SPECIAL REPORT : Part 421
By Shamindra Ferdinando
A COPE (Committee on Public Enterprises) meeting on May 25, chaired by Prof. Charitha Herath (SLPP National List), revealed the devastating truth about the utterly irresponsible public finance management that led to the ruination of the national economy.
A two-page press release in Sinhala issued by Janakantha Silva, Director Legislative Services and Acting Director of Communications, on the same day, disclosed how the incumbent dispensation caused the unprecedented meltdown.
But, the releasing of video footage of the entire meeting by the Parliament helped the public to clearly understand how the Finance Ministry, the Central Bank of Sri Lanka (CBSL), the Monetary Board, the then Presidential Secretary Dr. P.B. Jayasundera, the Cabinet of Ministers and the Parliament contributed to the debilitating economic-political and social crisis. The COPE meeting should attract Attorney General Sanjay Rajaratnam’s immediate attention. The Bar Association of Sri Lanka (BASL), too, cannot turn a blind eye to the shocking exposure of a seriously flawed public finance system and nothing but a negligent and incompetent Parliament.
But, the releasing of video footage of the entire meeting by the Parliament helped the public to clearly understand how the Finance Ministry, the Central Bank of Sri Lanka (CBSL), the Monetary Board, the then Presidential Secretary Dr. P.B. Jayasundera, the Cabinet of Ministers and the Parliament contributed to the debilitating economic-political and social crisis. The COPE meeting should attract Attorney General Sanjay Rajaratnam’s immediate attention. The Bar Association of Sri Lanka (BASL), too, cannot turn a blind eye to the shocking exposure of a seriously flawed public finance system and nothing but a negligent and incompetent Parliament.During the proceedings, top Samagi Jana Balavegaya (SJB) member of the parliamentary watchdog committee, Dr. Harsha de Silva declared the appointment of ‘RW’ as the Finance Minister in addition to being the PM. When the former UNPer’s COPE colleagues raised eyebrows, Dr. de Silva quickly said: “Sorry. Mr. Ranil Wickremesinghe.’ A smiling Prof. Herath reminded that PM Wickremesinghe was Dr. de Silva’s former boss. The SJB’s economic guru de Silva functioned as State Minister for National Policies and Economic Affairs.
The then yahapalana premier held the Cabinet portfolios of those subjects. At the time the Treasury bond scams that had been blamed on Wickremesinghe and Company were perpetrated in Feb 2015 and March 2016, the CBSL functioned under the purview of Wickremesinghe’s ministry. So in actual fact Dr. Harsha de Silva, having been part of that yahapalana team that messed things up at the time in style, is in no position to take a ‘holier than thou stand’ now.
Similarly Champika Ranawaka, too, is under many a cloud. When he was the Power and Energy Minister, his bosom pal, then Chairman of the CEB, figured in the notorious Panama papers. So whose money had the then CEB Chairman Anura Wijepala banked in hidden accounts offshore?
Among those who had been at the meeting, summoned by the COPE, were Director General, Internal Audit, Finance Ministry Mrs. Deepika Colombage, Chief Financial Officer, Finance Ministry B.K.R. Balasooriya, Finance Secretary K.M. Mahinda Siriwardana, CBSL Governor Dr. Nandalal Weerasinghe, Deputy CBSL Governor T.M.J.Y.P. Fernando, Director General, Finance Ministry Hemal Kasthuriarachchi, Assistant Governor, CBSL Ananda Jayalath, Director, International Operations Department, CBSL Dr (Ms) D.S.T. Wanaguru, Monetary Board member Sanjiva Jayawardena, PC, Monetary Board member Dr. Ranee Jayamaha, Assistant Governor, K.M. A.N. Daulagala (Secretary to the Monetary Board), Assistant Governor, CBSL K.G.P. Sirikumara, Director, Economic Research, CBSL P.K.G. Harischandra, Director, Human Resources, CBSL A.M. Gunatilake, Director, Payment and Settlement Department, CBSL M.R. Wijewardena, Director, Legal and Compliance Department, CBSL Dr. (Mrs) A.A.I.N. Wickramasinghe , Director, Domestic Operations Department, CBSL Dr. R.A.A. Perera, Additional Director, Facilities Management Department, CBSL S.K.P. Vitharana, Additional Director, International Operations Department, CBSL S. Obeysekara, Chief Accountant, CBSL Mrs D.S.L. Sirimanne, Director, Department of Foreign Exchange Mrs. D.R. Karunaratne and Director, Department of non-bank financial institutions R.M.C.H.K. Jayasinghe.
