By Shamindra Ferdinando
The controversy over the Finance Ministry submitting a Cabinet paper for purchasing 228 Toyota Land Cruiser SUVs for members of Parliament has taken a new turn with the SJB, the TNA and the JVP/JJB denying that they ever asked for SUVs or any other vehicles.
SJB MP Dr. Harsha de Silva, TNA MP M.A. Sumanthiran and JJB National List MP Dr. Harini Amarasuriya yesterday (16) told The Island that their parties, or individual members, had not requested vehicles from the Finance Ministry or the Office of the Speaker. The SJB parliamentary group consists of 54 MPs, including seven National List members; the TNA and the JJB comprise 10 and three lawmakers, respectively.
When The Island sought an explanation from the SJB, the TNA and the JJB yesterday, lawmakers, de Silva, Sumanthiran, PC, and Amarasuriya emphasized that their parties or individual members had never requested vehicles, in writing or verbally.
Sumanthiran said that they had not been aware that vehicles had been ordered for MPs until the media reported the issue.
Former JVP MP Sunil Handunetti in conversation with ‘Sirasa Pathikada Presenter Asoka Dias yesterday alleged that SUVs had been ordered for lawmakers, in appreciation for their vote for the controversial Colombo Port City Economic Commission Bill (CPCECB) enacted in May. Altogether 149 members voted for the bill and 58 against.
One-time Chairman of the Committee on Public Enterprises (COPE) Handunetti said that the SLPP was the major beneficiary of the move. Among the beneficiaries are former Presidents, Mahinda Rajapaksa and Maithripala Sirisena, both elected members of the SLPP.
The SJB, the TNA and the JJB voted against the Bill though several SJM members representing the SJB, SLMC and ACMC voted with the government. The Island asked JVPer Handunetti for an explanation why SUVs had been ordered for those who voted against the bill. The former lawmaker said that the decision to place the order hadn’t been taken in parliament. The government ordered SUVs for all MPs as SLPP members alone couldn’t have been offered the perk, Handunetti said, pointing out that the Finance Ministry submitted the original cabinet paper for SUVs in the wake of the passage of the CPCECB. It was cancelled the following week, Handunetti said. Responding to another query, the former MP pointed out that the government owed an explanation if 225 vehicles had been ordered for MPs who were the intended recipients of the three remaining Toyota Land Cruisers.
The government felt the need to appease its 145 member parliamentary group regardless of rapidly deteriorating economic situation, Handunetti said.
Finance, Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal yesterday told The Island that proper protocols had been followed when the government placed the original order for vehicles. The former Governor of the Central Bank said so when we asked him whether the Finance Ministry had received requests from political parties or individual members for SUVs or Speaker Mahinda Yapa Abeywardena made a request on behalf of all political parties.
Handunetti emphasised that the real issue was not the circumstances under which the government put on hold or cancelled the SUV order but why Letters of Credit were opened for SUVs in the first place.
SJB MP Mujibur Rahman told The Island that foolish strategies adopted by the SLPP worthies should now be examined against Energy Minister Udaya Gammanpila’s shocking declaration that the country lacked financial resources even to pay for its fuel. The SLPP has proved that it was not fit to govern the country under any circumstances, the former UNPer said, urging the government to take the public into confidence. “Tell people the truth. The rapidly developing crisis cannot be suppressed by the SLPP parliamentary group staging silly dramas,” MP Rahman said.
sought an explanation from Colombo District SLPP lawmaker Madhura Withanage yesterday how he ended up in the list of those entitled for SUVs as he had personally assured President Gotabaya Rajapaksa in the run-up to the last general election in last August he wouldn’t take a duty free vehicle under any circumstances. MP Withanage said that he still remained committed to the assurance given publicly. The first time entrant to parliament said that he didn’t ask for a government vehicle. The MP recalled the funds received for a vehicle at the time he served as Kotte Mayor were utilized to acquire several vehicles for the health sector.
