SPECIAL REPORT : Part 364
by Shamindra Ferdinando
Justice Minister M.U.M. Ali Sabry, PC, on Sunday (18) declared that the commissioning of the Colombo Port City was an occasion to celebrate. Declaring that the high-profile project is turning point for post-war Sri Lanka, Minister Sabry explained how the mega project could transform the country.
Sabry, who had served as the Treasurer and as the Deputy President of the Bar Association (BASL) on many occasions, assured there was absolutely nothing to worry about the project.
Former President of the BASL U.R. de Silva, PC, Chief Advisor to the Justice Ministry, too, defended the project. Among those who defended the project were lawmakers Prof. G.L. Peiris, Keheliya Rambukwella, Ajith Nivard Cabraal, Shehan Semasinghe and Namal Rajapaksa.
The government responded following an unexpected attack from former President of the BASL Dr Wijeyadasa Rajapakse, PC. If the former Justice Minister, while being a member of the current administration’s parliamentary group, had not mounted such a frontal attack out of the blues, the government wouldn’t have had to mount such a strong defence of the Colombo Port City project. Wijeyadasa Rajapakse, attack was followed by the BASL declaration that it would move the Supreme Court against the establishment of an Economic Commission (EC) to manage the Colombo Port City. Saliya Pieris, PC, in his capacity as the President of the BASL, moved the SC against the government move. In nearly 20 petitions filed against the proposed Bill, the defendant is Attorney General Dappula de Livera, PC.
One-time internationally recognised top law academic Prof. Peiris emphasised that the proposed Bill was in line with the Constitution and received the sanction of the AG before being presented to the Cabinet of ministers.
It would be pertinent to mention that the CHEC Port City Colombo (Pvt) Limited had been the main sponsor of the National Law Conference 2020 on Feb 14, 2020 at Jetwing Blue, Negombo, during the tenure of Kalinga Indatissa, PC, as the President of the BASL. The CHEC Port City Colombo (Pvt) Limited had been among nearly 40 sponsors. USAID had been among the group. On the following day, Dr. Harsha Cabral, PC, and Dr. Asanga Gunawansa addressed the members on ‘Port City-Development of the law, local and international arbitration’. There were several related sessions which dealt with offshore financing, banking investment and FDI and its legal regime. Saliya Pieris and Manohara de Silva addressed the gathering on fundamental rights, labour laws and conflict of laws.
At the end of the inauguration of the event, on Feb 14, CHEC Port City Colombo (Pvt) Limited distributed a 51-page report titled ‘Economic Impact Assessment of the Port City Colombo’ prepared by leading multinational audit firm PricewaterhouseCoopers (Pvt) Limited. The distribution of the report followed the briefing given by the CHEC Port City Colombo (Pvt) Limited. In spite of the PricewaterhouseCoopers (Pvt) Limited declaring the report was meant for general guidance as regards matters of interest only and should be taken as investment advice, it presented an attractive picture of the project.
The Presence of President Gotabaya Rajapaksa, Chief Justice Jayantha Jayasuriya, PC, Attorney General Dappula de Livera PC and Justice Minister Sabry PC underscored the importance of the event. The writer was present on the occasion.
Clash over China project
All political parties should bear in mind that the current pathetic state of the economy cannot be blamed on China or any other country. If Parliament fulfilled its primary obligations as regards ensuring financial discipline and enactment of laws, the country wouldn’t have been in an extremely dicey situation, financially. Politicians now opposing the China led project, as well as those backing it, should keep in mind how the political parties, they represented ruined the national economy through their profligacy and downright mismanagement.
During the yahapalana administration, BASL received quite a bit of negative media coverage following revelation it received Rs 2.5 mn sponsorship from the disgraced Perpetual Treasuries Limited (PTL) for the three-day Law Asia 2016 Golden Jubilee Conference in August, 2016 during President’s Counsel Geoffrey Alagaratnam’s tenure as its President. The sponsorship was accepted over a year after the first Treasury bond scam perpetrated in late Feb 2015 caused a national stir.
