CPC will soon turn into a profit-making entity - COPE chairman

By Uditha Kumarasinghe

Senior Minister for Human Resources and COPE Chairman D.E.W. Gunasekara said the performance of most state institutions under COPE had vastly improved after he took over as chairman in 2010. The Minister in an interview with the Sunday Observer said that when he took over, there were some state institutions which had not submitted annual reports for ten years. All this has been rectified and brought upto date during the past four years. Submitting annual reports to Parliament was encouraging. Prior to 2010 only 20 to 40 institutions under COPE were taken up for scrutiny and investigated. The first time in the history of the Legislature, a decision was taken to investigate all institutions in 2011 and a report was completed. All these institutions were investigated again in 2013 for the second time. Now for the third time, COPE will submit its final report by investigating all 244 institutions by end December.

Minister Gunasekara said it was practically impossible to complete investigations on all 244 institutions in 365 days. Therefore, three sub committees have also been appointed to deal with this. The main committee will handle strategic business, largely on enterprises and the three sub committees will deal with various small organisations such as commissions and universities which are non-profit oriented organisations.

Q: As a senior parliamentarian you will recall years ago that COPE recommendations were promptly implemented. As this does not happen today, a follow- up Committee has been appointed to ensure implementation. What has gone wrong?

A: That follow up committee is not for the implementation of COPE recommendations. That is really to follow up the implementation of the COPE directives given to state organisations. COPE recommendations are meant to be implemented by the Executive. This has to be done by chief accounting officers and Ministers concerned.

Sometimes we give directions and committees are not following it up. That is why we set up this follow- up committee to give directions. For an instance, if we need a report from a secretary, we tell him to prepare it and we want to see whether he is following it up. Therefore we set up a three- member committee and their main task is to follow up and report to the main committee. That is the purpose.

Q: The old order of submitting financial statements to the Auditor General and annual reports to Parliament has eroded. What action has been taken to streamline this by holding heads of institutions and chief accounting officers accountable?

A: Now the situation has improved. When I took over in 2010, there were state institutions which had not submitted annual reports for ten years. They had not even submitted financial statements to the Auditor General. Now all this has been brought up to date during the last four years. Earlier, prior to 2010, all institutions were not scrutinized. If you go through the past records, only 20 to 40 institutions were investigated and reported to Parliament. We took a decision to investigate all 244 institutions.

Practically it is impossible to complete investigations on 244 institutions within a calender year of 365 days. That is why we set up three sub committees. The main committee deals with strategic business largely on enterprises and three sub committees deal with various other small organisations such as commissions and universities which are are non-profit organisations. As a result, we completed investigations on all the institutions.

This is the third time that we have submitted a report. The first time in the history of the legislature, we investigated all the institutions in 2011 and completed a report. Again in 2013, we investigated all of them for the second time. For the third time, we will be submitting the final report by investigating all the institutions by the end of December this year.

Now all institutions have submitted their reports for the year 2010. Of all institutions, there are only six institutions which have failed up to April this year to submit their reports for 2011. There were only 34 institutions which have not submitted their reports for 2012 by the end of April 2014. Now the situation is much better and encouraging. That question does not arise as all the institutions submit reports to Cabinet and Parliament.

Q: In India the Auditor General and Comtroller has punitive powers which are a deterrent for wrongdoers. Is there any possibility of introducing such a system in the interest of the country's finances?

A: The Auditor General has some powers. He seldom uses it. He has powers to surcharge offenders. That has been carried out not as a punitive measure. But the Auditor General imposes surcharges.

Q: Years ago, the Ceylon Petroleum Corporation was one of the highest profit earning bodies. Is there no solution to its monumental losses? What are the COPE recommendations in this regard?

A: The loss of the CPC for 2011 was Rs.92 billion and for 2012 was Rs.95 billion. But this loss has been reduced to Rs.6 billion in 2013. Losses in the CPC have drastically reduced. This is an achievement. I am quite confident, the CPC will show profit shortly. Now it is under control.

Q: The Auditor General, Public Accounts Committee and COPE are the watchdogs of the Government's coffers. How is it that the bureaucracy violates financial regulations and procedure?

A: Without a doubt Parliament is the watchdog. But according to the Constitution, heads of institutions and the Chief Accounting Officer who is the Secretary to the Ministry is responsible for all financial transactions as well.

He is the one who is answerable to COPE and to Parliament. In the past four years, we have made some improvement. Only 16 organisations incurred losses last year. Of these 16 organisations, 98 percent of the losses are related to four institutions- SriLankan Airlines, Mihin Air, CPC and the Ceylon Electricity Board (CEB). Other losses are minimal, there is vast improvement.

The CEB has already shown profit for 2013. The CPC will show profits for 2014. SriLankan Airlines and Mihin Air are the two major loss incurring institutions. SriLankan Airlines and Mihin Air were started without capital and that is the fundamental defect. They were not given capital and they were asked to borrow capital and start the business. Now they have not repaid the principle amount and the interest.