Civil society activist and attorney-at-law Nagananda Kodituwakku said that all political parties represented in parliament should take the responsibility for brazen abuse of parliamentary privileges. Former senior Customs officer Kodituwakku said that he hadn’t been successful in preventing massive concessions at the expense of the Treasury though he lodged a complaint with the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) and subsequently moved the Supreme Court.
Examination of court proceedings would reveal how the Treasury had been deprived of billions of rupees by way of duty free concessions to MPs over the years, the lawyer said, emphasizing that every government installed after 1977 should accept responsibility for the situation. The Treasury lost billions of rupees as members were allowed to sell duty free vehicles to those who could have afforded to pay duties/taxes, Kodituwakku, who gave up his British nationality to contest the last presidential election, said. However, he couldn’t join the fray as he couldn’t meet the stipulated condition to receive the backing of a registered political party.
The Island didn’t receive answers from the Speaker’s Office to the following questions submitted yesterday morning:
(i) Did Speaker Mahinda Yapa Abeywardene, in writing request Finance Ministry to place an order for SUVs for all MPs
(ii) Did he receive requests for the same from political parties and individual members and (iii)Did Speaker on his own requested Finance Ministry to order SUVs for all MPs.
In addition to the SLPP, the SJB, the TNA and the JJB, the parliament is represented by 11 other political parties. Of them, the Ahila Illangai Tamil Congress (AITC) and the Eelam People’s Democratic Party (EPDP) have two members each in parliament. Other parties have one seat each.
Pandora Papers disclosure: Int’l cooperation essential to hold wrongdoers accountable – TISL
Three RTI applications filed calling for information about asset declarations submitted by Nirupama Rajapaksa
Transparency International Sri Lanka (TISL) says international cooperation through diplomatic channels is essential to hold offshore enablers and asset destinations accountable.
TISL has said that in addition to a complaint filed with the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), three RTI (Right to Information) applications have been filed seeking asset declarations submitted by Nirupama Rajapaksa. TISL has also written to the FIU (Financial Investigation Unit) calling for immediate investigation into potential money laundering claims.
TISL has said in a media statement: “The Pandora Papers exposé provides clear evidence of how the offshore industry promotes corruption and demonstrates the importance of ensuring the transparency of beneficial ownership of entities. Particularly in Sri Lanka, the Pandora Papers refer to extensive assets held offshore by former Deputy Minister of Water Supply and Drainage, Nirupama Rajapaksa and her husband, Thirukumar Nadesan. TISL in its initial statement following the revelations, called on the Sri Lankan authorities to ensure that independent investigations are carried out expeditiously into the revelations made by tPandora Papers. Since then, the President has called on the Commission to Investigate Allegations of Bribery and Corruption (CIABOC) to investigate the claims made by Pandora Papers.
TISL has taken several steps since the initial statement, pertaining to the revelations made by Pandora Papers.
One 07 October 2021, TISL filed a complaint with CIABOC, calling for an investigation into the alleged unexplained assets of the former Deputy Minister and her husband who has been identified as Politically Exposed Persons (PEP). TISL noted that the transactions revealed through this exposé could amount to offences under Section 23A of the Bribery Act, Section 4(1) of the CIABOC Act, and relevant provisions of the Declaration of Assets and Liabilities Law, and requested the Commission to probe into the Declarations of Assets and Liabilities of Nirupama Rajapaksa relating to her tenure as a Member of Parliament. TISL requested CIABOC to investigate whether public funds have been embezzled and laundered to these foreign safe havens.
TISL also wrote to the Financial Intelligence Unit (FIU) of the Central Bank of Sri Lanka on 13th October, calling on them to coordinate with relevant law enforcement authorities at both local and international level to investigate potential money laundering allegedly committed by the former Member of Parliament and her spouse. The FIU, as the central independent body established in terms of the provisions of the Financial Transactions Reporting Act No. 06 of 2006 (FTRA), is empowered to facilitate the prevention, detection, investigation and prosecution of offences related to money laundering and terrorist financing.
