Absence of Accountability: The Bane of This Country

An Open Letter to the New President

by Amrit Muttukumaru, MA Econ.(Madras); MBM (Asian Inst. of Mgmt.), Colombo, 28 November 2005

Dear President Rajapakse,

Congratulations on your ascent to the all-powerful position of executive president and best wishes for a successful tenure.

It is a monumental understatement to opine that it will be extremely tough going. It has been said that you have a friendly disposition and that you are accessible to people. This will stand you in good stead in the onerous task ahead of you. Of course, you will need much, much more than this to get this country going on the path towards peace and prosperity.

Although it is now almost a cliché that the future of this country is dependent on the satisfactory resolution of the twin crises plaguing it - namely the ethnic and economic problems - it is not sufficiently appreciated that overriding all this is the glaring absence of good governance, of which the absence of accountability is the most serious. Indeed, an acceptable level of this attribute would not have permitted this country to reach its current pathetic state where it is tottering on the brink of anarchy. It is encouraging that, in your inaugural address, you have made reference to the need for ‘good governance’ and the application of the ‘rule of law’ towards ushering in a ‘disciplined society.’ These same sentiments were also articulated by some of your predecessors, most notably J.R. Jayawardene in his infamous ‘Dharmishta Society’ and Chandrika Kumaratunga’s cruel joke of  conducting affairs of state with ‘transparency’ and  a ‘human face.’ We all know what a farce these have been and the heavy price yet being paid by the country!

It is fervently hoped that your promises, too, do not suffer the same fate, at least for the sake of this beautiful country whose time is fast running out. What is being proposed is that, while appropriately addressing the ethnic and economic crises, issues of governance also should be addressed simultaneously.

You will appreciate that no one in this country will take any official pronouncements seriously, especially promises of good governance and particularly in respect of the rule of law and accountability. What the people of this country are witnessing with sickening regularity, especially since the ‘liberalisation’ of the economy in 1977, is the exact opposite of this, accompanied by the unbridled plunder of its resources with impunity by many of those holding political and economic power aided by a pliant public service.

A feature of lack of good governance is the symbiotic relationship between powerful sections of the political, corporate, public service and law enforcement establishments in an environment devoid of checks and balances. This is further exacerbated by a highly ineffective regulatory structure and an indifferent civil society.

The focus of this letter will be on the need for all round good governance and accountability, since it will be too unwieldy if the ethnic crisis and the economic woes are also addressed. The only comment I wish to make at present on the ethnic crisis is that, due recognition should be given to ground realities - social, political and military - while in respect of the economy you should commence implementing your promise of a policy incorporating the positive aspects of ‘liberalization’ tempered with the country’s socio-economic compulsions and the need for equity in which there will be no place for crony capitalism.   

No Accountability

It is crystal clear that this country is tottering, with its institutions of governance highly debilitated. This includes the executive, legislature, judiciary, regulatory agencies and administrative machinery. The rule of law also is in tatters. Human rights violations with impunity by officials of the state are almost endemic. Corruption and abuse of power are systemic in the absence of any demand for real accountability from civil society. Even many of those on the NGO gravy train and the media are comfortable in merely articulating generalized platitudes, instead of getting into specifics on a sustained basis, which alone could prove to be effective.

It is the appalling absence of the demand for accountability that has allowed the just-retired executive president to publicly state at a recent felicitation ceremony that “I can assure you that I am not going to take back home a red cent if it doesn’t belong to me and it gives me pride to say that I have not stained my hands with mud or blood,” in spite of several alleged outrageous cases of corruption and abuse of power during her presidency which to date have not been seriously disputed. These include, the virtual gifting of a vast extent of valuable prime land for a purported ‘Golf Project,’ after evicting hundreds of poor people, to some of her cronies, who lost no time in disposing of the same at a handsome profit, highly questionable privatizations such as AirLanka, ‘Thawakkal’ Cement, the Queen Elizabeth Quay in the Colombo port and the deal for locomotives with ships’ engines. Irregularities have also been highlighted by the Auditor-General in the management of the president’s fund, with controversy reportedly dogging it even in the dying days of the presidency in respect of cheques for donations amounting to a sum in excess of Rs.750 Million.

Possibly the bloodiest chapter in the ethnic conflict, accompanied by terrible human rights violations which led to the deaths and maiming of thousands of Sinhala and Tamil youth in the disastrous ‘war for peace’ campaign in the context of several alleged shady arms deals also involving some of her key officials, took place under her presidency. To cap it all, the former president has received an unprecedented gift of one and a half acres of high value real estate by unanimous cabinet decision over and above other generous perks. Don't you think that, by this yardstick, former Singapore prime minister, Lee Kuan Yew should have been given the whole of that island state and former Malaysian prime minister, Mahathir Mohamed at least the State of Selangor! 

Even the report recently submitted to parliament by the auditor-general on the alleged Rs. 3.57 Billion fraud in the VAT Division of the Inland Revenue Department brought to light by its trade union, remains dormant in parliament. The same applies to the Auditor-General’s report on serious irregularities in the handling of the Billions of Tsunami donor funds. Things were no better during the little over two year period under the post-December 2001 UNF administration where there were irregular privatizations such as Lanka Marine Services, LIOC and Sri Lanka Insurance Corporation and the unprecedented and dubious blanket ‘tax’ amnesty.

