| by Chndra Jayaratne
( December 26, 2012, Colombo, Sri Lanka Guardian) “Our leaders, by acts of unreserved surrender, have abdicated their accountability to us and totally sacrificed our rights before those in governance” was a pathetic cry heard recently from the wilderness, in a stage play that is in public performance currently.
An unknown source is attributed to have narrated the moral of the story as the play came to an end. “The pig and the chicken were on their way to breakfast, trying to decide what to have. When the chicken said, “Let’s have ham and eggs.” The pig then replied, “That’s fine for you, it’s a small donation on your part, but it’s a total sacrifice for me.” Guess who our leaders, the pig and the chicken in this story are?
The acts of surrender, as performed on stage, began with the financial crisis a few years ago. After that storm ended and as the animals picked the remnant left by the robber barons, those in governance walked away to a hail of bugles announcing ‘we are great’, ‘we delivered growth as the world saw an economic recession’. Seeing no amber lights, with this attitude and egoism, we did not prod them to action accountability.
Then we surrendered any rights we had to restrict future bad governance, when the 17th Amendment was burnt and the 18th introduced. As a great wall was built around surrounding us and strategic arms were acquired as arsenal of future governance, we minded our business seeing no dangers to our basic rights.
As the stock market flourished and did two consecutive years of over a century in growth, we applauded and hailed our leadership achievements. We blinded ourselves to the market manipulations, pony racing and pump and dump games played on openly by the favourite punters. We also blinded ourselves to the state bank funds and the working class savings pot being used as a channel to dump large volumes of stock that had unjustly enriched the favoured ‘mafia.
Around then same time we dug deep in to our pockets and coughed up the over one hundred million dollars in cash to support a burnt out effort, danced on stage with all the ‘peacock pomp and pageantry’ to the hail of loud speakers announcing a Common Wealth Games in the back yard of the home of the king. The only outcome we have to account to our stakeholders is the fun and good times of some in governance and the enrichment of professionals and PR hailers during the bid process.
We used a black cloth to cover our eyes and gag our mouth as the precious forex reserves were dwindled to support egoistic and unprofessional monetary management. We watched in silence the efforts in pursuit of hoodwinking the animals that the great resurgence had begun towards a new star of Asia being born. We hailed the announcement of rising per capita GDP growth targets.
We plugged our ears when these ego merchants blared about 4 and 5 K growth delivery which was around the corner. Towards this elusive dream we sold the precious ‘gold’ in the treasury and appreciated the rupee, killing the export sector slowly. With the double whammy of our external debt accumulating at a rate faster than ever, we yet remained silent in surrender.
We also surrendered our future as policy changes expanded our trade gap. We took foreign commercial loans and used them in meeting the deficit of the badly managed national budget and invested in projects with no matching dollar cash flows. Here too we watched them strangle the export sector with the exchange rate policy in force. To make matters worse we joined in the chorus of support, as the Executive went with the begging bowl to the IMF for a bail out. Even then we never dared to say “we need transparency, accountability and risk mitigation of class ‘A’ grade, at least hereinafter”.
Then we made the supreme surrender, by only making a few murmurs, that also mostly privately, when the Expropriation Bill was enacted contrary to the promise by leaders in governance swearing to deliver saving grace clauses. This surrender made us bound hand and foot, with no advocacy internationally or legally.
Next came the threat of takeover of part of the property inside our boundary fenced plantations, purportedly for distribution to the landless villagers. The red signals flashed as these new owners were to operate within the plantation, whilst our own landless plantation labour stayed confined to line rooms. Here again we may have meekly surrendered our property risks mitigation options. This threat yet remains a risk looming in the horizon.
The screws of the coffin of slow and painful death were then slowly tightened. The first began tightened by allowing the private sector and banks to borrow big sums in foreign currency, with the Executive promoting same through big adverts. We hailed this as a very progressive step. Not many were concerned that essential processes of risk mitigation and risk management techniques were not being advocated prominently. Was this a move with intent to leverage our balance sheets with risks to us when State balance sheet was over stretched with debt leverage?
The pinnacle State banks were seen to be engaging in multimillion dollar property investments and borrowing in foreign currency and lending in rupees mainly to poorly performing public institutions. Will any such borrowings by banks tied to unrestricted lending to State entities, lead to another round of possible State funded recapitalisations in the not too distant future?
We remained gagged and blinded as the military apparatus supported by subsidies costs began competing with us and poor householders. We also looked the other way as politicos were behind gang fights, murders, child abuse and even extra judicial killings of those in custody.