Through the letter TISL requested the FIU to take further steps to furnish the authorities with evidence, examining the financial transactions that have flowed in and out of Sri Lanka by coordinating with local and foreign financial institutions connected to these two individuals.
TISL has also filed three Right to Information Requests to the Elections Commission, Parliament of Sri Lanka and the Presidential Secretariat, calling for the Declarations of Assets and Liabilities of Nirupama Rajapaksa as an election candidate, Member of Parliament and Deputy Minister respectively
The Declaration of Assets and Liabilities Law No 1 of 1975 makes it mandatory for Parliamentarians and senior public officials to annually submit a declaration of assets and liabilities, which includes the assets and liabilities of their spouse and dependent children. If the former Parliamentarian has not disclosed the overseas assets revealed through Pandora Papers, she will be in breach of the Declaration of Assets and Liabilities Law. Therefore, her asset declarations would be a key tool to identify whether the overseas assets of the deputy minister, her spouse and children revealed through Pandora Papers have been disclosed at the time.”
TISL Executive Director, Nadishani Perera, commenting on the matter stated “We urge the relevant authorities in the country to take immediate action to independently investigate the revelations made by Pandora Papers. It is important that the due process is followed without any interference, obstructions or delays. For the PEPs implicated, there remains a path to clearing their name, if they were to heed the call of the public by making the relevant asset declarations public. A thorough and impartial investigation will also bolster faith in the law enforcement agencies of the country and prove to be an important deterrent against perpetrators of white-collar crimes.”
The TISL Executive Director also noted that “while it is important to take stringent action to prevent foreign currency unlawfully flowing out of the country into secrecy jurisdictions, it is also imperative that countries like Sri Lanka take this issue up on a diplomatic level in order to ensure financial institutions in countries such as Singapore are also held accountable and that steps are taken to recover any proceeds of crime back to our country from these asset destinations.”
German flight delay caused by pilot’s credit card problem, says AASL chief
By Sirimanta Ratanasekera
Chairman of the Airport and Aviation Services Sri Lanka (AASL) Ltd, Maj Gen (Retd) G. A. Chandrasiri said that a false and malicious accusation had been levelled that the officials attached to the Bandaranaike International Airport had unnecessarily delayed a German charter flight that arrived at the airport for emergency landing with 226 passengers.
Maj Gen Chandrasiri denied the allegation.
A Condor flight with 226 passengers travelling from Germany to the Maldives made an emergency landing on 26 Sept at the BIA around 11.25 am due to inclement weather in the Maldivian air space.
However, when the flight attempted to leave Sri Lanka around 1 pm, officials of the German charter airline, Condor, faced delays of about one hour when paying landing fees, since their credit cards had not been activated to make international payments.
“Now some parties, with vested interests to tarnish the good name of our airport, are spreading false rumours that the credit machines at the airport were dysfunctional. This is a malicious accusation,” Maj Gen Chandrasiri said.
He said that a three-member committee, led by a President’s Counsel, had been appointed to conduct an investigation and he would receive the investigation report within two days.
Maj Gen Chandrasiri said that the German charter airline so far had not raised any issue or made any complaint in the incident. He said that the AASL would inform the Condor airline of the situation after he received the report.
“As at 2020 January, the BIA had been an airport catering to around 20,000 passengers daily. This came to a halt following the pandemic. Now, it is coming back to its former situation. It is at this juncture those with malicious interests try to tarnish our name. If the flight in question made a normal landing it would have been our responsibility but it was an emergency,” Maj Gen Chandrasiri said.
AASL Operational Director Shehan Sumanasekera said that there had been some false media reports about the incident. “I myself monitored the entire scenario from CCTV and made inquiries from relevant officials. There were no lapses on the part of the airport or officials. It was a problem with the credit cards of the pilots of the flight.
