COPE faults 48 institutions:

'Audit, an integral part of transparency'- DEW

By Manjula FERNANDO

Senior Minister of Human Resources and Chairman of the Committee on Public Enterprises (COPE) DEW Gunasekera joined in an interview with the Sunday Observer in the Parliament, shortly after presenting their latest report on the performance and financial accountability of the State institutions.

In the interview he emphasised the need to strengthen the Department of Auditor General and spoke of the challenges facing the public sector of the country.

Q: You have classified in the COPE report some 40 state companies, out of 229 that were under the committee's microscope, as loss incurring enterprises. What has led to this situation?

A: Among the reasons identified, the failure by the Ministry Secretary to perform as the chief accounting officer responsible for all financial transactions was seen as a crucial factor. The Secretaries have faltered from this most important role.

Q: Do you think the people have faith that this report will contribute to eliminate corruption in the state sector ?

A: I do not know yet, but that is our intention . That is why we want to implement the report and that is why we are discussing a mechanism to implement the recommendations. I have summoned all the permanent secretaries for a conference here in parliament. President's Secretary and Treasury Secretary have also been invited.

Q: What is the message the President has given the COPE committee?

A: In his budget speech President Rajapaksa said that he fully appreciates the work by the COPE. This is a positive signal that the report is going to be well received and given serious thought.

We have received a good response from all the institutions and the Ministry Secretaries under whose purview these institutions function. Judging by that, I am quite confident that we can make a difference. The public servants did not regard the committee's work as offensive action, but instead they have been very cooperative.

Q: Do you think the 40 odd faltering institutions can be salvaged?

A: Yes I think we can. Not all the companies are incurring losses. Some of them have been losing their profits at an alarming rate. Some even by 90 per cent. We have pointed them out, so that corrective action can be taken immediately.

There are a number of stakeholders, the Government, the management and the line Ministries, we all must get together.

Then we can do it. We are cautioning with regard to the appointment of Chairmen and Board of directors.

The people chosen should be professionally qualified. I don't want to mention names. For instance there is a state insurance company, among the institutions that we scrutinised, where not a single board of director is qualified in insurance.

There was a recently set up bank, where no board member was qualified in Banking. No wonder these companies were running at a loss or heading towards bankruptcy.

This particular Bank has given so much of loans but not a single cent was recovered. We have personally informed this to the President. We are not blaming just one person for the faults that we have unearthed. The responsibility has to be shared down the line from the top most position of the Government.

Q: An equal number of members from the Government and the opposition were seated in the COPE committee. Was there any dissent at any time?

A: No dissent at any stage. We sat at the meetings as independent judges in a court room. This culture of working together in issues of national interest was there from the beginning. The politicisation of committees began with the politics of the open economy. But I was able to bring all of them together and win the confidence of the opposition members.

A: We made Karu Jayasuriya as one of the chairmen of the three subcommittees.

That step made a collateral change. We worked as a team. He was the Chairman of sub committee II, the other Chairmen of sub committees were Minister Susil Premajayantha and Deputy Minister Lasantha Alagiyawanna

Q: How did you extract information on internal dealings, the hidden data?

A: We summoned officials of the individual institutions and made inquiries, their statements had to be supported by documents. In fact some of the officials who were helpless to take action against their superiors were happy the COPE was doing their work for them.

The corrupt Bosses stopped misappropriation of funds and vehicles fearing COPE exposure.

The committee members later discussed these minutes, what transpired at the question and answer sessions and came out with the recommendations that has been compiled in the COPE report that we tabled today (Dec 1).

Q: Given the past experience with the COPE reports, the corrupt officials may think that they need not fear your committee because the report will never be taken seriously?

A: We have already seen results. Our initial work brought back a vehicle that was lost from a state institution for over eight years.

This is just one incident. When an official concerned informed the committee, upon questioning that he did not know where the missing vehicle was, I insisted him to lodge a police complaint then itself, on his way back to office.

The vehicle was returned within 48 hours. It was found non other than a Minister was responsible for the misappropriation of that vehicle. We took action and the results were immediate. We are after another similar case where an ex-minister is involved.

He has also taken home a vehicle in this manner. I am certain we could get the vehicle returned soon. But results with regard to finances and such dealings need collaborative action and take longer to correct.

Q: Now the report has been presented in parliament. What is the next step?

A: Our part of the job has come to a conclusion now. Now it is up to the administration to act on the recommendations. But I want to facilitate the next step. This is why I have summoned a meeting of the Ministry Secretaries including the President's Secretary and the Treasury Secretary in January next year in parliament.

All the 229 institutions that we scrutinised are under the Ministries.

At the meeting we will revisit the responsibilities of the Ministry Secretary. There we will convey them how important it is to implement the recommendations in the report.

One of our key recommendations is for the Ministry Secretary, as the Chief Accounting Officer to study the report in depth. Necessary corrective action will also be discussed there.

The President will also see the report and he will think twice before appointing persons with flawed records as chairmen, board members or otherwise to state institutions in future.

Q: Did you go into the ways how these incompetent persons gained entry to reputed organisations resulting in their downfall?

A: That was not our mandate. But the appointing procedure of officials to state institutions is quite well known.

Q: Your wish is that these recommendations will create a precedent and be a model for future appointments?

A: That is what we are aiming at. We hope that it will be so. I made a special statement in parliament after the report was tabled.

Then we issued the copies of the report to the media in a special media briefing. We want to create public opinion. We don't want to hide the findings and see it end up in the dust bin.

Q: What are the biggest institutions that received flak by the COPE?

A: CEB, Ceylon Petroleum Corporation, National Transport Board, etc. But some of these institutions cannot be blamed for the losses incurred. The Government subsidises electricity, the prices of oil as a consumer protection mechanism. Thus the treasury has to go on subsidising. If they allow the market forces to play the role without intervention by the Government with regard to policy or the price, then of course their profits will rise.

Q: What recommendations do the COPE have with regard to such enterprises to make them profitable?

A: That of course the Government has to decide, people have to be looked after but at the same time the companies should be assisted to make profit.

They should not be allowed to be white-elephants or a burden on the country's economy. The COPE looked into the economy, efficiency, effectiveness and productivity of these companies.

The COPE is not a stakeholder responsible for the operations of these institutions. The President, particular Ministries, the board of directors must decide as to how they can overcome these challenges.

All the 229 institutions that we scrutinised were not profit making companies, for instance the official languages commission is not a commercial company. We scrutinised their performance. With regard to commercially viable enterprises the treasury cannot continue to subsidise, they have to be allowed to run profitably.

COPE mandate is to look into their accounts and the performance. The performance as to whether the institutions were serving the people as per their obligations, thereby to strengthen the countability and the transparency of these institutions.

Q: At the end of the 16 months of heavy work looking into the irregularities in 229 state institutions, how do you feel about the outcome?

A: First of all we were able to complete the whole assignment before the deadline - the budget debate. Secondly we have produced a report with very good recommendations plus a set of general recommendations to be noted by the President, the Ministers and Secretaries, etc. We have proposed to streamline tender procedures.

The past 16 months of work by the COPE has made a significant impact on the institutions concerned. We did not function as 'rude administrators', instead we build up a good rapport that yielded results.

Our role has made a very positive impact on their functions and I am satisfied with what we have achieved. Now it is up to the officers concerned to act on these recommendations.