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Sunday, 19 May 2013





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Government Gazette

COPE: Dragnet set to catch sharks and sprats

By exposing corruption and large-scale misuse of State funds in state corporations, he gave teeth to the COPE and made it a powerful instrument of imposing financial discipline and propriety. Perhaps Senior Minister for Human Resources D.E.W. Gunasekaraís political creed would have inspired him to do a clean job of work leaving no room for criticism or bias. The dragnet he lays catches both sharks and sprats.

The Minister in an interview with the Sunday Observer said since the first Public Accounts Committee was established in the country in 1921, this is the first time in the history of the legislature where all 235 public enterprises were scrutinised and examined by COPE.

The Minister said he was planning to submit the next COPE report shortly. Issues are there, but many corrective measures have been taken. As far as COPE is concerned, there are 235 state institutions assigned to it. It has completed the investigations of the 235 institutions within a span of 365 days. When the last COPE report was presented to the Cabinet, President Mahinda Rajapaksa instructed the Ministers and secretaries to accept its recommendations and implement them.

A number of those recommendations has already been implemented. Some serious cases have been referred to the Bribery Commission and few others to the CID to conduct further investigations. The next COPE report to be submitted this year, would show a large number of state institutions which were running at a loss, and since made profitable.

Excerpts of the interview:

Question: The COPE reports have unearthed serious irregularities, misuse of state funds, especially corporation bosses paying their income tax out of state funds. What corrective measures have been adopted to prevent its repetition and has any action been taken against them?

Answer: This appeared in my last report, not in the report that I am going to present soon. We had discussions with the Treasury. This had happened long ago, somewhere at the end of the 1990s. We found that there had been collective agreements between the respective managements and trade unions on this matter. In certain corporations, even the Treasury had been in the norm of it.

Now there is a difficulty with regard to the collective agreement. Until the term of the contract ends, they are unable to revise the whole thing. That is understandable and we took that into account. Now the Treasury has taken a firm decision to rectify these omissions and commissions.

What we have recommended was that the salaries could be increased but you canít pay income tax on behalf of the employees by using Government funds. That is our principled position. When they do such things the profits of the corporations will drop. The report for 2000 which I have submitted states that nearly Rs.2 billion of corporation funds have been paid to the Inland Revenue Department for 2000. To that extent, all those balance sheets have been revised.

Then the profits will further go down. The only thing is they have agreed to make those corrections and they want to do away with it as early as possible. They wanted time and we agreed. Altogether there are 28 institutions which include the Peopleís Bank, Bank of Ceylon, Central Bank, National Savings Bank, Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board (CEB). Rs.2 billion is no joke. But the Inland Revenue Department was satisfied because they got the money. The money came from the corporate funds and not from the employees.

That is the irregularity. They were trying to justify it. But we didnít accept it. There is a violation of the Inland Revenue Act. The only purpose of an income tax is not to collect money to state coffers and disburse it to society. That is one of the aims of imposing a tax. But that concept has been completely negatived by this decision. Redistribution of income is one of the principal concepts of taxation. It has to be taken into account. Now they have accepted it and they will correct it. We have to wait and see. In my next report, I shall see whether there are any improvements.

Q:Despite the revelations by the Audit, COPE and PAC, the incidence of misuse of state funds is on the increase. Donít you think these bodies should be empowered to take punitive action against wrong-doers?

A: We have taken a number of corrective measures. It is for the first time in the history of the legislature that all public enterprises were examined. As far as COPE is concerned there are 235 state institutions assigned to COPE. During the 365 days of the year, we had completed 235 institutions. Since the first Public Accounts Committee was established in the country in 1921, this is the first time in the history where all the institutions were scrutinised and examined.

We are going to submit its report shortly. Issues are there, but a number of corrective measures have been taken. When the last COPE report was presented to the Cabinet, the President instructed Ministers and Secretaries to accept its recommendations and implement them. At present a number of those recommendations has already been implemented. We have referred the worst cases to the Bribery Commission and a few others to the CID for further investigation. We are calling for reports on the progress they have made. In the next COPE report, we will include these as well. When I present the next COPE report this year you could see a large number of state institutions which were running at a loss made profitable. At the time I presented my last COPE report, there were certain institutions which had not produced their Annual Report for the past ten years. Now every institution has submitted its Annual Report to the Cabinet and the Parliament.

Q:What relief measures could be adopted to provide further relief to electricity consumers?