State Minister of Aviation and Export Zones Development DV Chanaka said that he too had called for a report on the matter, which is due to be submitted tomorrow.
Verite shows how Lanka can achieve sustainable debt dynamics
Verité Research, a private think tank that provides strategic analysis for Asia, hosted the online discussion Steering out of the Debt Crisis: Recipe for Budget 2022 on Oct 14. The event was anchored around addressing Sri Lanka’s debt and USD liquidity crisis, and featured presentations by Executive Director, Nishan de Mel, Research Director, Deshal de Mel, and Analyst Anushan Kapilan. An expert panel included Dr. Shantayanan Devaranjan (Georgetown University), Dr. Nandalal Weerasinghe (former Senior Deputy Governor – CBSL) and Dr. Mick Moore (Institute of Development Studies – UK).
A press release issued by the think tank said: Verité Research presented analysis pertaining to debt management and fiscal measures, including specific proposals to increase government revenue and improve the allocation of expenditure.
The Verité Research analysis showed that Sri Lanka can achieve sustainable debt dynamics by meeting two conditions with regard to its domestic debt, and two further conditions with regard to its foreign debt. The presentation explained that, despite some challenges, achieving these conditions was feasible for Sri Lanka – provided policy-makers choose to do so.
The main challenges arise from poorly formulated fiscal/budget measures, coupled with the pandemic-induced setbacks which have resulted in successive downgrades of Sri Lanka’s credit ratings. As a result, Sri Lanka has been locked out of global capital markets, and rapidly depleted its foreign reserves, as it has continued to pay back foreign bondholders, at the expense of negative feedback on the local economy.
The Verité Research analysis showed that the worst is yet to come. Sri Lanka’s foreign reserve would be completely depleted by the end of 2022 if no surprise inflows materialise, and even if they did, the crisis would simply re-emerge in 2023. This means that even if Sri Lanka can claim to be technically solvent, it does not have the liquidity to sustainably pay back its foreign debt until the country credit rating is improved by at least two notches.
The current path of repaying debt offers a high return to bondholders at the expense of huge pain to domestic businesses and consumers, and makes the credit rating outlook even more precarious. The solution is to share the pain with bondholders by pre-emptively restructuring the debt. This can improve the foreign reserve position more quickly, and thereby improve the country’s credit rating more quickly as well. This alternative path is less painful to the local economy, offers a faster recovery, with a higher probability of success. It is a better path for the Sri Lankan economy than repaying foreign bondholders in full, even if it were able to do so.
A clear distinction needs to be made between a forced restructuring which would occur if a country were to default in a disorderly way without negotiating with creditors, and an orderly pre-emptive restructuring of debt following negotiations with creditors. The sooner Sri Lanka moves to an orderly pre-emptive debt restructure, the easier it would be to do so, and the more favourable it would be for the Sri Lankan economy. Delaying the decision is damaging and can result in outcomes that are highly disruptive.
Currently the primary deficit is at 7.4% of GDP. At the current GDP growth rate of a little under 4% (predicted by Verité Research), it is necessary to reduce the primary deficit to around 2% of GDP or less to help stabilise the debt.
The Verité Research analysis showed that in the base case scenario with no policy changes, the debt to GDP Ratio would increase to 123.08% by 2025, however with prudent fiscal measures it can be kept down to 108.8% by 2025.
The fiscal measures proposed included the reduction of the personal income threshold to LKR 1 Mn per Annum; the reintroduction of PAYE with a threshold of LKR 1.5Mn; reintroduction of WHT on interest income; increasing the VAT rate to 10% in 2022 and to 12% in 2023; reducing the VAT free thresholds from LKR 300 Mn to LKR 150 Mn in 2022; simplifying the corporate tax regime to a three-tier regime; and increasing the total taxes on cigarettes and alcohol in line with increases in inflation and GDP according to a tobacco taxation formula introduced in the 2019 budget.
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