According to statistics, not more than ten airlines all over the world are running at plus profit. These are national carriers and most airlines are running at a loss and governments are subsidising them as a requirement. Sometimes some of the positive gains of our airlines are not reflected. For instance, our national carrier brings many tourists. Foreign exchange is earned but the airline does not get that money. That money either goes to the tourism sector or the private sector. But nationally they are doing a great service. Airlines all over the world are running at a loss but the country is gaining. We have to take that fact also into consideration.

Q: Under your chairmanship, are you satisfied with the performance made by state institutions which come under the purview of COPE?

A: Of course, they have achieved progress. Of these 244 state institutions, nearly 76 commercial organisations are profit oriented. Others are non-profited oriented and are really service- oriented such as universities, commissions and various other organisations.

In such institutions, our main effort is to investigate how they have spent the money. Because the Government has to earn and that dividend comes to the coffers of the Treasury. Of those concerns, it was only 16 institutions which were running at a loss last year. Compared to the past, I could see that there is much improvement after I took over as chairman of COPE.

Q: What are the prospects for Indo-Sri Lanka relations under the new Indian political dispensation?

A: With regard to Indo-Sri Lanka relations, I am optimistic looking at the foreign policy enunciated by the new Modi Government.External Affairs Minister Sushma Swaraj had made a declaration that they are not going to interfere into the internal affairs of other countries. They have perticularly mentioned that they must have the best of friendship with the neighbours more than any other areas from the neighbours.

We are one of their closest neighbours and that is a salutary factor on our part. Because I find up to the end of war against terrorism, we have maintained relations with India at very satisfactory level. Until the end of war, there was no complaint of any interference on the part of India or even on the part of Tamil Nadu. Tamil Nadu politics didn’t play any role at all with regard to the war on terrorism.

There were of course chauvinistic elements in Tamil Nadu and they were shouting their heads off . But two major parties which come to power alternately in Tamil Nadu never interfered or even made any pronouncement until the war on terrorism was over. This was to our advantage.

In the post conflict era, we find that relations took an adverse turn. It is necessary to make a reappraisal of our relations between Sri Lanka and India. In my view, I feel we have gone wrong from the time we won Independence. Our former Governments under whatever leadership concentrated on Delhi- Colombo relations or at the Senanayake or Bandaranaike and Nehru and Gandhi level.

We lost the side of emerging state governments. Today the political landscape in India has completely changed. Earlier the Congress was ruling the whole of India. Today state parties have come to power. They have become formidable. At the inception, it was a Congress Government which was running in Tamil Nadu. Today it is not the Congress or the other alternative BJP which is running Tamil Nadu. It is the AIADK and DMK alternative that has come to power. These state parties are a formidable force. But on our side, we have no relations at all with thee political parties. In Tamil Nadu, we don’t have any relation at state, political, people’s or university level.

Now we have to rethink to reappraise the whole policy. We must try to reestablish our contacts with the State Governments particularly Tamil Nadu being our immediate neighbour. From Jaffna it is only 20 miles across the Indian Ocean. We must bear in our mind that 75 million people live in Tamil Nadu whose culture, language, religion, lifestyle are almost close to the Sri Lankan Tamils. That is a determining factor. When we talk of international relations on the Indian factor, the Tamil Nadu factor should also be brought into the scene. Because we are the closest neighbours to the Tamil Nadu state.

You will be shocked to hear that a Chief Minister of Tamil Nadu has never visited Sri Lanka. But Presidents and Prime Ministers even from geographically distance areas like Latin America come here, but not from the state which is just 20 miles across the Indian Ocean. So something has gone wrong on both sides. Therefore as much as the new Modi Government, we also must rethink to re-establish contacts at various levels such as state, political party, trade union and religious readers leve with Tamil Nadu. This will be the only solution.

Q: Could you explain the callousness on the part of Western democracies to keep mum on atrocities against Palestinians while harping on Sri Lanka’s alleged human rights violations?

A: That is their double standard policy. Mainly I would say Western policy is dominated by American and British policies. Basically these two countries are imperialistic. They have a policy because they go after in search of their own geopolitical interest in the rest of the area. They have their global strategy that rule the world. Then they all have other geopolitical interests such as raw materials, markets and various other things as well as strategic areas and study centres. Similarly in Asia, particularly with regard to the American policy, there is a shift from the Atlantic to the Pacific due to the fact that India and China are the two most populated countries in the world. They are becoming emerging economies. That is a threat to the West. Asia leads the world economy today. That is a factor which is provoking Western democracies.

Therefore, they are trying to adjust foreign policy to fit their strategic policies, global strategy and geopolitical interests. They try to interfere into our affairs. That is what is happening in the Middle East. We can see what is happening in Afghanistan, Iraq, Syria, Lebanon,Yemen and around the line. Their latest strategy is that they are trying to bring NATO forces closer to Moscow. That is why the Ukrainian issue has come up.

That is why the Russian Government had to react fast and annexed Crimea and see that NATO forces don’t come closer to Moscow. These are global strategical and geopolitical interests. That is a part of their game.They always have double standards, one policy for their friends and another for those who are not friends.

