Governor and governance

By Jayasri Priyalal

The four letter G word, the readers may find missing in the captioned phrase is GOOD. The author deliberately dropped the word as it has been overused in Sri Lanka for some time.

Policymakers bonding with thieves or professionals tainted with questionable integrity has caused immense hardships to the taxpayers and to the overall health of the economy. In one of the previous article of this author, titled ‘Robbing Banks from the Inside,’ the gravity of white colour crimes of insiders and their insider dealings was enumerated. 

Perpetual profits earned by a primary dealer connected with an insider influence, leading to the huge bond scam was revealed later. The COPE Parliamentary Committee report exposes well, the impact of the deal on the economy and the future generations.  

The aim of this article is to call up professionals to get up and stand up to be “HARD” on the problems surfaced and be “SOFT” on the people connected so that future occurrences of similar public robberies could be avoided . This does not mean to propose ways and means for the culprits to run scot-free; unaccountable. 

Policymakers, responsible officials holding high public office in Sri Lanka have clearly demonstrated their understanding and concerns about responsibility and accountability at times of their questionable actions and inactions. Responsibility can be delegated by a superior to a peer,subordinate or an official appointed, but accountability not.As it cannot be detachedfrom the person accountable.

In a rare incident in this part of the world, Dr. AtiurRahaman, former Governor of Bangladesh Bank, demonstrated the true act of accountability and tendered his resignation following the hacking of its account in Federal Reserve Bank New York, swindling close to $ 100 million. 

Dr. Rahaman’s consistent support for widespread digitisation of both central banking and commercial banking has helped achieve robust transparency and accountability in the financial sector in Bangladesh. He walked his talk, used his authority to force MNC banks operating in Bangladesh to provide credit to therural economy.Fortunately, he continues to work as a Professor in the department of Development Studies in Dhaka University. A good candidate to become a consultant or an expert in the finance industry to solicit good counsel for Sri Lankan policymakers.

The acute financial deficiency in Sri Lanka is no more a secret. All governments in the past have equally contributed to the mess. One consolation for the citizens can only be justified as the country was fighting three decades of war to wipe out a ruthless terror group in the country. Since 2009, after ending the war what went wrong in managing the coutnry’sfinances? Finance was not in hands of good brains, such as Dr. N.M. Perera, Felix Dias Bandaranaike, and Ronnie De Mel.

Finance portfolio in the cabinet of ministers has beenvestedwith the Executive President for a long time. Furthermore, a substantial amount of budgetary allocations were made available to the Finance Ministry, although many institutions under the purview of the Finance Ministry had a healthy cash flow. This scenario deprived finances to other deserving sectors to stimulate growth in the economy, and compelled to be under the control of the head of the government for obvious reasons.

As we have seen very often, money is what money does and as the usual huge pot of money will always attract wrong people to the right job. The Secretary to Treasury and Ministry of Finance became a jack of all trades as the Executive President had other priorities to deal. In the recent past decade, tail in the Ministry of Finance was wagging the body and the head. However, under the Yahapalana administration, the finance portfolio is not vested with the Executive President.It appears that there are three heads in the Finance Ministry now, and the tail is often getting confusing, diverse stimuli from the head to respond.

As stated above, this author is keen to be hard on the problem, and unearth the facts to learn from the mistakes instead of pointing fingers,to stimulate the thought processes of those who are genuinely concerned to find alternatives to arrest declining trends.

In the light of aforementioned; one has to welcome the decision of President Maithripala Sirisena to seek judicial advice on the legality of the actions and inactions of Central Bank of Sri Lanka for a period of ten years. So this will enable the public to be clear on the facts and not get confused with the issues being politicised. The public now genuinely trust the independence of the judiciary. Hence the public expectations are high for the Judiciaryto spot those who are accountable and propose a suitable course of remedial actions.

Civil service, a public administration was anesthetised with the introduction of the executive presidential system in Sri Lanka. And thereafter many of those appointed to public office were happy to become yes men of the politicians who were in power. The media reported extensively and were critical about the roles and functions  of Governor of Central Bank, Attorney General, Chief Justice and many other public office holders were singing songs of praises to appease the political gurus and made blunders causing immense reputational damages in the past decade. 

Many other professionals were non-committal and observing the downfalls silently. There is a dire need for all those professionals to act collectively, as the policymakers are rattling with outdated, ineffective policy tools of yesteryear.

President Maithripala Sirisena made his intentions clear that the proposed judicial inquiries on the alleged bond scam and actions and inactions of Governance in Central Bank ofSri Lanka to be reviewed for a period of 10 years. This writer proposes that President Sirisena  to include the following critical actions and inactions on the  part of Central Bank of Sri Lanka in framing the  terms of reference for the judicial inquiry as they have done immense damage to the finances of the country.

nOil hedging deal – Did the banks who were syndicating the deal obtain necessary exchange control approval from the Central Bank of Sri Lanka to go ahead with the deal? If so what is therationale for approving the deal were the facts and assumptions put forward by the banks were independently verified?

nTrading in gold – What was the motive behind Central Bank of Sri Lanka to enter into trading in gold, and profits and losses booked on the transactions and commissions paid and what is the current state of play?

nExponential profit figures of Central Bank – The annual report of the CBSL records steady growth of Central Bank profits earned since 2004, sources, and breakdown of the profit figures (Rs. 1 billion to Rs. 43 billion from 2004 to 2013)

nBank consolidations – Reasonsfor policy divergence in pursuing mergers and consolidations of commercials banks on one hand and issuing fresh licenses to others to open branches

nIssuanceof bonds –Toascertain whether there are links to insider dealing between the Uncle and Nephew as alleged recentlyand before

Finally, one more, though it is out of the scope of the time frame referred to the inquiry, Who is responsible for the authorising the license for PramukaSavings Bank? Why is the judicial process slow to bring the culprits to justice? 

(The writer is the Regional Director responsible for Finance Sector; working with UNI Global Union Asia & Pacific Regional Organisation in Singapore.)