authority to approve or undertake any borrowing on behalf of the government. The borrowing limit, in any given year, is set by Parliament. Therefore, the government cannot borrow beyond the limit set by Parliament. In addition, all external borrowing has to be approved by the Finance Minister, and the Cabinet of Ministers. The Governor and the CBSL only have an advisory role. On ISBs, they have marketing and issuance as additional responsibilities once the Cabinet approved the transaction.
It is also important to recognize that ISBs are only one channel for external commercial borrowings. Others include short-term SWAPs, foreign term loans/syndicated loans and external flows into government rupee securities. The article dealt with only one instrument, having ignored the switching that was undertaken during 2015-19 to increase the maturity and reduce the cost of foreign borrowing.
As regards the USD 10 bn increase in ISBs outstanding during 2015-19, USD 5 bn of this increase can be attributed to switching away from shorter term (one year or less) and more expensive SWAPs and highly volatile foreign portfolio investment (hot money) in Government rupee securities to longer term (5 and 10 years) and less costly ISBs. SWAPs were reduced from approximately USD 2.5 bn to USD 500 mn.
Volatile and foreign investment in government rupee securities was reduced from USD 3.5 bn to USD 600 mn. In addition, during the course of 2019, a second ISB of USD 2 bn was issued to create a stronger buffer of external reserves to address the inevitable increase in uncertainty going into elections due shortly thereafter. (The money required for 2019 had been raised through an ISB, issued in March 2019.)
So about USD 7 bn of the USD 10 bn increase in the stock of ISBs outstanding, during 2015-19 may be attributed to increasing the stability and reducing the cost of the ISBs outstanding by switching instruments and raising the buffer provided by external reserves prior to a period of uncertainty, associated with elections.
The remaining increase of USD 3 bn may be partly attributed to the fact that borrowing incurred earlier had not resulted in a sufficient increase and/or saving of foreign exchange. Hence money had to be borrowed to repay debt incurred earlier. In fact, Verite Research found that 89 percent of external debt, repaid during 2015-19, could be accounted for by liabilities incurred prior to 2015.
The adverse debt dynamics were recognized and the Medium Term Debt Management Strategy was published in April 2019 to chart the way to sustainability. In addition, the Active Liability Management Act (2018) was introduced to expand the tools available to the CBSL for managing external debt sustainably. The CBSL, as the economic adviser to the Government, also advocated that there should be a primary surplus in the budget and that non-debt creating inflows (such as exports, remittances, tourism proceeds, FDI, inflows into the CSE and government securities) should be increased to enhance the capacity to service debt while supporting the level of imports necessary to achieve the growth potential of the economy.
They also pointed out that only one of the ISBs, issued during 2015-19, has been settled to date. This amounted to USD 500mn. They expressed the view that it is not possible to sustain the argument that servicing ISBs, incurred during 2015-19 ,led to the standstill in debt repayments in April 2023.
Treasury bond scams and tax cuts
Sweeping tax concessions to the rich and reduction of VAT, that had been introduced by President Gotabaya Rajapaksa’s government to encourage business in 2019/2020, escalated the financial crisis, leading to the declaration of the state of bankruptcy, two years later. No one in the Gotabaya Rajapaksa’s cabinet dared to challenge such far reaching tax concessions and VAT reduction.