A section of the Opposition, some members of the civil society, and SLPP Colombo District MP Dr. Wijeyadasa Rajapakse, PC, are up in arms over the proposed establishment of an Economic Commission (EC) to manage the Colombo Port City. Some trade unions, affiliated to political parties, too, are opposed to the move. As to how sincere their loud outcry is yet to be determined by the highest court in the land.
JVP leader Anura Kumara Dissanayake, MP, compared what he called a future Chinese administration of the Colombo Port City with that of China-administered Hong Kong. The same JVP turned a blind eye when the yahapalana government with which they were then openly cavorting with, gave away the Hambantota Port on a platter to Beijing on a 99-year lease.
Those opposed to the proposed EC asserted that as the Colombo Port City would be outside the purview of Parliament, it wouldn’t be subjected to domestic laws. The Cabinet of ministers, recently sanctioned legislation that once gazetted and passed in Parliament it would enable the setting up of an EC.
Samagi Jana Balavegaya lawmaker Attorney-at-Law Lakshman Kiriella warned of the Colombo Port City becoming a federal structure beyond the financial control of the Central Bank, Monetary Board and the Finance Ministry. Among those who moved the Supreme Court against the proposed Bill are the BASL, Purawesi balaya, Centre for Policy Alternatives (CPA), the JVP and the UNP. Three civil society activists, Oshala Herath, Dr. Ajantha Perera and Jegan Jegatheeswaran, too, filed cases.
Rebel lawmaker Wijeyadasa Rajapakse last Thursday (15) flayed the entire political system with the focus on the incumbent government over the move. MP Rajapakse basically repeated what JVP leader Anura Kumara Dissanayake said several days ago. What is really interesting is where the former Justice Minister addressed the media. Many an eyebrow was raised when the MP lambasted the government at Abayaramaya, Narahenpita, with Ven Muruththettuwe Ananda by his side.
Some monks are sullying the robe by getting involved in virtually every other brouhaha raised in the political arena, when they should essentially be guiding the adherents of Buddha’s teachings on that path.
On the following day, the former minister claimed that President Gotabaya Rajapaksa blasted him over the statement made on the previous day. Lawmaker Rajapakse acknowledged that he wouldn’t hesitate to take a decision regarding his political future with the SLPP government. The government parliamentary group is likely to be undermined by this development. It would be pertinent to mention that the government overcame opposition to the 20th Amendment to the Constitution from its ranks. The 20th Amendment required two-thirds majority.
President Gotabaya Rajapaksa presented the Colombo Port City EC Bill to the Cabinet of ministers. The 76-page Bill provides for the establishment of an EC authorised to grant registrations, licences, authorisations, and other approvals to carry on businesses and other activities in the Special Economic Zone (SEZ) to be established within the Colombo Port City.
The proposed EC will consist of not less than five members and not more than seven members, including its Chairman and they will be appointed by the President, under whose purview the Colombo Port City functions.
The Bill, titled the ‘Colombo Port City Economic Commission Act’, is expected to be presented to Parliament within the next few weeks.
Lawmaker Dissanayake declared that Parliament should defeat the move. However, with the ruling party enjoying a two-thirds majority in Parliament with its group numbering 145 members, the dilapidated Opposition is not in a position to thwart the government’s mega project.
A US warning
Against the backdrop of continuing US-China rivalry, Sri Lanka should be extremely cautious in finalizing the Colombo Port City Economic Commission Act. Unsolicited and clearly interfering, the US advice into the country’s internal affairs in this regard shouldn’t be ignored.
The media recently quoted the US Ambassador to Sri Lanka and the Maldives Alaina Teplitz as having said: “Any legislation relating to the Port City has to be considered very carefully for its economic impact. And of course, among those un-intended consequences could be creating a haven for money launderers and other sorts of nefarious actors to take advantage of what was perceived as a permissive business environment for activities that would actually be illegal.” Teplitz was further quoted as having said: “I do recognize that the government of Sri Lanka wants to take advantage of the investment that has already been made in creating the Port City foundation, but the legislation really needs to be reflected to address these challenges and to be careful of what it might be to open doors to bad practice and unfair competition for the rest of the country.”
The country’s tax revenues have plunged in 2020, raising concerns over debt and the fiscal path, credit downgrades and Sri Lanka’s ability to sustain vital public services to the people, while managing loss-making state enterprises.