Of them, only Governor Dr. Weerasinghe, Treasury Secretary Siriwardana and Monetary Board members Jayawardena and Jayamaha responded to the queries raised by the COPE. On behalf of the parliamentary watchdog, its Chairman Prof. Herath, Eran Wickremaratne (SJB), Rear Admiral (retd.) Sarath Weerasekera (SLPP), Rauff Hakeem (SLMC), Madura Vithana (SLPP), Jagath Pushpakumara (SLPP) and Premnath C. Dolawatta (SLPP) raised questions and also commented on the issues at hand. But, the day certainly belonged to SJB lawmakers, Patali Champika Ranawaka, who is also the leader of ’43 Brigade’ and Dr. Harsha de Silva.
At the onset of the proceedings, Prof. Herath, while underscoring the sensitive nature of the impending discussions, declared the 2018 and 2019 Auditor General’s reports on the CBSL were to be examined with the focus on the current status of the apex operation.
SJB MPs on the offensive
After Dr. Weerasinghe and Mahinda Siriwardana made their initial statements and responded to queries raised by Prof. Herath, lawmaker Ranawaka questioned the accountability on the part of the CBSL as well as the Monetary Board for the current crisis. The former minister Ranawaka emphasized that senior officials of both institutions couldn’t, under any circumstances, absolve themselves of the responsibility for bankrupting the country. The Colombo District MP didn’t mince his words when he declared that the top management officers of the CBSL were a handsomely remunerated lot whose culpability in the whole sorry state of affairs couldn’t be ignored.
Pointing out that the government has officially accepted Sri Lanka’s bankrupt status, MP Ranawaka compared how the financial meltdown finally led to street violence, including death of a lawmaker whereas senior CBSL and Monetary Board members who oversaw the ruination of the national economy seemed not to have attracted public attention.
The former JHU heavyweight Ranawaka posed several pertinent questions to those who had been summoned before the COPE regarding the role and conduct of the Secretary to the Treasury, CBSL and the Finance Ministry. Dr. de Silva, too, raised contentious issues at hand relating to the crisis, particularly how the SLPP handled the economy during the March/April 2020 to March 2022 period when CBSL Governor Ajith Nivard Cabraal suddenly resigned after having floated the Rupee. The much delayed decision to float the Rupee caused a catastrophe as it then immediately nosedived against the dollar and other major currencies.
Their relentless probing questions exposed an ugly truth. The shocking exposure of the then Prime Minister Mahinda Rajapaksa who handled the finance portfolio, the then Presidential Secretary Dr. P.B. Jayasundera, himself a former top Central Banker and ex-Treasury Secretary, Governors of the Central Bank Prof. W.D. Lakshman and Ajith Nivard Cabraal, Monetary Board member and Treasury Secretary S.R. Attygalle, the entire Cabinet-of-Ministers chaired by President Gotabaya Rajapaksa and the Parliament to varying degrees has sent shock waves through the political establishment.
COPE proceedings revealed how those who had been responsible for public wellbeing, both at ministerial and official level, simply allowed the situation to deteriorate to such an extent today the government lacked the wherewithal to meet basic requirements. They were most probably waiting for India and China, in rivalry, come to their rescue. The Indian help came but it was too late as the situation had snowballed in next to no time. As to why China dragged its feet might be due more to Rajapaksa sibling and duel citizen Basil increasingly sailing the Lankan ship towards the West, forgetting the fact that we achieved so much in the past thanks to China, including its unquestioning support to us in our fight to defeat LTTE terrorists.