The sale of islands for tourism and long lease of land for property development with total state capture and without transparency and validation of the real nature and faces of the investors and their credibility remained unopposed by us. Port expansion and land reclamations on Galle Face using foreign commercial borrowings continue and we lauded them and clean Colombo efforts blind to mounting national debt burdens.
Continuing with a risky foreign policy of attacking our old and reliable trading and investment partner countries in the west, keeping India at arm’s length and embracing China, whilst holding hands with Iran and Russia and making positive overtures to African countries was not seen as not in our long-term interest, despite the trade and investment links with the latter new friends being marginal. We have abandoned an aggressive stand with our advocacy to link with Indian supply chains via CEPA, as strongly argued for by several globally recognised Sri Lankan economists.
The final screws of the coffin began tightening in the recent months. The first of these tightened with the passage of the National Budget 2013, in conflict with the Supreme Court determination. Leaders in governance did not care two pennies for the need for transparency and good governance as articulated by the Supreme Court by agreeing, without Parliamentary sanction, not to transfer one budget line to another, not agree to rein in the spending of slush funds reserved only for extreme situations, and not to take foreign loans.
This extreme step of passing the next year’s Appropriation Bill without strict adherence to the SC ruling based on a non transparent Attorney General’s advise using the higher majority in Parliament, may lead to risks surfacing during due diligence the next time commercial loans are negotiated. Will sponsoring bankers raise amber if not red flags in the future on the constitutionalism of this move? How will we react then by being silent now?
The next screw to tighten was with a real reversal of support to the export sector and in attracting foreign investments to bridge the investment gap. By allowing the exchange rate over to appreciate by a significant margin over a short period and the big boss announcing that there will be further appreciations to come as new FDI and loan remittances come in, signalled the potential severe uncertainty in the exports sector. This step will rivet the screws to a position of no return as far as investors and exporters are concerned. However, we have blinded ourselves remaining silent.
Most importantly we watched the impeachment saga unfold, and also watched the noose tighten around the rule of law and independence of the judiciary with the stoning of courts, judicial high ups being pistol lashed by goons and finally a the biggest dolphin fish, once a dancing partner of the giant whales, being declared guilty by a kangaroo court to crimes deserving a death sentence by public hanging. A late murmur of reservation on risks ahead shows our blindness as this Executive action. Resultant State capture will send shivers down the spines of investors, realising that they will in the future operate within a state without any respect for the rule of law. The clear demonstration of how not to conduct a fair trial against a purported offender will scare away future trade and investment partners.
As this saga unfolded we did not see nor want to infer that our property rights had been totally violated by the banks and bankers made pawns by the leaders in governance when made to act like starving kitten before the governing mother cat. The bank or banks in question handed over information normally held covered in velvet cloaks of legal secrecy. They have violated their trusteeship responsibility over our rightfully owned property in the form of account information.
We are however blind not to see how this act of purported public examination by 117 protesting petitioners was made possible and who is and with what authority were the information obtained and shared publicly for the advancement of personal objectives of the Executive. This was an sacrilegious act sacrificing trust devolved on a banking system already creaking all over with investment scams and loans sharks operating parallel banks on the Kelani palama, as a popular Sinhalese short rag branded it.
Whilst all these risks were tightening around us, we dug deep in to our pockets to fund the night races on a play ground of the leaders, as we were consigned to a cemetery in a coffin with democracy, rule of law and justice as our pall bearers to be cremated alongside.
Can we continue to remain gagged and blinded, if the consequential risks of downgrading Sri Lanka’s credit rating, increases in the country risk premium, downgrading of the country on transparency, business confidence, and global investment indices drag the nation and its engine of growth spiralling down? Will we similarly look the other way if the correspondent banks insist on international counter guarantees on local letters of credit for exports and imports? Are risks of sanctions and trade restrictions a possibility?
Will we yet remain in deep meditation even as the country nose dives on bad governance, denigrating the rule of law, judicial independence being taken away, reliability of contracts at risk, validity of international borrowings filled with question marks and safety of property rights and banking transactions are seriously doubted by our trading and investment partners?
Who will volunteer to take the blinds and gags off our leaders presently not seeing and hearing and thus not advocating against what is happening in our nation negatively impacting on the engine of growth and citizens?
(The writer is a good governance activist and a former Chairman of the Ceylon Chamber of Commerce. He is a regular columnist with the Financial Times, Colombo)