A: That is a big question. I donít look at the CEB in isolation. We will have to take into the account the general situation. The CPC gave oil to the CEB. But the CPC has not received its dues. As a result, the CPC is also in trouble. The CPC supplied oil to the CTB but the CTB doesnít pay. The CTB is already in loss and they have defaulted their payments to the CPC. The CPC also provides oil to SriLankan and Mihin airlines. When they also donít pay, the entire burden has to be borne by the CPC which is very unfair, since it is not subsidised. A number of institutions are involved in this, not only the CEB. As far as the CEB is concerned, there are other contributory factors too. At present we are studying the working of the CEB. One question which has been brought to our notice is that its accounting system is outdated and we have to go for a new accounting system in keeping with international standards. This is a Corporation which deals with production, transmission and distribution of energy. Itís very difficult to find out at which point these losses had been incurred. Some of the Cost Accountants told me that we would have to shift the present financial accountancy system to cost accountancy system.

When such a system is introduced it would be easier to vary. The other point is that the policy of the Government is ďElectricity for AllĒ. When we contribute to this policy, we must understand that even the poorest man is to be supplied with electricity. We will have to take into account the purchasing and spending capacity. I am inclined to agree with the former Power and Energy Minister Champika Ranawakaís contention.

We generate electricity from hydro power which incurs the least cost of electricity. I am also inclined to accept the former Ministerís view, that the least cost of electricity should be given to the poor people. The next is coal power. Oil is the costliest input. This is a complicated system. When all these are put into one basket, it would be difficult to provide electricity to the lower segment of society. Therefore, there should be a different system to provide electricity to the people.

That is why we discussed it at the Cabinet and provided relief to electricity consumers at the lowest level so that it covers nearly 50 percent of the population. It has also given little concession to the next upper level. We have to look at this problem from various angles. ďElectricity for allĒ means we also accept the fact that all people are not equal. Their purchasing and spending capacity is varied. That means we take the principled position that even the poorest man should enjoy electricity.

Then the question arises how could he afford? Then we have to subsidise that. Today, electricity is not a luxury. It is available in every nook and corner of the country. I believe the overall policy of electricity has to be revised to afford concession to the needy. About 40 percent of electricity goes for airconditions. Why should that burden be shared by other sections or the householders? So, it is a complicated issue.

Q:Is there any justification to politicise the electricity issue by resorting to a one day strike rather than further negotiating with the authorities for relief?

A: Of course trade unions have a right to protest. We canít deny their right to protest. If the consumer who is a worker finds he canít afford it he has a right to protest. But politicising the issue is another question and I donít agree with it.

Q:There is opposition from certain UPFA constituent parties against the holding of the Northern Provincial Council Elections on various grounds. The grant of political and land powers has also become controversial. Your comments?

A: Holding of elections in the Northern Province is a long delayed issue. I am one of the three members in the parliamentary group who voted for the 13th amendment. It was brought forward to find a solution to the problem of national minorities. Secondly, itís an extension of democracy as well. That is why it has been extended to other areas. Since 1988 all provinces except the North and the East, enjoyed the benefits of the 13th amendment. For a moment I donít deny that people in those provinces didnít benefit. When I was an MP for Kalawana, at that time there were only foot-bridges in my electorate. Today, I canít find a single foot-bridge in that electorate. All the bridges have been constructed by the Provincial Council. From 1988 to date, lots of development has been taken place in rural areas and people have benefited very much.

Now the Central Government has extended its frontiers through the infrastructure development of the whole island. But the people have forgotten the fact that the Provincial Councils contributed so much. The Northern and Eastern provinces where the national minorities are the majority were denied development due to the war on terrorism. Now the war on terror has come to end and four years have elapsed.

We should not delay any further and the people in the North should be given the right as much as the people in the Southern or Western provinces who have been enjoying it since 1988. Why should they be denied the right? The other issues should be tackled separately. My position is that the Northern Provincial Council Elections should be held and whoever wins should be allowed to run it.

The President and the Central Government have all the powers. There were occasions where Provincial Councils were dissolved. So, there is nothing to fear. The Executive President is powerful. But there are some imaginary fears. They have been caused by certain sections to delay the process. It would be a grave injustice if the Northern people who have been suffering for so many years are denied this right when all others have enjoyed it for the past 25 years.Police powers and other issues should be thrashed out separately. That is why President Rajapaksa has suggested to appoint a Parliamentary Select Committee. We are prevailing on the TNA. The UNP has issued a statement that they have decided to attend the select committee. The TNA should also attend.