Lawmakers Ranawaka and Dr. Silva pressed the Finance Secretary Siriwardana, Governor Weerasinghe and Monetary Board members on (1) massive tax cut implemented soon after the last presidential election in Nov 2019, contrary to the advice given by the IMF (2) the IMF’s refusal to grant RFI (Rapid Financing instrument) to Sri Lanka in March/April 2020 and (3) printing money (4) colossal losses suffered by the CBSL due to its refusal to float the Rupee.
Officials’ answers flabbergasted COPE. The Finance Ministry, CBSL and the Monetary Board had been mercilessly dominated by the SLPP and did nothing to change the extremely dangerous path the country was taking. The SLPP was hell-bent on continuing with its reckless strategy at whatever consequences.
Conduct of Monetary Board
The Monetary Board consists of five persons – two ex-officio members, Governor, Secretary to the Finance Ministry, and three nominated members. At the time of the issue at hand Prof. W.D. Lakshman and S.R. Attygalle had served on the Monetary Board and the latter as the Secretary to the Finance Ministry as well. The Monetary Board’s appointed members were President’s Counsel Sanjiva Jayawardena, Dr. Ranee Jayamaha (retired Central Bank Deputy Governor) and successful businessman Samantha Kumarasinghe, who put Sri Lanka on the world cosmetic manufacturing map through his Nature’s Secret line of products, which earned the ire of some multinational leaders in the field because of its resounding overnight success.
The Monetary Board consists of five persons – two ex-officio members, Governor, Secretary to the Finance Ministry, and three nominated members. At the time of the issue at hand Prof. W.D. Lakshman and S.R. Attygalle had served on the Monetary Board and the latter as the Secretary to the Finance Ministry as well. The Monetary Board’s appointed members were President’s Counsel Sanjiva Jayawardena, Dr. Ranee Jayamaha (retired Central Bank Deputy Governor) and successful businessman Samantha Kumarasinghe, who put Sri Lanka on the world cosmetic manufacturing map through his Nature’s Secret line of products, which earned the ire of some multinational leaders in the field because of its resounding overnight success.Dr. de Silva flayed the government over the appointment of Samantha Kumarasinghe, claiming he didn’t know the basics in economics. But SJB economic pundit was apparently not aware that Kumarasinghe has a MBA from the prestigious Harvard Business School like the late A.S. Jayawardena, who, with his Harvard MBA, went on to serve successfully as the country’s Central Bank Governor and Treasury Secretary during some of the most testing times for this country, especially during the Asian financial crisis of 1996 and the terrorist bombing of the Central Bank in 2001.
According to a statement, dated July 15, 2020, issued by the CBSL, Sanjeeva Jayawardena has been appointed with effect from Feb 26, 2020 and Dr Ranee Jayamaha and Samantha Kumarasinghe with effect from June 29,.2020. President Gotabaya Rajapaksa appointed them under section 8(2)(c) of the Monetary Law Act with the approval of the Constitutional Council.
MP de Silva questioned the suitability of Kumarasinghe on the basis of an article he published in the Lankadeepa in which the SJB heavyweight claimed the Monetary Board member expressed views very much contrary to basic economy theories.
Let me reproduce a CBSL statement issued on July 15, 2020 on Kumaasinghe’s appointment. The Island believes it would be fair by the former Monetary Board member.
The text of the CBSL statement: “Samantha Kumarasinghe currently serves as Chairman and Managing Director of several companies in Sri Lanka, Bangladesh and Vietnam that operate in industrial sectors across cosmetics, textile chemicals, household cleaning products, organic food and biological fertilisers.
He currently serves as a member of the Presidential Task Force for Economic Revival and Poverty Eradication (2020), President of Lanka Industry Forum for Empowerment (LIFE) (2018 to date) and Chairman of Cosmetics Sector Advisory Committee at the Ministry of Industries (2016 to date). He has also served in the capacities of member of Presidential Industrialisation Commission (from 2018 to 2019), a board member of the Insurance Board of Sri Lanka (2012 to 2014), a committee member of the Implementation of the Integrated Curriculum, Subjects and Review of Academic Activities Process of the Ministry of Education (2013) and as Commissioner of the Presidential Taxation Commission (2009 to 2010).