Your ability to promote good governance will be dependent on your own credibility and moral authority. However much you may wish otherwise, the ‘Helping Hambantota’ issue, if ignored, will haunt your administration and your own prestige unless transparently inquired into and responsibility accepted for any wrong doing. If you do so, it will be the first time such action has occurred in this country, and it will propel you into the ranks of a statesman, which we have lacked, and send a strong signal that you will brook no nonsense from any quarter. I suggest this in good faith in the interest of this country.

Corporate Governance

We have been given a glimpse of the atrocious state of corporate governance with its endemic conflict of interest long kept under wraps, due to one individual with huge political clout aggressively thriving on this rotten system breaking the unwritten rule among the elite corporate community of not ‘poaching’ in each other’s ‘backyard’! This is patently obvious because another instance of a similar transgression of the Banking Act some years ago by this same individual was never challenged.

Another controversial individual much in the news in the run-up to the just concluded presidential election who could also be construed to have breached the Banking Act in a similar manner has also been severely left alone, presumably due to not upsetting any vested interests! This case, which is merely the tip of the iceberg, exposes the ‘unholy’ nexus between powerful sections of the corporate sector, the political establishment and the regulatory agencies, which includes some key professional bodies as well.

A major component of the bottom line of many of our larger corporate entities could be traced to state patronage. This includes being beneficiaries of highly questionable privatizations, where in some cases state monopolies have been converted to private monopolies and preposterous payments been made by the state to companies for the purchase of power from environmentally destructive diesel guzzling sources of generation. The resultant cost of power being one of the highest in the world and dampening the growth of industry seems to be of little or no consideration.

Even more than a decade after the privatization of plantations, the condition of the plantation workers continue to remain pathetic. However, this does not prevent the charging of unconscionable, hefty management fees. Is it not a fact that the performance of high profile state agencies such as TAFREN, NCED and SEMA with a surfeit of key private sector personnel have been at best mediocre?

Under these circumstances, does our private sector deserve to be assigned the role of ‘engine of growth’ of the economy? It is observed that the traditional penchant of our business leaders to pay obeisance to the new political leadership has already commenced, irrespective of their stance at the hustings! It is hoped that the recent convert to your policies with purported corporate governance credentials will be a source of strength to you in cleaning up the Augean stables.

Recommendations

1) ‘Constitutional Council’

Sadly, the salutary intentions of the 17th Amendment to also depoliticize appointments to key public institutions has proved to be a failure for reasons which include constraints in the law itself since ultimately the members of the ‘Constitutional Council’ (CC) themselves are political appointees! None of the purported ‘independent’ commissions are functioning in the manner intended. For example, the Bribery and Corruption Commission has for the most part been inactive with concentration on relatively trivial cases, while some terribly irregular promotions have been granted to some police officers by the Police Commission. The Asian Human Rights Commission seems to be far more active in this country than our own Human Rights Commission!

It is suggested that you appoint a not too unwieldy presidential committee composed of competent and truly independent persons to make recommendations to you to drastically improve on the 17th Amendment to make the goal of good governance a reality. You may even invite one or two eminent persons from overseas, possibly India, to serve on this committee. You may even consider allowing them to draw up their own terms of reference for your approval. It is critical that public comments are invited through the mass media on their draft proposals prior to finalization. This whole exercise should be completed within a maximum period of three months.    

Their key task inter alia will include:  

(a) Framing the guidelines for membership in the CC to minimize politicization and maximize independence and competence with a hawk eye to prevent any ‘conflict of interest’.

(b) Listing the state and regulatory agencies that should fall under the purview of the CC. For example, at present the Securities and Exchange Commission does not fall under the ambit of the CC. There is also no reason why the minister of trade and commerce should be appointing several members to the ‘Council’ of the Institute of Chartered Accountants of Sri Lanka. This task should be vested with the CC. Similarly, the members of the Sri Lanka Accounting & Auditing Standards Monitoring Board should also be appointed by the CC  

(c) Ensuring the required powers and resources to the ‘independent’ commissions established by the 17th Amendment

2) State Media

The preliminary report of the European Union’s presidential election observation mission had this to say about the media scene in this country with reference to both the state and private media:

“…the lack of a truly independent media system impedes citizens in their ability to assess the campaigning by candidates.” It is felt that this is a fair assessment of the reality. In this context it is suggested that steps be taken to convert the state media paid for by the people of this country into an independent entity on the lines of the BBC structure with further improvements, if possible.

3) Freedom of Information Act

The proposal for a Freedom of Information Act has so far not materialized. It is important that the views of the public should be sought through the mass media within a stipulated time frame prior to presentation to parliament.

4) Whistleblowers

The mechanism through legislation should be in place to encourage and give protection to whistleblowers in government, public and private sectors.

5) Others

Other areas for consideration towards good governance include, revamping the Company Law and better regulation of the securities market and the financial system to vastly enhance the degree of transparency and accountability. Unacceptable delays in the legal system need urgent attention. More powers to parliament’s oversight committees and making public the assets and liabilities disclosures of all parliamentarians as well as the executive president. The underpinning of all political appointments on sound management principles and meritocracy is paramount.  It is noted that you intend to make the executive president accountable to parliament. This is a commendable measure. While urging you to do so without undue delay, you will appreciate that this will have little meaning if the immunity provision in the constitution given to the executive president is continued. Election campaign funding is another area needing attention.

In conclusion, it could be said that there is no substitute for the eternal vigilance and assertiveness of civil society to usher in good governance and accountability. It is the absence of this that continues to be the tragedy of this country.

Best Wishes,