Then all political parties in Parliament can sit together and decide. These are not issues which cannot be solved. I donít want Police powers to be given to the North and the East, nor to the other Chief Ministers. They will abuse it. It has been in the statute for 25 years. Until these problems are sorted out, let it be in the statute.

Why should we drag it controversially. By doing so, we will be inviting another war. We should not send a message to the national minorities or to the international community that the Government is not prepared to consider these things. It will only strengthen the hands of the separatists. A collective effort should be made by all political parties. It is not a matter that the Government alone can tackle. All should get together and solve the national question once and for all. History has shown that a Government or single party alone cannot solve this problem. It is only through the collective strength and consensus that a solution can be found for the problem of the minorities.

Q: How do you distinguish the no-confidence motion of the past with what we witness today in Parliament? Do no-confidence motions impact the Government or its sponsors to create a better image of themselves in the public mind?

A: The Opposition has a right to present a no-confidence motion. The Opposition through presenting a no-confidence motion expects to give them an opportunity for debate on certain vital issues. As far as the recent no-confidence motion against Foreign Employment Promotion and Welfare Minister Dilan Perera is concerned I describe it as a ďBahubuthaĒ resolution. It is very unfortunate and unjust because he was not the Minister holding office at the time when the incident took place. He was not the Minister at the time when Rizana was sent abroad or when the alleged crime was committed. He didnít hold the present ministerial portfolio when the death sentence was issued to Rizana. After five years, Dilan Perera was appointed to the present ministerial portfolio. He did everything possible to save the life of Rizana. Knowing this, the Opposition moved the no-confidence motion against Minister Dilan Perera. If the Opposition brought a no-confidence motion against the Government, it would have provided an opportunity to debate the whole policy of foreign employment and other issues. But the no-confidence motion against Minister Dilan Perera is politically motivated.

Q:What do you think of the proposal to live telecast Parliamentary proceedings? What will be its impact on the country and the Government?

A: It has positive as well as negative effects. Positive in the sense that it provides an opportunity to the voters to watch Parliamentary proceedings and view how their elected representatives perform.

As regards the behaviour of certain MPs when they know that their voters are watching, it might help to correct their behaviour. If they continued to behave in such a manner, it will demean the dignity of Parliamentarians and bring Parliament into disrepute. Then the people would not like to see Parliamentary proceedings.

That would be a dangerous trend and lead to anarchy. When the people lose faith in Parliament, elections and their own representatives, they may try to look for other alternatives. But Speaker Chamal Rajapaksa wanted to study how these things are being done in India, Canada and various other countries. I believe we can come to some compromise by taking into consideration the positive and negative effects.

Q:Many politicians, scholars, scientists and a sizeable segment of the public attribute the current social, economic and political ills to the 1978 constitution. How do you look at this scenario?

A:It is only one cause. Why did the then President J.R. Jayewardene introduce the 1978 constitution? Mainly parochially I believe he wanted the UNP to be in power for eternity. So he ruled for 17 years. The political and economic thinking behind J.R. Jayewardene was, it was during 1978 that the Thatcher and Reagan philosophy was coming into ascendancy. The Neoliberal economic theory was also gaining ground. So he brought the 1978 constitution to accelerate economic development based on a Neoliberal economic theory. That was his purpose. When we look back neoliberalism has brought disastrous consequences socially, economically and culturally. That is why people are talking about cultural effects and the collapse of the family unit.

Q:Due to the rapid expansion of the market economy and its extension to China and Cuba, and the collapse of the Soviet Union, the re-emergence of socialism is uncertain. Your views?

A: After the October revolution, it ushered in a new era and brought a large number of states into alternative economic models.

The Soviet Union collapsed in 1991. There are many factors that contributed to it. One main factor is the closed economy. It came to a point where two thirds of the world is on the market economy. In a closed economy whatever you manufacture, you are unable to compete with others. So that competitive advantages are there. There was a big dialogue going on at that time in the Soviet Communist Party and other Communist parties. In the context of the prevailing global economic environment, we must go for a market economy plus a planned economy.

That is what China tried. That is why I consider that after Lenin, the greatest political and socialist thinker was Deng Xio Peng. He fought for it in his party and his theory prevailed later. It is adopted by all others. Even in Cuba Fidel Castro accepted the Chinese model. At present two thirds of the world has a market and capitalist economy.

When we reach a certain point, it is necessary to go with the market economy for a speedy development and lift the people out of poverty. That experiment has been proved correct.


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