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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Friday, March 09, 2007

COPE Report— what next?

The Island: 09/03/2007" By R. K. H. M. Fernando Former Director General, Public Finance General Treasury

The recent debate in Parliament over the latest report of the Committee on Public Enterprises is significant for its content as much as for being the first formal debate on a report on the COPE. The Committee that lay somewhat dormant for all these years sprang into action with its chairman Mr. Wijedasa Rajapakse P.C. fortunately free from ministerial shackles, probing some vital organs of the State Corporate Sector with the reportedly active participation of his fellow parliamentarians. It should be mentioned here that the present COPE, set up at the beginning of the Parliamentary session represents the Parliamentarians of all hues and the recent estrangement of the members of the JVP from the Government together with the entry into it of a substantial number of ministers of the former UNP regime gave this debate an opportunity to reflect an updated legislative opinion in a scenario of latest Parliamentary formation.
The salient features of the report just discussed warrant closer examination. Certain vital public utility institutions such as the CEB, CPC and its subsidiaries and financial institutions such as the Central Bank and the Sri Lanka Insurance have come under this probe and this is perhaps the first time that a COPE report has been subjected to a full two-day debate. Hence the very fact that a debate was promptly allowed or rather not blocked is to be appreciated and credit should go to the present regime on this account.

The writer observes that even the comparatively older Public Accounts Committee with its strong background tradition could not have any of its reports debated in detail as in the present case. These reports were merely approved and directed to be published as sessional papers — virtually a way of sweeping under the carpet criticism or comment, the basic tools of transparency.

It is ironical that attempts were made to treat as mud-slinging the references to individual parliamentarians whose conduct has been probed in this report. The chairman of the COPE himself has humbly and honestly admitted in his speech in Parliament, referring to the Parliamentarians in the first person: ‘This report is an indictment on all 225 of us who are here. It is not because we have all robbed the country, but because we are the Custodians of Public finances and we have failed to do our duty in this regard over the years.’ This statement has to be contrasted with that of the former Minister (himself a former chairman of the Committee) to the effect that the report was an indictment of the Government. If reference in the debate to individual parliamentarians whose conduct has been specifically dealt with in the report is mudslinging, the entire report boils down to be an exercise in mud-slinging. The JVP however has made a positive contribution to the debate albeit they are now in the middle of the political divide. Mr. Sunil Handunnetti made the point succinctly when he said, ‘If a germ is to be destroyed then the sunlight must be let in. If we open the Committee proceedings to the media, we will be able to kill the germ.’

There are attempts to exploit the bizarre disclosures made in this report about mismanaged Public Enterprises to justify further privatisation of these loss making enterprises. The proposal is absurd as no investor is likely to come forward to buy an institution that is running at a loss and whose efficiency is at the lowest ebb. Only speculators will venture, that too only to tap the assets and give up half way. In the present context, no nationally sustainable policy on privatisation is likely to evolve with the Mahinda Chinthanaya (the vision of the present regime) and the policy of the former UNP regime having different approaches to privatisation. Hence, restructuring through new management techniques with the minimum capital outlay and checks against political interference appears to be the viable solution. This is what the present regime is pursuing as is seen in the case of the BCC, SLTB and CWE.

The charge that Chairmen and Directors of these mismanaged Public Enterprises have been appointed on the basis of political influence is applicable to both regimes. It is the COPE that can act as a meaningful deterrent to this chronic practice by calling evidence from such chairman and directors, preferably in public as the practice of naming and shaming will go a long way in discouraging this practice obstinately practised by all the previous regimes.

The conduct of the debate on the COPE report was by itself intriguing and amusing. The government ministers, except for the newcomers, though in an unenviable position, with the findings of the report slapping on the new Ministers, whoever may have been the Ministers in office at the time of the particular misconduct, fared well, whereas the newcomers with skeletons in their cupboards were conspicuous by their absence or reticence. This was evident by the performance of the Minister of Finance and the Minister of Power and Energy. Perhaps the newcomers were taken by surprise and it was too early for them to plan, formulate and come out with a strategy of defence. The solitary speaker who ventured in a cavalier manner betrayed the entire legislative community when he said that this kind of report had been presented to Parliament before and that it is not such a big thing. I hope that the majority of Parliamentarians do not share this view or the attitude displayed therein.

Then there was a canard which appeared to gather momentum on the first day of the debate that the Chairman of the Committee had left the country owing to threats to his life because of the report. The explanation given by the Chairman who was present on the second day cleared air on this issue and it was evident that nothing could discourage or deflect the Chairman in his mission which he carried out in conformity with the accepted norms of Parliamentary Accountability.

The occasion was an ideal opportunity to highlight the role of the members of the Legislature as against Ministers representing the Executive. As the Chairman has rightly pointed out in his short but comprehensive speech, the COPE and PAC are the heart and lungs of Parliamentary Democracy. The members of Parliament are collectively accountable for the people’s funds. This accountability should be distinguished from mere responsibility. Even the independently elected President is only ‘responsible’ to the Parliament in executing the policy laid down by it.
Mr. Rajapakse could only make a passing reference to Financial Control by the Parliament and Financial initiative by the Executive obviously due to lack of time. He dismissed forthwith the widely held wrong view that only the Government is responsible for Financial Control.
His views on the need to follow a multiparty process for the national budget deserve further study and follow up. Herein, the writer wishes to recall the attempt made by the PAC in the late nineties through a special report prepared by the committee with the participation of the Treasury officials to have an Estimates Committee for the preparation of the National Budget.
The proposal did not find favour with the Treasury in the present legal framework and the current political set up. At present, expenditure estimates are presented to the Parliament well ahead of the Budget Speech. These are prepared by the Treasury and approved by the Cabinet before laying before the House. No Opposition involvement is allowed in this process. This is in keeping with the old British tradition and based on the principle that financial initiative is the prerogative of the Executive and any Financial Bill has to be presented only by a Government Minister. Revenue proposals prepared and kept confidentially are to be brought to the House in a secret box and formally read giving an element of surprise. In recent times, under both regimes the surprise element of the tax proposals has given way to pre-budget imposition of taxes overnight through the Gazette. As such, I see no harm in allowing even the broader Revenue proposals to be discussed in the House with the participation of all the members and eventually the specific revenue proposals based on them to be introduced by the Minister of Finance in the form of a Bill. The new arrangement indirectly suggested by Mr. Rajapakse may need changes to the present legal provisions and Standing Orders. This will make the Revenue Expenditure Budget debate in the Parliament more transparent and not a mere post mortem exercise.

I would suggest that a seminar with wide participation be organised by parties and organisations interested in good governance to discuss this issue. The independence of the Auditor General also should be taken up simultaneously, without such a back up from a wider section of society any attempt to change the present status quo is bound to lead nowhere as was the case with the Audit Act and the Public Finance Act.

Apart from the Chairman’s contribution, there was a healthy discussion of the vital issue of accountability on Public Finance with the participation of all political parties. The event and the outcome not planned in advance exploited by certain parties to achieve their narrow political ends should be made a regular occurrence during the presentation—of all future PAC and COPE Reports.

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