Cronyism and conflict of interest
View(s):Dealing with conflicts of interest in the political, public and private sectors has been one of the biggest challenges society has faced in Sri Lanka.
When the conflict between Central Bank Governor Arjuna Mahendran and his son-in-law Arjun Aloysius whose firm Perpetual Treasuries figured in the recent Treasury bond issue, was once again raised at a meeting on Thursday of the Sunday Times Business Club, UNP parliamentarian and Deputy Minister Eran Wickramaratne responded saying, “conflict of interest is a serious issue.”
He also presented a counter-argument, saying that when the President Mahinda Rajapaksa was in power and his elder brother Chamal was made the Parliamentary Speaker, no one raised any objection. “The head of the country and the head of Parliament came from one family,” he said expressing the thought that people now have the freedom of expressing themselves, even if it means criticising the highest of the land.
True. But two wrongs don’t make a right, a point that Wickramaratne himself acknowledged on Thursday while pointing out that conflict of interest is a societal bane and may need some legislative process to ensure it doesn’t happen under any government.
Barring conflicts of interest by law would make life easier too for the media which has been the whipping bag of many regimes for raising conflicts in positions of power, over and over again.
Public sector conflict of interest has grown over the years and every new regime that comes in performs even better than the previous incumbent – in the conflict of interest and cronyism rating index.
This extends to the period of Sirima Bandaranaike’s 1970-77 government and got better (or worse) in successive governments. During J.R. Jayewardene’s UNP regime of 1977 onwards, the then President appointed his brother, son and a few others in high positions. President Ranasinghe Premadasa appointed many cronies to office while Chandrika Kumaratunga was also faulted for appointing cronies in office.
However the appointment of cronies and conflict of interest were taken to a new high under Mahinda Rajapaksa’s administration.
His sons, brothers and other relatives were given high positions while cronies were nominated to top jobs.
These cronies in turn appointed their own cronies: example – directors and chairpersons to commercial banks by the former Central Bank Governor. Officials and politicians like P.B. Jayasundera, Gamini Senerath and Sajin Vass Gunawardene (to name a few) were among those who appointed cronies with high salaries to various institutions.
A sizeable section of Sri Lanka’s foreign service was filled with cronyism mainly due to Vas Gunawardene’s control over positions with then Foreign Minister G.L. Peiris watching on the sidelines, as often reported in the Sunday Times Political commentary.
With relatives, friends and associates in high places, the Rajapaksa family had a stranglehold on the economy. Most of these associates continue to serve as officials today making it difficult for the new administration to work. Deputy Minister Wickramaratne says that the bureaucracy is slow and held back deliberately by officials and either they have to be fired or politicians have to quit.
Conflict of interest among chairpersons and directors of listed companies is even worse and too numerous to list. The Securities and Exchange Commission has seen its fair share in the past with some officials installed in positions by powerful business interests.
Conflict of interest has come to haunt this Government too which is on the road to good governance, transparency and accountability but with quite a few bumps on the way. For example the first conflict that arose was in the appointment of the Central Bank Governor while a relative was involved in trading in the market. That later became a serious issue.
Then while the former chairman of SriLankan Airlines was removed, the airline’s CEO remained even though he was a political appointee.Rumour was that the CEO was closely connected to a business associate of the new chairman of the airline, assuring him of protection.
He was fired only after the Weliamuna committee probing the airline recommended in its interim report (not the final one released last week), that he should be discontinued if they were to proceed with the probe.
The appointment of the new President’s brother to a key position is also not a good move in the context of good governance and an end to cronyism.
With cronies installed in office earlier, how does a new regime function if these functionaries are not removed?
Taking the bull by the horns is perhaps not the best approach but in the absence of any other solution, the Government recently nominated its own set of directors to commercial banks to replace those who were appointed by the former regime. While acknowledging that this is not the best way to govern, Wickramaratne cites the example of the former Chief Justice Mohan Peiris who refused to step down and was then forced out as there was no other option, otherwise the country would have suffered.
The same applies in the case of directors of banks where the process may not be the best but nevertheless has to be done to bring in professionals.
“We need to move to a level where all key appointments are made through either a legal or transparent process without conflicts of interest. The best person should be picked for the job,” Wickramaratne said.
A law governing conflicts of interest would perhaps be the best course of action for the future.
Best examples of conflict of interest laws prevailing in other countries could be used to model one that would suit Sri Lanka. Such a proposal is also likely to get the support of all major political parties even in the next parliament.