How the loss of as much as Rs 600 bn in revenue, as alleged by the Opposition ,due to tax concessions and reduction of VAT, contributed to the current crisis, should be examined, also taking into consideration (1) Treasury bond scams perpetrated in Feb, 2015 and March 2016 at a time the CBSL has been under the then Prime Minister Ranil Wickremesinghe, in his capacity as Minister of Policy Planning and Economic Affairs (2) Enactment of new Foreign Exchange Act in 2017 in the wake of Treasury bond scams. Critics say the repealing of time-tested exchange control law that has been in place for decades paved the way for exporters to ‘park’ export proceeds overseas. Of the 225 MPs, 94 voted for the new law whereas 18 voted against. In spite of Justice Minister, Dr. Wijeyadasa Rajapakse, PC, taking up this issue, both in and outside Parliament, remedial measures hasn’t been taken, to date. The Finance Ministry owed an explanation as to how it intended to compel the exporters to bring back export proceeds (3) Continuing public-private sector partnership in corrupt practices, particularly mis-invoicing (under invoicing and over invoicing of imports/exports) (4) Pivithuru Hela Urumaya leader Udaya Gammanpila, MP, has moved the Supreme Court against the Central Bank Bill. The Attorney-at-Law alleged that the new law violated Article 3 and 4 of the Constitution hence needing the approval of the people at a referendum. In addition to Gammanpila, Dr. Gunadasa Amarasekera and Jathika Nidahas Peramuna leader Wimal Weerawansa, too, moved the Supreme Court in terms of the Article 121 against the Bill titled ‘Central Bank of Sri Lanka.’ Former JVP MP Wasantha Samarasinghe, on behalf of the Jathika Jana Balavegaya (JJB), too, moved the Supreme Court in this regard.
A warning from Hanke
The country is in a bind. In spite of the execution of the agreement with the IMF later this month, the situation remains dicey. The absence of economic recovery plan continues to cause further instability.
Therefore, the government and the Opposition should seek a consensus on a national action plan, even if Local Government polls cannot be conducted in late April, regardless of the Supreme Court intervention.
Steve Hanke, Professor of Applied Economics, at Johns Hopkins University, in the USA, recently issued a dire warning to Sri Lanka. Appearing on CNBC’s ‘Squawk Box Asia,’ Prof. Hanke declared Sri Lanka needs institutional reforms in order to achieve long-term debt sustainability.
Referring to Sri Lanka and what was described as emerging markets (Argentina and Montenegro), where he played a key role in establishing new currency regime, former economic advisor to US President Ronald Reagan warned “Unless you change the institutions and the rules of the game, governing these countries, they’re always going to remain in the same … situation that they’ve been in for a long time.”
Prof. Hanke added: “In fact, most of the personalities, involved in Sri Lanka ,at the high level, are exactly the same as they’ve been for years. So nothing has changed.”
In other words, those who have ruined Sri Lanka are spearheading the economic recovery process. The American is spot on. Sri Lanka is in a pathetic situation. Those who had systematically brought Sri Lanka to its knees, by pursuing ill-fated policies, emerged as its saviours. That is the bitter truth. The role of the executive, legislature, and judiciary, needs to be examined. Those who have moved the Supreme Court against the Bill, titled ‘Central Bank of Sri Lanka,’ have quite conveniently forgotten how the Yahapalana government, and Central Bank, twice perpetrated Treasury bond scams. What would have Prof. Hanke said if CNBC raised Treasury bonds scams during ‘Squawk Box Asia.’
If not for Deepa Seneviratne, the then head of Public Debt Department, Governor Arjuna Mahendran’s role couldn’t have been proved. Former Auditor General Gamini Wijesinghe said so at an event organized by the Colombo Municipal Council years ago.
Sri Lanka cannot forget Prof. Hanke’s remark in the CNBC programme. “You have to remember that we have a country that since 1965 has had 16 IMF programmes and they’ve all failed. You get temporary relief in anticipation of a bailout. But in the long run … none of these IMF programmes work.”
It would be pertinent to briefly examine how interested parties brazenly protected perpetrators of the Treasury bond scams.
Having named Mahendran as the Governor, regardless of the opposition from President Maithripala Sirisena, those planning to commit the first daylight robbery of the Central Bank moved Deepa Seneviratne to the Public Debt Department as its head, in spite of her not having had any previous experience in the particular division. It seems they had obviously felt comfortable in having a lady officer there they thought they could manipulate her to suit their need. But Seneviratne turned tables on the bond thieves by putting up a note to register her strong opposition to Mahendran’s move. She should have been rewarded for her fearless stand with at least a national honour if not an international one, even from bodies like the UN, the Transparency International, Amnesty International, etc. But it seems that even these international busy bodies have their own political angles.