Q: Today developing countries including Sri Lanka borrow from international funding organisations to finance infrastructure development. Is there any harm in this as alleged by the Opposition?

A: As long as we manage our debts, there is no harm. If we don't have money to build our physical resources such as infrastructure, then we will have to go in for capital somewhere else. There is nothing wrong in taking loans and every country obtains loans. America borrows from China. Similarly there is nothing wrong so long as we can manage it. Earlier in 2002, our foreign debt rose to 102.3 percent of the GDP. Now it has been brought down to close upon 75 percent. It is manageable and we can afford to take loans. But there are certain negative trends, we must see that our exchange reserve is adequate to ensure exports.

Of all these things, I mean the external factor is important. Because our economy is a small economy. It is a 67 billion economy. In a world of 65000 dollar billion world economy, it is vulnerable to the external shocks. Therefore we will have to be careful. That is why we must have sufficient external reserve. We must see that our external trade does not decline and that it increases. Then we should have internal government revenue which is also another important factor. Because government revenue has gone down from 1977. It was 24 percent of the GDP in 1978. Today it is only 12 percent. We can’t afford to allow it to decline further. If that happens, we don’t have money for recurrent expenditure. Because we can’t obtain loans for recurrent expenditure. The loans obtained for infrastructure is an investment. We can afford to go in for loans for investment but not for expenditure for consumption. We have to use Government revenue for consumption. Government revenue has declined. That is due to the inadequacy of our tax policy. My conclusion is that the tax policy needs revision.

Q: The Opposition talks of fielding a Common Candidate for the next Presidential election. Do you think that they would be able to pose a threat to the Government?

A: It is a developing situation. If I speak on behalf of my party, we have suffered enough under the Executive Presidency for the last 35 years.

We have to put an end to it. We fight not for a Presidential Election but for the abolition of the Executive Presidency. Only the Left parties were asking for it right from the beginning. But this demand has increased now.

Practically all political parties now demand for the abolition of the Executive Presidency. I don't know to what extent they are sincere. Some have changed their policies. Ven.Maduluwawe Sobitha thera says that the present Government should put an end to the Executive Presidency. If that does not happen, they will be compelled to field a Common Candidate. Yet there is no consensus on that. We are just watching what developments would take place now or in the next one year. It is premature to comment and speculate as to what would happen.

Q: Today Socialism appears to have given way to neo-liberalism. What are the future prospects for the working class and the downtrodden?

A: It is not Socialism which has given way to neo-liberalism, but the fact that Socialism collapsed. The demarcating line was 1991. The unipolar world emerged immediately after the collapse of the Soviet Union and the Socialist countries. Under the conditions of a unipolar world, the theory of neo-liberalism started gaining ground. Because neo-liberalism means that all the barriers are taken away for capital to penetrate throughout the world.

Now not only capital, even labour, production and everything are crossing all boundaries. In short, neo-liberalism means that the state should keep away from economic activities and allow capital to run the economy on its own without state interference. That is where we clash with that theory, which means the freedom is given for the maximum exploitation of labour through capital.

That will be not be in the interest of the majority of the people. That is why we say that state intervention is necessary. That is why we have put a stop to privatisation and the state sector is widening its frontiers. New enterprises are coming up. Even the loss-making enterprises are gaining now. We should have the private sector and the state sector go on pararel and nourishing each other.

Socialism is a long- term perspective. In a unipolar world, we are compelled to depend on foreign agencies for loans such as the IMF, the World Bank and Washington consensus agencies. Again the situation has changed today. Because the world is shifting from being unipolar to being multi-polar with the rise of China as the leading world economy.

Then a number of new economic centres are coming up, such as South Africa in the African continent, Brazil as the biggest economy in Latin America, Russia in Eurasia and India in Asia. That is why BRICS has formed. The BRICS organisation took a decision a few weeks ago to initiate an alternative World Bank and IMF to help developing and Third World countries. President Mahinda Rajapaksa told the Cabinet that we have already made an application to be an observer and that is being granted. We will have observer status in BRICS soon.

BRICS represents 43 percent of the world population and it has 35 percent of the Dollar reserves with exchange. They give concessionary loans without stipulating conditions like the IMF and World Bank. I think for the first time, this is an alternative and the IMF and World Bank have lost their monopoly. That works in favour of the developing countries. You can be a little more optimistic.

Q: The old guard in leftist politics are a fast diminishing breed which portends gloom to decent politics in many developing countries. Your views?

A: That is your imagination. You must see the Left is also emerging in the rest of the world. In Latin America, 13 countries with pro-Left governments are emerging. Under the new conditions, the world order is shifting from unipolarity to multi-polarity. All the new economic centres are in developing countries not in developed countries.

All the Latin American countries including Brazil and its President is a leftist. It is a pro-Left Government. The Left is not diminishing and it is coming forward now in coalition Governments. Coalition politics is becoming the order of the world today either right, middle or left.

Pro-left coalitions are there in Latin America and pro-right coalitions in certain areas in Western Europe. It is in the centre like in countries like ours. As long as there is the curse of poverty and exploitation, the Left will never diminish. It will re-emerge.