Let me examine shocking revelations in Parliament, pertaining to waste, corruption and irregularities as the fiscal environment continued to deteriorate. Evaluation of reports released by the Communication Department of Parliament as regards inquiries conducted by the Committee on Public Enterprises (COPE), the Committee on Public Accounts (COPA) and the Committee on Parliamentary Finance (COPF) chaired by Prof. Charitha Herath, Prof. Tissa Vitharana and Anura Priyadarshana Yapa, respectively, would enable the public to grasp the gravity of things that had been perpetrated and the resultant situation.
The country celebrated Sinhala and Tamil New Year in an utterly bad financial environment, undoubtedly exacerbated by the pandemic as has happened world over. Televised celebrations also involving lawmakers representing the SLPP and the SJB highlighted the absurdity of a deteriorating situation. Lawmakers joined celebrations amidst continuing controversy over unprecedented slashing of duty on sugar imports, importation of contaminated coconut oil, destruction of forests and unbridled corruption.
Horrifying picture
Statements issued by the Communications Department revealed a horrifying picture. A pathetic situation caused by those who enjoyed political power since the introduction of the JRJ Constitution in 1978. Interestingly the two major political parties primarily responsible for the current predicament are no longer in power. The last general election, in August 2020 reduced the UNP to just one National List MP. The SLFP parliamentary group consists of 14 members with only one of them elected on the SLFP ticket. The rest entered Parliament through the SLPP. Political parties essentially engineered, encouraged and conveniently turned a blind eye to corruption. The examination of the House Communication Department statements revealed how the political set up, public sector and the private sector perpetrated corruption.
Parliament faces challenges
COPE Chairman Prof. Herath explained the growing financial indiscipline among those enterprises coming under his purview when he presented their first report to Parliament on March 10, 2021. SLPP National List lawmaker alleged that the power of Parliament to supervise public sector enterprises had been challenged. Prof. Herath cited the Auditor General’s report on the Lakvijaya coal-fired power complex at Norochcholai, Puttalam, as an example to highlight the financial lawlessness. One-time Media Secretary questioned how some public sector enterprises were excluded from the AG’s scrutiny.
Another SLPP lawmaker Shantha Bandara pointed out how various public sector institutions blatantly ignored instructions issued by parliamentary watchdog committees.
Speaker Mahinda Yapa Abeywardena, himself under fire for accommodating the members of his family and relatives on his staff assured that ways and means to address those issues would be addressed through the proposed new Constitution. Abeywardena insisted that the current situation could be addressed only through the enactment of a new Constitution.
Can Speaker Abeywardena’s assurance be accepted under an extremely volatile fiscal situation? How can tangible measures required to address the crisis be further delayed on the assurance that such issues would be dealt with through the proposed new Constitution. Unless Parliament accepted its responsibilities namely (a) enactment of new laws and (b) financial discipline, the country faces an extraordinary crisis.
The statement issued on April 12 by the Chinese Embassy in Colombo, ahead of the Sinhala and Tamil New Year, is a grim reminder of Sri Lanka’s predicament. Sri Lanka’s Ambassador in Beijing Dr. Palitha Kohona signed the loan agreement with the China Development Bank at the Sri Lankan Embassy in Beijing. The latest loan is the balance of USD 1 billion, out of which USD 500 million was received last year.
Before examination of COPE, COPA and COPF reports, let me remind what Secretary to the Finance Ministry S.R. Attygalle told Parliament on Dec 07, 2020 in response to a query pertaining to discrepancy in pensions. The Communications Department of Parliament quoted Attygalle as having said that the annual salary, pension and gratuity payments cost the Treasury a staggering Rs 1.1 trillion. In addition to that amount, the absorbing of 50,000 graduates to the public sector in terms of a 2021 budget proposal as well as 100,000 employment opportunities to the poorest of poor families, too, would cost a hefty sum.
When the writer sought a clarification from Attygalle on April 15th morning, the official explained the salaries amounted to a staggering Rs 800 bn annually and the rest for pension and gratuity.
Public finances are in turmoil. COPE, COPA, COPF as well as Parliamentary Consultative Committees essentially highlight waste, corruption and irregularities. The following are some samples of revelations.