It would be of pivotal importance to keep in mind that President Sirisena appointed a Commission of Inquiry (CoI) in January 2017, about 10 months after the second robbery, and two years after the first.
The Commission comprised Justice K.T. Chitrasiri, the late Justice P S Jayawardena and retired Deputy Auditor General V. Kandasamy. Sumathipala Udugamsuriya functioned as its Secretary. CoI issued a devastating report that implicated Perpetual Treasuries Limited (PTL) in the Treasury bond scams.
President Sirisena went to the extent of dissolving Parliament, in June 2015, to prevent the Committee on Public Enterprises (COPE) tabling its report on the first bond scam. SLFP leader Sirisena owes an explanation. Justice Chitrasiri’s CoI didn’t inquire into that aspect. Sri Lanka’s response to waste, corruption, irregularities and mismanagement is baffling. Let me end this piece reminding how the Bar Association of Sri Lanka (BASL) secured a substantial sponsorship from Perpetual Treasuries Limited (PTL) deeply mired in a bond scam, in 2016, for the Law Asia Conference during the tenure of its then President Geoffrey Alagaratnam, PC. The BASL never explained why it obtained PTL sponsorship even after the exposure of Treasury bond scams. That partnership also escaped the CoI. The rest is history.
Knowing what is now happening to the US economy with a string of bank failures and unprecedented bailouts, especially due to hoodoo economics it introduced in recent decades, like repeated quantitative easing (blindly printing trillions of dollars leading many to say the dollar is now only good as toilet paper) that has been practiced to ensure its world hegemony, the whole world might be hit with bank failures and even by a depression worse than the one that befell with the stock market crash of 1929. Already the contagion has spread to Europe with some leading banks there also requiring help.
Washington’s debt now stands at USD 31 trillion and climbing, but our own debt burden is still under USD 55 billion. So if we can get our exporters, who have stashed export earnings abroad, to bring them back, the picture here will not be as scary as it is made out to be. Even Minister Wijeyadasa Rajapakse has said that our export proceeds that have been parked overseas is in the region of USD 55 billion.
Soonwe will start receiving the IMF bailout, but our economic whiz kids have not done anything to plug the massive foreign exchange leak that has been freely draining foreign currency from the country, since the nineties, by way of private foreign exchange dealers who have been allowed to sell foreign exchange to any Tom, Dick and Harry, including drug dealers, to take their sales proceeds out of the country!
We would also like to ask the relevant authorities what they have done to recover monies stashed abroad by Lankans illegally that were exposed in great detail by the likes of Panama Papers and Pandora Papers.
A Miscellany of Thought
N. A. de S. Amaratunga (2022)
A Review by G. H. Peiris
I cannot claim to have the scholarly competence to place under critical scrutiny all items in this collection of writings authored by Professor N. A. de S. Amaratunga, and published in The Island from time to time since the early years of the present century. Accordingly, this ‘review’ is no more than an attempt to convey to a wide readership my gratitude for what I have learnt from Professor Amaratunga’s insights on a series of metaphysical and secular issues that have figured prominently during the recent past in the arena of debate and discussion among our intellectual elite, my appreciation of his rational perceptions and his subtle banter in responding to bizarre elements in our public affairs.
As a brief introduction to the author I should state that Professor Amaratunga’s career record is featured by several decades of distinguished and dedicated service to the University of Peradeniya in teaching, research and clinical work. Acquiring advanced skills in the field of ‘Maxillofacial Surgery’, he has provided physical and psychological relief of life-long impact to thousands of patients. He is also credited to have trained several of his junior colleagues in the Faculty of Dental Science, had has served as its Dean. The offer he received from the Peradeniya University of the Prestigious Award of the ‘Degree of Doctor of Science’ is testimony to his eminence in Sri Lanka’s community of scholars and professionals.