Kumarasinghe studied at Royal College, Colombo. He is a chemistry graduate of the University of Peradeniya and an alumnus of the Harvard Business School, USA. He started his entrepreneurial career in 1993 with just 12 employees and was adjudged ‘Entrepreneur of the Year’ in 2008. He was awarded a Presidential National Honours Award in 2019 for his valuable contribution to the country.”
Dr. Jayamaha strongly defended her conduct as a member of the Monetary Board and that of President’s Counsel Jayawardena. Commenting on calamitous decisions to fix the Rupee at 203 and refusal to engage the IMF, Dr. Jayamahaha alleged that Governor Lakshman, Finance Secretary Attygalle and nominated member Kumarasinghe pursued an agenda of their own. Dr. Jayamaha alleged that the Governor’s group always had the majority and therefore, they couldn’t have opposed. Dr. de Silva rejected Dr. Jayamaha’s stand.
The lawmaker insisted that all members of the Monetary Board were equally responsible for the current predicament. The MP suggested that Dr. Jayamaha and President’s Counsel Jayawardena should have gone public to deter the Governor and his colleagues.
SJ hits back
Sanjeeva Jayawardena quite clearly explained how he and Dr. Jayamaha took a common stand on touchy matters. Apropos Sri Lanka’s RFI request and related issues, Jayawardena revealed, beginning early 2020, they on nine different occasions, recommended/suggested engagement with the IMF. Jayawardena also explained their efforts to establish what he called an external debt monitoring mechanism. The President’s Counsel explained how Governor Cabraal acted, contrary too decision taken in respect of floating the Rupee at a proper forum. Jayawardena and Jayamaha have also warned against excessive money printing. Dr. de Silva asked for the minutes of the relevant meetings. The lawmaker reiterated that members of the Monetary Board bear equal responsibility for the current crisis.
One of the most controversial issues was the massive tax cut to the tune of Rs 600 bn implemented by the current dispensation. Treasury Secretary Mahinda Siriwardana asserted that the decision on the tax cut should have been reversed in the wake of the Covid-19 eruption. Dr. de Silva pushed Siriwardana on the issue at hand. The former UNPer asked Finance Secretary Mahinda Siriwardana to reveal the person who decided to implement the tax cut regardless of specific IMF advice at a time the lending agency called for debt restructuring in the wake of Colombo seeking RFI? The lawmaker also wanted the Finance Secretary to confirm whether the Finance Ministry conducted a survey before the controversial decision was made? Lawmaker de Silva asked who dropped the IMF recommendations to the dustbin. Finance Secretary side-stepped the issue in spite of lawmaker Ranawaka attacked the CBSL and the Finance Ministry on the same issue. The Finance Secretary struggled to cope up with the situation whereas Dr. Weerasinghe revealed how the tax cut was ordered. According to Dr. Weerasinghe, there hadn’t been any consultations at any level before they were informed of the disputed decision.
Earlier, Dr. Weerasinghe, in response to probing questions, acknowledged the circumstances Dr. PB Jayasundera decided not to engage the IMF regardless of the precarious economic outlook. Lawmaker Ranawaka repeatedly said that the crisis that had engulfed the country is far worse than the Treasury bond scams, 2019 Easter Sunday massacre or alleged war crimes.
Appearing before the COPE, as well as the Committee on Public Finance (COPF), headed by Anura Priyadarshana Yapa (SLPP) Dr. Weerasinghe last week acknowledged how the Finance Ministry misled the Parliament over the years. There hadn’t been a previous instance of a CBSL Chief going public with the truth. Dr. Weerasinghe told COPE how the Parliament allocated unavailable funds to various ministries on the basis of false estimates. That had been the norm as politicians and officials cooperated in a despicable way to deceive the public.
Dr. Weerasinghe also blamed such irresponsible practices for the current crisis. Perhaps, Dr. Weerasinghe should be especially commended for reminding the COPE of the responsibility of the Parliament in ensuring suitable appointments are made. The CBSL Chief dared to be forthright in his appearances before parliamentary watchdog committees thereby set up new standards in Sri Lanka’s utterly corrupt public services. However, the CBSL Chief, too, cannot exonerate himself of the responsibility for overall irresponsible conduct of the institution, as pointed out by Dr. de Silva in respect of the Monetary Board.