The COPA on March 26, 2021, revealed the failure on the part of the Inland Revenue Department to collect taxes. The Communications Department reported how the Inland Revenue Department received 6,878 dishonoured checks worth Rs. 240 million as at 31 Dec, 2020. It was also revealed at the COPA meeting that Court cases had been filed by Inland Revenue Department in the Colombo Magistrate’s Court to recover Rs. 2670 million in tax arrears from casinos.
The Communications Department of Parliament on March 24, 2021, on the basis of Consultative Committee of the Ports and Shipping Ministry, reported a highly contentious matter involving Sri Lanka Customs. The Consultative Committee was told how due to failure on the part of the Sri Lanka Ports Authority (SLPA) to pay due taxes to the Customs for the importation of gantry cranes, the latter was now entitled to 50 per cent of the fine imposed on the SLPA. The Consultative Committee, while asserting such a payment to the Customs was a major problem recommended talks with relevant officials, including the Secretary to the Treasury to recover the money as a payment to the government. The Communications Department quoted Ports and Shipping Minister Rohitha Abeygunawardena as having said that the issue at hand should be also discussed with the COPA.
The Communication Department of Parliament on March 2, 2021 reported the shocking revelation of how Lanka Mineral Sands Limited caused substantial revenue loss at a time the country was facing an extremely serious financial crisis. The report dealt with the COPE meeting held in Parliament on the same day. COPE Chairman Prof. Charitha Herath instructed the Secretary to the Ministry of Industries, Anusha Palpita, to immediately investigate and submit a report on the tender awarded by Lanka Mineral Sands Limited for the sale of 85,000 metric tonnes of ilmenite at USD 147 per tonne to the third-place bidder instead of the prospective winning bidder, who had offered the highest price of USD 165 per tonne of ilmenite. Lanka Mineral Sands claimed that their decision was based on a recommendation made by a tender subcommittee appointed by the Cabinet of Ministers and that the transaction received Cabinet approval. Questioning the rationale in awarding the tender to the third-placed bidder, COPE discussed the possibility of the Lanka Mineral Sands Limited deceiving the Cabinet of Ministers. The inquiry revealed that the current price of a metric tonne of ilmenite is close to USD 240. Many an eyebrow was raised when it was revealed that substantial part of the sold stock to a buyer in October 2020 was still stored in the Pulmudai at the expense of the Lanka Mineral Sands. The buyer hadn’t paid the full payment, the COPE was told.
The Island received the entire set of statements issued by watchdog committees. A communiqué issued on March 15, 2021 by the Communications Department of Parliament revealed the failure on the part of the Finance Ministry, Inland Revenue and the Justice Ministry to take remedial measures in respect of laws delay. Their failure seriously affected the revenue collecting process.
The Commissioner General of Inland Revenue H. M.C. Bandara has told COPA that his department had not been able to recover billions of rupees in tax arrears due to lengthy judicial process and the attendant delays. The COPA assured that the Ministry of Justice, the Ministry of Finance and the Inland Revenue Department would be summoned for a discussion. That promised meeting is yet to take place. During the COPA meeting held on March 10, 2021, it was also pointed out the deficiencies in a list that contained names of tax defaulters. The COPA also pointed out the shortcomings in Legacy and Ramis computer systems that controlled tax files and the revelation of Rs 107 bn in tax arrears according to Legacy system, out of which only Rs 224 mn have been recovered exposed the chaotic situation.
The government needs to address shortcomings in the revenue collection process without further delay. In an utterly corrupt system, delays, failures and shortcomings seem to be deliberate and well calculated. With the country on the brink of financial disaster, it would be the responsibility of parliament to take remedial measures. Perhaps, the Presidential Commission inquiring into the Customs should summon parliamentary watchdog committees at the onset of public sittings to obtain a clear picture of the ground situation before it proceeds.
Readers should not think we are merely scare mongering, but the truth remains that we must be responsible for our future instead of ever being ready to beg for handouts or rescue packages from outside. True that unlike most powerful Western nations and their lending arms China has not been behaving like the proverbial Shylock. But we have an inherent duty not to live beyond our means.