What probably enhances Professor Amaratunga’s status among the intellectual elite of Sri Lanka is the fact that his talents, interests, and concerns have not been confined to professional expertise. He has authored several creative writings in Sinhala which the cognoscenti place at par with the best works of that genre. More relevant than all else to the present ‘commentary’ is his capacity for elucidating the essence of certain complex metaphysical issues – especially those of Buddhist philosophy ‒ with the same clarity of thought seen in his contributions to media forums on current affairs.
In his ‘Introduction’ to the volume Professor Amaratunga makes a categorical statement regarding the paradigmatic guidelines of his ‘thoughts’. They are rendered below in abridged form as follows:
(a) The distinctive elements of our island civilisation are derived from Theravada Buddhism and the Sinhala language.
(b) The leadership of Sri Lanka’s mainstream politics since the termination of British rule in the mid-20th century has continued to be impaired by a cultural duality – on one side of the divide, the ‘alienated’ whose behavioural values and norms bear the imprint of subservience to values prescribed by the ‘West’, and, on the other side, those who treasure our civilisational heritage and understand the needs and aspirations of the majority of our people.
(c) His standpoint is that of an ardent ‘nationalist’, in the sense that he is unequivocally committed to safeguarding and promoting Sri Lanka’s national interests.
On literature, Professor Amaratunga adds that he is inclined towards the need for ‘social relevance’ of the fine arts, and believes that the paradigm of ars gratia artis (‘art for art’s sake’) is inappropriate for Sri Lanka, especially in creative writing.
The ‘miscellany’ of this volume is structured to constitute four ‘Sections’ – titled as: 1. ‘Literature and Culture’; 2. ‘Religion’; 3. ‘Economy’; and 4. ‘Health’. The first two of these ‘Sections’, consist respectively of 25 and 19 essays of unequal length. In these ‘Sections’ the reader could pick out from different points of the temporal sequence in which they are arranged items that constitute a mutually cohesive group from the viewpoint of content. For example, in the first ‘Section’, there are six such items, each serving as a contribution to an ongoing media debate, but when considered as a group would be seen as an invaluable enrichment of understanding on a significant feature of the educational system of the country – such as, say, the impact of the nation-wide ‘Fifth-standard Scholarship Examination’ or ‘The general decline of standards in higher education’. Likewise, in the total of 18 articles in ‘Section’ 2, thirteen items could be considered as a mutually cohesive group of thoughts that illuminates certain vitally significant aspect of Buddha Dhamma and Buddhism as practiced in Sri Lanka.
The forgoing observations do not detract from the intrinsic value of the short contributions referred to. Indeed, in my amateur assessment, in Section 1, the items titled ‘Quality of University Education’, ‘Purpose of the Novel and its Appraisal’, and the twin items titled ‘Darwinian Evolution vs. Intelligent Design’; and in Section 2, ‘Truth in Buddhism and Realism in Literature’, and ‘Mind, Matter and Nirvana in Mahayana and Theravada Buddhism’, are examples of the author’s extraordinary depth of understanding and his skill of disseminating that knowledge in a lucid form.
It is in the 3rd Section of the volume titled ‘Politics’ that the real ‘miscellany’ of Thought is found, consisting of 78 items, and accounting for well over half the total page-length of the volume. Since they have been presented in a chronological order ‒ with the first item published in 2001, and the last in 2021‒ the list of items, at first glance, looks like a total mess which, indeed, is how our politics look. But a closer scrutiny show that all items in this list could be placed in one or another of 6 ‘Sub-Sections’ titled as ‘Ethnic Relations’, ‘Foreign Affairs’, ‘Electoral Politics’, ‘Development Plans and Projects’, and ‘Constitutional Issues’, with the chronology of the list providing the vicissitudinous background of each contribution which Professor Amaratunga has made, and each discussion or debate in which he has participated.
Once again I should emphasise that foregoing observation does not imply that the ‘Thoughts’ in this section, read individually, are either uninteresting or irrelevant to our present concerns. On the contrary they offer ideal readings both as reminders of the volatile scenarios we have passed though during the past two decades as well as the unshakable faith our politicians appear to have on the widespread dementia among the voter-population and on their own ability to hoodwink the electorate. Professor Amaratunga’s thoughts could re-kindle fading memories, especially on repeated failures to fulfil campaign pledges, the large-scale losses due to financial malpractices, the allegations of ‘war-crimes’ and of ‘violation of human rights’ in the counter-attack by the major powers of the North Atlantic alliance in retaliation to Sri Lanka’s close relations with the People’s Republic of China, the ingredients of success in the US-sponsored ‘regime change’ effort culminating in the establishment in 2015 of a puppet government in Colombo, the betrayal of our national interests by our own self-seeking representatives at the protracted Geneva inquisitions, the constitutional fiasco of August 2018, the euphoric Gotabhaya victory about a year thereafter, and then, the stunning exposure by the pandemic of the fundamental weakness of our dependent economy.
In the 4th Section of the volume titled ‘Health’, most of the items are devoted to diverse experiences witnessed globally and in Sri Lanka during the Covid-19 pandemic, but in an unconventional manner in the sense that they emphasise significant aspects that have not received adequate attention in the analytical writings on the pandemic. In my view the most significant issue highlighted in this section is the need for Sri Lanka to adopt development strategies towards self-reliance, especially in the availability of medicinal drugs and on food-security. Implicit in several items of this section is a forewarning of the risks entailed in the pursuit of development policies that enhance Sri Lanka’s macroeconomic dependence on the major global and regional powers.
Many items in this miscellany of thoughts contain a prominent element of dissent and disagreement with other participants in the media debates and discussion for which The Island has served as a major forum. But that dissent has all along been featured by a laudable sense of “civilised intelligence”. As a professional whose skills have an intense demand, his interests and concerns have not remained confined to his professional expertise – a feature often seen among other ‘specialists’ including those of the university community.
This volume is, first of all, a demonstration of intense and well-informed concern on a wide range of issues of vital importance to Sri Lanka. Had that quality been more widespread it is unlikely that those earning six-figure incomes would threaten collective action to bring the economy to a standstill to express their dissatisfaction on a relatively marginal erosion of monthly emoluments at a time of unprecedented national crisis, attempting to conceal their avarice with a façade of safeguarding democracy, or eliminating public corruption, or on grounds of their capacity to earn higher incomes outside Sri Lanka.
Yet another exemplary feature I discern in this ‘Miscellany of Thoughts’ is that its contents are not angry knee-jerk reactions when provoked by thoughts different to his own. Professor Amaratunga’s dissent is entirely free of the crude clashes often seen in the so-called social media. Nor are his thoughts based on a hurried consumption of internet ‘short-eats’. In his thoughts that extend beyond brief corrective interjections of ‘common sense’, what we see is an extraordinary depth of knowledge acquired through serious reading and a thorough understanding of the issues on which he had focused.
Loneliness of the Bottom Half
By Lynn Ockersz
There you crouch by your hearth,
Seeing your fires sputtering out;
Your hopes of a bubbly pot of rice,
Ending in inflationary smoke spirals,
Leaving you with the painful thought,
That your dignity as mother and wife,
Is gravely harmed and beyond repair,
For, a turn of events not of your making,
Has reduced you and yours to penury,
So much for that Trickle-down Theory,
That Pundits say will end your misery,
But they tell you not to stop dreaming,
Because soon you will be bailed out,
Of your State of longsuffering;
Thanks to Princely tips from ancient Italy.
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